TaxTMI 
TaxTMI 
2022 (3) TMI 999
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....ues that in respect of the petitioner no.1-Company, a Corporate Insolvency Resolution Process (CIRP) was initiated vide Order dated October 28, 2019 under the Insolvency and Bankruptcy Code, 2016 (for the sake of brevity, 'the IBC'), on an application filed under Section 7 of the IBC by the Stressed Assets Stabilisation Fund. Pursuant to the order of the National Company Law Tribunal (NCLT), Amravati Bench, the Resolution Professional appointed by the Adjudicating Authority called for claims from creditors vide Public Announcement dated October 31, 2019, which was widely circulated. Subsequently, the Resolution Plan was passed by the NCLT, Amravati bench vide order dated November 10, 2021. It is argued that by operation of Section 31(1) of the IBC, the petitioner no.1 has no dues whatsoever upon the approval of the said Resolution Plan. 4. The learned Senior Advocate submits that claims which were not filed before the approval of the Resolution Plan and were not a part of the said Plan, stand extinguished. The learned Senior Advocate places reliance on the provisions of Section 31(1) and Section 238 of the IBC on such score and cites Ghanashyam Mishra and Sons Private Limited Vs. ....
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.... respondent. Reliance is placed on the provisions of Section 31(1) of the IBC and Ghanashyam Mishra (supra) on such count. 8. The learned Senior Advocate next submits that the respondent is a Statutory Body and is required to comply with laws and grant fair treatment to the petitioner. Section 56 of the Electricity Act, 2003 (hereinafter referred to as 'the 2003 Act') confers the power of disconnection of electricity supply for default in payment by a licensee and provides the conditions when such power may be invoked, the procedure and manner of the exercise of such power, the period for which such power can remain effective and the circumstances under which such a power cannot be exercised. However, once the Resolution Plan is passed, it is submitted, the Company which is taken over (in the present case, the petitioner no.1) starts on a 'clean slate theory', meaning that there is no debt in existence, all of which are extinguished after the passing of the Resolution Plan. 9. The learned Senior Advocate next cites Isha Marbles Vs. Bihar State Electricity Board, reported at (1995) 2 SCC 648, wherein the Supreme Court held that an Auction Purchaser cannot be fastened with t....
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....not inconsistent with any provision of the IBC, and, therefore, Section 238 thereof will not come into play. Section 30(2)(e) of the IBC expressly preserves such legal right, it is argued. Moreover, it is argued that there is no conflict between Section 56 of the 2003 Act and any Clause of the Resolution Plan. Such a conflict could have arisen had the relief in terms of the paragraph 4(h)(iii)(i) as mentioned in the writ petition been granted by the NCLT, that is, the WBSEDCL was specifically deprived of its right to recover the outstanding dues (decretal debt). Even if deprived of its right to recover the outstanding dues, the right of the WBSEDCL not to supply electricity to the petitioner no.1 was not curtailed or taken away. 15. The petitioners' liability, as contended in the writ petition, is limited to what is provided for in the Resolution Plan sanctioned by the NCLT on November 10, 2021 in CP (IB) No. 325/7/HDB/2018, from which it appears that the Operational Creditors were getting paid 0.25 per cent of their respective admitted dues. Had the respondent-WBSEDCL lodged its claim on the basis of the decree, the pro-rata payment to the Operational Creditors would have accordi....
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....is payable by the Resolution Applicant to the creditors of the Company. Such legal fiction of extinguishment of liability on passage of a Resolution Plan, cannot be extended to the gamut of rights under Part III of the Constitution (Fundamental Rights). Similarly, a Resolution Plan cannot have the effect of altering or modifying the contractual rights of a third party. 19. For the last above proposition, the learned Senior Advocate cites Jaypee Kennsington Boulevard Apartments Welfare Association and others Vs. NBCC (India) Limited and others, reported at (2022) 1 SCC 401 and Municipal Corporation of Greater Mumbai (MCGM) Vs. Abhilash Lal and others, reported at (2020) 13 SCC 234. In this connection, the WBSEDCL also relies on two judgments of the NCLT in IMICL Dighi Maritime Limited Vs. Dighi Port Limited, reported at (2019) SCC OnLine NCLT 8142 and Phonenix Arc Pvt. Ltd. Vs. Anush Finlease and Construction Pvt. Ltd., reported at Manu/NC/8740/2020. 20. Section 238 of the IBC comes into operation, it is argued, only in cases of clear conflict between any of the IBC provisions and those of any other statute. For this proposition, the learned Senior Advocate appearing for the WBSED....
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.... passing through the scrutiny of the Resolution Professional and Committee of Creditors, is submitted to the Adjudicating Authority (NCLT). Under Section 31 (1) of the IBC, upon approval by the Adjudicating Authority, the resolution plan becomes binding on the Corporate Debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. 28. Section 238 of the IBC stipulates that the provisions of the Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 29. The Supreme Court, in Essar Steel (supra) and Ghanashyam Mishra's Case (supra), has propounded the "Clean Slate" theory. According to the theory, a successful resolution applicant cannot suddenly be faced with undecided claims after the resolution plan submitted by him has been accepted, as this would amount to "a hydra head popping up" which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully takes over the business of the corporate debtor. All claims must be submitted to and decided by the resolution pro....
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.... 35. Again, upon approval of the resolution plan for the petitioner no. 1 by the NCLT (Adjudicating Authority), Amravati on November 10, 2021, all debts (including operational debts) of the petitioner no. 1 stood extinguished by application of the "Clean Slate" theory. 36. The WBSEDCL endeavours to conceptually segregate the apparently dual rights of the licensee - that of recovery of the dues and continuance of disconnection. However, such contention does not stand the test of reason, since the rights are different on surface but united in their common nucleus, which is the debt/dues to the licensee. Both of the purported dual rights emanate from such nucleus. It is the debt/dues of the consumer to the licensee which forms the core of both the rights of recovery and disconnection. 37. It is the claim for the dues of the consumer to the licensee in respect of electricity charge or other sums which provides the bulwark of the rights of the licensee. 38. If the debt due to the licensee (under the 2003 Act), in its avatar as an operational creditor (under the IBC), is extinguished by operation of Section 31 (1) of the IBC, read in the context of the landmark judgments of Ess....