Resolution plan and electricity dues: supply can be withheld until premises-related dues are cleared despite insolvency resolution.

An approved resolution plan that omits statutory electricity dues owed to a State distribution licensee does not bind that authority in the manner suggested by the petitioner, although the demand itself was not quashed because the approval order was not challenged. Reading the Electricity Act, 2003 with the supply code, the Court held that a licensee may refuse fresh connection or restoration of supply for premises until dues attributable to those premises are cleared, and this does not amount to barred monetary enforcement under insolvency law. The writ petition therefore failed and the impugned communications remained undisturbed.

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Issues: (i) Whether the approved resolution plan extinguished the petitioner's pre-resolution electricity dues so as to bar TANGEDCO from enforcing those dues. (ii) Whether TANGEDCO could refuse fresh electricity supply or restoration of supply for the premises on the strength of the outstanding dues.

Issue (i): Whether the approved resolution plan extinguished the petitioner's pre-resolution electricity dues so as to bar TANGEDCO from enforcing those dues.

Analysis: The approved resolution plan did not include the statutory electricity dues payable to TANGEDCO. The decision in Rainbow Papers was applied to hold that a resolution plan which ignores statutory dues owed to a State authority does not satisfy the requirements of the insolvency framework and is not binding on such authority. At the same time, the Court declined to quash the demand through certiorari, since the approval order of the adjudicating authority had not been challenged and the legal effect of the plan could not be ignored for all purposes.

Conclusion: The petitioner could not obtain quashing of the impugned demand on the facts of the case, though the dues were treated as not enforceable in the manner sought by the petitioner.

Issue (ii): Whether TANGEDCO could refuse fresh electricity supply or restoration of supply for the premises on the strength of the outstanding dues.

Analysis: The Court read the duty to supply electricity under the Electricity Act, 2003 along with the supply code provisions governing reconnection and new connections where prior dues remain unpaid. It held that insisting on clearance of dues attributable to the premises before granting fresh connection or restoring supply did not amount to enforcing the monetary claim barred by the insolvency resolution process. Such a refusal was treated as action in accordance with the governing electricity law and supply code.

Conclusion: TANGEDCO was entitled to decline fresh connection or restoration of supply until the outstanding dues attributable to the premises were satisfied.

Final Conclusion: The writ petition failed because the Court found no ground to compel a fresh connection or restoration of supply notwithstanding the insolvency resolution, and the impugned communications were left undisturbed.

Ratio Decidendi: An approved resolution plan does not prevent a distribution licensee, acting under the electricity law and supply code, from refusing fresh or restored supply to premises until dues attributable to those premises are cleared, even if direct monetary enforcement of the claim is otherwise barred.

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