Resolution plan extinguishes pre-resolution electricity dues; supply must be restored on payment of reconnection charges only.

Approval of a resolution plan under the Insolvency and Bankruptcy Code extinguishes pre-resolution operational dues under the clean slate principle, so a distribution licensee cannot insist on payment of past electricity arrears or disconnection charges as a condition for restoring supply. Section 56(1) of the Electricity Act, 2003 may support disconnection and reconnection charges, but only reconnection charges arising on actual restoration remain payable after the plan is approved. A civil decree founded solely on extinguished dues also loses enforceability. The writ petition was allowed, and electricity supply was directed to be restored on payment of reconnection charges alone.

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Issues: Whether electricity supply disconnected for pre-resolution dues could be restored after approval of the resolution plan, and whether the distribution licensee could insist on payment of past arrears and disconnection charges notwithstanding extinguishment of claims under the insolvency process.

Analysis: The resolution plan approved under the Insolvency and Bankruptcy Code binds the corporate debtor and all stakeholders, and claims not forming part of the plan stand extinguished on the clean slate principle. Dues payable to the distribution licensee constitute operational debt, and once the underlying debt is extinguished, the basis for continuing disconnection and for insisting upon clearance of past arrears also disappears. Section 56(1) of the Electricity Act, 2003 permits disconnection and reconnection charges, but the pre-existing electricity dues and disconnection charges relate to the period before approval of the resolution plan and cannot survive against the resolution applicant. Only reconnection charges, which arise upon actual restoration of supply, remain payable. The civil decree obtained on the footing of the extinguished dues also loses enforceability.

Conclusion: The petitioner was entitled to restoration of electricity supply on payment only of reconnection charges, and the respondent could not insist on payment of past electricity dues or disconnection charges.

Final Conclusion: The writ petition was allowed, and the distribution licensee was directed to restore electricity supply on the limited condition of payment of reconnection charges alone.

Ratio Decidendi: On approval of a resolution plan under the Insolvency and Bankruptcy Code, pre-resolution operational dues stand extinguished, and statutory rights or decrees founded solely on those dues cannot be enforced to insist upon payment as a condition for restoration of essential services.

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