2025 (2) TMI 1116 - AT - IBC

NCLAT rules resolution applicant not liable for pre-CIRP electricity dues under Section 60(5) IBC

NCLAT held that NCLT has jurisdiction to decide issues arising from approved resolution plans under Section 60(5) of IBC, 2016. The tribunal ruled that ... Jurisdiction of NCLT to decide issues after the approval of the resolution plan - NCLT nullified the outstanding dues payable to the Appellant for the period prior to initiation of Corporate Insolvency Resolution Process. Whether the NCLT has jurisdiction to decide the issue after the approval of the resolution plan? - HELD THAT:- Once the resolution plan is approved its binding on the Corporate Debtor, its employees, members, creditors including the Central Government, any State Government or any local authority to whom a debt in respect of payment of dues arising under a law for a time being in force, such authorities to whom statutory dues are owned, guarantors and other stakeholders involved in the resolution plan as per provisions of Sub-section (1) of Section 31 of IBC, 2016. Whether the SRA is liable to pay past electricity dues of pre-CIRP period of the Corporate Debtor, even after approval of the resolution plan and taking over of the Corporate Debtor, is an issue directly arising from approval of the resolution plan and its successful implementation. The NCLT has jurisdiction to entertain or dispose of any application or proceeding by or against the Corporate Debtor arising out of or in relation to the insolvency resolution. This position has been reiterated in recent judgment of this Tribunal in the case of Damodar Valley Coorporation Vs. Mackeil Ispat & Forging Ltd. & Anr., [2025 (2) TMI 425 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB] - NCLT has jurisdiction to decide the issue relating to pre-CIRP outstanding electricity dues. Whether the dispute regarding the demand for payment of arrears relating to the Corporate Debtor by the Successful Resolution Applicant, after the approval of the resolution plan, can be dealt only under the Electricity Act, 2003, and the Rules made therein, and cannot be adjudicated under the IBC, 2016? - HELD THAT:- This Tribunal in the case of Madhya Gujarat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd., [2018 (9) TMI 1959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] has held that in view of Section 238 of the IBC, 2016, the provisions of Gujarat Electricity Regulatory Commission (Electricity Supply Code and related matters) Regulations, 2015 cannot override the provisions of IBC, 2016 - The Hon’ble Supreme Court in the case of Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors. [2023 (7) TMI 831 - SUPREME COURT] has held that the provisions of IBC, 2016 override the provisions of the Electricity Act, 2003. In view of the provisions of Section 238 of IBC, 2016 and the guidelines given in the judicial decisions discussed above, it is held that provisions of the IBC, 2016 over ride the provisions of Electricity Act, 2003, and the issue of payment of pre-CIRP electricity dues of corporate debtor by the SRA is an issue which can be decided by the NCLT u/s 60(5)(c) of IBC, 2016 Whether the Successful Resolution Applicant is liable to pay the arrears of electricity dues for the pre-CIRP period of the Corporate Debtor, even though no claim is filed by the electricity company in CIRP and no such provision is made in the resolution plan? - HELD THAT:- The Successful Resolution Applicant has taken over the Corporate Debtor and its commitment made in the resolution plan does not include any payment towards the electricity dues of the Corporate Debtor. As per scheme of IBC, 2016 the creditors relating to pre-CIRP period are required to file claim before the Resolution Professional (RP) regarding the debt payable by the Corporate Debtor. In the present case, no claim was filed by the Appellant electricity company and there was no commitment in the resolution plan to pay any amount towards pre-CIRP electricity dues. In the present case the Appellant had not even filed its claim before the RP and it cannot be permitted to benefit from of its failure to file the claim and yet be paid pre-CIRP dues for restoring the electricity. The SRA had made payment under protest only under the compulsion to get the electricity restored and to make the Corporate Debtor to restart its business, which is one of the primary aim of the IBC, 2016. The Appellant is barred from seeking arrears of the amount that stands extinguished by operation of law as pre-condition to restoring the electricity connection. Conclusion - i) NCLT has jurisdiction to adjudicate disputes arising from insolvency resolutions, as per Section 60(5) of the IBC. ii) The provisions of the IBC, 2016 override those of the Electricity Act, 2003, as per Section 238 of the IBC. iii) Once a resolution plan is approved, it is binding on all stakeholders, extinguishing pre-CIRP dues unless claims are filed during the CIRP. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core issues considered in this judgment were:a) Whether the National Company Law Tribunal (NCLT) has jurisdiction to decide issues after the approval of the resolution plan.b) Whether disputes regarding the demand for payment of arrears relating to the Corporate Debtor by the Successful Resolution Applicant (SRA), after the approval of the resolution plan, can be dealt only under the Electricity Act, 2003, and the Rules made therein, and cannot be adjudicated under the Insolvency and Bankruptcy Code (IBC), 2016.c) Whether the SRA is liable to pay the arrears of electricity dues for the pre-Corporate Insolvency Resolution Process (CIRP) period of the Corporate Debtor, even though no claim is filed by the electricity company in CIRP and no such provision is made in the resolution plan.ISSUE-WISE DETAILED ANALYSISJurisdiction of NCLT Post-Approval of Resolution PlanThe relevant legal framework is Section 60(5) of the IBC, 2016, which grants NCLT jurisdiction over matters relating to the insolvency resolution of the Corporate Debtor. The Tribunal interpreted this to mean that NCLT has the authority to adjudicate disputes arising from or relating to the insolvency of the Corporate Debtor. The Supreme Court's decisions in Gujarat Urja Vikas Nigam Limited vs. Amit Gupta & Company & Ors. and Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors. were cited to support the view that NCLT holds exclusive jurisdiction over such matters. The Court concluded that NCLT has jurisdiction to decide issues related to pre-CIRP outstanding electricity dues.Adjudication Under IBC vs. Electricity ActThe Tribunal examined Section 238 of the IBC, 2016, which provides that the provisions of the IBC override other laws. This was supported by precedents such as Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Private Limited & Ors. and Madhya Gujarat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd., which affirmed the supremacy of the IBC over the Electricity Act, 2003. The Tribunal held that disputes relating to the resolution of insolvency of the Corporate Debtor, including payment of pre-CIRP electricity dues, fall under the jurisdiction of the IBC and can be adjudicated by the NCLT.Liability of SRA for Pre-CIRP Electricity DuesThe Tribunal found that the SRA, having taken over the Corporate Debtor, is not liable for pre-CIRP electricity dues as these were not included in the resolution plan, and no claim was filed by the electricity company during the CIRP. The Supreme Court's rulings in Tata Power Western Odisha Distribution Ltd. & Anr. Vs. Jagannath Sponage Pvt. Ltd. and Southern Power Distribution Company of Andhra Pradesh Ltd. vs. Gavi Siddeswara Steels (India) Pvt. Ltd. and Another were referenced, which held that power distribution companies cannot insist on payment of arrears for restoring electricity connections. The Tribunal concluded that the SRA cannot be held liable for pre-CIRP dues, which were extinguished upon approval of the resolution plan.SIGNIFICANT HOLDINGSThe Tribunal preserved key legal reasoning, emphasizing that:- NCLT has jurisdiction to adjudicate disputes arising from insolvency resolutions, as per Section 60(5) of the IBC.- The provisions of the IBC, 2016 override those of the Electricity Act, 2003, as per Section 238 of the IBC.- Once a resolution plan is approved, it is binding on all stakeholders, extinguishing pre-CIRP dues unless claims are filed during the CIRP.The final determination was that the appeal was dismissed, and the impugned order nullifying outstanding electricity dues for the pre-CIRP period was upheld. The Tribunal found no merit in the appeal and ruled that the SRA was not liable for the pre-CIRP electricity dues.