TaxTMI 
TaxTMI 
2026 (6) TMI 1426
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....harma, Member (Judicial) These two Company Appeals are listed for admission as fresh, along with the respective urgent listing applications, being IA No. 739/2026 & IA No. 741/2026. Heard Learned Counsel for the Appellant on the grounds of urgent hearing application, and upon being satisfied with the reasons for urgency as expressed by the Learned Counsel for the Appellants. The urgent hearing applications would stand allowed. 2. Besides the urgent hearing application, these Company Appeals are also accompanied with the exemption applications, being IA No. 737 & 740/2026, as well as, exemption applications, being IA No. 742 & 744/2026 respectively, as it has been respectively preferred in the two Company Appeals, praying for exemption in placing the certified copy of the impugned order on record, as well as for the exemption from supplying the dim and legible copies. So far as the exemption application is concerned for supplying the certified copy of the impugned order is concerned, the Appellants are directed to place the certified copy of the impugned order by the next date fixed. 3. The Company Appeals are accompanied by stay applications being IA No. 738/2026 & IA No. ....
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....will not be considered". This was challenged in CA (Ins) No. 87/2023 which was dismissed on 04.10.2023 as there is no merit in the Company Appeal. The same was challenged before Supreme Court in Civil Appeal No. 8178/2023. Supreme Court allowing the Appeal observed that after permitting to file rejoinder, bank must be permitted to rely on assertions made in rejoinder, but not permitted. NCLT in the meantime decided the Section 7 application. So, Supreme Court has remitted back the matter to NCLT for fresh consideration of Section 7 application as preferred by Respondent No. 1 herein. Bearing on the judgment of Supreme Court in Civil Appeal No. 8178/2023, CA (AT) (Ins) No. 53/2024 which was preferred challenging the Section 7 was rejected and closed. Consequent to which the proceedings revived back and the same has now been re-adjudicated by the impugned order of 15.05.2026, that has been rendered in CP (IB) No. 205/7/HDB/2021. 7. The Learned Counsel for the Appellant had primarily harped upon the implication of Section 17 of the Electricity Act, alleging that it would be creating a restraint on licensee in transfer of electricity distribution license as contemplated under the pr....
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....rned Counsel for the Appellant is based upon the fact that, the provisions of the Electricity Act, which contains in it the provision under Section 174 of Electricity Act, would be giving it an overriding effect, as it would be an independent existence, overriding the provisions contained under Section 238 of the I&B Code, which prescribes for that the provisions of I&B Code to have an overriding effect. 9. On the other hand, this question has been answered to the contrary by the Learned Counsel for the Respondent, contending thereof that, the arguments extended by the Learned Counsel for the Appellant, that the provisions contained under the Electricity Act, would be having an overriding effect in the light of the provisions contained under Section 174 of the Electricity Act. The Learned Counsel for the Appellant in answer to the said argument has laid more reference to a judgment reported in 2023 Vol 10 SCC Page 60, wherein the Hon'ble Apex Court was dealing with the situation, as to what would be the interplay of the two overriding effects, particularly the provisions contained under Section 173 & 174 of the Electricity Act, to be read with Section 238 of I&B Code and in ....
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.... submit its claims (concerning customs dues/operational debt) in terms of the procedure laid down, in strict compliance of the time periods prescribed under IBC, before the adjudicating authority. 57.3. In any case, the IRP/RP/liquidator can immediately secure goods from the respondent authority to be dealt with appropriately, in terms of IBC." 57. Similarly, in Duncans Industries Ltd. v. AJ Agrochem [Duncans Industries Ltd. v. AJ Agrochem, (2019) 9 SCC 725 : (2019) 4 SCC (Civ) 669], Section 16-G of the Tea Act, 1953 which required prior consent of the Central Government (for initiation of winding-up proceedings) was held to be overridden by IBC. In a similar manner, it is held that Section 238 IBC overrides the provisions of the Electricity Act, 2003 despite the latter containing two specific provisions which open with non obstante clauses (i.e. Sections 173 and 174). The position of law with respect to primacy of IBC, is identical with the position discussed in ABG Shipyard Liquidator [ABG Shipyard Liquidator v. Central Board of Indirect Taxes & Customs, (2023) 1 SCC 472 : (2023) 1 SCC (Civ) 251] and Duncans Industries [Duncans Industries Ltd. v. AJ Agrochem, (2....
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.... was sworn by the Director of the IPCL, who had executed the Corporate Guarantee on behalf of the Corporate Debtor and particularly the covenants contained therein merely existence of a different legal opinion regarding the applicability of Regulation 5.13.2 of WBERC Regulations, itself cannot render the transaction to be fraudulent or coercive. 13. So, we are of the view that, at this stage looking to the controversy involved in consideration, we do not find that it's a fit case which calls for grant of the interim order. The stay applications being IA No. 738/2026 & 743/2026 would stand rejected. Let the matter itself be considered on its merit after the exchange of pleadings. The Respondents may file the counter affidavit within a period of three weeks. List these Appeals on 17.07.2026. As per: Mr. Jatindranath Swain, Member (Technical) With utmost humility, I would like to differ from the conclusion drawn by my learned colleague, Member (Judicial) on the interim stay applications IA No. 738 & 741 of 2026 filed by the appellants in the respective company appeals CA(AT)(CH)(Ins) No. 262 & 263 of 2026. 2. At the cost of repetition, I would like to draw a brief outli....
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....BC has not been determined by Ld. NCLT. ii. The corporate guarantee was executed without prior written consent of WBERC, in contravention to regulation 5.12.3 of WBERC (Licensing, and conditions of license) Regulations, 2013 and since it is a contract prohibited by the said regulation, which has a penal clause, it has to be considered as void and unenforceable under section 23 read with section 10 of Indian Contract Act, 1872, as held by Hon'ble Supreme Court in Asha John Divianathan v. Vikram Malhotra [2021 SC Online SC 147] Mannalal Khetan v. Kedarnath Khetan [AIR 1977 SC 536]. Accordingly, no debt can rise from a void instrument and hence since no debt is payable, section 7 petition is not maintainable. iii. Further, the operation of the corporate guarantee is expressly confined by clauses 2.1, 2.2 and 2.7 to the non-regulated assets and the surplus from regulated assets of IPCL and therefore, entire assets and operations of IPCL which include the regulated assets and which are not the part of the corporate guarantee, cannot be put under CIRP, pending in-depth clarification on this issue, because it will involve putting upon the corporate debtor, a liability be....
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....ontext, it was ruled that section 173 and 174 of Electricity Act will not override section 238 of IBC. The case in the instant case is entirely different; it is not about recovery of the dues of a distribution licensee. It is about admission of a distribution licensee into CIRP on account of invocation of a corporate guarantee which prima facie appears to have been executed by the said distribution licensee (CD) against the provisions of the electricity act and where the corporate guarantee executed covers only the non-regulated assets and the surplus from the regulated assets. Ld. NCLT has not dwelt upon these aspects of whether the CD had the authority to execute the corporate guarantee and whether the entire CD can be brought under CIRP when only non-regulated assets have been pledged. Instead, it has repeatedly harped upon the fact that the CD has willingly executed the corporate guarantee knowing fully well the prohibitions provided in the Electricity Act and that it has admitted the same on multiple occasions and it has indulged in multiple litigations and on that account, it has determined the corporate guarantee to be a valid document primarily based on the conduct of IPCL,....