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TMI Blog2022 (5) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... ection by the Appellant. By the impugned order the Adjudicating Authority has directed the Appellant, electricity provider, to energize the connection of the Corporate Debtor and further to refund the balance to the Appellant (Respondent No.1) after retaining the security deposit amount as per Regulation. The Respondent No.1 was also directed to make payment of statutory charges, if any. Aggrieved by the order dated 05.10.2021, this Appeal has been filed by the Appellant. Brief facts of the case necessary to be noticed for deciding this Appeal are: i. The Corporate Debtor has obtained an electricity connection from the Appellant. By an order dated 09.03.2018, on an application by State Bank of India, Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor. Due to non-payment of electricity dues, the Appellant disconnected the electricity supply of the Corporate Debtor on 24.12.2018. No Resolution Plan having been approved, the Adjudicating Authority passed an order on 12.02.2019 directing for liquidation of the Corporate Debtor. The Respondent No. 2 was appointed as Liquidator. ii. The Liquidator issued an e-auction notice for going concern sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed and the following is ordered: a. Since a deposit of Rs.24.50 Crore has already been made by the Applicant on behalf of the Corporate Debtor, Respondent No. 1 is directed to conclude the necessary documentation with the Corporate Debtor and energise the connection to the Corporate Debtor within 3 days from the date of this order; b. Respondent No. 1 is directed to energise the connection to the Corporate Debtor for 24 MW as per the load requirement of the Applicant; c. Respondent No. 1 is directed to keep the security deposit amount as per regulations and refund the balance to the Applicant within 7 days from the date of this order; d. Statutory charges of APTRANSCO, if any, to be paid by Applicant/ Corporate Debtor within 3 working days from the date when such charges are intimated by APTRANSCO/ Respondent No. 1. e. Respondent No. 1 is also directed to approach Respondent No. 2 liquidator for payment of its dues and Respondent No. 2 is directed to consider the dues of the Respondent No. 2 in accordance with the Code and make the payment as per S. 53 of the Code; f. Corporate Debtor is directed to pay the electricity dues of the Respondent No. 1 from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for refund of the amount deposited by the Respondent No.1. Respondent No. 1 has deposited an amount of Rs.20 Crores to immediately receive the electricity connection pending adjudication of the application filed by the Respondent No.1. Judgment relied by learned counsel for the Appellant of the Hon'ble Supreme Court in 'Telangana State Southern Power Distribution Company Ltd. & Anr.' (supra) has no application as there was specific terms and conditions that the auction purchaser will be responsible for any charges including electricity charges, hence, the Hon'ble Supreme Court held that the electricity dues will be payable by Successful Auction Purchaser. The auction in 'Telangana State Southern Power Distribution Company Ltd. & Anr.' (supra) was not an auction by the Liquidator under the IBC rather the said auction was under SARFAESI Act, 2002, which is not attracted in the present case. 5. Learned counsel for the Liquidator submits that the Liquidator has already written to the Appellant to grant the electricity connection to the Respondent No.1. The Appellant is not entitled to any relief in this Appeal. The Corporate Debtor has been sold as a going concern in pursuance of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s disposed of in terms of the settlement arrived at by the parties." 10. After aforesaid order dated 21.06.2021, Sale Certificate was also issued by the Liquidator to the Respondent No.1 which clearly mentions that the Liquidator has received the full consideration money for sale of the Corporate Debtor as a going concern "ON AS IS WHERE IS WHATEVER THERE IS AND WITHOUT RECOURSE BASIS". The terms and conditions of the sale which has been brought on record as Annexure R-1 as well as E-auction Notice which has been filed with the Reply of Respondent No. 1 does not indicate that there was any indication in e-auction notice that electricity dues of the Corporate Debtor shall be payable by the Auction Purchaser. Sheet anchor of the Counsel for the Appellant is Regulation 8.4 of the General Terms and Conditions of Supply. Regulation 8.4 provides as follows:- "8.4 Transfer of Service Connection The seller of the property should clear all the dues to the Company before selling such property. If the seller did not clear the dues as mentioned above, the Company may refuse to supply electricity to the premises through the already existing connection or refuse to give a new connection t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code. Pre-CIPR dues of the Appellant have been treated as operational debt and the same required to be paid as per Section 53 of the Code. The payment under Section 53 of all debts including operational debt has to be made in accordance with Section 53. Thus, the Appellant is entitled to receive pre-CIRP dues as per provisions of section 53. Hence, the Appellant cannot be heard in contending that he should realize the said amount from the Successful Auction Purchaser. The claim of the Appellant to realize the pre-CIRP dues from Successful Auction Purchaser is clearly in conflict of the statutory scheme as laid down in the Code. 14. Now, we come to the electricity dues during the CIRP. The said dues are also to be taken care of and paid in accordance with Section 53(1). The electricity consumed by the Corporate Debtor during CIRP period is an insolvency process cost which is also to be paid in accordance with Section 53 Sub-section (1) of the Code. The above is the statutory scheme for payment of all claims including operational debts i.e. claim of the electricity dues pre-CIRP and post-CIRP. When the claim of the creditors of a Corporate Debtor which is gone into liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of dues of the past owners who had obtained the connection. There have been some differences in facts but, in our view, there is a clear judicial thinking which emerges, which needs to be emphasized: A. That electricity dues, where they are statutory in character under the Electricity Act and as per the terms & conditions of supply, cannot be waived in view of the provisions of the Act itself more specifically Section 56 of the Electricity Act, 2003 (in pari materia with Section 24 of the Electricity Act, 1910), and cannot partake the character of dues of purely contractual nature. B. Where, as in cases of the E-auction notice in question, the existence of electricity dues, whether quantified or not, has been specifically mentioned as a liability of the purchaser and the sale is on "AS IS WHERE IS, WHATEVER THERE IS AND WITHOUT RECOURSE BASIS", there can be no doubt that the liability to pay electricity dues exists on the respondent (purchaser). C. The debate over connection or reconnection would not exist in cases like the present one where both aspects are covered as per clause 8.4 of the General Terms & Conditions of Supply." 17. It is to be noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the second Respondent/Liquidator has specifically submitted that even these claims by the Uttar Haryana Bijili Vitran Nigam were not submitted in the prescribed form either during the CIRP Process or at the Liquidation stage. We are of the considered view that at this stage subsequent to the sale of the 'Corporate Debtor Company' as a 'going concern', these claims cannot be foisted upon the Appellant. The scope and objective of the Code is to extinguish all claims specifically the ones which were not even made during the CIRP or in the Liquidation stage, to aid the purchaser of the Company as a 'going concern' to start on a 'clean slate'. The Hon'ble Supreme Court in 'Ghanshyam Mishra & Sons Pvt. Ltd.' Vs. 'Edelweiss Asset Reconstruction Company Ltd. & Ors.', Civil Appeal No. 8129 of 2019 and in 'CoC of Essar Steel India Ltd.' Vs. 'Satish Gupta & Ors.' (2020) 8 SCC 531 has laid down the proposition that the purchaser of the Company even in the Liquidation stage cannot be burdened with past liabilities when it is not mentioned in the 'Sale Notice'." 19. This Tribunal again had occasion to consider a case pertaining to electricity dues in insolvency proceeding in Company App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -CIRP and post-CIRP dues are to be recovered from the Successful Auction Purchaser satisfying the entire dues of the Appellant, hence, in event, as in the present case, Electricity Supply Provider files a claim in the liquidation proceeding which is partly paid in the liquidation proceeding then the said payment shall be in excess to the entire dues realized by the Appellant from the Successful Auction Purchaser, which is not the intend of the IBC proceeding nor a claimant even if it is Electricity Supply Provider can realize its claim against a Corporate Debtor in liquidation contrary to the scheme of IBC. 22. We, thus, are fully satisfied that the submission of the Appellant that they are entitled to recover the entire pre-CIRP and post-CIRP dues from the Successful Auction Purchaser i.e. Respondent No. 1 cannot be accepted. The Adjudicating Authority did not commit any error in issuing the directions as contained in the order dated 05.10.2021. We, however, are of the view that the Appellant is entitle to claim its electricity dues both pre-CIRP and post-CIRP in accordance with Section 53 of the Code. Ends of justice be served in granting liberty to the Appellant to move the Adj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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