IN THE HIGH COURT AT CALCUTTA
PRAKASH SHRIVASTAVA, RAJARSHI BHARADWAJ, JJ.
West Bengal State Electricity Distribution Company Limited – Appellant
Versus
Vasavi Industries Limited and Another – Respondents
MAT No. 646 of 2022, CAN No. 1 of 2022
Decided On : 12-07-2022
Electricity Act, 2003 - Section 56 - Insolvency and Bankruptcy Code, 2016 - Section 31(1) - Challenging order - Appellant has been directed to restore electricity supply to respondent no. 1 herein (writ petitioner) only on reconnection charges without insisting upon deposit of its previous claims or past dues of electricity and other charges which had resulted into disconnection - Held, Court find that right of appellant to recover the amount which was due prior to the resolution plan had extinguished on approval of resolution plan - Appellant is now required to provide the electricity connection to respondent in terms of Electricity Act, 2003, hence, learned Single Judge has not committed any error in allowing writ petition and issuing requisite direction in this regard- Court find no error in order of learned Single Judge, hence, no case for interference is made out - dismissed
JUDGMENT :
PRAKASH SHRIVASTAVA, J.
1. This appeal is at the instance of the Electricity Distribution Company, i.e. the respondent in the writ petition, challenging the order of the learned Single Judge dated 23rd of March, 2022 whereby WPA 1936 of 2022 has been allowed and appellant has been directed to restore the electricity supply to the respondent no. 1 herein (writ petitioner) only on the reconnection charges without insisting upon deposit of its previous claims or past dues of electricity and other charges which had resulted into disconnection.
2. The respondents, herein, had filed the writ petition with the plea that the respondent no. 1 is an ISO9001 certified company engaged in the manufacturing of iron, steel and ferro alloy products. The matter relates to the electricity connection of the plant at Bishnupur, West Bengal which was shut down in 2014. The respondent no. 1 was placed under Corporate Insolvency Resolution Process (for short ‘CIRP’) under the Insolvency and Bankruptcy Code, 2016 (for short ‘the IBC’) pursuance to which, the respondent no. 1 was taken over by the new management through respondent no. 2 who was a successful resolution applicant. For putting back the respondent no. 1 in operation by the new management, new electricity connection was required. Further case in the writ petition was that the electricity charges of the Damodar Valley Corporation (for short ‘DVC’) were on the lower side and recently, the respondents had come to know that the Government of West Bengal had decided that all industrial parks in the State will be supplied power by the appellant by the matching tariff of DVC. The respondents had approached the appellant and had submitted the representations for making the power available at the competitive rate. Further case of the respondents was that the appellant had orally refused to grant power supply or grant a No Objection Certificate (NOC) till the entire earlier unpaid amount are paid by the respondent no. 1. In the aforesaid background, the writ petition was filed by the respondents with a prayer to direct the appellant to provide electricity connection to the respondent no. 1 at the competitive rate or to issue NOC to the respondents to seek power supply from the DVC or any other source.
3. Learned Single Judge, after hearing learned counsels for both the parties, has noted that CIRP was initiated and a resolution plan was passed by the NCLT on 10th of November, 2021. Learned Single Judge has found that upon approval by the adjudicating authority, the resolution plan becomes binding on the corporate debtor and its employees, members, creditors, guarantors and other stake-holders involved in the resolution plan. It has further been found that Section 238 of the IBC has overriding effect. After taking note of the judgment of the Hon’ble Supreme Court on the point. Learned Single Judge has found that the dues payable to the appellant squarely fall within the ambit of “operational debt” as defined by the IBC and the dues of the appellant relate back to the period immediately prior to the disconnection of the electricity supply, which took place on 29th of November, 2014, i.e., before the enactment of the IBC. Hence, the right of the appellant to recover got extinguished by operation of Section 31(1) of the IBC. On reaching to the above conclusion, learned Single Judge has allowed the writ petition.
4. Submission of learned counsel for the appellant is that the appellant was not permitted to file affidavit-in-opposition before the learned Single Judge. He has further submitted that in the resolution plan, the relief relating to grant of power connection was not allowed and in terms of the earlier agreement dated 15th of November, 1997, the appellant had right to disconnect the electricity on non-payment of electricity charges. Further referring to the West Bengal Regulatory Commission (Electricity Supply Code) Regulation, 2013, he has submitted that the respondent can get the new conn
Commissioner of Income Tax (Central)
Indian Young Lawyers Association and Others vs. State of Kerala and Others
Innoventive Industries Limited vs. ICICI Bank and Another
Municipal Corporation of Greater Mumbai vs. Abhilash Lal and Others
The 'Clean Slate' theory established by the Supreme Court in insolvency cases extinguishes all claims not included in the Resolution Plan, impacting the rights of creditors and other parties involved....
Pre-CIRP debts are extinguished upon approval of the Resolution Plan under the IBC, and the pendency of an appeal does not automatically stay the implementation of the approved Resolution Plan.
Approved resolution plan entitles corporate debtor to new electricity connection without liability for pre-CIRP dues of third-party lessor; IBC prevails over electricity laws, ensuring clean slate an....
Claims against a successful resolution applicant for dues not presented during CIRP are extinguished after approval of the resolution plan, confirming the clean slate principle.
Purchaser in going concern liquidation sale on 'as is where is' basis liable for pre-existing electricity dues; cannot seek waiver under IBC post-liquidation closure despite Section 53 distribution.
Past liabilities of a corporate debtor cannot be imposed on the auction purchaser when seeking a new connection, based on the clean slate principle under insolvency law.
Login now and unlock free premium legal research
Login to SupremeToday AI and access free legal analysis, AI highlights, and smart tools.
Login
now!
India’s Legal research and Law Firm App, Download now!
Copyright © 2023 Vikas Info Solution Pvt Ltd. All Rights Reserved.