CIRP stay dispute over electricity law restrictions and corporate guarantee validity led to a difference of opinion and reference.

Interim stay on admission of the corporate debtor into CIRP was disputed on two grounds: alleged restrictions under the Electricity Act and WBERC Regulations, and the alleged invalidity of the corporate guarantee. One view held that the Insolvency and Bankruptcy Code had primacy over the Electricity Act's overriding clauses, and that the challenge to the guarantee did not justify suspending the insolvency process, so no interim protection was warranted. The other view treated the lender's authority to execute the guarantee, the effect of the WBERC regime, and the consequences of placing a distribution licensee into CIRP as distinct issues requiring deeper scrutiny. There was a difference of opinion, and the matter was referred to the Chairperson.

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Issues: Whether interim stay ought to be granted on the order admitting the corporate debtor into CIRP, in view of the alleged statutory restrictions under the Electricity Act and the WBERC Regulations, and the alleged invalidity of the corporate guarantee.

Analysis: One view held that the primacy of the Insolvency and Bankruptcy Code had already been affirmed in relation to the overriding clauses of the Electricity Act, that the challenge to the corporate guarantee did not, at this stage, justify suspension of the insolvency process, and that no interim protection was warranted. The differing view held that the case raised a distinct issue concerning the authority of a regulated electricity distribution licensee to execute the guarantee, the effect of the WBERC regime on the validity of that transaction, and the wider consequences of bringing a distribution licensee into CIRP without deeper scrutiny of those questions.

Outcome: There was a difference of opinion on the interim stay applications and the matter was directed to be placed before the Chairperson for appropriate reference.

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