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Tribunal protects electricity services in insolvency, orders bank refund, stresses Code compliance The Tribunal ruled on the issues of payment of electricity bills and the 5% tagging by Punjab National Bank during insolvency proceedings. It held that ...
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Tribunal protects electricity services in insolvency, orders bank refund, stresses Code compliance
The Tribunal ruled on the issues of payment of electricity bills and the 5% tagging by Punjab National Bank during insolvency proceedings. It held that essential services like electricity cannot be disconnected during the moratorium period and directed the Resolution Professional to address outstanding arrears. Additionally, the Bank was ordered to refund the amount deducted in violation of the moratorium. The Tribunal emphasized compliance with the provisions of the Insolvency and Bankruptcy Code, 2016, in resolving these matters.
Issues Involved: 1. Payment of electricity bills during the moratorium period. 2. 5% tagging by Punjab National Bank on the Corporate Debtor's account.
Analysis:
Issue 1: Payment of Electricity Bills The Tribunal considered the application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016, which declared a moratorium and appointed an Interim Resolution Professional. The first issue raised was regarding the payment of electricity bills during the moratorium period. The Applicant argued that as electricity is an essential service, it cannot be disconnected for non-payment of bills, and the outstanding amount should be considered in the resolution plan. The Tribunal referred to Section 14(2) of the Code, which prohibits the termination of essential services during the moratorium period. The Electricity Department argued that since the Corporate Debtor is using electricity directly for production, the exemption from payment does not apply. The Tribunal directed the Resolution Professional to apply for separate electricity meters for different premises and pay arrears within two months from the sale proceeds.
Issue 2: 5% Tagging by Punjab National Bank The second issue involved the 5% tagging by Punjab National Bank on the Corporate Debtor's account. The Bank had made deductions based on a previous arrangement, which the Tribunal found to be in violation of the moratorium declared under Section 14(1) of the Code. The Tribunal ordered the Bank to refund the amount recovered after the commencement of the insolvency process within two weeks. This refund would enable the Resolution Professional to clear the outstanding dues of the Electricity Department. The Tribunal disposed of the application with these directions, emphasizing compliance with the orders.
In conclusion, the Tribunal addressed the issues of payment of electricity bills and the 5% tagging by Punjab National Bank in the context of insolvency proceedings, ensuring compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.
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