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TMI Blog2025 (3) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... to time between CD and Respondents. He further cites letter dated 08.11.2024 from CD to Respondents in this regard. The Respondent submits that they did not file any claim subsequent to publication of Form P10 on account of FS and SFS as these charges become due only after the bill is raised by the Discom. It is important to understand the genesis of SFS. The SFS was imposed on Electricity Distribution Companies of Rajasthan, as a result of dispute with M/s Adani Power Rajasthan Ltd. (APRL), which was running a coal based thermal power plant with an installed capacity of 1320 MW at Kawai, Rajasthan. The power generated by the Kawai plant was to be purchased by 3 electricity distribution companies of Rajasthan viz. Jaipur Vidyut Vitran Nigam Ltd. (JVVNL), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) and Jodhpur Vidyut Vitran Nigam Ltd. (JdVVNL). These three electricity distribution companies are collectively referred to as Rajasthan Discoms. APRL had signed Power Purchase Agreement (PPA) with the Rajasthan Discoms for supply of 1200 MW from their plant. The FSA is commonly known as SFS by the consumers and the same terminology is used by Discoms in their electricity bills. It is clear f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court and manner of recovery from end consumer was finalized by the RERC. FS and SFS are in our view statutory charges as decided by RERC and are payable only after the bill is raised in monthly instalments as decided by RERC consequent to final decision of Hon'ble Supreme Court. In this regard, Appellants have relied upon the judgement of Hon'ble SC in Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. & Ors. [2023 (7) TMI 831 - SUPREME COURT]. The aforesaid Judgment holds 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 matter in aforesaid case related to liquidation proceedings under the Code, where the appellant Discom held security interest against a property of the respondent and which was attached on the application of the appellant. In the present case, the appellant has not identified any specific provision of the Electricity Act that is in direct conflict with the IBC. A mere assertion of overriding effect, without demonstrating any inconsistency, is insufficient, it is required to follow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le their claims within the prescribed period and are now attempting to recover dues contrary to the provisions of the Code. Brief facts of the case 3. M/s Shree Rajasthan Syntex Ltd./Appellant, is a public listed company engaged in the manufacturing of synthetic spun yarns, cotton yarns, and polypropylene yarns. It is a registered MSME with Udyam Registration Certificate No. UDYAM-RJ-33-0000458, dated 21.07.2020. The company operates a textile yarn manufacturing plant in the tribal District of Dungarpur, Rajasthan. 4. In 2022, the Appellant filed CP No. (IBPP)-01/54C/JPR/2022 before the Adjudicating Authority under Section 54C of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Pre-packaged Insolvency Resolution Process (PPIRP). On 19.04.2023, the Adjudicating Authority admitted the PPIRP application and appointed Dr. Lekh Raj Bajaj as the Resolution Professional (RP). 5. On 19.04.2023, the Appellant submitted a list of claims to the RP under Regulation 20 of the PPIRP Regulations, 2021. On 26.04.2023, the RP issued a public announcement (Form P9), published in Financial Express (English) and Rasthtadut, Udaipur (Hindi), inviting claims from creditors. The Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP"). The Fuel Surcharge and Special Fuel Surcharge were pre-insolvency claims and should have been filed as part of the resolution process. 11. The counsel submitted that the Ld. NCLT has committed a grave error by failing to recognize that such demands stand extinguished upon the approval of the Resolution Plan in light of the authoritative judgment of the Hon'ble Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., [(2021) 9 SCC 657]. The decision unequivocally establishes that all claims not forming part of an approved resolution plan shall stand extinguished and be deemed non-recoverable. 12. He further stated that the impugned order violates the principle of "clean slate" enshrined in Section 31(1) of IBC, 2016, as established in Essar Steel India Ltd. v. Satish Kumar Gupta, [(2020) 8 SCC 531] and Ghanashyam Mishra (supra). 13. The counsel submitted that the Respondents' claim was not submitted during the PPIRP process, and allowing recovery post-approval of the Resolution Plan is contrary to the Section 238 of the Code, which gives overriding effect of the Code over other laws including Electricity Act, 2003. 14. The Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the IBC is a complete code in itself and has an overriding effect over the other laws which are inconsistent with the provisions of IBC by the virtue of Section 238 of IBC. He stated that in this regard, the Judgment of Hon'ble Supreme Court in the matter of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. & Ors. [(2023) 10 SCC 60] may be relied wherein the apex court has held that section 238 of 1BC overrides the provisions of Electricity Act, 2003. The counsel further submitted, that by placing reliance on Prem Cottex (Supra), the Ld. NCLT defeated the whole intent and objective of IBC and gave a leeway to the Respondent No.1 to agitate its statutory barred claims on account of SF and SFS. 22. The counsel further submitted that term 'claim' as defined u/s 3(6) of IBC in contrast to term "debt" includes any liability or obligation qua the Corporate Debtor irrespective of fact whether it has become due and payable. In the present matter, the right to payment accrued for the Respondent No.1 immediately upon the passing of the order dated 01.09.2022 by the RERC. Further, in the 23rd Annual Report (2022-2023), the Respondent No.1 in its Balance Sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate stage, the Respondents are now estopped from raising any fresh demands. Furthermore, Regulation 88 of the RERC (Terms and Conditions for Determination of Tariff) Regulations, 2019, required the Respondent to levy FS on a quarterly basis, which they failed to do. The delayed imposition of FS and SFS after the conclusion of the PPIRP is arbitrary, impermissible, and violative of the principles of natural justice. 26. In view of the aforesaid facts and circumstances, the counsel for appellant prays that this Hon'ble Appellate Tribunal may be pleased to allow the present appeal and set aside the Impugned Order dated 14.06.2024, and further declare that: a) the outstanding SFS of Rs. 2,23,97,641/- pertaining to connection with K. No 130511029076 and SFS of Rs. 63,82,275/- pertaining to PDC Connection with K No.130511029079 including any late payment surcharge etc., stands extinguished and the same cannot be demanded/recovered from the Appellant. b) the outstanding FS of Rs. 2,0140,611/- (updated Oct 2022- March 2023) being pertaining to the period prior to commencement of PPIRP i.e. 19.04.2023 including any late payment surcharge etc., also stands extinguished and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r securing a blanket stay order against disonnection dated 13.06.2023 from the Adjudicating Authority, the appellant ceased making further payments. Instead, the appellant now seeks extinguishment of the demand, which was structured in instalments by the RERC. 32. The respondent contended that the appellant's argument that these are past liabilities is entirely baseless. The electricity dues arise when the bill is generated, not when the consumption occurred. 33. Further, counsel stated that the appellant's contention that the Insolvency and Bankruptcy Code (IBC) would override the Electricity Act, 2003, is legally untenable. The appellant has failed to demonstrate any specific conflict between the two statutes. In the absence of such a conflict, the principle of harmonious construction must be applied, and the regulatory framework of the Electricity Act must prevail. 34. Counsel for the Respondent states that the appellant has made inconsistent and contradictory statements regarding its payments: i. The affidavit filed by the Resolution Professional (RP) incorrectly asserts that fuel surcharge payments, as mentioned in Form-P10 have been made. However, per para 9 of the RP's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2021 SCC OnLine SC 870 wherein it was observed that: "Though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the Licencee and that, therefore electricity charges would become 'first due' only after the Bill is issued, even though the liability would have arisen on past consumption." 19. The aforementioned Judgment clarifies that the obligation to pay under the Electricity Act arises when the bill is raised by the DISCOM. Since, the amount of the SFS is to be recovered in the coming five years and the FS liability arises at the time of raising of the bill by the electricity department, it cannot be said that the SFS and the FS were due prior to the initiation of the PPIRP. Thus, we find force in the argument of the Respondents that they could not have filed a claim pertaining to SFS and FS as the liability to pay arises at the time of raising of the bill. 20. It is relevant to mention here that the Resolution Plan approved by this Adjudicating Authority provides for payment of Rs. 39,09,678 (Rupees Thirty-Nine Lakh Nine Thousand Six Hundred and Seventy-Eight Only) to Ajmer Vidyut Vitr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent paras. Can FS and SFS Claims be Extinguished Under IBC? 41. The first question is whether FS and SFS charges were erased under IBC when the resolution plan was approved. The Appellant argues that once a resolution plan is approved under Section 31 of IBC, all prior claims not included in the plan no longer exist. The Appellant relies on judgments like Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., [(2021) 9 SCC 657] and Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors., [(2020) 8 SCC 531], which confirm that creditors cannot claim pre CIRP period dues after the resolution. 42. The appellant also submitted that the Respondents No. 1 & 2 did not file their claim during the insolvency process and accordingly all claims not forming part of the approved resolution plan stand extinguished and cannot be enforced subsequently. 43. The Respondents on the other hand submitted that there was no requirement on their part to file the claim, as it is the duty of the appellant to collate all the claims and submit the same to the RP for inclusion in claim form. In this regard, we have a look at the statutory provisions under IBC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 less, pending d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer Vidyut Vitran Nigam Ltd. (AVVNL) and Jodhpur Vidyut Vitran Nigam Ltd. (JdVVNL). These three electricity distribution companies are collectively referred to as Rajasthan Discoms. APRL had signed Power Purchase Agreement (PPA) with the Rajasthan Discoms for supply of 1200 MW from their plant. 50. Due to a change in coal allocation policy of Govt. of India, domestic coal supply was not available as envisaged in PPA. Entire tariff computation for supply of power from the ARPL was based on domestic coal availability. To run the plant and generate power for supplying to Rajasthan Discoms, APRL had to import coal. In view of increased cost of imported coal, APRL sought additional tariff over and above the quoted tariff as Special Fuel Surcharge (SFS). The Rajasthan Electricity Regulatory Commission (RERC) allowed SFS, but the same was not agreed by the Appellate Tribunal. 51. The matter was adjudicated by the Hon'ble Supreme Court in Jaipur Vidyut Vitran Nigam Ltd. & Ors. Vs. Adani Power Rajasthan Ltd. & Anr. [Civil Appeal No. 10188/2018], on 29.10.2018, wherein the Hon'ble Court ruled that Rajasthan Discoms were liable to compensate APRL for additional fuel costs. Initially, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the APTEL have recorded the concurrent finding on facts. We find no ground to interfere. No substantial question of law is involved. It was held in Energy Watchdog, that change in law was brought about in the NCDP of 2007 by the decision of 26.7.2013. It is provided in Article 10.2.1 how the change in law is to be applied to compensate for the impact. It was also held that carrying cost is payable from the date the change in law has taken place, and carrying cost is passed on the restitution principle. Article 10.2.1 of the PPA in question is similar to Article 13.2 considered in Energy Watchdog. 66. Liability of the Late Payment Surcharge at the rate of 2% in excess of applicable SBAR per annum, on the amount of outstanding payment, calculated on a day to day basis (and compounded with monthly rest) for each day of the delay. Therefore, there shall be huge liability of payment of Late Payment Surcharge upon the appellants Rajasthan Discoms. 67. In our opinion, it would be appropriate to direct the appellants Rajasthan Discoms to pay interest/late payment surcharge as per applicable SBAR for the relevant years, which should not exceed 9 per cent per annum. It is also provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of change in law and allow recovery of additional power purchase cost through Special Fuel Surcharge Adjustment (FSA) passed the tariff order on 01.09.2022. The operating part of the order vide para 14 and 15 is extracted below: "14. Accordingly, the Commission, based on the material placed on record, orders as under: i. Considering the financial hardship of the Discoms and at the same time to avoid tariff shock to the consumers, Commission deems it appropriate to consider 5 years repayment period to allow Discoms to recover the amount of Rs. 7438.58 Crores (5996.40 Cr principal amount & 1442.18 Cr interest component), on account of special FSA at the rate of Rs. 0.14/ unit from the consumers being billed on bimonthly basis in 30 equal installments and at the rate of Rs. 0.07/Unit from the consumers being billed on monthly basis in 60 equal installments. The FSA over this period will be recoverable on the consumption of Last Quarter of FY 2021-22 for all categories of consumers. ii. The Discoms are directed to utilize the receipt on account of special FSA for repayment of loan taken by them for the purpose. Discoms are also directed to create a separate account head for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of FS & SFS by the consumers. The installments of FS were decided by RERC at an earlier occasion. Accordingly, The bills for SFS and FS are sent to the consumers along with monthly bills for consumption of electricity as per the instalments fixed by RERC. The amount of SFS or FS as decided can only be claimed in accordance with the manner laid down in the tariff order. In this case RERC has fixed that SFS be recovered from the consumers in 60 monthly instalments @ Rs. 0.07 per unit. Similar orders have been issued in regard to FS earlier. 65. As we have seen earlier, though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the licensee, hence, electricity charges would become "due" only after the bill is issued, even though the liability would have arisen on consumption. FS and SFS are not normal business debts but statutory charges under the Electricity Act, 2003, which would arise only after the bill is raised by the Discom to the consumer. IBC does not allow prospective claims to be eradicated by approval of resolution plan. It is seen from the records that FS and SFS charges have been paid up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending engineer (Comml.) Ajmer Vidyut Vitran Nigam Ltd. Vidyut Bhawan Panchsheel Nager Ajmer 305004 Ref : your Letter ref no : AVVNL/CE(HQ)/SR.AO(COMMl.)/2024/D.2000 Dated 29.10.2024 received by us on 04.11.2024 with respect to account reconciliation Dear Sir We refer to your above letter and we understand that the matter is related to an affidavit submitted by Resolution Professional in the Hon'ble NCLAT. While we being the Applicants are not authorized to comment on the contents of the submission of any of the Respondents, we would still like to clarify the matter of payments / accounts as under in order to offer our best assistance to the Nigam : 1. In the period from 19.04.2023 to 30.06.2023, we have made payments to the tune of Rs. 263,00,640/- to you. The receipt nos. corresponding to this payments are from Sr. Nos 1570/23 to 1570/56 as issued from your office in Dungarpur. 2. Apart from the above, one payment of Rs. 39,09,678/- was made separately on 21.09.2023 which is also reflecting in your records (Receipt No 1570/92). 3. Regarding the heads under which the payments were made, please note that our account is a running account where payments a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be eradicated under IBC. ii. The decision of Hon'ble Supreme Court in 'Pioneer Urban Land and Infrastructure Ltd. & Anr. Vs Union of India, (2019) 8 SCC 416' related to the rights of homebuyers under IBC and their classification as Financial Creditor. The Hon'ble Supreme Court also held that the RERA is to be read harmoniously with the Code, as amended by the Amendment Act. It is only in the event of conflict that the Code will prevail over the RERA. Remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code. The ratio of Judgment supra does not apply to the present case. iii. Hon'ble Supreme Court in 'China Development Bank Vs. Doha Bank Q.P.S.C. and Others, (2024) SCC OnLine SC 3829'- This case involved financial claims under international loan agreements. The basic dispute in the instant case related to whether the appellant was a Financial Creditor or not u/s 5 (8) of the Code. The ratio of the aforesaid case is not applicable in the present case. iv. Hon'ble Supreme Court in 'New O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. We agree with the contention of Respondent in this regard that he could not have filed the claim for FS/SFS as it would be violative of Hon'ble SC's order and Section 142 of the Electricity Act, 2003. The obligations for payment in this case would arise in future as per the direction of Hon'ble Supreme Court and tariff orders of arrears. 72. We have also seen that none of judicial precedents cited by the appellant is squarely applicable to the facts of this case. In view of discussion above we also hold that the FS and SFS charges for which bill has not been raised cannot be wiped out by the clean slate principle, as these are statutory dues which would arise in future and liability to pay would come after the bill is issued. 73. We now take up the second issue regarding the contention that the Insolvency and Bankruptcy Code, 2016 (IBC) overrides the Electricity Act. In this regard, Appellants have relied upon the judgement of Hon'ble SC in Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. & Ors. [(2023) 10 SCC 60]. The aforesaid Judgment holds that Section 238 of the IBC overrides the provisions of the Electricity Act, 2003 despite the latter containing two s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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