TaxTMI 
TaxTMI 
TaxTMI 
2022 (3) TMI 604
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....pany Petition bearing number CP(IB) 2119/MB/C-IV/2019. 2. The Appellant is aggrieved by the impugned order, which has, inter-alia, directed restoration of power connection to the Corporate Debtorfor getting a better resolution plan and ordered for reconnection of power supply of the Durgapur factory of Corporate Debtor within 15 days on deposit of current electricity dues from the date of initiation of CIRP without payment of past dues and any security deposit from the Corporate Debtor as it is only reconnection of disconnected connection. 3. It is stated in the Appeal that the Appellant and Respondent No. 1/Karthik Alloys Limited entered into a Power Supply Agreement dated 1.1.1997 to provide power supply to Respondent No. 1/Corporate Debtor for a contract demand of 10,000 KVA. The Corporate Debtor failed to make payments due for power supply and the accumulated dues became a large amount, whereupon the Appellant/DVC sent a notice dated 19.6.2019 for payment of dues amounting to Rs. 3,02,14,047 within 15 days from the date of the issue of the notice failing which the power supply line would be disconnected without any further notice to the Corporate Debtor (notice dated 19.6.201....
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....uestioned the 'going concern' status of the Corporate Debtor and urged that rehabilitation of the Corporate Debtor should not be at the cost of another commercial entity -the Appellant -which is contrary to the real intent of the IBC. 6. We heard the arguments advanced by the Learned Senior Counsel of the Appellant and the Learned Counsel of the Respondent No.2/IRP. 7. The Learned Senior Counsel for Appellant has argued that since electricity connection had already been disconnected at Durgapur plant of the Corporate Debtor prior to initiation of the CIRP, its reconnection is not covered under the provision of section 14(2) of the IBC in the present case as section 14(2) only prohibits termination or suspension or interruption of supply of essential goods or services to the Corporate Debtor during moratorium period. He has further referred to the definition of 'essential supplies' as provided in regulation 32 of the CIRP Regulations, 2016 to claim that essential goods and services referred to in section 14(2) shall mean electricity, water, telecommunication services and information technology services only to the extent they are not a direct input to the output produced or suppli....
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....oncern also claiming that the contract demand of the Corporate Debtor was 9500 KVA, and after disconnection of electricity supply in September 2019it is highly improbable that the Corporate Debtor was doing manufacturing using a diesel generator for a 9500 KVA furnace. In view of such improbability it is not possible that the Corporate Debtor would have been a going concern at the beginning of the moratorium period. He has further argued that supporting documents such as payment of GST starting from March 2019 till date should have been verified by the Adjudicating Authority before assuming that the Corporate Debtor was a going concern and consequently giving the benefit of reconnection of power supply. She has also claimed that the Appellant is losing revenue through such non-payments and is unable to serve new customers, thereby affecting industrial growth in its area of operation as defaulting entities are not paying their dues, and in the present case it stands to lose Rs. 27,78,95,386/- if the plea of Resolution Professional is accepted. 11. The Learned Senior Counsel for Appellant has cited the following judgments in support of her contentions: - (1) M/s. Embassy Property D....
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.... the Appellant/Uttarakhand Power Corporation Limited, the electricity supply should be restored. 15. The impugned order dated 8.12.2020, in paragraphs 5 and 6 records as follows:- "5. Accordingly, this Bench orders for reconnection of the power supply of the factory within 15 days on deposit of current electricity dues from the date of initiation of CIRP. It is also made clear that the Damodar Valley Corporation will not be insisting for its past dues before the CIRP to be deposited upfront by the Corporate Debtor for which the claim has already been submitted by Damodar Valley Corporation before the RP. RP confirms that the claim of Damodar Valley Corporation has already been admitted. 6. Further, power supply company i.e. Damodar Valley Corporation is also directed not to insist for any security deposit from the Corporate Debtor as it is only reconnection of disconnected connection and the existing security deposit should be continued as it is." 16. The relevant clauses of West Bengal Electricity Regulatory Commission Regulations (WBERC Regulation) are as given below: West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013 "4.0 Discon....
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....tion can be provided as per terms and conditions as applicable for an intending consumer as per SOP." 17. The Resolution Professional filed IA No. 1203 of 2020 in Company Petition bearing No. CP(IB) 2119/MB/C-IV/2019 praying for restoration of electricity connection to the plant of the Corporate Debtor situated at Durgapur, West Bengal. The pleadings made with regard to restoration of electricity connection in this IA are as follows: "6. That the applicant, upon perusal of records of the corporate debtor and subsequently as informed by the suspended board of Director became aware of the following facts: (i) That the Corporate Debtor was operating its business from its two units. The first unit situated in the state of Maharashtra which is closed and the second unit which is situated at the state of West Bengal at Durgapur which is a going concern unit of the corporate debtor. (ii) That the applicant immediately after getting appointment as IRP has visited the factory premises situated at Durgapur of the corporate debtor and seen that the electricity connection in the factory has been disconnected by the DVC due to unpaid electricity dues amounting to Rs. 22,57,06,151.00 (....
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....services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2-A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances as may be specified." 21. Further, Regulation 32 in the CIRP Regulations,2016 which relates to essential supplies is as follows:- "32. Essential supplies. - The essential goods and services referred to in section 14(2) shall mean - (1) Electricity; (2) Water; (3) Telecommunication services; and (4) Information technology services, to the extent these are not a direct input to the output produced or supplied by the corporate debtor. Illustration. - Water supplied to a corporate debtor will be essential suppl....
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....Supreme Court has held that NCLT lacks jurisdiction to issue a direction in the matter. The Learned Senior Counsel for Appellant has sought to draw a parallel between the context in the Embassy Property Development case with that in the present case and argued that the matter of reconnection pertaining to or arising out of the Electricity Act, 2005 and the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013 falls in the exclusive domain of tribunals under the West Bengal Electricity Regulatory Commission Regulations, 2013, and NCLT does not have purview/jurisdiction to adjudicate or pass any directions in such disputes or matters. In the instant case there has been no termination of Power Supply Agreement whereas in the case of Embassy Property Developments judgment the mining leases had been extended by an order of NCLT, and hence the context and situation in both the cases are entirely different. 25. The Learned Counsel for Appellant has also cited the judgment of NCLAT dated 1.10.2021, in the matter of Damodar Valley Corporation versus Cosmic Ferro Alloys Limited (2020 SCC OnLine NCLAT 392) wherein this Tribunal has held that no waiver for ....