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TMI Blog2025 (2) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016. Whether the SRA is liable to pay past electricity dues of pre-CIRP period of the Corporate Debtor, even after approval of the resolution plan and taking over of the Corporate Debtor, is an issue directly arising from approval of the resolution plan and its successful implementation. The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor arising out of or in relation to the insolvency resolution. This position has been reiterated in recent judgment of this Tribunal in the case of Damodar Valley Coorporation Vs. Mackeil Ispat & Forging Ltd. & Anr., [2025 (2) TMI 425 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] - NCLT has jurisdiction to decide the issue relating to pre-CIRP outstanding electricity dues. Whether the dispute regarding the demand for payment of arrears relating to the Corporate Debtor by the Successful Resolution Applicant, after the approval of the resolution plan, can be dealt only under the Electricity Act, 2003, and the Rules made therein, and cannot be adjudicated under the IBC, 2016? - HELD THAT:- This Tribunal in the case of Madhya Gujarat Vij Company Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as jurisdiction to adjudicate disputes arising from insolvency resolutions, as per Section 60(5) of the IBC. ii) The provisions of the IBC, 2016 override those of the Electricity Act, 2003, as per Section 238 of the IBC. iii) Once a resolution plan is approved, it is binding on all stakeholders, extinguishing pre-CIRP dues unless claims are filed during the CIRP.
Appeal dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that these disputes fall under the Electricity Act, 2003, and the Rules made therein, and cannot be dealt with under the provisions of the Companies Act, 2013 or IBC, 2016. The issue before NCLT was essentially relating to reconnection of electricity and the reconnection was ordered on 28.02.2018 against the deposit of amount by the Corporate Debtor, but the Corporate Debtor failed to deposit any amount. Subsequently, the Corporate Debtor paid an amount of Rs. 89,82,000/- (being 25% of the outstanding dues), but the cheque got dishonoured. v. It was submitted that subsequently, the Corporate Debtor was admitted into CIRP on 23.08.2018 and the Ld. NCLT on 17.10.2018 directed PSPCL to restore connection to the Corporate Debtor upon deposit of Rs. 1,00,000/-. Since even this amount was not deposited, restoration was not done. On 12.01.2021, the Ld. NCLT approved the resolution plan and the plan did not deal in any manner with the electricity connection. On 20.03.2021, the Corporate Debtor deposited the entire default amount with PSPCL and the electricity connection was restored. The Corporate Debtor could not have invoked the jurisdiction of Ld. NCLT to examine transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid in law. 4. In its oral and written submissions, the Learned Counsel for the Respondent submitted as under: i. The Respondent is SRA in the CIRP process of Parabolic Drugs Limited (now Akums Lifesciences Limited). The resolution plan was approved by the Ld. NCLT on 12.01.2021 and the Respondent had approached the office of the Appellant for restoration of electricity connection to re-start the production facility. The Appellant stated the amount of Rs. 3,87,96,889/- was outstanding on account of non-payment of electricity bills by the Corporate Debtor. These outstanding dues pertain to the year 2017 and 2018 i.e. period prior to commencement of CIRP. ii. The Respondent filed an interim application before the Ld. NCLT. The Respondent paid Rs. 3.88 crores to the Appellant on 19.03.2023 under protest to obtain the electricity connection in order to revive the operations and production of the resolved company. iii. It was submitted that the Ld. NCLT disposed of the IA vide the impugned order dated 07.07.2023 stating that the Appellant had failed to file its claim for pre-CIRP dues before Resolution Professional. It was submitted that the Appellant was aware of the CIRP and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Corporate Debtor, even though no claim is filed by the electricity company in CIRP and no such provision is made in the resolution plan? 7. (i) On the first issue, the Appellant has relied on the judgement in the case of Vikram Sanghvi v. Bank of Baroda (2021) SCC OnLine NCLT 298 wherein it is held in para 18 to 21 that reliefs and concessions which do not hinder the proper implementation of resolution plan should be sought from relevant competent authorities. This judgement is not applicable to the facts of this case, as the electricity supply is essential for resurrecting the corporate debtor and the issue here is altogether different and related to the claim relating to the Pre-CIRP dues. 7. (ii) It will be relevant here to refer to the provisions of the IBC, 2016 as contained in Sub-section 5 of Section 60. The said Sub-section is reproduced below: "Section 60. Adjudicating Authority for corporate persons. (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 60(5)(c) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the corporate debtor. However, in doing so, we issue a note of caution to NCLT and NCLAT to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the corporate debtor. The nexus with the insolvency of the corporate debtor must exist." 7. (iv) The Hon'ble Supreme Court in the case of Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors. (2019) 2 SCC 1, para 84, has held as under: "84. If, on the other hand, a resolution plan has been approved by the Committee of Creditors, and has passed muster before the adjudicating authority, this determination can be challenged before the appellate authority under Section 61, and may further be challenged before the Supreme Court under Section 62, if there is a question of law arising out of such order, within the time specified in Section 62. Section 64 also makes it clear that the timelines that are to be adhe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force, such as authorities to whom statutory dues are owed,] guarantors and other stakeholders involved in the resolution plan." 7. (viii) Whether the SRA is liable to pay past electricity dues of pre-CIRP period of the Corporate Debtor, even after approval of the resolution plan and taking over of the Corporate Debtor, is an issue directly arising from approval of the resolution plan and its successful implementation. The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor arising out of or in relation to the insolvency resolution. This position has been reiterated in recent judgment of this Tribunal in the case of Damodar Valley Coorporation Vs. Mackeil Ispat & Forging Ltd. & Anr., Company Appeal (AT) (Insolvency) No. 1663 of 2023 dated 06.02.2025. We hold that NCLT has jurisdiction to decide the issue relating to pre-CIRP outstanding electricity dues. 8. (i) On the second issue, whether the disputes relating to supply of electricity and arrears of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on plan to the Board to be recorded on its database." From the aforesaid provision, it is clear that the 'Resolution Plan' is binding on the 'Corporate Debtors', 'Financial Creditors', 'Operational Creditors' and all other 'stakeholders' including 'guarantors'. The provision of Section 31 being binding on the appellant 'Operational Creditor', in view of Section 238 of the I&B Code, the provisions of 'Gujarat Electricity Regulatory Commission (Electricity Supply Code and related matters) Regulations, 2015', cannot override the same. 4. As per the approved Resolution Plan' a sum of Rs. 80.80 Lakhs is payable to the appellant (Operational Creditor). The said amount having paid by the successful 'Resolution Applicant', the appellant in its turn is required to restore the electricity connection of the 'Corporate Debtor'. We find no merit in this appeal. It is accordingly dismissed. No cost." ( Emphasis Supplied ) 8. (iii) The Hon'ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors. in Civil Appel Nos. 7976 of 2019 has held that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd. v. AJ Agrochem, Section 16G of the Tea Act, 1953 which required prior consent of the Central Government (for initiation of winding up proceedings) was held to be overridden by the IBC. In a similar manner, it is held that Section 238 of the IBC overrides the provisions of the Electricity Act, 2003 despite the latter containing two specific provisions which open with non-obstante clauses (i.e., Section 173 and 174). The position of law with respect to primacy of the IBC, is identical with the position discussed in Sundaresh Bhatt and Duncan Industries (supra) [refer also: Innoventive Industries (supra), CIT v. Monnet Ispat & Energy Ltd., Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., and Jagmohan Bajaj v. Shivam Fragrances Private Limited]." ( Emphasis Supplied ) 8. (iv) On the issue whether PSERC has exclusive jurisdiction over the Electricity dues, being statutory in nature under Electricity Act, we would also like to refer to the judgment of Meghalaya High Court in Reliance Infratel Ltd. and Anr. v. State of Meghalaya and Ors [WP(C) No. 238 of 2023] wherein the Court has affirmed the overriding nature of IBC Code, 2016 over the Electri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or the generating company in respect of supply, transmission or distribution or wheeling of electricity to him, the licensee or the generating company may, after giving not less than fifteen clear days' notice in writing, to such person and without prejudice to his rights to recover such charge or other sum by suit, cut off the supply of electricity and for that purpose cut or disconnect any electric supply line or other works being the property of such licensee or the generating company through which electricity may have been supplied, transmitted, distributed or wheeled and may discontinue the supply until such charge or other sum, together with any expenses incurred by him in cutting off and reconnecting the supply, are paid, but no longer: Provided that the supply of electricity shall not be cut off if such person deposits, under protest,- (a) an amount equal to the sum claimed from him, or (b) the electricity charges due from him for each month calculated on the basis of average charge for electricity paid by him during the preceding six months, whichever is les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically gives overriding effect to IBC, 2016 over other laws. 9. (iii) Once the resolution plan has been approved, the SRA cannot be foisted with any additional liability of the pre-CIRP period. In the judgments in the case of (a) Tata Power Western Odisha Distribution Ltd. (TPWODL) & Anr. Vs. Jagannath Sponage Pvt. Ltd., Civil Appeal No. 5556 of 2023 and (b) Southern Power Distribution Company of Andhra Pradesh Ltd. vs. Gavi Siddeswara Steels (India) Pvt. Ltd. and Another in Civil Appeal No. 5716-5717 of 2023, the Hon'ble Supreme Court has held that power distribution company cannot insist on the payment of arrears for the purpose of the restoration of the electricity connection and such a matter would fall within the ambit of Section 60(5)(c) of the IBC, 2016. 9. (iv) This Tribunal, in the case of Yarn Sales Corporation Vs. Punjab State Power Corporation Ltd. in Company Appeal (AT) (Ins.) No. 292 of 2024 has held that power distribution company cannot insist on payment of past dues to restore electricity. A similar view was taken by this Tribunal in the case of Twentyone Sugars Limited vs. Maharashtra State Electricity Distribution Co. Ltd. in Company Appeal (AT) (Ins.) N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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