TaxTMI 
TaxTMI 
2019 (2) TMI 886
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....ount of Rupees Rs. 2607848.71 (Rupees Twenty Six lakh Seven Thousand Eight Hundred Forty Eight Seventy One Paise Only)" 2. A Petition was submitted by Andhra Bank as a Financial Creditor against Oracle Home Textile which was admitted u/s.7 of The Insolvency Code vide Order dated 09.08.2018 in respect of a Financial Debt of Rs. 39.71 Crores. On admission, IRP was appointed and "Moratorium" was declared. 3. The Applicant had disconnected electricity connection of the Corporate Debtor on 14.08.2018, thereafter the Resolution Professional has submitted a Miscellaneous Application (MA 839/2018) for restoration of electricity connection. The Prayer was admitted and the electricity connection was restored on 27.08.2018. It was directed that the Resolution Professional shall contact the Officer-in-Charge of the Electricity Company for discussion on terms of payment of electricity dues. The Executive Engineer of Wapi Industrial Division, DGVCL had contacted the Officer of the Electricity Department for payment of Rs. 26,07,848/-. However, no amount was paid. The Applicant states that in view of Section 14 and Regulation 31 & 32 of Insolvency Resolution Process for Corporate Person, Re....
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....ntrol the provisions as prescribed in Sections of The Code. Due to this reason, the applicability of the Regulation 32 overriding the main provisions of Section 14 is doubtful under the present circumstances. As per Sub-section (2) of Section 14 "The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period". At the time of enactment, it was not specified but later on by the introduction of Regulation 33 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, four services are specified, i.e. Electricity, Water, Telecommunication and Information Technology. An exception is carved out that these services shall be considered as "essential services" to the extent these services are not a 'direct input' to the 'output produced' or supplied by the Corporate Debtor. While dealing this question Respected NCLAT in the case of Dakshin Gujarat VIJ Co. Ltd. v. ABG Shipyard Ltd. (NCL-AT) has held as under :- "13. However, from the provisions of 'I&B Code' and Regulations, we find that no prohibition has been made or bar imposed towards p....
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....espondent - M/s. ANG Industries Ltd. / Insolvency Resolution Professional to pay the current electricity charges to the appellant for the period from 12th October, 2017 onwards. The appellant will raise the electricity bill for the period from 13th October, 2017 to 31st October, 2017; November, 2017 and December, 2017. The respondent - Corporate Applicant through Resolution Professional will pay the outstanding dues in instalments - first instalment for the month of October, 2017 to be paid by 15th February, 2018, and the dues for the month of November be paid by 28th February, 2018; dues for the month of December, 2017 be paid by 15th March, 2018 and the dues for January, 2018 and February, 2018 be paid y 31st March, 2018. If the Respondent fails to pay the amount within the stipulated period or in two consecutive months, it will be open to the appellant to give notice and disconnect the electricity supply of the Corporate Debtor." 5.2 The objective of introduction of this Code is to reorganize the business of a Debtor Company and in a time bound manner make effort for maximisation of value of the assets of Debtor Company. To achieve this target, electricity connection is requi....
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.... one of the steps to be taken to settle the outstanding Debt is to improve in-house revenue generation. Simultaneously, other step can also be advised by directing the Financial Creditors, being part of the Committee of Creditors, to infuse sufficient capital to run the ongoing concern. The members of the Committee of Creditors can arrange 'temporary finance'to run the business of the Debtor Company. If these steps are notgoing to be taken by the Creditors, then the only option shall be left is to go ahead with the Resolution of "Liquidation", which is a last resort and in the case of a going concern, not an advisable remedy. In this case, it an encouraging step of the members of the Committee of Creditors by passing a Resolution in favour of running of the business, which means the expenditure required for manufacturing activity shall be borne by the Committee of Creditors. 5.4 Learned Resolution Professional has explained the financial problem since the Corporate Debtor is already under heavy Debt. It is also informed that the members of the Committee of Creditors have not agreed to induct Funds for the purpose of running of the business. At this juncture, it is worth ....
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....o facilitate the insolvency resolution process; and (e) any other costs as may be specified by the Board;" (highlighted to place emphasis) 5.7 On careful and logical reading of the definition of "Insolvency Resolution Cost" it transpires that any cost incurred by the Resolution Professional in running the business of the Corporate Debtor as a going concern is to be First borne by the Applicant (Petitioner), which shall be ratified and paid by the Committee of Creditors. In this regard, the procedure prescribed is in Section 20 of The Code i.e. Management of Operations of Corporate Debtor as 'going concern', reads as follows:- "20. Management of operations of corporate debtor as going concern [*42] (1) The interim resolution professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. (2) For the purposes of sub-section (1), the interim resolution professional shall have the authority- (a) to appoint accountants, legal or other professionals as may be necessary; (b) to enter into contracts....
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....Committee of Creditors. 5.10 As far as the question of payment to be made to DGVCL is concerned, the Resolution Professional is hereby directed that electricity consumed on commencement of CIRP shall be paid as per the prescribed charges as cost of CIRP. The commencement of CIRP in this case is from the date of the Order i.e. 09.08.2018. For the old outstanding payment due as on the date of commencement of CIRP, DGVCL has an option to lodge its claim of electricity charges to the Resolution Professional as prescribed under Insolvency & Bankruptcy Code. A requisite form is required to be submitted to Resolution Professional for lodgement of claim which ought to be admitted for due consideration, either at the time of finalization of Resolution Plan or even at the time of Liquidation of Assets of the Debtor Company. The Application filed by the Electricity Company is therefore allowed in terms of the above directions. (B) M.A. 1452/2018:- 6. This Miscellaneous Application is submitted by an employee of Oracle Home Textile Limited (Corporate Debtor) and contesting that this Application is on behalf of all the Employees and Workmen of the Corporate Debtor. Prayer of the Applic....