TaxTMI 
TaxTMI 
2026 (5) TMI 1311
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........... 21 (i) Overriding Effect of the IBC over Electricity Laws.. 22 (a) Arrival of IBC............................................. 22 (b) Interplay in between IBC and Electricity Laws.................................................................. 24 (c) Principles Laid Down by the Supreme Court........... 29 (ii) Notice of CIRP and non-submission of claims......... 35 (a) Nature of Electricity dues under the IBC................ 35 (b) Whether Public Announcement is sufficient Notice under IBC...................................................... 36 (c) Effect of non-filing of claim under CIRP................... 38 (iii) Maintainability of demand notices raised for pre-CIRP period..................................................... 39 VI. Conclusion...................................................... 43 VII. Order............................................................. 47 1. Both writ petitions, filed under Article 226 of the Constitution of India, arise out of a similar grievance, wherein the respective petitioners challenge the demand notices issued to them towar....
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.... sources for safe operations, specifically indicating that one such source was being drawn through the tertiary winding of Inter-Connecting Transformer-II (hereinafter referred to as "ICT-II"). Subsequently, an Electrical Energy Supply Agreement dated 18.04.2015 came to be executed between the petitioner and Respondent No. 1. 6. In continuation thereof, the ICT-II was charged on 02.10.2015 and allegedly utilised as a source of auxiliary power. The Uttar Pradesh Electricity Regulatory Commission (UPERC) declared commercial commissioning of the transmission lines and substations with effect from 27.10.2017, which was communicated by UPPTCL to the petitioner on 19.07.2018. 7. Subsequently, the company has gone into the insolvency as the National Company Law Tribunal (hereinafter referred to as the "NCLT"), Allahabad Bench, vide its order dated 06.07.2020 initiated the CIRP against the company under the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "IBC, 2016"). 8. During the CIRP, Resurgent Power Ventures Pvt. Limited submitted a resolution plan on 19.07.2021, which was approved by the Committee of Creditors (hereinafter referred to as "Co....
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....ling a petition under Section 7, IBC before NCLT, New Delhi, Principal Bench. Ld. NCLT admitted the petition filed by the SBI on 26.07.2017 and appointed an Interim Resolution Professional (hereinafter referred to as "IRP") while imposing moratorium as per procedure prescribed under IBC. 14. The IRP made public announcement inviting claims from all creditors as per procedural requirement under IBC. Subsequently, on 03.02.2018, TSL submitted its resolution plan, which was approved by the CoC on 20.03.2018. The NCLT approved TSL's resolution plan vide its order dated 15.05.2018. Following this approval, TSL acquired the control and business of BSL on 18.05.2018, and BSL's name was changed to Tata Steel BSL Limited (TSBSL) on 27.11.2018. The NCLT's approval was upheld after appeals against resolution plan got dismissed by the NCLAT on 10.08.2018 and the Supreme Court on 22.02.2021. Eventually, TSBSL was wholly amalgamated with TSL pursuant to the order dated 29.10.2021 passed by the learned NCLT, Mumbai Bench, with effect from 11.11.2021. 15. As appeared from records, on 11.03.2019, the erstwhile TSBSL officially intimated Respondent No. 2 about the completion of the CIR....
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.... impugned recovery notice (RC No. 36) demanding the amount under the Uttar Pradesh Revenue Code (hereinafter referred to as "Revenue Code"). 19. Upon receipt of the recovery citation, the petitioner sent a letter dated 20.02.2025, seeking a month-wise and year-wise calculation of the differential amount, disclosure of the precise basis for reclassification to (HV-1) category, and reiterating the applicability of the "clean slate" principle under the IBC, which makes the pre-CIRP unclaimed dues extinguished. Thereafter, on 21.03.2025, Respondent No.2 issued the demand notice, being Notice No. 10013, while stating that the department had not been formally informed of the CIRP and requiring the petitioner to undertake a formal change of name. Thereafter, the petitioner addressed letters dated 03.04.2025 to both PVVNL and the Tehsildar, placing on record the earlier intimations, including those made since 2019, and disputing the initiation of recovery proceedings. II Submissions on behalf of Petitioners 20. Having heard Sri Anurag Khanna, learned Senior Advocate assisted by Sri Varad Nath, as well as Ms. Sadhavi Kumar, learned counsel for the petitioner in Writ C No, 19391 of ....
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....elweiss Asset Reconstruction Company Ltd, where the Hon'ble Supreme Court held in para 95(i) that once a Resolution Plan is approved, a creditor cannot initiate proceedings for recovery of claims which are not part of the Resolution Plan. Therefore, all claims except provided in the plan shall stand permanently extinguished." (emphasis supplied) 23. It was further submitted that after the approval of the resolution plan by the NCLT, respondent authorities conducted the inspection on 17.10.2022 at the premises of the petitioner. Later, respondents raised a demand notice dated 09.01.2023 demanding payment from 02.10.2015, which cannot be permissible in law as demand is raised for the pre-CIRP period. 24. It was submitted by the learned counsel that the petitioner has already discharged liabilities which pertain to the period after approval of the resolution plan, and the dispute in the present petition is confined to the demand raised for the pre-resolution period. Learned counsel relied upon Section 31 of the IBC, 2016 to buttress his submissions that the petitioner is not liable for the demand related to the pre-CIRP duration. 25. Sri Devashish Bharuka, learne....
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....tion 31 of the IBC makes the approved resolution plan binding on all stakeholders, including governmental and statutory authorities, and all claims not forming part of the approved resolution plan stand extinguished upon its approval. It is further emphasized that CIRP proceedings are in rem in nature and bind all stakeholders without requiring individual intimation. Reliance in this regard is placed on the judgement of the Supreme Court in RPS Infrastructure Ltd. v. Mukul Kumar (2023) 10 SCC 718. 31. It was further submitted that the respondents had acted arbitrarily in both matters. In Writ C No. 19391 of 2023, the petitioner's electricity connection was reclassified from industrial to commercial without any cogent basis or supporting material, and despite repeated requests dated 16.02.2022 and 02.03.2023, no meaningful breakup of the demand was supplied to the petitioner. In Writ C No. 17846 of 2025, similar arbitrariness is alleged in the assessment of demand without proper disclosure or transparency, rendering the impugned actions violative of principles of natural justice. 32. Further, it was submitted that CIRP being in rem proceedings, all stakeholders are deemed to h....
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....7. Heard Sri Sambhu Chopra, learned Senior Advocate assisted by Sri Narendra Kumar Tiwari, learned counsel for the respondents in Writ C No.-19391 of 2023 and Sri M. C. Chaturvedi, learned Senior Advocate assisted by Sri Ravi Anand Agarwal, learned panel counsel for respondents in Writ C No.-17846 of 2025. Learned counsel for the respondents in both petitions submitted that the writ petitions are misconceived and the impugned demands are fully justified in law as well as on facts. It was contended that the reliance placed by the petitioners on the doctrine of "clean slate" under the IBC is wholly misplaced, inasmuch as statutory dues and electricity charges owed to public authorities cannot be extinguished in the manner suggested. In support of this submission, counsel appearing for respective respondents, relied upon the judgments of the Supreme Court in Telangana State Southern Power Distribution Company Ltd. v. Srigdhaa Beverages, (2020) 6 SCC 404 and State Tax Officer v. Rainbow Papers Limited (2023) 9 SCC 545. 38. Learned counsel further submitted that a conjoint reading of the principles in above-mentioned judgments along with the provisions of the Electricity Act, 2003 an....
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....d metering arrangement. The same was discovered during inspection conducted on 17.10.2022, wherein it was found that electricity was being consumed through an undisclosed arrangement and was accordingly assessed. 44. It was submitted by the counsel that such unauthorised consumption continued for a prolonged period and liability for electricity consumption commenced from 02.10.2015 as it was duly reflected in the impugned demand notices. The inspection took place after approval of the resolution plan on 15.06.2022, the petitioner cannot rely upon the resolution plan to avoid liability for actual consumption. 45. It was further submitted that the petitioner continued correspondence in its own name even after the alleged takeover and also made payments under its earlier identity, thereby demonstrating continuity of liability. It was therefore submitted that the petitioner was attempting to evade statutory liability under the guise of insolvency proceedings, which is impermissible in law. 46. Regarding Writ C No. 17846 of 2025 learned counsel for the respondent submitted that the impugned demands were raised strictly in accordance with statutory provisions governing electrici....
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....riff category. It was further submitted that no crystallised claim existed during CIRP so far as the respondents are concerned, and therefore there was no occasion to file any claim before the Resolution Professional. It was also submitted that no notice of CIRP was received by the respondent authorities. 52. Learned counsel for the respondents further submitted that since the erstwhile company continued in the same name even after approval of the resolution plan by the NCLT - and its subsequent affirmation by the Appellate Tribunal and dismissal of the special leave petition by the Supreme Court - the liability is deemed to have continued. Consequently, the petitioner, being the successor entity, cannot avoid such liability. 53. Sri M.C. Chaturvedi, learned Senior Advocate appearing for the respondent authorities, further submitted that since the electricity connection was originally granted in the industrial category (HV-1) to BSL, the petitioner was not justified in utilising it for commercial purposes. It was submitted that this misuse was discovered during an inspection conducted on 13.01.2023, and accordingly the demand was raised. It was further submitted that once una....
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....g for determination in these petitions. (i) Overriding Effect of the IBC over Electricity Laws. (a) Arrival of IBC 58. In the history of economic law reforms in India, bringing IBC holds a distinct place, as it introduced a consolidated, time-bound framework for insolvency resolution, replacing the earlier fragmented regime of multiple forums and different laws. The legislative design of the IBC prioritises resolution and makes liquidation as a last resort; its main objective is to protect the economic value of the company and keep the corporate debtor as a going concern while under CIRP. 59. The basic feature of insolvency law framework is the finality accorded to an approved resolution plan by the Statute, including necessary provisions to minimize interference with the final resolution plan. Under IBC, once a plan is approved by the adjudicating authority, it is intended to bind all stakeholders - including governmental and statutory authorities - to ensure that the successful resolution applicant is not burdened with unforeseen or belated claims relating to the period preceding the resolution process. 60. Generally, the "clean slate principle" is being used to ex....
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....sides are ad idem that the grievance in the present petitions is confined to demand notices raising claims pertaining to the pre-CIRP period, the consideration is accordingly limited to the legality and enforceability of such demands arising prior to the approval of the resolution plan. 65. Relevant provisions of the Electricity Act, 2003 require consideration, and in this regard, counsel appearing for respondent authorities relied upon Sections 173 and 174 of the Electricity Act, 2003, which are reproduced below: "173. Inconsistency in laws.-Nothing contained in this Act or any rule or regulation made thereunder or any instrument having effect by virtue of this Act, rule or regulation shall have effect in so far as it is inconsistent with any other provisions of the Consumer Protection Act, 1986 (68 of 1986) or the Atomic Energy Act, 1962 (33 of 1962) or the Railways Act, 1989 (24 of 1989). 174. Act to have overriding effect.- Save as otherwise provided in section 173, the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue o....
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.... the IBC is designed to confer finality upon the resolution process by making the approved resolution plan binding on all stakeholders, and simultaneously through its overriding clause, it ensures that nothing should unsettle matters concluded therein to create problem for the resolved company after completion of CIRP. The legislative intent is thus to create a self-contained and comprehensive framework where all claims against the corporate debtor are required to be addressed during CIRP period only, so that upon approval of the resolution plan, the rights and liabilities stand conclusively determined. 70. We also consider it necessary to refer legal maxim, "leges posteriores priores contrarias abrogant", which means wherever two enactments are irreconcilably inconsistent, the later enactment must prevail to the extent of such inconsistency. This principle of interpretation of statutes is generally applicable in a situation where two enactments appear to operate in the same field but got enacted in different timeline. It is a settled rule of statutory interpretation is that where there is a conflict between two statutes, the Court must first attempt a harmonious construction, h....
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....tutory character of electricity dues or the provisions of the Electricity Act cannot override the express mandate of the IBC. As a subsequent enactment, the IBC provides a comprehensive insolvency framework while accounting for all other existing laws. Therefore, the claims in question, which relate to any period prior to approval of the resolution plan are to be considered as extinguished. (c) Principles Laid Down by the Supreme Court 77. The Supreme Court in Essar Steel India Ltd. Committee of Creditors v. Satish Kumar Gupta (2020) 8 SCC 531, held that: "107. For the same reason, the impugned NCLAT judgment [Standard Chartered Bank v. Satish Kumar Gupta, 2019 SCC OnLine NCLAT 388] in holding that claims that may exist apart from those decided on merits by the resolution professional and by the Adjudicating Authority/Appellate Tribunal can now be decided by an appropriate forum in terms of Section 60(6) of the Code, also militates against the rationale of Section 31 of the Code. 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 u....
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.... that the plan becomes binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. The legislative intent behind this is to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans would go haywire and the plan would be unworkable. ... 102. In the result, we answer the questions framed by us as under: 102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect t....
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....Supreme Court held as follows: "11. Admittedly, the claim in respect of the demand which is the subject-matter of the present proceedings was not lodged by Respondent 2 after public announcements were issued under Sections 13 and 15 IBC. As such, on the date on which the resolution plan was approved by the learned NCLT, all claims stood frozen, and no claim, which is not a part of the resolution plan, would survive." 82. In this regard, reference may be made to Paschimanchal Vidyut Vitran Nigam Ltd. (supra), wherein the Supreme Court considered the status of electricity dues in the context of the IBC and held that the IBC overrides the provisions of the Electricity Act, 2003, as section 238 of the IBC contains a non-obstante clause. The Supreme Court distinguished findings of Rainbow Papers (supra) and further held that: "53. Rainbow Papers [STO v. Rainbow Papers Ltd., (2023) 9 SCC 545] did not notice the"waterfall mechanism" under Section 53-the provision had not been adverted to or extracted in the judgment. Furthermore, Rainbow Papers [STO v. Rainbow Papers Ltd., (2023) 9 SCC 545] was in the context of a resolution process and not during liquidation. Section....
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....ectricity Dues under the IBC 83. Under IBC, the concept of a claim is intentionally broad, and it forms the foundation for determining the scope of liabilities in insolvency proceedings. Section 3(6) IBC defines a claim. The definition is significant, as it enables diverse liabilities, including statutory dues on corporate debtor. Thus, the statutory character of electricity dues as a claim, by itself, is not excluded from the ambit of the IBC, but once a resolution plan is approved, any claim pertaining to the period prior thereto, if not forming part of the resolution plan, can be claimed after the implementation of the resolution plan or the same is extinguished is to be determined. 84. In the light of IBC framework and judicially established principles, it cannot be accepted that liabilities pertaining to a period prior to the resolution can be permitted to resurface after conclusion of the CIRP, merely because they were not earlier quantified, and thereby burdening the resolved corporate entity. Permitting such an approach would defeat the finality attached to the resolution plan and undermine the very objective of revival by exposing the corporate debtor to uncertain an....
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....ming stakeholders of the initiation of the CIRP. The provision mandates a public announcement containing complete particulars of the corporate debtor, the interim resolution professional, and significantly, the last date for submission of claims, along with consequences of non-compliance. Such announcement is required to be made in the manner prescribed under the regulations. 88. The nature of CIRP proceedings as proceedings in rem and the effect of public announcement have been considered by the Supreme Court in RPS Infrastructure Ltd. v. Mukul Kumar (2023) 10 SCC 718. Supreme Court held that: "21. The second question is whether the delay in the filing of claim by the appellant ought to have been condoned by Respondent 1. The IBC is a time bound process. There are, of course, certain circumstances in which the time can be increased. The question is whether the present case would fall within those parameters. The delay on the part of the appellant is of 287 days. The appellant is a commercial entity. That they were litigating against the corporate debtor is an undoubted fact. We believe that the appellant ought to have been vigilant enough in the aforesaid circumstances....
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....ior to approval of the resolution plan and the claims could have been filed if the respondent authorities were vigilant, that demand would not be sustainable. However, to the extent demand arises from detection of unauthorised consumption revealed during inspection, and the same is for the consumption by the resolved company and after resolution plan got implemented, the dues are liable to be paid. 94. Similarly, in Writ C No. 17846 of 2025, the demand is based on inspection indicating excess load and misuse of tariff category. To the extent the demand pertains to continuing usage or post-resolution liability, it would not be hit by the resolution plan. However, any component of the demand related to the pre-CIRP period, which did not form part of the approved resolution plan, would liable to be set aside due to the same reasoning. 95. We are also of the view that even otherwise, the exercise of statutory power must conform to the principles of natural justice. In the present case, the grievance regarding not providing proper breakup and lack of clarity in the impugned demands assumes significance and the authorities are directed to act with fairness and transparency while ma....
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.... the commercial wisdom of the CoC is decisive in matters relating to the resolution of the corporate debtor and is not ordinarily subject to judicial interference. In Torrent Power Ltd., (supra) the Supreme Court has held that the commercial wisdom of the CoC is paramount. It has further observed that: "12.5. The issue is no longer res integra, the law having been settled that the commercial wisdom of the CoC enjoys primacy and cannot be supplanted by judicial review. Neither the NCLT, nor the NCLAT nor even this Court is empowered to substitute its assessment in place of the commercial decision arrived at by a requisite majority of the CoC. 13. The appeals before us typify the growing strategic use of the judicial system by unsuccessful resolution applicants, who seek to reopen almost every commercial decision under the guise of procedural impropriety. This converts the corporate resolution process into a protracted adversarial contest and erodes the value of the Corporate Debtor. Such an approach incentivises delay, rent-seeking, and strategic obstruction and is fundamentally inconsistent with the economic logic and statutory design of the IBC. 13.1. In....
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....38 IBC, which is a subsequent legislation containing a clear and unambiguous non obstante provision giving it primacy over all other laws in case of inconsistency. Accordingly, even though the Electricity Act occupies a special field and contains its own overriding provision, the legislative intent of Section 238 of the IBC ensures that, in matters of insolvency, the provisions of the IBC shall prevail notwithstanding any inconsistency with the Electricity Act, including Sections 173 and 174 thereof. 102. Thus, we are of the view that while the respondents are not precluded from exercising statutory powers in respect of post-resolution discoveries or continuing liabilities, they cannot be permitted to enforce claims which stand extinguished by operation of law under the IBC. The impugned demands are required to be examined and segregated accordingly for determining their enforceability wherever the same is not done. Supreme Court in Paschimanchal Vidyut Vitran Nigam Ltd. (supra) has held the primacy of IBC over electricity dues and as per this principle, all submissions made by respondents regarding claiming primacy of Electricity Laws over IBC are unacceptable. 103. The resp....
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....eafter approved by NCLT and have attained finality. 108. In such circumstances, the legal consequence flowing from Section 31 of the IBC, 2016 is that the approved resolution plan is binding on all stakeholders, including statutory authorities, and operates to extinguish all claims which were not filed during CIRP or which did not form part of the approved resolution plan. The said provision, read with the overriding effect contained in Section 238 of the Code, leaves no doubt that any attempt to enforce pre-CIRP claims outside the framework of the resolution plan is impermissible in law. Approved resolution plan conclusively determines all claims against the corporate debtor, leaving no scope for the enforcement of any claim outside the approved plan. 109. The Supreme Court in Essar Steel India Ltd. (supra) has clearly held that the objective of the IBC is to ensure that the successful resolution applicant takes over the corporate debtor on a clean slate, which is free from past liabilities except those specifically incorporated in the resolution plan. This principle has been reaffirmed in Ghanshyam Mishra & Sons (P) Ltd. (supra), wherein it has been categorically held that ....