The approval of a resolution plan in an insolvency proceeding does not automatically discharge the liabilities of the directors or personal guarantors. The liability of the guarantor is co-extensive with that of the corporate debtor, and the resolution plan does not absolve the guarantor of their liability.

JUDGMENT :

1. Heard Sri Ashish Kumar Singh learned counsel for the petitioner, Sri Pranjal Mehrotra learned counsel for the respondent Nos.1 & 2 and learned Standing Counsel for the State respondents.

2. The present writ petition is directed against the notice of demand dated 30.06.2022 under Section 3 read with Section 5 of the U.P. Government Electrical Undertakings (Dues Recovery) Act, 1958, for recovery of electricity dues of the Company namely M/s Trimurti Concast Pvt ltd, a Company incorporated under the Companies Act, 1956. The petitioner herein is one of the two Directors of the aforesaid Company. Another Director Sri Ashok Sharma s/o Avtar Chand Sharma is also the noticee alongwith the petitioner herein, as indicated in the impugned notice itself.

3. The Company namely M/s Trimurti Concast Pvt ltd is in default of the dues of the respondent corporation and, as such, would be addressed as 'defaulter company' hereinafter.

4. The brief facts relevant to decide the controversy at hand are that on an application/petition filed by the M/s Ram Alloys Casting Pvt ltd under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short “IB Code” 2016) and the rules framed thereunder, the defaulter company went into insolvency. At the time of filing of the present petition, insolvency resolution process with respect to the defaulter company (which may also be mentioned as the 'Corporate debtor' hereinafter) had already been commenced. By an order dated 22.3.2022, the National Company Law Tribunal (in short NCLT) had approved the resolution plan and on the application filed by the respondent no.1 Corporation namely Paschimanchal Vidyut Vitran ltd for its claim of electricity dues, it was directed by the Tribunal that since the approval of resolution plan was under consideration, the claim as prayed be considered before the approval of the resolution plan by the adjudicating authority. The claim of the applicant Corporation, thus, was to be considered along with other Operational Creditors for whom the resolution applicant had made specific provisions in the resolution plan.

5. It is contended in the writ petition that after the order dated 22.3.2022 passed by NCLT Allahabad, the electricity connection of the Consumer Company (defaulter company) namely M/s Trimurti Concast Pvt ltd has been disconnected permanently on 30.08.2022, in continuation with the temporary disconnection made on 9.7.2019. The recovery is sought to be made by the demand notice dated 30.06.2022 issued in the name of both the Directors of the defaulter company, which is subject matter of challenge herein.

6. A copy of the demand notice had been forwarded to the District Magistrate, Muzzaffarnagar on 02.08.2022 in FORM-2 by the Executive Engineer, Paschimanchal Vidyut Vitran Nigam Ltd (PVVNL), for making recovery of dues as arrears of land revenue.

7. It was argued by the learned counsel for the petitioner that the defaulter Company is a Corporate debtor within the meaning of IB Code, 2016 since the date of commencement of the insolvency proceedings, which is 24.12.2019. With the approval of the resolution plan and the recognition of the respondent no.1 Corporation (PVVNL) as Operational creditor, the dues of the respondent Corporation were to be settled by making specific provision in the resolution plan, at the time of issuance of the demand notice under challenge. It was urged that once the Company went into insolvency, the outstanding electricity dues towards the defaulter company being Corporate debtor could not have been recovered from its Directors. No steps can be taken for recovery of any kind of dues of the Company (Corporate debtor) by adopting any other mode under any other provision, and its Directors who are otherwise not personally liable, cannot be subjected to recovery.

8. The contention is that the Insolvency Resolution plan approved by the NCLT is binding on the Corporate debtor as also all other Stakeholders. The moratorium period under Section 14