Insolvency liquidation dues cannot be shifted to auction purchasers as a condition for a fresh electricity connection.

A successful auction purchaser of a liquidated asset may invoke section 60(5) of the Insolvency and Bankruptcy Code, 2016 where the dispute over a fresh electricity connection arises from the liquidation process. The tribunal treated the application as maintainable because the relief sought had a direct nexus with liquidation and was not barred by functus officio. It further held that pre-CIRP electricity dues of the corporate debtor must be dealt with in the insolvency process and cannot be demanded from the auction purchaser as a condition for a new connection. The distribution company's failure to file its claim in liquidation prevented it from bypassing the statutory insolvency framework.

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Issues: (i) Whether an application by a successful auction purchaser seeking electricity connection after liquidation was maintainable under section 60(5) of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the electricity distribution company could insist on payment of the corporate debtor's pre-CIRP electricity dues before granting a fresh connection to the successful auction purchaser.

Issue (i): Whether an application by a successful auction purchaser seeking electricity connection after liquidation was maintainable under section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Analysis: The dispute arose directly out of the liquidation process and the demand for a fresh electricity connection after sale of the asset in liquidation. The application was therefore one arising out of or in relation to the insolvency and liquidation proceedings. The contention that the adjudicating authority had become functus officio was rejected because the relief sought had a direct nexus with the liquidation process and fell within the tribunal's jurisdiction under section 60(5).

Conclusion: The application was maintainable under section 60(5) of the Insolvency and Bankruptcy Code, 2016.

Issue (ii): Whether the electricity distribution company could insist on payment of the corporate debtor's pre-CIRP electricity dues before granting a fresh connection to the successful auction purchaser.

Analysis: The sale was on an as is where is, as is what is, whatever there is and without recourse basis, but the pre-CIRP electricity dues of the corporate debtor were claims that had to be dealt with in the insolvency process. Since the distribution company had not filed its claim in the liquidation proceedings, it could not bypass the statutory scheme and recover the old dues from the successful auction purchaser as a condition for a new connection. The authorities relied upon by the appellant were distinguished, while the line of insolvency decisions applying the clean slate principle and the waterfall mechanism was followed.

Conclusion: The electricity distribution company could not insist on payment of the corporate debtor's pre-CIRP electricity dues for grant of a fresh connection.

Final Conclusion: The impugned directions granting electricity connection without recovery of the old dues were upheld, and the appeal failed.

Ratio Decidendi: In liquidation proceedings, pre-CIRP dues of the corporate debtor must be pursued within the insolvency framework and cannot be enforced against a successful auction purchaser as a condition for a fresh utility connection, and disputes arising from such demand are maintainable under section 60(5).

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