Security deposit interest claims in liquidation fall outside insolvency jurisdiction and do not arise automatically under electricity regulations.

A dispute over interest on an electricity security deposit was held not entertainable under section 60(5) of the Insolvency and Bankruptcy Code because it did not arise directly from the insolvency or liquidation process and no express right to interest had been granted in the earlier relief. The forum noted that the original supply was not restored, the auction purchaser obtained a fresh connection, and any such grievance could lie before the electricity grievance forum or civil court. On merits, Regulation 4.11 of the Gujarat Electricity Regulatory Commission (Security Deposit) Regulations, 2005 did not create an entitlement to interest for the auction purchaser from the earlier disconnection date.

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Issues: (i) Whether the claim for interest on the electricity security deposit, arising in the context of liquidation and subsequent fresh electricity connection, was entertainable by the Adjudicating Authority under section 60(5) of the Insolvency and Bankruptcy Code, 2016; (ii) Whether the successful auction purchaser could claim interest on the security deposit under Regulation 4.11 of the Gujarat Electricity Regulatory Commission (Security Deposit) Regulations, 2005.

Issue (i): Whether the claim for interest on the electricity security deposit, arising in the context of liquidation and subsequent fresh electricity connection, was entertainable by the Adjudicating Authority under section 60(5) of the Insolvency and Bankruptcy Code, 2016?

Analysis: The claim for interest was not shown to arise directly from the insolvency resolution or liquidation process. The earlier relief only required restoration of electricity supply and continuation of the security deposit in the name of the corporate debtor; it did not grant any express right to interest on that deposit. The record also showed that the original connection was not restored and that the successful auction purchaser opted for a fresh connection and obtained refund of the security deposit. In these circumstances, the dispute was found to be outside the insolvency forum's jurisdiction and capable of being pursued before the appropriate electricity grievance forum or civil court.

Conclusion: The claim was not entertainable under section 60(5) of the Insolvency and Bankruptcy Code, 2016, and the rejection of the application on jurisdictional grounds was upheld.

Issue (ii): Whether the successful auction purchaser could claim interest on the security deposit under Regulation 4.11 of the Gujarat Electricity Regulatory Commission (Security Deposit) Regulations, 2005?

Analysis: Regulation 4.11 contemplates payment and annual adjustment of interest on a consumer's security deposit in the ordinary course of electricity supply. Here, the electricity supply had been permanently disconnected years earlier, the present appellant entered the picture only later as a successful auction purchaser, and the arrangement ultimately culminated in a fresh connection rather than restoration of the old connection. The regulation, on these facts, did not create an enforceable entitlement to interest for the appellant from the date of disconnection of the earlier consumer's supply.

Conclusion: No entitlement to interest under Regulation 4.11 was established in favour of the appellant.

Final Conclusion: The appeal failed on both jurisdiction and merits, and the impugned rejection order was left undisturbed.

Ratio Decidendi: A dispute over interest on a security deposit, where the claim does not arise directly from the insolvency or liquidation process and no express relief for interest was granted, cannot be entertained under section 60(5) of the Insolvency and Bankruptcy Code, 2016; a successful auction purchaser in such circumstances cannot claim interest under the electricity security-deposit regulation as a matter of course.

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