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TaxTMI 
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2026 (4) TMI 1838
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....btor ("CD") - Cosmic Ferro Alloys Ltd. on an application filed by the City Bank NA vide order dated 16.01.2018. In the CIRP of the CD, the Respondent No.1 - Damodar Valley Corporation ("DVC") filed its claim towards unpaid electricity dues to the extent of Rs. 64.44456 crores, prior to insolvency commencement date. (ii) A Resolution Plan was submitted in the CIRP of the CD by the Consortium. The electricity dues during the pendency of the CIRP was also assessed to the tune of Rs. 4.87 crores. The Resolution Plan proposed entire payment to the Respondent of Rs. 24.67 crores, which was to be paid in five instalments upto 31.03.2023. The Resolution Plan came to be approved by the Adjudicating Authority vide order dated 11.10.2018. (iii) A dispute relating to determination of tariff by DVC was pending consideration before the Hon'ble Supreme Court in Civil Appeal No.4881 of 2010, which Appeal was filed by DVC against the order of Electricity Appellate Tribunal, which dismissed the Appeal of the DVC against the order of Central Electricity Regulatory Commission ("CERC"). The Appeal filed by DVC came to be dismissed by the Hon'ble Supreme Court by judgment and order dat....
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....il Appeal No.6926 of 2021 challenging the order of this Tribunal dated 01.10.2021, which Appeal was dismissed by the Hon'ble Supreme Court on 26.11.2021. (ix) which needs no consideration for the purpose of the present Appeal. (x) The Appellant has filed an IA before the Adjudicating Authority being IA (IBC)No.708/KB/2021 praying for various reliefs. The Applicant's case in the application was that the Applicant came to know about the bills generated by Respondent, consequent to order of the Hon'ble Supreme Court dated 03.12.2018 under which the Applicant was eligible for refund or arrears calculated in terms of the Tariff Order published by WBERC, based on the order of Hon'ble Supreme Court 03.12.2018, reference to the statement dated 26.07.2020 and 01.01.2021 was made in the application. (xi) The application filed by the Appellant was replied by the Respondent. In the reply fled by Respondent to the application, the Respondent took the plea that the Respondent is bound by the order dated 11.10.2018, which has provided only amount of Rs. 24.67 crores against the total claim filed of Rs. 64.44456 crores and CIRP amount of Rs. 5.87 crores. The Respondent i....
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....e Corporate Debtor/ applicant, the relief sought by the applicant staying the demand of the DVC beyond Rs. 24.67 Crores is thus rejected. The DVC shall however give connection to the applicant as per the relevant rules of the DVC on completion of all formalities and deposit of requisite amount by the applicant/ Corporate Debtor within one month." 3. We have heard Shri Abhijeet Sinha, learned Senior Counsel appearing for the Appellant and Shri Jyoti Kumar Choudhary, learned Counsel appearing for the Respondent. 4. Learned Counsel for the Appellant submitted that application, which was filed by the Appellant being IA (IBC)No.708/KB/2021 is only confined to arrears to which Appellant was entitled, consequent to the Tariff Revision Order issued by WBERC for the period 2006-09 and 2009-13 and consequent to the order of the Hon'ble Supreme Court dated 03.12.2018. It is submitted that for the period 2006-09 net principal arrear, to which the Appellant was entitled was Rs. 37.50 crores and net principal arrear for 2009-13 was Rs. 12.48 crores with interest @ 6%. It is submitted that even if the claim of Respondent of Rs. 64.44456 crores for the period is set off, still the Appellant ....
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....fore we proceed to consider the rival submissions of the parties, it is relevant to notice certain prayers and pleadings in IA (IBC)No.708/KB/2021 and the reply, which was filed by the Respondent to the said application. 8. In the application, the Appellant has extracted the provisions of Resolution Plan, where Rs. 24.87 crores was proposed to Respondent towards its claim of Rs. 64.44456 crores. The CIRP cost till date and NCLT order for Rs. 4.87 crores were also noted as dues towards DVC. The total amount payable was Rs. 24.87 crores towards pre-CIRP and during CIRP dues. The Plan also waived all the liabilities claimed by Operational Creditor and other creditors as on the date of approval. In the application, the Applicant has given the reasons for not initially been able to pay the second instalment under the Plan. Certain communication subsequent to the Plan approval order has also been referred to and filing of application IA 1271 of 2019 was also mentioned, which was disposed of on 20.11.2019. In Paragraph 21, the Applicant has referred to the claim of refund, consequent to Tariff Order of WBERC. Paragraph-21 of the application is as follows: "21) On or about Sept....
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....ution Plan to the Respondent no.1 which however the Applicant was unable to pay in view of the pandemic Covid-19 which has engulfed the entire Country since the last week of March, 2020 till date." 10. The Applicant pleaded that he is entitled for receivable of Rs. 89.75 crores, consequent to tariff revision. In the application, following reliefs were made by the Applicant: a) The Respondents either by themselves and/or by their men, agents or assigns be directed to act in terms of the Resolution Plan as approved and confirmed by the Hon'ble Adjudicating Authority by its order dated October 11, 2018 passed in CP (IB) No.596/KB/2017; b) The Respondents be directed to not to demand any amount beyond Rs. 24.67 Crores less whatever has already been paid for the period before the date of approval of Resolution Plan i.e. before 11.10.2018; c) The Respondents be directed to give effect to the Resolution Plan in its books of accounts and in its systems and thereafter generate a fresh bill after adjusting the amount paid by the Applicant and also the Amount receivable by the Applicant in view of the Hon'ble Supreme Court's order dated 3.12.2018 in C....
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....une 2020, the Commission has issued a Tariff Order for 2006 to 2009. Accordingly, DVC had issued a revised bill for the purpose of its record, whereby the claim of DVC for the aforesaid tariff periods, namely 2006 to 2009 and 2009 to 2013 stood reduced to Rs. 56.67 crore approximately. According to the applicant, though they are not liable to pay the dues of DVC in terms of the said bill, they are seeking adjustment of the refund. (m) A bare perusal of the bill would show that there was short payment by the Corporate Debtor up to April 2010 to the extent of Rs. 15.88 crore and there was further shortfall in payment post May 2010 to the extent of Rs. 78.78 crore which includes Dues of Rs. 15.94 Cr. for the period from consumption month of February 2020 to August 2020. During the period upto April 2010, DVC used to fix its own tariff and the consumer defaulted in payment of the power supply bills raised as per Provisional tariff order issued by Hon'ble Central Electricity Regulatory Commission on 23.06.2011. Hon'ble Calcutta Hogh Court declared that (clause 4) of Regulation 5 of 2009 Tariff Regulation related to determination of provisional tariff order is ultra vire....
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....plicant is not entitled to initiate any proceedings, which is not part of the Resolution Plan. In Paragraph 8 of the reply, following was pleaded: "8. With reference to paragraphs 12 to 19 of the said application, save what are matters of record and save what will appear therefrom, allegations to the contrary are denied and disputed. It is denied that the demand of DVC can be said to be purported or exorbitant or that the same is not payable or that there is any mistake in the calculation of interest in the bill generated on 1 January, 2021 or that the same requires any rectification. DVC has issued a revised bill dated 1st January, 2021 pursuant to the Tariff orders of the West Bengal Electricity Regulatory Commission dated 19th March 2020 for the period 2009 to 2013 and 19th June 2020 for 2006 to 2009 respectively. Accordingly, DVC had issued a revised bill for the purpose of its record, whereby the claim of DVC for the aforesaid tariff periods, namely 2006 to 2009 and 2009 to 2013 stood reduced to Rs. 56.67 crore approximately. According to the applicant, though they are not liable to pay the dues of DVC in terms of the said bill, they are seeking adjustment of the refu....
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....d 01.01.2021, which are on the record of the paper book of the Appeal at Pages 180 to 322, were duly generated by Respondent for adjustment of its internal account and were meant to finalise the bad and doubtful debt, which was specific submission of the Respondent noticed in Paragraph-41 of the order. In Paragraph 42 of the impugned order, the Adjudicating Authority also noticed the Regulation 5.10 of the West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2011, where bad dues have been dealt with. Paragraph 42 of the impugned order is as follows: "42. It is submitted that in exercise of raising the bill dated 01.01.2021 became necessary for adjustment of bad and doubtful debt relating to the corporate debtor. The resolution plan allowed Rs. 24.67 crores only, leaving out the balance claim of DVC which had to be written off as bad debt. The adjustment of accounts was necessary to arrive at the actual figure of bad debt. Under West Bengal Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2011, Chapter 5 lays down the General principles for computing cost and return. Regulation 5.10 is to the extent as fo....
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.... is given in annexure pages. Errors, if any, or any lawful change, if required, will be done and the same will be adjusted in subsequent bill(s). Regards, Sd/- Amitra Deputy Chief Engineer (Comml) Copy to Engineer In Charge, BarJora Sub/Stn. GOMD-VI,DVC." 16. Along with the letter, a summary of actual payable amount was annexed. The amount of Rs. 27,50,06,287/-, which according to the Appellant is net principal arrear for 2006-09 consequent to reduction in tariff. In the same computation under Item-1, net unpaid bill amount since May 2010 as details in Annexure V(A) is mentioned as Rs. 78,77,71,366/-. When there are arrears of electricity dues, any reduction in tariff at best shall reduce the arrears payable by consumer. When a sum was in arrears, the payment of electricity bills, which obviously included the tariff as was charged at the relevant time, any reduction in the tariff shall be adjusted from the arrears and the submission of the Appellant that the Appellant was entitled for refund of the amount consequent to tariff reduction has no legs to stand. The aforesaid bill dated 01.01.2021 also clearly mentions that net outstanding is Rs. 56,66,84,128/-. ....
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....Respondent has generated bills giving effect to the WBERC Tariff Order dated 19.03.2020 and 19.06.2020, but on the said basis, no demand is being made against the Appellant for any period prior to CIRP. As regards prayer (d) regarding reconnection, both the learned Counsel for the parties submitted that no issues need to be decided with regard to reconnection, which has already been directed. We, thus, are of the view that substantially, no relief as claimed by the Appellant in the application could have been allowed by the Adjudicating Authority. With regard to reconnection, the Adjudicating Authority in Paragraph 48 has directed that "the DVC shall however give connection to the Applicant as per the relevant rules of the DVC on completion of all formalities and deposit of requisite amount by the Applicant/ Corporate Debtor within one month". Thus, prayer (d) stood virtually allowed. 18. Learned Counsel for the Appellant has relied on judgment of the Hon'ble Supreme Court in Civil Appeal No.2609 of 2013 - Sharada Sanghi & Ors. vs. Asha Agarwal & Ors., where reliance has been placed in Paragraphs 44 and 45 of the judgment, which are as follows: "44. This Court in Satluj....