Tribunal clarifies 'Moratorium' doesn't excuse Corporate Debtor from current electricity charges

The Tribunal clarified that the 'Moratorium' order does not exempt the Corporate Debtor from paying current charges for essential services like electricity. While such costs may be considered as 'Insolvency Resolution Process Costs,' the Corporate Debtor remains liable for payment to ensure business continuity. Specific directions were issued for the payment of outstanding current charges for electricity by the Resolution Professional to the Appellant by specified dates, prohibiting late payment surcharges or disconnection of supply. The appeal was disposed of with these observations, and no costs were awarded in the case.

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Issues: Interpretation of 'Moratorium' order regarding current charges for essential services like water and electricity payable by the Corporate Debtor.

Analysis:
1. Interpretation of Moratorium Order: The main issue in this case was the interpretation of the 'Moratorium' order concerning the current charges payable by the Corporate Debtor for essential services like water and electricity. The Appellant argued that the 'Moratorium' order should only cover the amount due for services provided before the 'Moratorium' was imposed, not the current charges. On the other hand, the Resolution Professional contended that as per Regulations 31 and 32 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the Appellant is obligated to supply essential goods and services, including electricity, even during the 'Moratorium' period.

2. Legal Provisions: The Tribunal examined Section 14 of the Insolvency and Bankruptcy Code, 2016, which deals with 'Moratorium.' Sub-section (2) of Section 14 specifically states that the supply of essential goods or services to the Corporate Debtor, as specified, cannot be terminated, suspended, or interrupted during the 'Moratorium' period. Additionally, Regulations 31 and 32 outline that amounts due for essential goods and services, including electricity and water supplies, are to be included in the 'Insolvency Resolution Process Costs.'

3. Decision: The Tribunal clarified that while the 'Moratorium' order protects the supply of essential services, it does not exempt the Corporate Debtor from paying current charges for such services. The Tribunal emphasized that Regulation 31 cannot override the substantive provisions of Section 14. Therefore, any costs incurred for essential services during the 'Moratorium' period may be considered as 'Insolvency Resolution Process Costs,' but it does not mean that the services should be provided free of cost. The Corporate Debtor remains liable to pay for essential services to ensure the company's continuity.

4. Final Orders: In light of the above analysis, the Tribunal issued specific directions for the payment of outstanding current charges for electricity by the Resolution Professional to the Appellant by specified dates. The Appellant was prohibited from levying late payment surcharges or disconnecting the electricity supply due to delayed payments, in accordance with Section 14(2) of the Insolvency and Bankruptcy Code. The appeal was disposed of with these observations and directions, and no costs were awarded in the case.

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