CIRP essential service dues must be paid when incurred, and creditor-approved maintenance recovery may stand absent legal infirmity.

During CIRP, essential electricity supply may continue as a going-concern expense, and current dues arising from that supply are payable when incurred rather than deferred as insolvency costs. The commentary also notes that a Committee of Creditors commercial decision to enhance maintenance charges and recover electricity-related dues from allottees will ordinarily stand where allottees participated in the process and no procedural impropriety or legal infirmity is shown. On that basis, coercive recovery measures for non-payment of such dues were treated as consistent with the insolvency framework.

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Issues: (i) Whether the Resolution Professional and the Committee of Creditors could validly decide to enhance maintenance charges and recover electricity-related dues from allottees during CIRP. (ii) Whether electricity dues for essential supply during CIRP could be deferred as CIRP costs or were payable when incurred, and whether coercive recovery measures could be taken for non-payment.

Issue (i): Whether the Resolution Professional and the Committee of Creditors could validly decide to enhance maintenance charges and recover electricity-related dues from allottees during CIRP.

Analysis: The project was being run as a going concern during CIRP, and the Resolution Professional was required to preserve operations and address outstanding liabilities connected with maintenance and electricity. The issue of pending electricity dues and inadequate maintenance recovery was repeatedly placed before the Committee of Creditors, which considered the business exigency and approved enhancement of maintenance charges through requisite voting. The allottees were represented in the Committee of Creditors and participated in the decision-making process. In that factual setting, the commercial decision taken by the Committee of Creditors on maintenance recovery was not shown to suffer from any procedural impropriety or legal infirmity.

Conclusion: The decision to enhance maintenance charges and recover the related electricity dues was upheld.

Issue (ii): Whether electricity dues for essential supply during CIRP could be deferred as CIRP costs or were payable when incurred, and whether coercive recovery measures could be taken for non-payment.

Analysis: Electricity supply was treated as an essential service necessary for continuation of the corporate debtor as a going concern. The scheme of moratorium did not create a bar against payment of current dues arising from such essential supply, and the statutory framework, including the amended moratorium provisions, contemplated continuity of essential services subject to payment of current dues. The tribunal relied on the principle that essential supply may continue during CIRP, but non-payment of dues arising during the moratorium cannot be permitted. On that basis, the direction requiring payment of pending electricity and maintenance dues and permitting coercive steps for recovery was held consistent with the insolvency framework.

Conclusion: Electricity dues were held payable and coercive recovery directions were upheld.

Final Conclusion: The impugned directions were sustained, and the appeal was found to lack merit.

Ratio Decidendi: During CIRP, dues arising from essential services necessary to preserve the corporate debtor as a going concern must be paid when incurred, and the commercial decision of the Committee of Creditors on related maintenance recovery is not open to interference absent legal infirmity.

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