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TMI Blog2021 (11) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing exercise, R3 and R4 could be prodded to extend further concessions in favour of the Appellant No. 1/ the Company. The issue between the parties is at a stage now when the non-viability of the financial arrangement between the Corporate Creditors and the Corporate Debtor subsumes, arguably if any, the public law element which can be attributed to either the RBI Framework of 2019 or, to the nature of the business of the Appellant No.1/ the Company, i.e. to generate an essential service such as electricity. Admittedly, having regard to the commercial arrangement arrived at between the parties at the said Consortium Meeting dated 17th February, 2021, there is no legal flaw in R3 and R4 taking the next logical step under the IBC. The Tariff Order dated 31st May, 2021 being fundamental to both the Corporate Debtor and the Corporate Creditor, its failure necessitated that the parties re-visit their positions or, at least brief each other of their respective positions, prior to embarking upon exercising their respective legal options. It would be thus open to the parties to keep the Tariff Order dated 31st May, 2021 one last time on the table and, on failure to reach a common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, in exercise of its appellate jurisdiction under Article 226 of the Constitution of India, can issue directions consistent with an efficacious effort at resolution of the disputes, failing which the proceedings under the IBC shall continue. Before tackling the above referred question, it will be standard protocol to refer to the essential aspects of the dispute. First, the Appellant No.1/ the Company is a thermal power generating enterprise which is in charge of operating two 150 MW. coal based thermal power plants at Haldia in the State of West Bengal. The proposed third power generating unit of the Appellant No.1/ the Company is not the subject matter of this dispute. In 2015, the Appellant No.1/ the Company obtained investments by way of loans from R3 and R4 for all the three units. The first two units, i.e. Unit I and Unit II, are already in commercial operation. The power is supplied to the West Bengal State Electricity Distribution Limited (WBSEDCL) on the basis of the tariff fixed by the Commission. Power Purchase Agreement (PPA) was entered into by and between the Appellant No.1/ the Company and the WBSEDCL, first on 28th of December, 2010 and thereafter Suppleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eth of the restructuring proposal being worked out with R3 and R4 is amenable to be corrected in exercise of the Writ Jurisdiction of this Court. It is pointed out that the nature of business of the Appellant No. 1/ the Company pertaining to supply of electricity to common consumers through an agency of State namely, the West Bengal State Electricity Distribution Company Limited (WBSEDCL), carries with it a public law element read with the nature of the restructuring exercise under the aegis of the said RBI Framework of 2019. In such a scenario, the Court sitting in Writ Jurisdiction is qualified to decide on the propriety of the unilateral action under the IBC undertaken by R3 and R4. Mr. Mookherjee argues that the action under the IBC has been taken by R3 and R4 without putting the Appellant No.1/ the Company to substantial notice of the cancellation of the restructuring proposal as arrived at in the said Consortium Meeting of 17th of February, 2021. The initiation of IBC proceedings has resulted in an abrupt closure of the right of Review which the Appellant No.1/ the Company is entitled to claim before the Commission under the 2003 Act. Such action on the part of R3 and R4 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r obligations qua the restructuring exercise coterminous with the pronunciation of the Tariff Order by the Commission on 31st of May, 2021. The prejudice claimed by the Appellant No.1/ the Company qua the Tariff Order, does not bind R3 and R4 who, as Corporate Creditors, are free to proceed to realise their debts. With the non-acceptance of the Tariff Order by the Appellant No.1/the Company, the restructuring exercise triggered by the said Consortium Meeting collapsed freeing the parties of their reciprocal obligations. R3 and R4 are within their rights to claim their debts by invoking the IBC. It is submitted on the strength of In Re: A. Naveen Chandra Steels Private Limited vs. Srei Equipment Finance Limited and Others reported in (2021) 4 SCC 435 which, in turn relies upon In Re: Swiss Ribbons Pvt. Ltd. Vs. Union of India reported in (2019) 4 SCC 17 that proceedings under the IBC are adequately competent to save the restructuring of the stressed assets of the Appellant No.1/ the Company. Therefore, it is incorrect on the part of Appellant No.1/ the Company to take the position that with the initiation of the IBC proceedings, the restructuring process has collapsed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to errors on the face of the records, settling a Tariff is undoubtedly an arithmetical exercise. It would be therefore entirely for experts to prove, disprove and, ultimately decide, the correctness or otherwise of the fundamentals connected thereto. H) The question hardly begs an answer that a non-viable tariff is no tariff at all. Equally, Corporate Creditors cannot wait ad infinitum for the tariff adjudicatory process to be exhausted and their debts dry up. Needless to emphasise, in all this, the Commission must get its act together since shoddy arithmetic fetches zero numbers. I) At the same time, the action of R3 and R4 in proceeding straightaway invoking the IBC requires to be positioned in the context of the action taken by the Appellant No.1/the Company in terms of the said Consortium Meeting. Admittedly, except chasing the tariff, the Appellant No.1/the Company has failed in key commitments such as pumping in 0.83 billion rupees in Working Capital infusion. Such a failure, on the face of the record, would justify the conduct of R3 and R4 to make an unilateral dash to the NCLT. J) The question now arises whether the Writ Court can step into this issue at all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, AIR 1963 SC 1909, that the High Courts too can exercise power of review, which inheres in every court of plenary jurisdiction. I would say that power to do complete justice also inheres in every court, not to speak of a court of plenary jurisdiction like a High Court. of course, this power is not as wide which this Court has under Article 142. That, however, is a different matter. M) Therefore, the Tariff Order dated 31st May, 2021 being fundamental to both the Corporate Debtor and the Corporate Creditor, its failure necessitated that the parties re-visit their positions or, at least brief each other of their respective positions, prior to embarking upon exercising their respective legal options. It would be thus open to the parties to keep the Tariff Order dated 31st May, 2021 one last time on the table and, on failure to reach a commonality of perceptions, either of the parties could then proceed with their chosen legal remedies. N) This Court is not at all unmindful of the primacy of the IBC proceedings. This Court is also not at all unmindful of the fact that the survival of the corporate entity, viz. the Appellant No.1/the Company, as distinguished from its Prom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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