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TMI Blog2024 (7) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... to NPCL. In the present case since the Corporate Debtor was admitted into CIRP and RP had been appointed, the responsibility to discharge the pending payments of maintenance charges including electricity dues fell on the RP in terms of the statutory construct of IBC. It is also an admitted fact that in terms of Section 11(4)(d) of RERA Act, the Corporate Debtor was obligated to provide essential services including electricity supply till the maintenance of the project was taken over by the association of allottees. Besides the RP placing the issue of maintenance charges and electricity dues before the CoC for its deliberations and consideration, it is also found that the RP, in all fairness, had from time to time sent communications to the allottees regarding the electricity overdue amount and emphasised the need to clear the outstanding dues of NPCL to avoid disconnection of electricity supply - the communications though not an exhaustive list, clearly depicts that the RP had been making bonafide efforts to apprise the allottees of the need to clear the outstanding electricity dues to stave off the stark possibility of electricity disconnection. There are no credible ground which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar imposed by the IBC towards payment of dues arising from essential services supply during CIRP period nor is there any statutory provision which stipulates that the Corporate Debtor is not liable to pay such amounts till completion of the period of moratorium. There are no infirmity in the impugned order of the Adjudicating Authority holding that the Corporate Debtor through the RP was obligated to make payment of the electricity dues as approved by the CoC and apply coercive measures to collect the same to make payment to the NPCL - appeal dismissed. - [ Justice Ashok Bhushan ] Chairperson , [ Barun Mitra ] Member ( Technical ) And [ Arun Baroka ] Member ( Technical ) For the Appellant : Mr. Yashish Chandra , Mr. Aran Dev Pandey , Advocate For the Respondents : Mr. Rishabh Jain , Advocate for R - 1 ( RP ). Mr. Anil Dutt , Mr. Sarthak Garg , Mr. Sarvesh Mehra , Mr. Anupam Choudhary , Advocates for R - 2 ( NPCL ) JUDGMENT ( Hybrid Mode ) [ Per : Barun Mitra , Member ( Technical ) ] 1. The present appeal filed under Section 61 of Insolvency and Bankruptcy Code 2016 ( IBC in short) by the Appellants arises out of the Order dated 14.06.2023 (hereinafter referred to as Impugned Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding increase in maintenance charges from homebuyers@ Rs. 2/- per sq. ft. plus GST; (ii) In the meanwhile, as an interim measure during the pendency of present application, stay the operation and effect of the decision of CoC in 12th Meeting of CoC conducted on 21.01.2022 regarding increase in maintenance charges from homebuyers@ Rs. 2/- per sq. ft. plus GST; (iii) In the meanwhile, as an interim measure during the pendency of present application, direct the RP not to disconnect/interrupt the electricity to the Applicants for non-payment of increased maintenance charges. (iv) Direct the RP to treat the excess/outstanding electricity charges as CIRP Costs. (v) such other and further orders as this Ld. Adjudicating Authority may deem just and fair in the interest of justice. The Adjudicating Authority after hearing the IA 1146/2022 on 14.03.2022 passed interim orders on 14.03.2022 directing the respondents as well as other residents of the Sanskriti Project to make payment of all pending dues towards the electricity charges as well as maintenance charges as decided by the CoC. However, the RP/CoC was directed not to take any action for disconnection of electricity of the residents. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es etc. Apart from projecting inflated outstanding bills, the RP had also subjected the Home Buyers to pay electricity rates at commercial rates which tantamount to overcharging. Furthermore, the RP had failed to recover electricity dues from allottees who received possession but were not residing in the residential project. This has shifted the burden of defaulting non-resident allottees on the Appellant. It was vehemently contended that the RP had illegally fastened the total liability upon the resident Home Buyers to pay for electricity charges though it was also being consumed by the Corporate Debtor for carrying out construction activities. Further, the RP had also failed to check illegal diversion of electricity despite complaints having been lodged with RP. 4. It has also been contended that under Regulations 31 and 32 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, ( CIRP Regulations in short) electricity dues form part of the CIRP costs and have to be paid as per Section 53 of the IBC only at the time of distribution of CIRP costs to all stakeholders. The RP by collecting the electricity dues was violating the provisions of IBC and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h regard to the non-payment, and maintenance charges which include the electricity charges of the common area. 7. Asserting that electricity charges of common area had remained uncaptured in the earlier rate of maintenance, it was contended that it is reasonable that residents were to bear the burden of clearing the related arrears and current dues. Moreover, the maintenance activity for the common areas such as lifts, corridors etc. had to be taken care of by the RP. To enjoy uninterrupted supply of electricity, the Home Buyers were bound to pay their maintenance bills on time so that the IRP in turn could pay to NPCL. It is also asserted that providing maintenance services fell in the realm of business activity as opposed to CIRP activity. Merely because payment of electricity dues is to be treated as CIRP cost does not absolve the liability of residents to pay arrears of maintenance. The RP claimed that the Appellants have only made a sweeping statement regarding mismanagement of maintenance activities by RP without giving proof of even a single instance. The RP also denied any illegal use or diversion of electricity. It was also claimed that the stage of handing over of mainten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA No. 82 of 2022 against the disconnection notice issued by NPCL and sought stay of the disconnection. The Adjudicating Authority in its order dated 20.01.2022 granted interim relief and had directed NPCL not to proceed with its disconnection notice and to ensure electricity supply to the projects of the Corporate Debtor. Though NPCL had filed I.A. No. 1432 of 2022 seeking vacation of the interim order dated 20.01.2022, the same was dismissed by the Adjudicating Authority and been challenged by them before this Tribunal wherein notice has been issued. 11. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 12. The short question before us is to consider the propriety of the directions issued by the Adjudicating Authority that the RP shall be free to take coercive steps with regard to the non-payment of maintenance charges including the electricity charges of the common area and make the payment to the NPCL and further that RP shall not take any action with regard to disconnecting the electricity of the Home Buyers flats. 13. To answer the question as outlined above, we need to first decipher at the very out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f supply and may adversely affect more than 400 families staying in Sanskriti Casa Royal. The Chairman also informed that Hon ble NCLT has given direction vide order dated 04.11.2020 to the Resolution Professional to place an agenda in this relation before CoC for taking appropriate decision. ( Emphasis supplied ) 15. Thereafter, item no. 14 was tabled in the 3rd CoC meeting to consider, discuss and authorize the RP to increase the electricity rate @ Rs. 8.91/- per unit from the allottees having possession of their flats in Sanskriti Project of the Corporate Debtor. It was stated in the Agenda Note that the Corporate Debtor is charging Rs. 7/- per unit from the residents residing at the Sanskriti whereas NCPL charged Rs. 8.91/- per unit. It was also submitted by the RP that the services of electricity to residents of the Sanskriti on the temporary electricity connection of Corporate Debtor is on back to back basis without adding any markup . Hence, to reduce the deficit in the collection of electricity charges and make the regular payments to NPCL so that buyers may not face any coercive action from NPCL, the RP proposed to increase the electricity rate from Rs. 7/- per unit to Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the 12th CoC for approval. We notice that this resolution was passed by CoC with the requisite majority and more pertinently the Authorised Representative of the financial creditors in class informed that 80% had cast their votes in favour of the resolution. 19. Another significant CoC meeting was the 15th meeting held on 11.04.2022 where the permanent solution of multi-point electricity connection to the residents of Sanskriti was discussed and approved. It was mutually agreed to decide the matter through voting and two options were given to CoC member to decide upon. The first option was that the cost of the infrastructure related to multi point electricity connection be financed by all allottees who took possession on or before insolvency commencement date. The second option was that the cost of the infrastructure be financed by all real estate allottees whether they filed their claim before RP or not. We notice that first option was approved by the CoC and this resolution was again passed with the requisite majority including the financial creditors in class. 20. Besides the RP placing the issue of maintenance charges and electricity dues before the CoC for its delibera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been present in the CoC meetings and exercised their voting rights on the determination of the maintenance fees and electricity dues, the allottees cannot question the authority of the CoC to have made these business decisions. It goes without saying that the commercial decision of the CoC is paramount and nonjusticiable and every dissatisfaction cannot partake the character of a legal grievance. 22. This brings us to next part of the question as to whether payment of electricity charges being an essential service, such amount can be accounted towards CIRP costs and that the Corporate Debtor is not liable to pay the amount till the completion of the period of moratorium. 23. This issue has been squarely covered by the judgement of this Tribunal in Shailesh Verma vs Maharashtra State Electricity Distribution Company in CA(AT)(Ins)No. 383 of 2022. This Tribunal by making a contextual and purposive interpretation of statutory provisions of moratorium and its subsequent amendment by Act 1 of 2020 had held that while benefit of essential services should be continued, there should not be any default in the discharge of the dues arising therefrom. The relevant portion of the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Insolvency and Bankruptcy Code, Second Edition 2021, are as follow: Statement of Objects and Reasons The Insolvency and Bankruptcy Code, 2016 (the Code) was enacted with a view to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order or priority of payment of Government dues and to establish and Insolvency and Bankruptcy Board of India. 2. A need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors, to provide immunity against prosecution of the corporate debtor and action against the property of the corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions, and in order to fill the critical gaps in the corporate insol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the present case, when Corporate Debtor took a decision that supply of electricity is necessary to make the value of Corporate Debtor as has been specifically pleaded in IA No.1661 of 2021 as noticed above, the Corporate Debtor is obliged to make payment. 24. Coming to the facts of the present case, we find that the RP has admitted that electricity supply by NPCL, being in the nature of supply of essential goods and services, was necessary to be continued so as to protect and preserve the value of the Corporate Debtor and hence dues arising from electricity supply require to be discharged. This subject matter has been considered and deliberated at length by the CoC from time to time in its various meetings and resolutions passed to collect the outstanding amount from the allottees to square off the dues of NPCL. Given this backdrop, we find that the Adjudicating Authority did not commit any fault in directing that payment be made of all pending dues towards the electricity charges as well as maintenance charges as decided by the CoC and further clarifying that the RP is free to take coercive steps with regard to the non-payment, and maintenance charges which include the electric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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