2025 (4) TMI 514 - AT - IBC

Power of Auction: NCLT Can Order Electricity Restoration for Liquidated Property Under Insolvency Code Section 60(5)(c)

The SC/HC affirmed the NCLT's jurisdiction to direct electricity connection restoration for an auctioned property during liquidation proceedings. The ... Restoration of Electricity Connection at the auctioned property - jurisdiction of National Company Law Tribunal (NCLT) to direct the restoration of an electricity connection at the auctioned property as part of the liquidation proceedings - HELD THAT:- There is no dispute that the respondent became the Successful Auction Purchaser in the liquidation proceeding of the Corporate Debtor. The appellant has already filed a claim in the liquidation proceeding and his claim has been dealt with in the liquidation proceedings. The submission which has been pressed by the Appellant is that the Adjudicating Authority has no jurisdiction to consider the application filed by the Successful Purchaser. Reliance has been placed in Gujarat Urja Vikas Nigam [2021 (3) TMI 340 - SUPREME COURT]. There cannot be any dispute to the preposition laid down by the Hon’ble Supreme Court that the ‘adjudication of dispute that arise dehors the insolvency of corporate debtor cannot be entertained.’ The present is a case where application arose of auction purchase arising out of the liquidation proceeding, hence is fully covered by the Section 60(5)(c) of the Insolvency and Bankruptcy Code. Conclusion - The disputes arising from the liquidation proceedings, including those related to auction purchases, fall within the jurisdiction of the NCLT under Section 60(5)(c) of the IBC. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:1. Whether the National Company Law Tribunal (NCLT) had jurisdiction to direct the restoration of an electricity connection at the auctioned property as part of the liquidation proceedings.2. Whether the adjudication of disputes arising from the auction purchase in the liquidation proceedings falls within the scope of the Insolvency and Bankruptcy Code (IBC), specifically under Section 60(5)(c).ISSUE-WISE DETAILED ANALYSISIssue 1: Jurisdiction of NCLT to Direct Restoration of Electricity ConnectionRelevant legal framework and precedents: The appellant challenged the jurisdiction of the NCLT based on the judgment of the Hon'ble Supreme Court in Gujarat Urja Vikas Nigam Ltd. Vs. Mr. Amit Gupta & Ors. This precedent established that disputes not related to the insolvency resolution process should be adjudicated by the relevant competent authority rather than the NCLT.Court's interpretation and reasoning: The Tribunal considered the argument that the NCLT lacked jurisdiction to direct the restoration of electricity connection. However, it noted that the issue arose from the auction purchase as part of the liquidation proceedings, thus falling within the scope of the NCLT's jurisdiction under Section 60(5)(c) of the IBC.Key evidence and findings: The Tribunal found that the respondent was the Successful Auction Purchaser in the liquidation proceedings and that the appellant had already filed a claim, which was addressed in the liquidation process.Application of law to facts: The Tribunal applied the principles from the Gujarat Urja Vikas Nigam case, emphasizing that the dispute was related to the insolvency of the corporate debtor and thus within the NCLT's jurisdiction. The Tribunal also referenced its own decision in M/s Uttarakhand Power Corporation Limited v/s M/s Shyam Baba Developers & Builders Pvt. Ltd., where similar directions for electricity connection were upheld.Treatment of competing arguments: The appellant argued that the NCLT lacked jurisdiction, relying on the Gujarat Urja Vikas Nigam case. The respondent countered that the issue was covered by a prior judgment of the Tribunal, which supported the NCLT's jurisdiction in such matters.Conclusions: The Tribunal concluded that the NCLT had jurisdiction to entertain the application filed by the Successful Purchaser, as the issue was related to the insolvency process and covered by Section 60(5)(c) of the IBC.Issue 2: Scope of Section 60(5)(c) of the IBCRelevant legal framework and precedents: Section 60(5)(c) of the IBC empowers the NCLT to adjudicate disputes arising from or related to the insolvency resolution process.Court's interpretation and reasoning: The Tribunal interpreted Section 60(5)(c) as providing the NCLT with jurisdiction over disputes arising from the liquidation proceedings of the corporate debtor, including those related to auction purchases.Key evidence and findings: The Tribunal noted that the application for restoring the electricity connection arose directly from the auction purchase during the liquidation proceedings.Application of law to facts: The Tribunal applied Section 60(5)(c) to the facts, determining that the dispute was sufficiently connected to the insolvency process to fall under the NCLT's jurisdiction.Treatment of competing arguments: The appellant's reliance on the Gujarat Urja Vikas Nigam case was addressed by distinguishing the nature of the dispute as one arising from the insolvency process, thus falling within the NCLT's jurisdiction under Section 60(5)(c).Conclusions: The Tribunal concluded that the dispute was within the scope of Section 60(5)(c) of the IBC, affirming the NCLT's jurisdiction to adjudicate the matter.SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'There cannot be any dispute to the preposition laid down by the Hon'ble Supreme Court that the 'adjudication of dispute that arise dehors the insolvency of corporate debtor cannot be entertained.' The present is a case where application arose of auction purchase arising out of the liquidation proceeding, hence is fully covered by the Section 60(5)(c) of the Insolvency and Bankruptcy Code.'Core principles established: The Tribunal reaffirmed that disputes arising from the liquidation proceedings, including those related to auction purchases, fall within the jurisdiction of the NCLT under Section 60(5)(c) of the IBC.Final determinations on each issue: The Tribunal dismissed the appeal, upholding the NCLT's order to restore the electricity connection at the auctioned property, affirming the NCLT's jurisdiction in the matter. The Tribunal found no grounds to challenge the NCLT's decision, as the issues were covered by existing legal precedents and statutory provisions.