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TMI Blog2022 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... lan is accepted as this would amount to a hydra head popping up, leading to the uncertainty of amounts payable by a prospective resolution applicant. It is undisputed before this Court that the claim of the appellant to recover the earlier dues of about Rs. 25 crores as against the respondent no. 1 does not survive. As per the judicial pronouncement noted on the facts of this case, such a claim extinguishes on approval of resolution plan. Section 43 of the Electricity Act, 2003 casts a duty upon the distribution licensee to supply electricity on request - Having due regard to the provision of Section 43, it is not open to the appellant to contend that though the earlier dues are not recoverable from the respondent no. 1, yet, the appellant will not supply electricity to the respondent. The counsel for respondent no. 1 has made it clear before this Court that it is ready to pay the fresh connection/reconnection charges to the appellant. The right of the appellant to recover the amount which was due prior to the resolution plan had extinguished on the approval of the resolution plan. The appellant is now required to provide the electricity connection to the respondent in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had submitted the representations for making the power available at the competitive rate. Further case of the respondents was that the appellant had orally refused to grant power supply or grant a No Objection Certificate (NOC) till the entire earlier unpaid amount are paid by the respondent no. 1. In the aforesaid background, the writ petition was filed by the respondents with a prayer to direct the appellant to provide electricity connection to the respondent no. 1 at the competitive rate or to issue NOC to the respondents to seek power supply from the DVC or any other source. 3. Learned Single Judge, after hearing learned counsels for both the parties, has noted that CIRP was initiated and a resolution plan was passed by the NCLT on 10th of November, 2021. Learned Single Judge has found that upon approval by the adjudicating authority, the resolution plan becomes binding on the corporate debtor and its employees, members, creditors, guarantors and other stake-holders involved in the resolution plan. It has further been found that Section 238 of the IBC has overriding effect. After taking note of the judgment of the Hon ble Supreme Court on the point. Learned Single Judge has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also placed reliance upon the judgment of the Hon ble Supreme Court in the matter of Paschimanchal Vidyut Vitran Nigam Limited and Others vs. DVS Steels and Alloys Private Limited and Others reported in (2009) 1 SCC 210 . He has raised the submission that a fiction cannot be enlarged by another fiction and the appellant cannot be directed to give electricity connection even though a claim is extinguished. In support of his submission, he has placed reliance upon the judgment of the Hon ble Supreme Court in the matter of Commissioner of Income Tax (Central), Calcutta vs. Moon Mills Ltd. reported in AIR 1966 SC 870, in the matter of Vithaldas Jagannath Khatri (Dead) through Shakuntala Alias Sushma and Others vs. State of Maharashtra Revenue and Forest Department and Others reported in (2020) 16 SCC 25, in the matter of Indian Young Lawyers Association and Others vs. State of Kerala and Others reported in (2019) 11 SCC 1. Final submission of learned counsel for the appellant is that though the appellant cannot raise a claim against the respondent no. 1 but the claim is not extinguished as it can be recovered from others, therefore, appellant cannot be compelled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 SCC OnLine NCLT 43 and Innoventive Industries Limited vs. ICICI Bank and Another reported in (2018) 1 SCC 407. He has further submitted that the provisions of Section 43 of the Electricity Act, 2003 are mandatory wherein the appellant has duty to supply electricity. He has also submitted that the respondent has invested Rs. 40 crores in the industry and no electricity connection has been given till now and the attempt of the appellant electricity company is to frustrate the efforts of respondent no. 1 by involving it in legal battle. He has submitted that Regulation 4.6.1 of West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulation, 2013 has no application and that Regulation 4.6.4 is not applicable because respondent is not a defaulter and even otherwise, it is contrary to the provisions of the IBC and therefore, cannot be made applicable. He has also submitted that the earlier agreement, prior to the CIRP, is contrary to the resolution plan, hence, cannot be attracted being specifically covered by Section 238 of the IBC and now respondent will enter into fresh agreement for electricity connection. He has further submitted that the plan has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disputed that the appellant is covered by Section 53(f) of the IBC because it is an operational creditor. 8. In terms of Section 238 of the IBC, the provisions of the Court have overriding effect. Section 238 of the IBC provides as under: 238. Provisions of this Code to override other laws The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 9. Hon ble Supreme Court in the matter of Ghanashyam Mishra (supra) has considered the scope of Section 31(1) of the IBC and has held that once the resolution plan is sanctioned under Section 31(1) of the IBC, the claims provided in the plan will stand frozen and all such claims which are not part of the plan will stand extinguished. Hon ble Supreme Court in this judgment has held that: 102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code. A successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who would successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, NCLAT judgment must also be set aside on this count. 11. Similar issue came up before the Hon ble Supreme Court in the matter of M/s. Ruchi Soya Industries Limited vs. Union of India and Others wherein by the judgment dated 17th of February, 2022 passed in Civil Appeal No. 447-448 of 2013 , after taking note of the judgment of Ghanashyam Mishra (supra), the Hon ble Court held that: Admittedly, the claim in respect of the demand which is the subject matter of the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vance as the disconnection was already done in the year 2014 and now it is the issue of reconnection/fresh connection to the respondent no. 1 after approval of resolution plan. 15. Learned counsel for the appellant has also raised the plea that though in the resolution plan respondent no. 1 had made a prayer for approval and permission of power HT connection without any penalty claims, dues, fees, charges and only on payment of prospective charges but the said prayer was not granted. 16. It is undisputed before this Court that the claim of the appellant to recover the earlier dues of about Rs. 25 crores as against the respondent no. 1 does not survive. As per the judicial pronouncement noted above on the facts of this case, such a claim extinguishes on approval of resolution plan. Section 43 of the Electricity Act, 2003 casts a duty upon the distribution licensee to supply electricity on request. Section 43 of the Electricity Act, 2003 reads as under: 43. Duty to supply on request. (1) [Save as otherwise provided in this Act, every distribution] licensee, shall, on an application by the owner or occupier of any premises, give supply of electricity to such premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, wherein NCLAT has held that: 21. Adverting to the contention of the Learned Counsel for the Appellant that the Adjudicating Authority has erred in denying the sale of the Corporate Debtor as a going concern to the Appellant without including any contingent liabilities, we hold that it is a settled law that when the sale proceeds of a Corporate Debtor are duly distributed in the Order of priority and in the manner prescribed under Section 53 of the Code, claims of any other Creditor cannot be entertained contrary to the provisions entailed under Section 53; subsequent to the distribution of sale proceeds under Section 53 no other entity including any Government entity can claim any past unpaid or outstanding dues against the Appellant who has purchased the Corporate Debtor Company as a going concern . It is significant to mention 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved in the CIRP under the IBC. 20. In the matter of Innoventive Industries Limited (supra), Hon ble Supreme Court has considered the issue of repugnancy of earlier State Law and the latter Parliamentary Law in reference to the provisions of the IBC and has held that: 60. It is clear, therefore, that the earlier State law is repugnant to the later Parliamentary enactment as under the said State law, the State Government may take over the management of the relief undertaking, after which a temporary moratorium in much the same manner as that contained in Sections 13 and 14 of the Code takes place under Section 4 of the Maharashtra Act. There is no doubt that by giving effect to the State law, the aforesaid plan or scheme which may be adopted under the Parliamentary statute will directly be hindered and/or obstructed to that extent in that the management of the relief undertaking, which, if taken over by the State Government, would directly impede or come in the way of the taking over of the management of the corporate body by the interim resolution professional. Also, the moratorium imposed under Section 4 of the Maharashtra Act would directly clash with the moratorium to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has held that YEDA established under the Act and its approval remains sine qua non for validity of resolution plan. Hence, that judgment has no application in the facts of the present case. He has also placed reliance upon the judgment of the Hon ble Supreme Court in the matter of Abhilash Lal (supra) but in that case, the issue was relating to authorization from Municipal Corporation for transfer/creation of interest in property owned by the Corporation and in that background, the Hon ble Supreme Court held that Section 238 of the IBC cannot be read as overriding the Municipal Corporation s right, its public duty to control and regulate how its properties are to be dealt with. He has also placed reliance upon the judgment of the Hon ble Supreme Court in the matter of Paschimanchal Vidyut Vitran Nigam Limited (supra). The said judgment relates to the issue of recovery of electricity dues from the purchaser of sub-divided plot and it has been held that in the absence of a contract to the contrary, the electricity supplies cannot recover due from earlier predecessor in title or possession from the purchaser as there is no privity of contract. This judgment does not deal wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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