Tribunal Upholds Priority of Electricity Dues in Liquidation Cases

The Tribunal upheld the impugned order, ruling that electricity dues must be paid on priority even if the Corporate Debtor enters liquidation. The Appellant was granted the liberty to provide specific details on electricity supply not directly linked to the Corporate Debtor's output for potential modification of the order by the Adjudicating Authority. The appeal was disposed of with no costs incurred, maintaining the impugned order and allowing the Appellant an opportunity to seek relief regarding electricity supply not directly impacting the Corporate Debtor's output.

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Issues:
1. Disconnection of electricity supply during Corporate Insolvency Resolution Process (CIRP) and applicability of Section 14 of the Insolvency and Bankruptcy Code, 2016.
2. Lack of funds in the Corporate Debtor's corpus and the role of the Financial Creditor during CIRP.
3. Incurred electricity dues during CIRP and the protection under Section 14(2) and (2-A) of the IBC.
4. Interpretation of essential goods or services under Regulation 32 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016.

Analysis:
1. The appeal arose from an order by the Adjudicating Authority regarding outstanding electricity dues during CIRP. The Appellant argued that electricity supply to the Corporate Debtor was cut off during CIRP, violating Section 14 of the IBC and Regulation 32 of the Insolvency Resolution Process regulations.

2. The Appellant highlighted the lack of funds in the Corporate Debtor's corpus and the non-cooperation of the Financial Creditor, SIDBI, during CIRP, causing difficulties for the Resolution Professional in conducting the process and raising interim finance.

3. The Appellant incurred electricity dues amounting to Rs. 7,18,647 during CIRP to maintain the Corporate Debtor as a going concern. The Appellant acknowledged the necessity to pay the dues for protection under Section 14(2) and (2-A) of the IBC, emphasizing the relevance of the incurred costs to sustain the Corporate Debtor's operations.

4. The Tribunal analyzed Section 14(2) and (2-A) in conjunction with Regulation 32, defining essential goods or services under the IBC. It clarified that electricity usage by the Corporate Debtor in CIRP would only be considered an essential supply if not a direct input to the output produced or supplied by the Corporate Debtor, as illustrated in the regulation.

5. The Tribunal upheld the impugned order, emphasizing that electricity dues would be paid on priority even if the Corporate Debtor entered liquidation. It granted the Appellant liberty to provide specific details on electricity supply required not directly linked to the Corporate Debtor's output, allowing a potential modification of the order by the Adjudicating Authority based on these particulars.

6. In conclusion, the appeal was disposed of with no costs incurred, maintaining the impugned order while providing the Appellant with an opportunity to seek relief concerning electricity supply not directly impacting the Corporate Debtor's output.

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