The court affirmed the rights of operational creditors and clarified that their outstanding dues cannot be extinguished post-CIRP unless properly included in the resolution plan, emphasizing the need for fair treatment and transparency.

ORDER

This petition was filed for a writ of certiorarified mandamus to quash the demand notice of the respondents and to further direct the respondents to provide the electricity connection.

THE FACTS:

2. The case of the petitioner is as below:

a) The petitioner herein is a public limited company, and it is also registered under the MSME Act, 2006. It had availed financial assistance from M/s. Indian Overseas Bank (henceforth IOB). However, it suffered huge business loss owing to which it could not service its loan-liability to the IOB, and as to be expected its loan was notified as NPA by the lender. Thereafter on 24.03.2017, the IOB assigned the debt of the petitioner-company to M/s. Alchemist Asset Reconstruction Company Ltd., (hereinafter referred to as 'Financial Creditor/FC).

b) The assignee of the loan, as a Financial Creditor moved the NCLT with an application under Sec.7 of the IBC against the petitioner- company for initiating a Corporate Insolvency Resolution Process (henceforth CIRP). The statutorily prescribed course of action commenced, accordingly an Interim Resolution Professional (IRP) was appointed, Committee of Creditors (IOB) was constituted, and it approved the resolution plan and submitted it, and on 06.12.2021 it was approved by the Adjudicating Authority, the NCLT.

c) In terms of the resolution plan, only the financial creditor of the petitioner was partially benefited, since the value of the assets of the petitioner was far short of the value of the liability it faced. So far as Operational Creditors are concerned, the resolution plan directed that they would be paid pro rata at 1% of the value of their claim. The petitioner accordingly redeemed itself from the debt-trap it faced.

d) While so, TANGEDCO, to which the petitioner owed arrears of unpaid electricity charges from June, 2019 to a tune of Rs.32,86,061/- issued a demand notice dated 19.01.2022 for the said sum. The petitioner had replied stating that it had already gone through CIRP and as per the Resolution Plan approved by the NCLT, all the outstanding dues of the company not falling within the purview of the Resolution Plan stood extinguished. And, since the demand of the TANGEDCO was not met, it promptly disconnected the electricity service connection of the petitioner.

e) Thereafter, on 24.2.2022, the petitioner applied for a temporary connection of the LT Energy. TANGEDCO, however, declined to provide the electricity service connection on the ground that the petitioner needs to pay the arrears of electricity consumption charges to it.

f) Contending that the demand of arrears of electricity charges runs counter to the spirit behind the IBC engineered Resolution Process, the claim of the TANGEDCO itself is arbitrary and illegal, the petitioner challenges it in this proceeding.

3. TANGEDCO has filed its counter, wherein it essentially highlighted that, (a) for non-payment of current consumption charges, the electricity connection provided to the petitioner was disconnected on 08.08.2019, well prior to the commencement of insolvency proceedings; and (b) Regulation 17 of the Electricity Supply Code has made it mandatory for an applicant for fresh electricity service connection to pay the entire arrears of electricity charges.

THE ARGUMENTS

4. Mr.Om Prakash, the learned senior counsel for the petitioner argued that, for the TANGEDCO to sustain any claim against the petitioner, it should have made its claim as an Operational Creditor during the Resolution Process in the CIRP proceedings. It, however, did not choose to make a claim. Now, when once the Resolution Plan is approved by the NCLT on 06.12.2021, all the unclaimed outstanding liability of the petitioner company has extinguished, and the petitioner starts a new innings with the score board reading zero for none. In Ghanashyam Mishra & Sons