Stale electricity arrears and unsubmitted insolvency dues cannot be enforced against an auction purchaser or used to disconnect supply.

Statutory dues arising before the insolvency sale could not be enforced against the auction purchaser because the respondents had not lodged their claims in the insolvency process and the liabilities were not included in the approved resolution plan; such unsubmitted claims stood extinguished. A demand for electricity arrears relating to 2008-09, raised in 2025, was also unsustainable because Section 56(2) of the Electricity Act bars recovery by disconnection of stale dues beyond the prescribed period. The HC quashed the demand notice and restrained disconnection of supply on the basis of the impugned arrears claim.

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Issues: (i) Whether electricity arrears relating to the corporate debtor's pre-auction period could be enforced against the auction purchaser when the claims were not submitted in the insolvency process and were not part of the approved resolution plan. (ii) Whether the impugned demand notice for arrears relating to 2008-09, issued in 2025, could be sustained and used as a basis to disconnect supply.

Issue (i): Whether electricity arrears relating to the corporate debtor's pre-auction period could be enforced against the auction purchaser when the claims were not submitted in the insolvency process and were not part of the approved resolution plan.

Analysis: The property was purchased in liquidation proceedings under the Insolvency and Bankruptcy Code, 2016, and the decisive question was whether prior statutory dues survived against the purchaser. The settled position applied was that once a resolution plan is approved, all claims not forming part of the plan stand extinguished and cannot later be enforced against the corporate debtor or other stakeholders, including Government authorities. The respondents had not lodged their claim before the resolution professional and the dues were therefore outside the approved process. The rule applicable to sales under the SARFAESI regime was held inapposite because an auction purchaser under insolvency proceedings stands on a different legal footing.

Conclusion: The arrears could not be recovered from the petitioner, and the respondents' claim stood extinguished.

Issue (ii): Whether the impugned demand notice for arrears relating to 2008-09, issued in 2025, could be sustained and used as a basis to disconnect supply.

Analysis: The demand was raised after an interval of about sixteen years. The legal position applied was that under Section 56(2) of the Electricity Act, 2003, recovery of electricity dues is subject to a two-year limitation and disconnection cannot be resorted to for stale arrears or supplementary claims raised beyond that period. Since the demand was for a period long antecedent to the notice and the respondents sought to press it for disconnection, the notice was held unsustainable on limitation as well.

Conclusion: The demand notice was unsustainable and could not justify disconnection of supply.

Final Conclusion: The writ petition succeeded, the demand notice was quashed, and the respondents were restrained from disconnecting electricity supply on the basis of the impugned arrears claim.

Ratio Decidendi: In insolvency proceedings, statutory dues not included in or submitted during the resolution process stand extinguished on approval of the resolution plan, and stale electricity arrears beyond the period prescribed under Section 56(2) of the Electricity Act, 2003 cannot be enforced by disconnection.

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