Shree Kedarnath Sugar & Agro Products ... vs Karnataka Power Transmission ...

IN THE MATTER OF: Shree Kedarnath Sugar and Agro Products Ltd. ...Appellant

Versus Karnataka Power Transmission Corporation Ltd. & ...Respondents Ors.

Present: For Appellant: Mr. Rony O John, Mr. Deep Roy, Mr. Piyush Swami, Mr. Dhaval Savla, Advocates For Respondent: Mr. Saurabh Agrawal, Mr. Komal Mundra, Ms. S. Sriranga, Ms. Sumana Naganand and Ms. Aspoorthi, Advocates for R1 and 2.

ORDER

(Virtual Mode)

13.07.2022: This appeal is directed against the order dated

28.01.2022 passed by the Adjudicating Authority (National Company Law

Tribunal, Court-I, Mumbai Bench) in I.A No. 64 of 2021 in CP (IB)

2851/MB/2018.

The brief facts of this case are that an application under Section 7 of

the Insolvency and Bankruptcy Code, 2016 (in short 'Code') was filed by

Indian Renewable Energy Development Agency Limited (Lender) before the

Adjudicating Authority to initiate the Corporate Insolvency Resolution

Process (In short 'CIRP'). The CIRP was initiated by the order dated

21.08.2019, and by way of admission order, the Adjudicating Authority approved the appointment of Mr. Bhuvnesh Maheshwari as the Interim

Resolution Professional (in short 'IRP') of the Appellant, who was later on

confirmed as the Resolution Professional (in short 'RP') in the meeting of the

Committee of Creditors (in short 'CoC') on 24.09.2019. In the 9th Meeting

dated 26.02.2020, the CoC approved the resolution plan submitted by

Respondent No. 3, Sri Sai Priya Sugars Limited with a majority vote of

95.21% and in furtherance to such approval of the CoC, the Adjudicating

Authority vide its order dated 21.09.2020 approved the resolution plan

submitted by Respondent No. 3 and Respondent No. 3 restarted the

production operations. Thereafter, Respondent No. 3, had approached

Respondent No. 1 and 2 to provide electricity services. The Appellant came

to know that Respondent No. 1 and 2, post the approval of the resolution

plan by the Adjudicating Authority, have raised claim for the payment of

outstanding dues of the Appellant, which was to be settled by Respondent

No. 3. In view of the aforesaid facts and circumstances, the Appellant filed

an application bearing I.A. No. 64 of 2021 on 14.12.2020 before the

Adjudicating Authority, which has been disposed of by the impugned order

dated 28.01.2022.

The grievance of the Appellant is that though in the case of

Ghanashyam Mishra & Sons Private Limited through the Authorized

Signatory Versus Edelweiss Asset Reconstruction Company Limited through

the Director & Ors. [(2021) 9 SCC 657]. It has been held in Para No. 95 that

Pre-CIRP dues gets extinguished after the approval of the resolution plan if

the said dues are not part of the resolution plan yet an observation has been

made in the impugned order that "in view of the above, the appellant needs to take up the matter with the relevant statutory authorities". According to

Counsel for the Appellant the Respondent No. 1 and 2 have no right to claim

the past outstanding dues which are allegedly Rs. 9,92,90,297/- plus

interest. He has further submitted that insofar as the electricity is

concerned, the matter which was pending before the Karnataka Bench at

Dharwan by way of writ petition was pertaining to interim relief but the new

electricity connection is to be issued in the name of Respondent No. 3, by

Respondent No. 1 and 2 without asking for the past dues. At this stage,

Counsel for the Appellant has fairly submitted that the other dues which are

required to be deposited for getting a new connection shall of course be

deposited by the Appellant.

On the other hand, Counsel for the Respondents has drawn our

attention to the order dated 21.09.2020 which was passed by the

Adjudicating Authority while approving the resolution plan. He has

categorically pointed out to paragraph 15(ii) of the said order which read

thus:-

"The approval of the resolution plan shall not be construed as waiver of any statutory obligations/liabilities of the corporate debtor and shall be dealt by the appropriate Authorities in accordance with law".

It is vehemently argued by Counsel for the Respondent that the

parties are bound by the order passed inter se which has attained finality as

the same was not challenged in the higher Court.

We have heard Counsel for the parties and perused the record with

their able assistance.

The issue is no more res-integra in regard to the payment of Pre-CIRP

dues because in the decision of Ghanashyam Mishra And Sons Private

Limited (Supra), the Hon'ble Supreme Court has observed as under:-

95(i).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 to a claim, which is not part of the resolution plan;

In view thereof, no further explanation is required for Respondent No.

1 and 2 to understand that they cannot demand the dues prior to the

commencement of the CIRP. Insofar as, the issue regarding the provision of

new connection is concerned, we also observe that Respondent No. 1 and 2

are not entitled and cannot demand pre-CIRP dues i.e. before the initiation

of the CIRP for the purpose of issuing the new connection to the Respondent

No. 3, but Respondent No. 1 and 2 are definitely within their right to ask for

all those dues, which are required to provide a new connection which shall

be deposited/paid by the Respondent No. 3.

The observation made by the Adjudicating Authority in the order of

approval of the resolution plan, which has been relied upon by the

Respondents is of no consequence in view of the decision of the Hon'ble Supreme Court in the matter of Ghanashyam Mishra And Sons Private

Limited (Supra).

In view of the above facts and circumstances of the case, the present

appeal succeeds and the same is allowed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Dr. Alok Srivastava] Member (Technical)

[Mr. Naresh Salecha] Member (Technical)

Sheetal/RR