2019 (1) TMI 927 - Tri - Companies Law

Tribunal rules on recovery of outstanding amounts and refund claim in electricity dispute

HARRY REFRACTORY AND CERAMIC WORKS P. LTD. Versus GENERAL MANAGER-CUM-CHIEF ENGINEER, JHARKHAND STATE ELECTRICITY BOARD AND OTHERS

The Tribunal held that the Jharkhand State Electricity Board was bound by the sanctioned rehabilitation scheme and could not recover outstanding amounts ... Proposal for rehabilitation - company was declared as a sick industrial company - application before BIFR - BIFR sanction scheme - applicant-company claimed recovery from the respondent-Board - Held that:- Scheme under implementation under sub-section (12) of section 18 of the Sick Companies (Special Provisions) Act, 1985 shall be deemed to be approved plan under subsection (1) of section 31 of the Insolvency and Bankruptcy Code, 2016 and the same has to be implemented as per the provisions of Part II of the Code. There is no dispute to the fact that order of the BIFR sanctioning the scheme is not appealed against by the respondent herein or by any other stakeholders. At page 122 of paper book, the company had produced copy of application filed by them before the BIFR. The BIFR's order is produced at page 128. It is 'The company is discharged from perview of the SICA/BIFR (iii) All creditors, statutory authorities are at liberty to recover their dues, if any, according to sanctioned scheme (v) Unimplemented portion of the sanctioned scheme would be implemented by all concerned ' There is no challenge to the above order passed by the BIFR. It is not in dispute that as per the sanctioned scheme the Jharkhand State Electricity Board directed to waive penal interest, compound interest, simple interest and liquidated charges. The respondent-Board is bound by the above order. Now, they cannot claim recovery of sum of ₹ 14,12,000 (rupees fourteen lakhs twelve thousand only) from the applicant-company. Hence, all order passed by the respondent-Board or its competent officer on June 22, 2017 are held to be not tenable under the law. They have to be set aside. Oder:- It is declared that the respondent-Board (Jharkhand State Electricity Board) is bound by sanction scheme dated May 25, 2012 and cannot claim recovery of any amount from the applicant-company as per order dated June 22, 2017 passed by its certificate officer. The applicant-company's claim of recovery of ₹ 5,00,000 (rupees five lakhs only) from the respondent-Board stands rejected. Issues:1. Interpretation of the Insolvency and Bankruptcy Code, 2016 in relation to a rehabilitation scheme sanctioned under the Sick Industrial Companies (Special Provisions) Act, 1985.2. Validity of recovery of electricity charges by the Jharkhand State Electricity Board from a company post-scheme sanction.3. Claim for refund of deposited amount by the company pending appeal against disconnection of electricity supply.Analysis:1. The case involved a company that had filed for rehabilitation under the Sick Industrial Companies (Special Provisions) Act, 1985 and subsequently sought relief under the Insolvency and Bankruptcy Code, 2016. The applicant argued that stakeholders, including the Jharkhand State Electricity Board, were bound by the rehabilitation scheme sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) and should not recover outstanding amounts post-scheme approval.2. The Jharkhand State Electricity Board contended that the company owed a significant sum for electricity charges, interest, and penalties, which they were entitled to recover. The respondent argued that the scheme had lapsed, making the exemption invalid. However, the Tribunal found that the scheme's provisions, including the waiver of certain charges, were still applicable as per the order of the BIFR, and the respondent could not claim the outstanding amount.3. Regarding the deposited amount during the appeal against electricity disconnection, the company claimed it was done under protest. However, the Tribunal noted that the deposit was made as per an undertaking to restore power supply, and there was no evidence of a protest. As the company was no longer considered a sick unit and had been deregistered, the Tribunal ruled that neither the company nor the Electricity Board could claim recovery of the deposited amount, ultimately rejecting the company's claim for a refund.In conclusion, the Tribunal declared that the Jharkhand State Electricity Board was bound by the sanctioned scheme and could not recover any amount from the company as per a subsequent order. The company's claim for recovery of the deposited amount from the Electricity Board was rejected, and the case was disposed of accordingly.