2023 (10) TMI 645 - AT - Insolvency and Bankruptcy

E-auction Bidder Wins: No Pre-CIRP Dues for Electricity Reconnection

The Tribunal deemed the application maintainable under Section 60(5) of the IBC. The appellant, as the highest bidder in the e-auction sale of the ... Successful Resolution applicant - Restoration of electricity connection - pre-CIRP dues - refusal on the ground of electricity dues - Maintainability of application under Section 60(5) of the IBC - HELD THAT:- What has been laid down by the Hon’ble Supreme Court in Gujarat Urja Vikas Nigam Limited [2021 (3) TMI 340 - SUPREME COURT] is that the NCLT has jurisdiction to adjudicate dispute which arise solely from or which relate to the insolvency of the Corporate Debtor. Looking into Section 60(5), the provision clearly provides that NCLT shall have jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor or corporate person or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor. The law is settled that an application can be entertained only when it raises a question which arises or relates to the insolvency of the Corporate Debtor. Judgment of the Hon’ble Supreme Court in Embassy Property Developments Pvt. Ltd. [2019 (12) TMI 188 - SUPREME COURT] has also been relied upon by the Counsel for the Respondent. Embassy’s case was a case where Adjudicating Authority has issued a direction to the Government of Karnataka to execute a supplemental lease deed for extension of mining lease which was held beyond the jurisdiction of the Adjudicating Authority - The judgment of the Embassy was a case where the Adjudicating Authority has issued direction pertaining to exclusion of supplementary lease which was in the jurisdiction of the Government under the MMDR Act, 1957. It was held that directions issued by the NCLT were beyond the jurisdiction vested in the NCLT. The Respondent cannot insist that unless the arrears of the electricity dues which dues were payable by the Corporate Debtor prior to disconnection are paid by the Appellant only then communication can be issued. The application is fully maintainable under Section 60(5) of IBC - Application allowed. Issues Involved:1. Maintainability of the application under Section 60(5) of the IBC.2. Entitlement of the appellant for reconnection of electricity without paying pre-CIRP dues.Summary:Issue 1: Maintainability of the Application under Section 60(5) of the IBC:The application filed by the appellant under Section 60(5) of the IBC was deemed maintainable. The Tribunal emphasized that the NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor. The Tribunal noted that the claim of the Respondent No.2 for arrears of electricity dues was admitted and dealt with as per Section 53 of the IBC during the liquidation proceedings. The Tribunal also referenced the Supreme Court's judgment in 'Gujarat Urja Vikas Nigam Limited vs. Amit Gupta & Ors.' which affirmed that NCLT has jurisdiction over disputes arising solely from or relating to the insolvency of the Corporate Debtor.Issue 2: Entitlement for Reconnection of Electricity without Paying Pre-CIRP Dues:The Tribunal ruled that the appellant, being the highest bidder in the e-auction sale of the Corporate Debtor as a going concern, is entitled to reconnection of electricity without paying pre-CIRP dues. The Tribunal noted that the claim of Respondent No.2 (Damodar Valley Corporation) was settled as per Section 53 of the IBC, and thus the claim for arrears stands extinguished. The Tribunal referenced several judgments, including 'Eastern Power Distribution Company of Andhra Pradesh Limited vs. Maithan Alloys Limited & Ors.' and 'Damodar Valley Corporation vs. Karthik Alloys,' which supported the view that claims settled in liquidation proceedings cannot be re-agitated. The Tribunal also cited the recent Supreme Court judgment in 'Tata Power Western Odisha Distribution Limited vs. Jagannath Sponge Private Limited,' which upheld that the successful resolution applicant cannot be burdened with past liabilities for grant of an electricity connection.Conclusion:The Tribunal set aside the impugned order dated 01.09.2022 and allowed IA No.984 of 2021. It directed Respondent No.1 to grant a fresh electricity connection after taking all necessary charges for the connection, excluding the outstanding dues of the Corporate Debtor which stood satisfied and extinguished as per the liquidation proceedings.