Power Companies Must Pay Fuel Surcharges Despite Resolution Plan as They Are Not Pre-Insolvency Liabilities

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Full Text of the Document

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....The NCLAT upheld that Fuel Surcharge (FS) and Special Fuel Surcharge (SFS) are statutory charges that become due only upon billing, and cannot be considered pre-insolvency liabilities extinguishable under a resolution plan. These charges, arising from variations in power purchase costs and Supreme Court decisions on change in law, are recovered in installments as mandated by RERC. The Tribunal found no conflict between the Electricity Act and IBC, applying harmonious construction between the statutes. The appellant's contention that Section 238 of IBC overrides the Electricity Act was rejected as no specific conflicting provision was identified. The appellant must pay outstanding FS and SFS within 60 days or face penalties under the Electricity Act.....