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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 ..... eferred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-III) in I.A. No. 1146/2022 and I.A. No. 3234/2023 in C.P. (IB) No. 1348/ND/2019. By the impugned order, the Adjudicating Authority dismissed IA No. 1146 of 2022 filed by the Appellants as infructuous and allowed I.A. No. 3234 of 2023 filed by Resolution Professional ('RP' in short) with liberty to take necessary steps with regard to payment of maintenance charges including electricity charges. Aggrieved with the impugned order, the present appeal has been preferred by the Appellants-Home Buyers. 2. The relevant facts of the present case which are necessary to be noticed and considered to decide the case at hand are as outlined below: The Corporate Debtor- Earthcon Infracon Pvt. Ltd. was developing a residential project named 'Sanskriti' with another housing project named 'CASA'. The Appellants represent Home Buyers of 'Sanskriti'. In 2019, a Section 7 application was admitted by the Adjudicating Authority following which the Corporate Debtor was admitted into Corporate Insolvency Resolution Proceedings ('CIRP' in short). The RP-Respondent No.1 was appointed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take any action for disconnection of electricity of the residents. Since the maintenance charges including electricity charges aggregated a total amount of Rs. 1.58 cr and the RP was not in a position to collect the dues from the residents and deposit with NPCL, the RP filed IA No. 3234 of 2023 before the Adjudicating Authority making the following prayers: "a. Modify the order dated 14.03.2022 and allow the Resolution Professional to disconnect the electricity of resident's flat not paying the maintenance@ 21- per sq ft and electricity dues; b. Pass such other order or orders as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the present case." The Adjudicating Authority after hearing the IA No. 3234/2023 on 14.06.2023 clarified that the order dated 14.03.2022 specifically mentioned that the RP shall not take action with regard to disconnection of electricity of residents' flats. Further modifying its earlier order of 14.03.2022, it clarified that "the RP is free to take coercive steps with regard to the non-payment, and maintenance charges which include the electricity charges of the common area." However, vide the same orders ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders. The RP by collecting the electricity dues was violating the provisions of IBC and its regulations lead for their unjust enrichment. In terms of Regulation 32 of CIRP Regulations, electricity has been defined as one of the essential supplies. Furthermore, Section 14 of the IBC mandates uninterrupted supply of essential goods or services to the Corporate Debtor and hence electricity supply cannot be terminated, suspended or interrupted. 5. Shri Rishabh Jain, Ld. Counsel representing the RP admitted that the Corporate Debtor had taken only one temporary electricity connection from NPCL for the residential project. The RP submitted that even after the Corporate Debtor was admitted into CIRP, the allottees continued to receive their electricity supply on the strength of the temporary single point connection. It was further submitted that when the RP took over the charge of the Corporate Debtor, there was already an outstanding electricity due of Rs. 70 lakhs and hence the 3rd CoC meeting had resolved to increase electricity rates from Rs.7 to Rs. 8.91 per unit. 6. It was further pointed out that as per Section 11(4)(d) of RERA Act, the Corporate Debtor is obligated to provide es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use or diversion of electricity. It was also claimed that the stage of handing over of maintenance to the allottees as per the UP Apartment Act had still not been reached. Even if electricity dues are collated as CIRP cost, it will not absolve Home Buyers of their liability to pay to the electricity supplier. 8. This Tribunal had allowed, on the request of the Appellant, the impleadment of NPCL. Making his submissions, Mr. Anil Dutt, Ld. Counsel representing NPCL submitted that the Corporate Debtor had been provided single point temporary commercial electricity connection for purposes of project construction. However, the Corporate Debtor provided electricity supply to the Home Buyers from this connection without applying for connection for Common Area services and individual connections. It was contended that the Corporate Debtor is obligated to pay current dues on account of electricity supply and the same cannot be treated as CIRP costs. Reliance was placed on the judgment of this Tribunal in Shailesh Verma vs Maharashtra State Electricity Distribution Company in CA(AT)(Ins)No. 383 of 2022 to assert that if supply of electricity is essential and is to be continued even during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Buyers flats. 13. To answer the question as outlined above, we need to first decipher at the very outset the pendency of maintenance charges including electricity dues. From the given factual matrix, it is an undisputed fact that when the RP took over the charge of the Corporate Debtor, there was shortfall in maintenance charges collected from the Home Buyers and an outstanding electricity due payable 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. We do not wish to enter into the realm of the dispute as to whether the association of allottees was already constituted or not as this is not the competent forum to consider this subject matter. In any case, irrespective of whether the association of allottees was consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t buyers may not face any coercive action from NPCL, the RP proposed to increase the electricity rate from Rs. 7/- per unit to Rs. 8.91/- per unit with effect from 01.01.2021. 16. We further notice that after due consideration of the matter, the CoC resolved to approve the increase in the electricity rate @ Rs. 8.91/- per unit w.e.f. 01.01.2021 from the allottees who had obtained possession of their flats in the project of the Corporate Debtor. We also notice that this resolution was passed by CoC with the requisite majority and more pertinently the Authorised Representative of the financial creditors in class had informed that 87% had cast their votes in favour of the resolution. 17. However, as the dues to the NPCL remained unpaid and a disconnection notice had been issued by NPCL, the RP tabled Agenda item no. 5 in the 12th CoC meeting dated 21.01.2022 to increase the rate of maintenance charges from Rs 1 to Rs. 2 plus GST per sq ft. to resolve the problem. The relevant extracts of the discussion on item no 15 is as follows: "The Chairman informed the committee that as per the electricity bill dated 25.12.2021 the electricity dues have accumulated to Rs. 99 lakhs and disconn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including the financial creditors in class. 20. Besides the RP placing the issue of maintenance charges and electricity dues before the CoC for its deliberations and consideration, we also find 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. Illustratively, we are noting down some of them. On 23.06.2021 a letter had been sent to all residents indicating decline in collection of maintenance charges and accrual of Rs. 1.40 cr as short fall on account of power supply and maintenance services as placed at page-147 of Appeal Paper Book ('APB' in short). On 04.02.2022, the RP had sent a communication to the residents stating that though the CoC had approved the appointment of a maintenance service agency @ Rs. 1.55 per sq. ft., the said agency had expressed their unwillingness to provide service at the same cost and hence there was a need to engage another agency for this purpose on enhanced rates. On 21.02.2022, the RP again explained to the resident allottees that electricity over-due amount was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit 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 judgment reads as under: "8. We need to notice the provisions of the Code to find out as to whether the Respondent, who was directed to supply the electricity was entitled to claim payment of electricity dues during CIRP period or the Respondent had to wait till the resolution of the CIRP of the Corporate Debtor to receive its dues. Section 14, sub-section (2) provides for supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during the moratorium period. Section 14(2) is as follows: "14(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period." 9. Section 14(1) has been amended by Act 1 of 2020 and explanation of Section 14(1) and sub-section 14(2A) as inserted by Act 1 of 2020 is as follows : "14(1) Explanation.-For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 insolvency framework, it has become necessary to amend certain provisions of the Insolvency and Bankruptcy Code, 2016." 11. When we look into the Statement of Objects and Reasons as extracted above, one of the object as expressly recorded was "in order to fill the critical gaps in the corporate insolvency framework". Explanation to sub- Section (1) of Section 14 and insertion of sub-section (2-A) of Section 14 was with the object to fill the critical gap in the corporate insolvency framework. Section 14, sub-section (2) as contained in the Code only provided for supply of essential goods or services to the Corporate Debtor contained an indication that supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period, brought a substantive provision that when Interim Resolution Professional or Resolution Professional consider the supply of goods or services critical to protect and preserve the value of the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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