TaxTMI 
TaxTMI 
2025 (3) TMI 784
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.... order dated 14.06.2024, passed by the National Company Law Tribunal, Jaipur Bench (hereinafter referred to as "Adjudicating Authority") in IA No. 283/JPR/2023 in CP No. (IBPP)-01/54C/JPR/2022. The Adjudicating Authority vide the impugned order permitted the Respondents, Chief Engineer (Commercial), Ajmer Vidyut Vitran Nigam Ltd. (Respondent No.1), to bill and recover Fuel Surcharge (FS) and Special Fuel Surcharge (SFS) from M/s Shree Rajasthan Syntex Ltd. (Appellant), for periods prior to the admission of the Company in Pre-Packaged Insolvency Resolution Process (PPIRP). 2. It is the contention of the appellant that this order was passed despite the approval of the Base Resolution Plan of the Appellant on 22.08.2023. The Appellant contends that the impugned order contravenes the principles of the Insolvency and Bankruptcy Code, 2016, particularly Section 31(1), which provides for a "clean slate" after the approval of a resolution plan. The Appellant challenges the legal and financial implications of the said order, contending that the Respondents failed to file their claims within the prescribed period and are now attempting to recover dues contrary to the provisions of the Cod....
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....22.08.2023, the Adjudicating Authority approved the Base Resolution Plan, making it binding on all stakeholders, including government authorities. 9. The Adjudicating Authority on 14.06.2024, passed the impugned order, allowing the Respondents to recover Fuel Surcharge and Special Fuel Surcharge for the period prior to insolvency admission. On 27.06.2024, the Respondent No. 1 sent a demand letter requiring payment of Rs. 1,79,66,332/- within 90 days, relying on the impugned order. The Appellant, aggrieved by the decision, filed the present appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016. Submissions of appellant 10. Learned Sr. Counsel for the Appellant states that the present appeal arises out of the impugned order dated 14.06.2024 passed by the National Company Law Tribunal, Jaipur Bench ("Ld. NCLT"), whereby the Ld. NCLT has erroneously permitted the Respondent No. 1 to raise demands towards Fuel Surcharge ("FS") and Special Fuel Surcharge ("SFS") pertaining to a period prior to the initiation of the Pre-Packaged Insolvency Resolution Process ("PPIRP"). The Fuel Surcharge and Special Fuel Surcharge were pre-insolvency claims and should have been f....
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....ority, it shall be binding on all stakeholders, including creditors, whether or not they have participated in the resolution process. Therefore, any claims that were not submitted in compliance with the PPIRP framework stand extinguished. 19. The Hon'ble Supreme Court has consistently held that once a resolution plan is approved, no further claims can be entertained. The reliance of the Ld. NCLT on Prem Cottex Vs. Uttar Haryana Bijli Vitran Nigam [2021 SCC Online SC 870], is wholly misplaced as the said judgment does not override the explicit statutory mandate of Section 31 of the IBC. 20. While passing the Impugned Order, the Ld. NCLT has wrongly placed reliance on the above judgment as the said judgment was delivered in the context of Section 56(2) of the Electricity Act, 2003. 21. It is most humbly submitted that the proviso to section 56(2) of Electricity Act, 2003 is in complete contraventions to the provisions of Section 31 of IBC which unequivocally states that after approval of Plan, any claim which is not part of plan shall stand extinguished. Further, the Ld. NCLT has failed to consider that the IBC is a complete code in itself and has an overriding effect over t....
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....8. e) Judgment passed by this Hon'ble Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 304 of 2017 titled as Export Import Bank of India Vs Resolution Professional JEKPL Private Limited. f) Judgment passed by this Hon'ble Appellate Tribunal (Chennai Bench) Edelweiss Asset Reconstruction Company Limited v. V Mahesh & Ors., Company Appeal (AT) (CH) (INS) No. 226 of 2021. 24. Counsel for the Appellant states that the demand for Rs.2,23,97,641/- towards SFS and Rs.63,82,275/- towards FS pertains to the period prior to the approval of the Resolution Plan and, therefore, stands extinguished in accordance with the "clean slate" doctrine. In this regard he cited the Judgment of Hon'ble Supreme Court in Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta (supra), which has reaffirmed that all prior claims against a corporate debtor, which are not accounted for in the approved resolution plan, cannot be enforced post-approval. 25. Counsel for the Appellant submitted that despite repeated opportunities, Respondent No. 1 failed to file any claims for FS and SFS during the PPIRP. Having failed to assert their claim at the appropriate stage, the Responden....
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....ates that the liability of the appellant is governed by the Electricity Act, 2003, and the orders of the Rajasthan Electricity Regulatory Commission (RERC). Relevant legal provisions and precedents include: i. Sections 61 and 62 of the Electricity Act, 2003, which outline tariff determination and recovery principles. ii. Section 142 of the Electricity Act, 2003, which provides penalties for non-compliance with orders and directions of regulatory authorities. iii. The RERC Order dated 01.09.2022, which directed the appellant to pay its dues in a structured manner. 30. The counsel for respondent invited attention to the Judgment of Hon'ble Supreme Court in Prem Cottex vs. Uttar Haryana Bijli Vitran Nigam Ltd. [(2021) 20 SCC 200] which has clarified that under Section 56 of the Electricity Act, 2003, the obligation to pay arises when the bill is raised, regardless of when the consumption occurred. The appellant's attempt to categorize the dues as past liabilities is thus legally unsustainable. 31. The Counsel for the Respondent further submitted that the appellant had been making instalment payments as per the directives of the Hon'ble RERC until April....
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....d. This admission directly contradicts the assertions made by the RP and the Corporate Debtor (CD). 36. Summing up, the counsel for the Respondent in light of the above facts and legal submissions prayed that the appeal filed by the appellant be dismissed with costs, as it is based on misleading claims and inconsistent assertions. Analysis and findings: 37. We have heard the Ld. Counsels for Appellant and Respondents in detail. We have also gone through the voluminous documents submitted by both parties and also their written submissions. 38. This appeal has been filed consequent upon the order of Adjudicating Authority in I.A. No. 283/JPR/2023 in Company Petition bearing C.P. (IBPP) -01/54C/JPR/2022. The findings in the impugned order are extracted below: "17. The bone of contention pertaining to SFS and FS between the parties is whether the complete liability towards the SFS and the FS pertains to pre-PPIRP period or not. In other words, the issue boils down to whether the complete liability towards SFS which is to be recovered in the coming five years and the FS was due and payable prior to the commencement of the PPIRP. 18. The Hon'ble Apex Cou....
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....90 days from the date of this order. No penalty or interest or late payment surcharge if any on such amount due, delayed in payments during pendency of matter before this tribunal shall be levied by the Respondent, if the billed dues are paid within 90 days from the date of this order. 23. In view of the aforementioned directions, the I.A. bearing No. 283/JPR/2023 stands is disposed off." 39. The main issue in this appeal is whether the Respondents, Ajmer Vidyut Vitran Nigam Ltd. (AVVNL), can recover Fuel Surcharge (FS) and Special Fuel Surcharge (SFS) from the Appellant, Shree Rajasthan Syntex Ltd., even though these charges relate to a period before the insolvency process began. The Appellant argues that these charges were erased once the resolution plan was approved, while the Respondents maintain that these are statutory charges and must be paid. 40. To decide this case, we have to address two issues: i. Do FS and SFS count as pre-insolvency liabilities that were erased when the resolution plan was approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC)? ii. In this matter of recovery of FS and SFS, is there a conflict bet....
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.... (2) Based on the records of the corporate debtor and other relevant material available on record, the resolution professional shall confirm the details received in Form P10." 45. It can be seen from Section 54G and Regulation 20 that it is the responsibility of Corporate Debtor to provide the complete claims from all the creditors to the Resolution Professional for inclusion in Form-P10. The respondents submit that the CD has a running account with the Respondents in which payments are made in tranches and reconciliation is done from time to time between CD and Respondents. He further cites letter dated 08.11.2024 from CD to Respondents in this regard. The Respondent submits that they did not file any claim subsequent to publication of Form P10 on account of FS and SFS as these charges become due only after the bill is raised by the Discom. 46. The question here is what is the stage at which electricity charges become due and payable as per the provisions of Electricity Act. Section 56 of the Electricity Act, 2003 has the relevant provision in this regard. This question has been answered by Hon'ble Supreme Court in Prem Cottex (supra). The relevant paras 9, 10, 11 of th....
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....o issues, this Court held that though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the licensee and that, therefore, electricity charges would become "first due" only after the bill is issued, even though the liability would have arisen on consumption." 47. The court has clearly held that under the Section 56 (2) of the Electricity Act, electricity charges would become "first due only after the bill is issued" even though the liability would have arisen on consumption. In the instant case the liability of FS/SFS relates to the prior period of 2013-2018 but the payment would become due, only after the bills are raised by the distribution company. 48. It is therefore clear that the stand of Respondents No. 1 & 2 that entire assessed amount of FS & SFS had not become due, as no invoice/bill for the same was raised by the distribution company is in accordance with the provisions of the Electricity Act. 49. It is important to understand the genesis of SFS. The SFS was imposed on Electricity Distribution Companies of Rajasthan, as a result of dispute with M/s Adani Power Rajasthan Ltd. (APRL), wh....
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....of 420.96 crores) on the Discoms. This cost pertained to variations in the variable cost of power procured from APRL in the period of May 2013 to January 2018 and any such variation in power purchase cost which is beyond the control of the petitioner (Discoms) and is treated as an uncontrollable parameter in the RERC Tariff Regulations. 54. Pursuant to the Hon'ble Supreme Court's Order dated 29.10.2018, the APTEL, on 14.09.2019, passed an order, allowing the appeal filed by APRL and rejected the appeal filed by Rajasthan Urja Vikas Nigam Limited (RUVNL) which conducts Power trading business of Rajasthan Discoms. On 14.10.2019, Rajasthan Discoms filed a review petition no. 7 of 2019 in Appeal No. 202 of 2018 for reviewing the order of Hon'ble APTEL dated 14.09.2019. 55. Subsequently, looking at the importance of the matter and time constraints the Discoms decided to file appeal in Hon'ble Supreme Court. RUVNL also filed Appeal no. 8625-8626 of 2019 on dated 08.11.2019 before the Hon'ble Supreme Court against the order dated 14.09.2019 of APTEL on the RUVNL. The Rajasthan Discoms were also a party to the aforesaid civil appeal. 56. The Hon'ble Supreme Cou....
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....rt and directed Rajasthan Discoms/RVUNL to make payment to ARPL along with interested calculated at SBSR which should not exceed 9% per annum(with annual compounding). Relevant extract of the Judgement are reproduced below: "We, thus, direct the respondents to pay to the petitioner, the principal amount (as per the terms/norms laid down in the Judgement of this Court dated 31.08.2020) minus Rs.2426.81 crores deposited by the respondents in terms of the interim order dated 29.10.2018 (which, as per the petitioner, the balance payable amount would be Rs.3048.63 crores) along with interest as per the applicable SBAR for the relevant years, which should not exceed 9% per annum (to be compounded annually), from the date the amount became due till the date of actual payment....." 59. Consequent upon the aforesaid order of Hon'ble Supreme Court the Rajasthan Discoms paid an amount of Rs. 5996.44 Crores to M/s APRL towards variations in variable cost of power procured from APRL in the period of May, 2013 onwards. 60. Subsequently, the Discoms in their petition to RERC for tariff revision stated that such variation in power purchase cost is beyond the control of Discoms and i....
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....ity bills. It is clear from the sequence of events in preceding paragraphs that the SFS has arisen as a result of Judgment of Hon'ble Supreme Court based on change in law in terms of existing PPA between APRL and RUVNL/Rajasthan Discoms. Based on the Judgment of Hon'ble Supreme Court the RERC had laid down the manner and mode of recovery of the SFS. The same was to be recovered @ Rs. 0.07 per unit from the consumers being billed on monthly basis in 60 equal instalments. 63. We note that the electricity tariff is fixed by the Electricity Regulatory Commissions based on Section 61 and 62 of the Electricity Act, 2003. Any organizations or person involved in activities relating to generation, transmission or distribution of electricity has to abide by the orders/ directions of the Regulatory Commission. Failing which they are liable for punishment under Section 142 of the Act as extracted below: "Section 142 - Punishment for non-compliance of directions by Appropriate Commission In case any person, who is required under this Act to comply with any order or direction given under this Act by the Appropriate Commission, fails to do so, he shall be liable to: ....
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.... Act, 2003. 66. We have also noted that the appellant has taken inconsistent positions regarding the payment of Fuel Surcharge (FS) and Special Fuel Surcharge (SFS). In IA 283/2023, they did not claim that these dues were extinguished but only requested that their electricity connection not be disconnected. However, after obtaining a relief from Ld. AA on 25.05.2023 against the disconnection the appellant stopped making installment payments and are now arguing for the complete extinguishment of these dues. This is a clear contradiction, as they had previously complied with the installment payments directed by the RERC, but later changed their stance to avoid further liability. 67. We also note that in their letter dated 08.11.2024, the appellant acknowledged that FS and SFS charges billed after 19.04.2023, though related to an earlier period, remain unpaid. They stated that between 19.04.2023 and 30-06-2023, they made payments amounting to Rs.2,63,00,640/- and an additional payment of Rs.39,09,678/- on 21.09.2023. They also admitted that their account is a running account, and payments are made in tranches. The letter further claims that, as per reconciliations on 27.03.2024 ....
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....ungarpur and in case of further query, we would always be willing to meet the officials at AVVNL Dungarpur again. Thanking you Yours Sincerely For Shree Rajasthan Syntex Ltd (Manager Accounts) 68. However, this statement directly contradicts the affidavit filed by the Resolution Professional (RP), who falsely claimed that FS had been paid. The respondent's counter affidavit, filed on 12.11.2024, confirms that the amount paid by the appellant totals to Rs. 79,31,227/- and excludes FS and SFS, as the amounts paid do not match those reflected in Form-P10. This clearly shows that the appellant is attempting to misrepresent facts to evade payment obligations under the Electricity Act, 2003. Their changing arguments and selective admissions indicate an effort to mislead the Tribunal by presenting differing claims in different contexts. 69. The appellant has cited several Judgments of Hon'ble SC and this Appellate Tribunal in support of their claim. The applicability of these Judgments to the present factual matrix has been examined. We now discuss the same: i. In 'Ghanshyam Mishra and Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Comp....
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....s argument. vi. This Appellate Tribunal in 'Edelweiss Asset Reconstruction Company Limited v. V Mahesh & Ors., Company Appeal (AT) (CH) (INS) No. 226 of 2021' -This case dealt with Corporate Guarantee and its crystallization into debt. Since FS and SFS are statutory obligations, this case does not support the appellant's argument. vii. Export Import Bank of India Vs. Resolution Professional JEKPL Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 304 of 2017 This case dealt with whether the 'Counter Corporate Guarantor', comes within the meaning of 'Financial Creditor' as defined under Section 5(7) & (8) financial claims under IBC or not. These are not relevant to the present factual matrix of the case. 70. Based on the discussion above, we note that FS/ SFS arise due to changes in power purchase cost beyond the control of Discoms and the same is treated as an uncontrollable parameter in tariff regulations. The Fuel Surcharge and Special Fuel Surcharge in the present case have arisen due to variation in fuel cost. Further, in case of SFS due to change in law as decided by Hon'ble Supreme Court. It is due to peculiarities in the instant matter that the final decisi....
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....t, 2003 ("the 2003 Act") had an overriding effect? ii. Whether arrears on account of supply of electricity by PVVNL could be considered as government dues? iii. Whether PVVNL was a secured operational creditor? Dismissing the appeal, the Supreme Court held that the appellant was subject to proceedings under the Code; the Court also did not agree with the contention that the dues of PVVNL were government dues and lastly Court agreed that PVVNL was a secured Operational Creditor and was eligible to get their dues under water fall mechanism prescribed in Section 53 of the Code. 75. The issues in the present case are very different from the PVVNL (supra). In the present case FS arises from the tariff order of RERC and SFS arises from the Judgment of Hon'ble Supreme Court based on which the RERC issued the tariff order. The SF and SFS dues would arise in future only after the bill is raised by the Discoms. This is similar to any operational debt, where the obligation to pay by CD arises after the bill/invoice is submitted by the Operational Creditor. We find no conflict between the provisions of IBC in this regard vis-à-vis provisions of Electricity Act 20....