Jagannath Sponge

Restoration of Electricity cannot be denied on the ground of arrears if the department has not claimed such arrears during Corporate Insolvency Resolution Process (CIRP) : NCLT

FACTUAL BACKGROUND

An application under section 60(5) of the Insolvency & Bankruptcy Code, 2016 read with Rule 11 of National Company Law Tribunal Rules, 2016 was filed to set aside letter dated 08.12.2022 issued by the respondent demanding arrears and to direct the TPWODL to provide electricity connection to the two sponge Iron Units of the Jagannath Sponge at Kuarmunda and Padajampalli.

The Jagannath Sponge – Applicant entered CIRP on 22.04.2019 by virtue an application under Section 10 of IBC, 2016 and eventually, the resolution plan was approved. After the approval of its resolution plan, Successful Resolution Applicant (SRA) requested TPWODL (Respondent 2) by its letters dated 16.06.2022 and 14.11.2022 to provide service connection to its Kuarmunda sites & Padajampalli units. TPWODL vide its reply demanded the applicant to clear Rs. 13,46,19,19,131/- payable towards the arrear amount for the two units for the period prior to the approval of the resolution plan and refused to grant connection to the units of the Applicant.

FINDINGS

The Tribunal held that the Resolution plan submitted by the applicant was approved by it and the said approved plan contains the concerned provision under Serial No.4 of the Waivers, Reliefs and Exemptions where it had granted permission to the applicant to avail new service connection without paying past dues prior to the date of approval of resolution plan. The Court citing the view expressed by the Apex Court in Ghanashyam Mishra And Sons’ vs Edelweiss Asset Reconstruction¹ stated that according to section 31 of IBC 2016, any resolution plan approved by the Adjudicating Authority is binding upon all including Central Government, State Government or any local authority. Therefore, the claim of the 2nd respondent that the resolution plan approved by the Tribunal is not valid and not binding on Respondents as against the successful resolution applicant deserves to be rejected.

It was further stated that in a recent case, Hon’ble the NCLAT-Delhi in Swastik Aqua Ltd and Anr vs Jharkhand Biji Vitran Nigam Ltd and Anr² was pleased to hold that Respondent having not filed any claim during the CIRP regarding pre-CIRP dues, it is not entitled to recover the pre-CIRP dues and on non-payment of the said amount, to disconnect the electricity. Here also the respondents did not submit any claim, hence are precluded from now claiming pre-CIRP dues.

The Tribunal answering the question of maintainability stated that the application was filed on the basis of approved resolution plan for service connection. The question of entitlement of granting relief to the applicant arises in relation to the insolvency resolution. Hence, the contention of the respondent that the provision of law is wrongly mentioned in the application i.e., section 60(5)(c) is incorrect and held that the application filed under section 60(5)(c) is maintainable. It was further held that the approved resolution plan with exemption clause was valid and binding upon the respondent, hence letter dated 08.12.2022 of the respondent was not valid and not enforceable as against the applicant.

JUDGEMENT/FINAL ORDER

The Tribunal allowing the application held that the amount of Rs. Rs.13,46,19,931 claimed by the respondents in their impugned letter dated 08.12.2022 is not valid or enforceable as against the successful resolution applicant. And further directed the respondent to consider the service connection application of the applicant, in accordance with the code/regulation without insisting.

REFERENCES

1.(2021) SCC 657

2.Company Appeal (AT)(Insolvency) No.847 of 2022

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