Clean slate principle bars revival of extinguished electricity arrears against a purchaser of the corporate debtor as a going concern.

Section 60(5) of the Insolvency and Bankruptcy Code was treated as conferring residuary jurisdiction over a dispute arising from liquidation and sale of the corporate debtor as a going concern, so the application was maintainable. The tribunal noted that the electricity claim had already been admitted in liquidation and dealt with under the statutory waterfall, making the attempt to insist on payment of the same extinguished arrears unsustainable. Applying the clean slate principle, it held that the successful bidder could not be compelled to clear pre-liquidation electricity dues as a condition for restoration or grant of a fresh connection, and only charges lawfully payable for a new connection could be insisted upon.

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Issues: (i) Whether the application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 was maintainable where the dispute concerned restoration of electricity connection after liquidation and sale of the corporate debtor as a going concern. (ii) Whether the successful bidder could be compelled to clear the corporate debtor's pre-liquidation electricity arrears as a condition for fresh electricity connection.

Issue (i): Whether the application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 was maintainable where the dispute concerned restoration of electricity connection after liquidation and sale of the corporate debtor as a going concern.

Analysis: Section 60(5) confers residuary jurisdiction on the Adjudicating Authority over questions of law or fact arising out of or in relation to insolvency resolution or liquidation proceedings. The dispute here arose after the corporate debtor's claim had already been admitted in liquidation, the sale as a going concern had been completed, and reliefs for restoration of electricity had already been granted in an earlier order. The question whether the distributor could insist on payment of extinguished arrears directly affected the liquidation outcome and the purchaser's ability to operate the unit.

Conclusion: The application was maintainable under Section 60(5) and the contrary finding was unsustainable.

Issue (ii): Whether the successful bidder could be compelled to clear the corporate debtor's pre-liquidation electricity arrears as a condition for fresh electricity connection.

Analysis: The corporate debtor's electricity dues had been lodged in the liquidation process and dealt with under Section 53 of the Insolvency and Bankruptcy Code, 2016. Once the claim stood admitted and distributed in liquidation, the creditor could not revive the same liability by insisting on its payment from the purchaser. The clean slate principle applicable to sale of the corporate debtor as a going concern precluded foisting past extinguished liabilities on the successful bidder. The distributor was entitled only to insist upon charges lawfully payable for a fresh connection, not the discharged pre-liquidation arrears.

Conclusion: The successful bidder could not be made liable to pay the corporate debtor's extinguished arrears as a precondition for restoration or grant of electricity connection.

Final Conclusion: The appeal succeeded, the impugned order was set aside, and the application for electricity restoration was allowed with relief limited to payment of charges lawfully payable for a fresh connection.

Ratio Decidendi: Where the corporate debtor's claim has been admitted and dealt with in liquidation under the statutory waterfall, the same liability cannot be re-agitated against the purchaser of the corporate debtor as a going concern, and a dispute over such insistence falls within Section 60(5) if it arises out of or in relation to the liquidation proceedings.

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