Electricity as manufacturing input is not an essential service under insolvency moratorium protection.

Electricity used as a direct input in manufacturing is not treated as an essential service under Regulation 32 of the IBBI (CIRP) Regulations, 2016. The provision protects electricity, water, telecommunication and IT services only to the extent they are not direct inputs to the output produced or supplied by the corporate debtor. Because the supply was used to run the manufacturing business rather than for domestic or ancillary needs, the moratorium protection under section 14(2) of the Insolvency and Bankruptcy Code was held inapplicable to restrain suspension or termination of supply.

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Issues: Whether electricity supplied for manufacturing activities of the corporate debtor constitutes an essential service within Regulation 32 of the IBBI (CIRP) Regulations, 2016, so as to attract the protection of section 14(2) of the Insolvency and Bankruptcy Code.

Analysis: Regulation 32 treats electricity, water, telecommunication services and information technology services as essential only to the extent they are not a direct input to the output produced or supplied by the corporate debtor. On the facts, the supply was being used for running the manufacturing business and not for domestic or ancillary needs. The Bench held that electricity consumed as an input for production does not fall within the category of essential supplies protected by the moratorium.

Conclusion: Electricity supplied for manufacturing purposes was not an essential service under Regulation 32, and section 14(2) of the Insolvency and Bankruptcy Code could not be invoked to restrain suspension or termination of supply.

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