Shree Rajasthan Syntex Ltd vs Chief Engineer Commercial Ajmer & Anr

(Arising against the impugned order dated 14.06.2024 passed by the National Company Law Tribunal, Jaipur Bench in IA No. 283/JPR/2023 in CP No. (IBPP)-01/54C/JPR/2022)

IN THE MATTER OF: Shree Rajasthan Syntex Ltd. Through its authorized representative having its registered office at: 27-a, First floor, Meera Nagar, ...Appellant Housing board colony, Udaipur, Rajasthan-313001 Versus Chief Engineer (Commercial), Ajmer, Ajmer Vidyut Vitran Nigam Ltd. Add: Vidyut Bhawan, Panchsheel nagar, Ajmer-305004 Email: cecoma vvnl@gmail.com

Managing Director, Ajmer Vidyut Vitran Nigam Ltd. Vidyut bhawan, Panchsheel Nagar, Ajmer-305004 ...Respondents

Email: mdajmerdiscom@gmail.com

Present:

For Appellant: Mr. Krishnendu Datta, Sr. Advocate, Mr. Anjaneya Mishra, Mr. Sahil, Mr. Nidish Gupta, Advocates and Mr. Prakul Khurana, Mr. Yash Tandon.

For Respondents: Mr. Bipin Gupta, Advocate for R- 1 & 2.

Mr. Gaurav Mitra, Ms. Neha Agarwal, Ms. Lavanya, Advocates for R-3.

J U D G M EN T (11th March, 2025)

INDEVAR PANDEY, MEMBER (T)

This appeal has been filed under Section 61(1) of Insolvency &

Bankruptcy Code, 2016 (hereinafter rereferred to as 'Code'). The appeal arises

from the impugned order dated 14.06.2024, passed by the National Company

Cont'd..../ -2-

Law Tribunal, Jaipur Bench (hereinafter referred to as "Adjudicating

Authority") in IA No. 283/JPR/2023 in CP No. (IBPP)-01/54C/JPR/2022.

The Adjudicating Authority vide the impugned order permitted the

Respondents, Chief Engineer (Commercial), Ajmer Vidyut Vitran Nigam Ltd.

(Respondent No.1), to bill and recover Fuel Surcharge (FS) and Special Fuel

Surcharge (SFS) from M/s Shree Rajasthan Syntex Ltd. (Appellant), for

periods prior to the admission of the Company in Pre-Packaged Insolvency

Resolution Process (PPIRP).

2. It is the contention of the appellant that this order was passed despite

the approval of the Base Resolution Plan of the Appellant on 22.08.2023. The

Appellant contends that the impugned order contravenes the principles of the

Insolvency and Bankruptcy Code, 2016, particularly Section 31(1), which

provides for a "clean slate" after the approval of a resolution plan. The

Appellant challenges the legal and financial implications of the said order,

contending that the Respondents failed to file their claims within the

prescribed period and are now attempting to recover dues contrary to the

provisions of the Code.

Brief facts of the case

3. M/s Shree Rajasthan Syntex Ltd./Appellant, is a public listed company

engaged in the manufacturing of synthetic spun yarns, cotton yarns, and

polypropylene yarns. It is a registered MSME with Udyam Registration

Certificate No. UDYAM-RJ-33-0000458, dated 21.07.2020. The company

operates a textile yarn manufacturing plant in the tribal District of

Dungarpur, Rajasthan.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -3-

4. In 2022, the Appellant filed CP No. (IBPP)-01/54C/JPR/2022 before the

Adjudicating Authority under Section 54C of the Insolvency and Bankruptcy

Code, 2016, seeking initiation of Pre-packaged Insolvency Resolution Process

(PPIRP). On 19.04.2023, the Adjudicating Authority admitted the PPIRP

application and appointed Dr. Lekh Raj Bajaj as the Resolution Professional

(RP).

5. On 19.04.2023, the Appellant submitted a list of claims to the RP under

Regulation 20 of the PPIRP Regulations, 2021. On 26.04.2023, the RP issued

a public announcement (Form P9), published in Financial Express (English)

and Rasthtadut, Udaipur (Hindi), inviting claims from creditors. The

Respondents did not file any claim regarding FS and SFS during the claim

submission period.

6. The Appellant received bills dated 05.04.2023 and 05.05.2023, wherein

the Respondent No. 1 charged Rs. 18,13,013/- and Rs. 27,89,415/-,

respectively, towards Fuel Surcharge (FS) for the period October 2021 - June

2022. Additional demands were raised for Rs. 2,23,97,641/- Special Fuel

Surcharge (SFS) and Rs. 63,82,275/- as SFS for Permanently Disconnected

Connection based on the Rajasthan Electricity Regulatory Commission's

order dated 01.09.2022. It is the submissions of the appellant that both the

aforesaid demands pertain to the period between years 2013 to 2018.

7. On 22.05.2023, the Appellant filed IA No. 283/JPR/2023 before the

Adjudicating Authority under Section 60(5) of the IBC, 2016, challenging the

demand for Fuel Surcharge and Special Fuel Surcharge and seeking interim

relief. On 25.05.2023, the Adjudicating Authority passed an interim order

Company Appeal (AT) (Ins.) No. 1411 of 2024 -4-

restraining the Respondents from disconnecting the electricity supply to the

Appellant's Dungarpur unit due to non-payment of the disputed charges.

8. The Committee of Creditors (CoC) meetings were held on 25.05.2023

and 16.06.2023, where the Base Resolution Plan submitted by the Appellant

was discussed and approved with 73.91% voting in favor. On 22.08.2023, the

Adjudicating Authority approved the Base Resolution Plan, making it binding

on all stakeholders, including government authorities.

9. The Adjudicating Authority on 14.06.2024, passed the impugned order,

allowing the Respondents to recover Fuel Surcharge and Special Fuel

Surcharge for the period prior to insolvency admission. On 27.06.2024, the

Respondent No. 1 sent a demand letter requiring payment of Rs.

1,79,66,332/- within 90 days, relying on the impugned order. The Appellant,

aggrieved by the decision, filed the present appeal under Section 61(1) of the

Insolvency and Bankruptcy Code, 2016.

Submissions of appellant

10. Learned Sr. Counsel for the Appellant states that the present appeal

arises out of the impugned order dated 14.06.2024 passed by the National

Company Law Tribunal, Jaipur Bench ("Ld. NCLT"), whereby the Ld. NCLT

has erroneously permitted the Respondent No. 1 to raise demands towards

Fuel Surcharge ("FS") and Special Fuel Surcharge ("SFS") pertaining to a

period prior to the initiation of the Pre-Packaged Insolvency Resolution

Process ("PPIRP"). The Fuel Surcharge and Special Fuel Surcharge were pre-

insolvency claims and should have been filed as part of the resolution process.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -5-

11. The counsel submitted that the Ld. NCLT has committed a grave error

by failing to recognize that such demands stand extinguished upon the

approval of the Resolution Plan in light of the authoritative judgment of the

Hon'ble Supreme Court in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss

Asset Reconstruction Co. Ltd., [(2021) 9 SCC 657]. The decision

unequivocally establishes that all claims not forming part of an approved

resolution plan shall stand extinguished and be deemed non-recoverable.

12. He further stated that the impugned order violates the principle of

"clean slate" enshrined in Section 31(1) of IBC, 2016, as established in Essar

Steel India Ltd. v. Satish Kumar Gupta, [(2020) 8 SCC 531] and

Ghanashyam Mishra (supra).

13. The counsel submitted that the Respondents' claim was not submitted

during the PPIRP process, and allowing recovery post-approval of the

Resolution Plan is contrary to the Section 238 of the Code, which gives

overriding effect of the Code over other laws including Electricity Act, 2003.

14. The Appellant submitted that the Respondents' demand violates

Rajasthan Electricity Regulatory Commission (Terms and Conditions for

Determination of Tariff) Regulations, 2019, which mandate quarterly

computation of fuel surcharges. The belated claim pertains to October 2021 -

June 2022, showing a clear delay.

15. The Appellant submitted its claims list, proposing a sum of

Rs.2,99,88,591/- towards the claim of Respondent No. 1 under the category

of Operational Creditors, as required under Regulation 20(1) of the IBBI (Pre-

Packaged Insolvency Resolution Process) Regulations, 2021, towards the

Company Appeal (AT) (Ins.) No. 1411 of 2024 -6-

claim of Respondent No. 1 under the category of Operational Creditors, as

required under Regulation 20(1) of the IBBI (Pre-Packaged Insolvency

Resolution Process) Regulations, 2021.

16. The Base Resolution Plan was approved on 22.08.2023, and the entire

sum of Rs.2,99,88,591/- was duly paid by the Appellant in accordance with

the approved plan, thereby satisfying all liabilities.

17. The Respondents, despite their knowledge of the PPIRP, did not object

or submit any additional claims within the statutory period as prescribed

under Section 54G of the IBC.

18. Counsel for the Appellant submits that under Section 31(1) of the IBC,

once a resolution plan is approved by the Adjudicating Authority, it shall be

binding on all stakeholders, including creditors, whether or not they have

participated in the resolution process. Therefore, any claims that were not

submitted in compliance with the PPIRP framework stand extinguished.

19. The Hon'ble Supreme Court has consistently held that once a resolution

plan is approved, no further claims can be entertained. The reliance of the Ld.

NCLT on Prem Cottex Vs. Uttar Haryana Bijli Vitran Nigam [2021 SCC

Online SC 870], is wholly misplaced as the said judgment does not override

the explicit statutory mandate of Section 31 of the IBC.

20. While passing the Impugned Order, the Ld. NCLT has wrongly placed

reliance on the above judgment as the said judgment was delivered in the

context of Section 56(2) of the Electricity Act, 2003.

21. It is most humbly submitted that the proviso to section 56(2) of

Electricity Act, 2003 is in complete contraventions to the provisions of Section

Company Appeal (AT) (Ins.) No. 1411 of 2024 -7-

31 of IBC which unequivocally states that after approval of Plan, any claim

which is not part of plan shall stand extinguished. Further, the Ld. NCLT has

failed to consider that the IBC is a complete code in itself and has an

overriding effect over the other laws which are inconsistent with the provisions

of IBC by the virtue of Section 238 of IBC. He stated that in this regard, the

Judgment of Hon'ble Supreme Court in the matter of Paschimanchal Vidyut

Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd. & Ors. [(2023) 10 SCC 60] may

be relied wherein the apex court has held that section 238 of 1BC overrides

the provisions of Electricity Act, 2003. The counsel further submitted, that by

placing reliance on Prem Cottex (Supra), the Ld. NCLT defeated the whole

intent and objective of IBC and gave a leeway to the Respondent No.1 to

agitate its statutory barred claims on account of SF and SFS.

22. The counsel further submitted that term 'claim' as defined u/s 3(6) of

IBC in contrast to term "debt" includes any liability or obligation qua the

Corporate Debtor irrespective of fact whether it has become due and payable.

In the present matter, the right to payment accrued for the Respondent No.1

immediately upon the passing of the order dated 01.09.2022 by the RERC.

Further, in the 23rd Annual Report (2022-2023), the Respondent No.1 in its

Balance Sheet as on 31.03.2023 booked/recognised the total amount of SFS-

Rs.145680 Lacs as an Income in the year 2021-2022 itself, showing that the

amounts of SFS were crystalized and known to Respondent No 1 prior to

initializing of Insolvency proceedings of the Applicant.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -8-

23. It is the submission of the Appellant that the claim u/s 3(6) of IBC

means right to payment which may be matured or unmatured, disputed or

undisputed, contingent, conditional, contingent and no mature at the time of

commencement. etc. and it is not required the amount has become "due and

payable" or not. In support of his arguments he has cited the following

Judgments:

a) Judgment passed by the Hon'ble Supreme Court in the case of

Pioneer Urban Land and Infrastructure Ltd. & Anr. Vs UOI, (2019) 8

SCC 416.

b) Judgment passed by the Hon'ble Supreme Court in the case of China

Development Bank Vs. Doha Bank Q.P.S.C. and Others, (2024) SCC

OnLine SC 3829.

c) Judgment passed by the Hon'ble Supreme Court in the case of New

Okhla Industrial Development Authority V. Anand Sonbhadra, (2023)

1 SCC 724.

d) Judgment passed by the Hon'ble Supreme Court in the case of

Embassy Property Development Private Limited v. State of Karnataka

&Ors., (2020) 13 SCC 308.

e) Judgment passed by this Hon'ble Appellate Tribunal in Company

Appeal (AT) (Insolvency) No. 304 of 2017 titled as Export Import Bank

of India Vs Resolution Professional JEKPL Private Limited.

f) Judgment passed by this Hon'ble Appellate Tribunal (Chennai Bench)

Edelweiss Asset Reconstruction Company Limited v. V Mahesh &

Ors., Company Appeal (AT) (CH) (INS) No. 226 of 2021.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -9-

24. Counsel for the Appellant states that the demand for Rs.2,23,97,641/-

towards SFS and Rs.63,82,275/- towards FS pertains to the period prior to

the approval of the Resolution Plan and, therefore, stands extinguished in

accordance with the "clean slate" doctrine. In this regard he cited the

Judgment of Hon'ble Supreme Court in Essar Steel India Ltd. (CoC) v. Satish

Kumar Gupta (supra), which has reaffirmed that all prior claims against a

corporate debtor, which are not accounted for in the approved resolution plan,

cannot be enforced post-approval.

25. Counsel for the Appellant submitted that despite repeated

opportunities, Respondent No. 1 failed to file any claims for FS and SFS

during the PPIRP. Having failed to assert their claim at the appropriate stage,

the Respondents are now estopped from raising any fresh demands.

Furthermore, Regulation 88 of the RERC (Terms and Conditions for

Determination of Tariff) Regulations, 2019, required the Respondent to levy

FS on a quarterly basis, which they failed to do. The delayed imposition of FS

and SFS after the conclusion of the PPIRP is arbitrary, impermissible, and

violative of the principles of natural justice.

26. In view of the aforesaid facts and circumstances, the counsel for

appellant prays that this Hon'ble Appellate Tribunal may be pleased to allow

the present appeal and set aside the Impugned Order dated 14.06.2024, and

further declare that:

a) the outstanding SFS of Rs. 2,23,97,641/- pertaining to connection

with K. No 130511029076 and SFS of Rs. 63,82,275/- pertaining to

PDC Connection with K No.130511029079 including any late

Company Appeal (AT) (Ins.) No. 1411 of 2024 -10-

payment surcharge etc., stands extinguished and the same cannot

be demanded/recovered from the Appellant.

b) the outstanding FS of Rs. 2,0140,611/- (updated Oct 2022- March

2023) being pertaining to the period prior to commencement of PPIRP

i.e. 19.04.2023 including any late payment surcharge etc., also

stands extinguished and the same cannot be demanded/recovered

from the Appellant.

Submissions of Respondents No. 1 & 2

27. Ld. Counsel for the Respondent stated that the present appeal filed by

the appellant, Shree Rajasthan Syntex Ltd., is devoid of merit and is based on

incorrect assertions. The appellant has sought relief from the Hon'ble

Tribunal based on misleading claims, particularly regarding the

extinguishment of outstanding electricity dues. The respondents, Ajmer

Vidyut Vitran Nigam Limited (AVVNL), categorically denies the appellant's

assertions. He further submits that the appellant had previously filed IA

283/2023 in CP (IBPP) 01/2022. In the aforesaid I.A. appellant did not seek

extinguishment of the electricity dues but merely requested that the electricity

connection not be disconnected.

28. He submitted that the respondents, in their reply to the said

application, demonstrated that the appellant has not approached the Tribunal

with clean hands. Specifically, no demand of Rs.63,82,275/- has been raised

after 19.04.2023, and no demand of Rs.2,23,97,641/- has been raised after

the same date. The claim that such demands have been raised is

demonstrably false.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -11-

29. Counsel for the Respondent states that the liability of the appellant is

governed by the Electricity Act, 2003, and the orders of the Rajasthan

Electricity Regulatory Commission (RERC). Relevant legal provisions and

precedents include:

i. Sections 61 and 62 of the Electricity Act, 2003, which outline

tariff determination and recovery principles.

ii. Section 142 of the Electricity Act, 2003, which provides

penalties for non-compliance with orders and directions of

regulatory authorities.

iii. The RERC Order dated 01.09.2022, which directed the

appellant to pay its dues in a structured manner.

30. The counsel for respondent invited attention to the Judgment of Hon'ble

Supreme Court in Prem Cottex vs. Uttar Haryana Bijli Vitran Nigam Ltd.

[(2021) 20 SCC 200] which has clarified that under Section 56 of the

Electricity Act, 2003, the obligation to pay arises when the bill is raised,

regardless of when the consumption occurred. The appellant's attempt to

categorize the dues as past liabilities is thus legally unsustainable.

31. The Counsel for the Respondent further submitted that the appellant

had been making instalment payments as per the directives of the Hon'ble

RERC until April 2023. However, after securing a blanket stay order against

disonnection dated 13.06.2023 from the Adjudicating Authority, the appellant

ceased making further payments. Instead, the appellant now seeks

extinguishment of the demand, which was structured in instalments by the

RERC.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -12-

32. The respondent contended that the appellant's argument that these are

past liabilities is entirely baseless. The electricity dues arise when the bill is

generated, not when the consumption occurred.

33. Further, counsel stated that the appellant's contention that the

Insolvency and Bankruptcy Code (IBC) would override the Electricity Act,

2003, is legally untenable. The appellant has failed to demonstrate any

specific conflict between the two statutes. In the absence of such a conflict,

the principle of harmonious construction must be applied, and the regulatory

framework of the Electricity Act must prevail.

34. Counsel for the Respondent states that the appellant has made

inconsistent and contradictory statements regarding its payments:

i. The affidavit filed by the Resolution Professional (RP) incorrectly

asserts that fuel surcharge payments, as mentioned in Form-P10 have

been made. However, per para 9 of the RP's affidavit, these payments

exclude fuel surcharge and special fuel surcharge.

ii. Further, a comparison of the payment figures reveals discrepancies.

The amounts referred to by the appellant do not match the figures

presented in P10. This inconsistency is highlighted in the Counter

Affidavit of the Respondent dated 11.11.2024, filed on 12.11.2024 The

same is reproduced below:

"2. That the contents of para no. 9 as stated are not admitted and are denied. The amounts referred on the dates by the RP totals to Rs 79,31,227/- and furthermore none of these amounts as indicated have been adjusted against any fuel surcharge rather all the payments have been made by the CD

Company Appeal (AT) (Ins.) No. 1411 of 2024 -13-

against the bills excluding fuel surcharge, special fuel surcharge the details of payment made by the CD to the AVVNL along with the bill are hereby marked and annexed as Annexure-1 with this counter affidavit."

35. Counsel for the Respondent further stated that the appellant, in its

letter dated 08.11.2024, admits that while certain payments have been made,

the fuel surcharge and special fuel surcharge billed after 19.04.2023 (but

related to prior periods) remain unpaid. This admission directly contradicts

the assertions made by the RP and the Corporate Debtor (CD).

36. Summing up, the counsel for the Respondent in light of the above facts

and legal submissions prayed that the appeal filed by the appellant be

dismissed with costs, as it is based on misleading claims and inconsistent

assertions.

Analysis and findings:

37. We have heard the Ld. Counsels for Appellant and Respondents in

detail. We have also gone through the voluminous documents submitted by

both parties and also their written submissions.

38. This appeal has been filed consequent upon the order of Adjudicating

Authority in I.A. No. 283/JPR/2023 in Company Petition bearing C.P. (IBPP)

-01/54C/JPR/2022. The findings in the impugned order are extracted below:

"17. The bone of contention pertaining to SFS and FS between

the parties is whether the complete liability towards the SFS

and the FS pertains to pre-PPIRP period or not. In other words,

the issue boils down to whether the complete liability towards

SFS which is to be recovered in the coming five years and the

Company Appeal (AT) (Ins.) No. 1411 of 2024 -14-

FS was due and payable prior to the commencement of the

PPIRP.

18. The Hon'ble Apex Court in the case of Prem Cottex Vs. Uttar

Haryana Bijli Vitran Nigam Ltd. 2021 SCC OnLine SC 870

wherein it was observed that:

"Though the liability to pay arises on the consumption of

electricity, the obligation to pay would arise only when

the bill is raised by the Licencee and that, therefore

electricity charges would become 'first due' only after the

Bill is issued, even though the liability would have

arisen on past consumption."

19. The aforementioned Judgment clarifies that the obligation to

pay under the Electricity Act arises when the bill is raised by

the DISCOM. Since, the amount of the SFS is to be recovered in

the coming five years and the FS liability arises at the time of

raising of the bill by the electricity department, it cannot be said

that the SFS and the FS were due prior to the initiation of the

PPIRP. Thus, we find force in the argument of the Respondents

that they could not have filed a claim pertaining to SFS and FS

as the liability to pay arises at the time of raising of the bill.

20. It is relevant to mention here that the Resolution Plan

approved by this Adjudicating Authority provides for payment

of Rs. 39,09,678 (Rupees Thirty-Nine Lakh Nine Thousand Six

Hundred and Seventy-Eight Only) to Ajmer Vidyut Vitran Nigam

Ltd.

21. In light of the facts and Judgments referred to above, we are

of the view that the disputed amount demanded by the

Respondents concerning Fuel Surcharge and Special Fuel

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Surcharge which is not covered under the Resolution Plan shall

be dealt with as per the ruling of the Hon'ble Supreme Court in

the matter of Prem Cottex Vs. Uttaranchal Vidyut Nigam Limited,

(Supra) and the liability of the consumer shall be computed at

the time the bill is raised by the Respondent.

22. Accordingly, we order as follows:

22.1. The Corporate Debtor shall pay the amount

demanded as Fuel Surcharge (FS) and Special Fuel

Surcharge (SFS) as and when raised through Bills, as per

the due dates specified in bills already raised/to be raised

in future. For the bills of FS and SFS already raised till the

date of this order, the Applicant is directed to pay the same

within 90 days from the date of this order.

22.2. Further, the Respondents are directed not to

disconnect the connection of the Corporate Debtor on

account of non-payment of such amount already due, until

90 days from the date of this order. No penalty or interest

or late payment surcharge if any on such amount due,

delayed in payments during pendency of matter before

this tribunal shall be levied by the Respondent, if the billed

dues are paid within 90 days from the date of this order.

23. In view of the aforementioned directions, the I.A. bearing

No. 283/JPR/2023 stands is disposed off."

39. The main issue in this appeal is whether the Respondents, Ajmer Vidyut

Vitran Nigam Ltd. (AVVNL), can recover Fuel Surcharge (FS) and Special Fuel

Surcharge (SFS) from the Appellant, Shree Rajasthan Syntex Ltd., even

though these charges relate to a period before the insolvency process began.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -16-

The Appellant argues that these charges were erased once the resolution plan

was approved, while the Respondents maintain that these are statutory

charges and must be paid.

40. To decide this case, we have to address two issues:

i. Do FS and SFS count as pre-insolvency liabilities that were erased when

the resolution plan was approved under Section 31 of the Insolvency

and Bankruptcy Code, 2016 (IBC)?

ii. In this matter of recovery of FS and SFS, is there a conflict between

Electricity Act, 2003 and IBC, 2016 or both can be harmoniously

interpreted?

We would examine both these issues in detail in subsequent paras.

Can FS and SFS Claims be Extinguished Under IBC?

41. The first question is whether FS and SFS charges were erased under

IBC when the resolution plan was approved. The Appellant argues that once

a resolution plan is approved under Section 31 of IBC, all prior claims not

included in the plan no longer exist. The Appellant relies on judgments like

Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction

Co. Ltd., [(2021) 9 SCC 657] and Committee of Creditors of Essar Steel

India Ltd. v. Satish Kumar Gupta & Ors., [(2020) 8 SCC 531], which

confirm that creditors cannot claim pre CIRP period dues after the resolution.

42. The appellant also submitted that the Respondents No. 1 & 2 did not

file their claim during the insolvency process and accordingly all claims not

forming part of the approved resolution plan stand extinguished and cannot

be enforced subsequently.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -17-

43. The Respondents on the other hand submitted that there was no

requirement on their part to file the claim, as it is the duty of the appellant to

collate all the claims and submit the same to the RP for inclusion in claim

form. In this regard, we have a look at the statutory provisions under IBC,

2016. Section 54 (G) deals with list of claims and preliminary information

memorandum. The relevant extracts of Section 54 (G) are produced below:

"Section 54G: List of claims and preliminary information memorandum.

1[54G. (1) The corporate debtor shall, within two days of the pre- packaged insolvency commencement date, submit to the resolution professional the following information, updated as on that date, in such form and manner as may be specified, namely:-

(a) a list of claims, along with details of the respective creditors, their

security interests and guarantees, if any; and"

44. The relevant regulations relating to Pre-Packaged Insolvency are IBBI

(Pre-Packaged Insolvency Resolution Process) Regulations, 2021. The

Regulation 20 relates to list of claims. The relevant portion of Regulation 20

is extracted below:

"Regulation 20: List of claims

20. (1) The corporate debtor shall submit a list of claims under sub-

section (1) of section 54G in Form P10 to the resolution professional.

(2) Based on the records of the corporate debtor and other relevant

material available on record, the resolution professional shall confirm

the details received in Form P10."

45. It can be seen from Section 54G and Regulation 20 that it is the

responsibility of Corporate Debtor to provide the complete claims from all the

Company Appeal (AT) (Ins.) No. 1411 of 2024 -18-

creditors to the Resolution Professional for inclusion in Form-P10. The

respondents submit that the CD has a running account with the Respondents

in which payments are made in tranches and reconciliation is done from time

to time between CD and Respondents. He further cites letter dated 08.11.2024

from CD to Respondents in this regard. The Respondent submits that they

did not file any claim subsequent to publication of Form P10 on account of

FS and SFS as these charges become due only after the bill is raised by the

Discom.

46. The question here is what is the stage at which electricity charges

become due and payable as per the provisions of Electricity Act. Section 56 of

the Electricity Act, 2003 has the relevant provision in this regard. This

question has been answered by Hon'ble Supreme Court in Prem Cottex

(supra). The relevant paras 9, 10, 11 of the Judgment are extracted below:

"9. Section 56 of the Electricity Act, 2003 reads as under:

"56. Disconnection of supply in default of payment.-(1) Where any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or the generating company in respect of supply, transmission or distribution or wheeling of electricity to him, the licensee or the generating company may, after giving not less than fifteen clear days' notice in writing, to such person and without prejudice to his rights to recover such charge or other sum by suit, cut off the supply of electricity and for that purpose cut or disconnect any electric supply line or other works being the property of such licensee or the generating company through which electricity may have been supplied, transmitted, distributed or wheeled and may discontinue the supply until such charge or other sum, together

Company Appeal (AT) (Ins.) No. 1411 of 2024 -19-

with any expenses incurred by him in cutting off and reconnecting the supply, are paid, but no longer:

Provided that the supply of electricity shall not be cut off if such person deposits, under protest.-

(a) an amount equal to the sum claimed from him, or

(b) the electricity charges due from him for each month calculated on the basis of average charge for electricity paid by him during the preceding six months, whichever is less, pending disposal of any dispute between him and the licensee.

(2) Notwithstanding anything contained in any other law for the time being in force, no sum due from any consumer, under this section shall be recoverable after the period of two years from the date when such sum became first due unless such sum has been shown continuously as recoverable as arrear of charges for electricity supplied and the licensee shall not cut off the supply of the electricity"

10. In Rahamatullah Khan³, three issues arose for the consideration of this Court. They were:

(i) what is the meaning to be ascribed to the term "first due"

in Section 56(2) of the Act;

(ii) in the case of a wrong billing tariff having been applied on account of a mistake, when would the amount become first due; and

(iii) whether recourse to disconnection may be taken by the licensee after the lapse of two years in the case of a mistake.

11. On the first two issues, this Court held that though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is raised by the licensee and that, therefore, electricity charges would become "first due" only after the bill is issued, even though the liability would have arisen on consumption."

Company Appeal (AT) (Ins.) No. 1411 of 2024 -20-

47. The court has clearly held that under the Section 56 (2) of the Electricity

Act, electricity charges would become "first due only after the bill is issued"

even though the liability would have arisen on consumption. In the instant

case the liability of FS/SFS relates to the prior period of 2013-2018 but the

payment would become due, only after the bills are raised by the distribution

company.

48. It is therefore clear that the stand of Respondents No. 1 & 2 that entire

assessed amount of FS & SFS had not become due, as no invoice/bill for the

same was raised by the distribution company is in accordance with the

provisions of the Electricity Act.

49. It is important to understand the genesis of SFS. The SFS was imposed

on Electricity Distribution Companies of Rajasthan, as a result of dispute with

M/s Adani Power Rajasthan Ltd. (APRL), which was running a coal based

thermal power plant with an installed capacity of 1320 MW at Kawai,

Rajasthan. The power generated by the Kawai plant was to be purchased by

3 electricity distribution companies of Rajasthan viz. Jaipur Vidyut Vitran

Nigam Ltd. (JVVNL), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) and Jodhpur

Vidyut Vitran Nigam Ltd. (JdVVNL). These three electricity distribution

companies are collectively referred to as Rajasthan Discoms. APRL had signed

Power Purchase Agreement (PPA) with the Rajasthan Discoms for supply of

1200 MW from their plant.

50. Due to a change in coal allocation policy of Govt. of India, domestic coal

supply was not available as envisaged in PPA. Entire tariff computation for

Company Appeal (AT) (Ins.) No. 1411 of 2024 -21-

supply of power from the ARPL was based on domestic coal availability. To

run the plant and generate power for supplying to Rajasthan Discoms, APRL

had to import coal. In view of increased cost of imported coal, APRL sought

additional tariff over and above the quoted tariff as Special Fuel Surcharge

(SFS). The Rajasthan Electricity Regulatory Commission (RERC) allowed SFS,

but the same was not agreed by the Appellate Tribunal.

51. The matter was adjudicated by the Hon'ble Supreme Court in Jaipur

Vidyut Vitran Nigam Ltd. & Ors. Vs. Adani Power Rajasthan Ltd. & Anr.

[Civil Appeal No. 10188/2018], on 29.10.2018, wherein the Hon'ble Court

ruled that Rajasthan Discoms were liable to compensate APRL for additional

fuel costs. Initially, in their order, the Hon'ble Supreme Court allowed 70%

compensation, later revised to 50%, leading to a Rs. 2,288.40 crore liability

for Rajasthan Discoms. This ruling established the basis for SFS, ensuring

that additional fuel costs would be recovered equitably from consumers. It

should be mentioned here that this was only an interim order and was subject

to final orders of Hon'ble Supreme Court.

52. Pursuant to the Judgment of Hon'ble Supreme Court's (supra), the

Appellate Tribunal for Electricity (APTEL), in Appeal No. 202 of 2018, issued

an order dated 14.09.2019, allowing the appeal filed by APRL and upholding

the recovery of SFS from all consumers.

53. To comply with the directions of the Hon'ble Supreme Court, the

Rajasthan Discoms had to resort to additional borrowing from the financial

institutions, due to which there was a total additional burden of Rs 2709.36

crores (including interest component of 420.96 crores) on the Discoms. This

Company Appeal (AT) (Ins.) No. 1411 of 2024 -22-

cost pertained to variations in the variable cost of power procured from APRL

in the period of May 2013 to January 2018 and any such variation in power

purchase cost which is beyond the control of the petitioner (Discoms) and is

treated as an uncontrollable parameter in the RERC Tariff Regulations.

54. Pursuant to the Hon'ble Supreme Court's Order dated 29.10.2018, the

APTEL, on 14.09.2019, passed an order, allowing the appeal filed by APRL

and rejected the appeal filed by Rajasthan Urja Vikas Nigam Limited (RUVNL)

which conducts Power trading business of Rajasthan Discoms. On

14.10.2019, Rajasthan Discoms filed a review petition no. 7 of 2019 in Appeal

No. 202 of 2018 for reviewing the order of Hon'ble APTEL dated 14.09.2019.

55. Subsequently, looking at the importance of the matter and time

constraints the Discoms decided to file appeal in Hon'ble Supreme Court.

RUVNL also filed Appeal no. 8625-8626 of 2019 on dated 08.11.2019 before

the Hon'ble Supreme Court against the order dated 14.09.2019 of APTEL on

the RUVNL. The Rajasthan Discoms were also a party to the aforesaid civil

appeal.

56. The Hon'ble Supreme Court in the order dated 31.08.2020 rejected the

appeal of the petitioner and held:

"(ii) Applicability of change in law

".......58. We find similarity in the present case as well as the Energy

Watchdog. The factual matrix was similar with the present case. We

find that the RERC and the APTEL have recorded the concurrent finding

on facts. We find no ground to interfere. No substantial question of law

Company Appeal (AT) (Ins.) No. 1411 of 2024 -23-

is involved. It was held in Energy Watchdog, that change in law was

brought about in the NCDP of 2007 by the decision of 26.7.2013. It is

provided in Article 10.2.1 how the change in law is to be applied to

compensate for the impact. It was also held that carrying cost is payable

from the date the change in law has taken place, and carrying cost is

passed on the restitution principle. Article 10.2.1 of the PPA in question

is similar to Article 13.2 considered in Energy Watchdog.

66. Liability of the Late Payment Surcharge at the rate of 2% in excess of applicable SBAR per annum, on the amount of outstanding payment, calculated on a day to day basis (and compounded with monthly rest) for each day of the delay. Therefore, there shall be huge liability of payment of Late Payment Surcharge upon the appellants Rajasthan Discoms.

67. In our opinion, it would be appropriate to direct the appellants Rajasthan Discoms to pay interest/late payment surcharge as per applicable SBAR for the relevant years, which should not exceed 9 per cent per annum. It is also provided that instead of monthly rest, the interest would be compounded per annum"

(emphasis supplied)

57. Hon'ble court upheld the contention of ARPL that changes to the Coal

Allocation policy of 2007 brought about by the decision of Govt of India on

26.07.2013 amounted to change in law as per provisions of PPA, and the

change in law is to be applied for compensating the impact of the same as per

PPA. Further the carrying cost was to be passed on to the discoms.

58. As there was a delay in final payment by the RUVNL the procuring

agency on behalf of Discoms, M/s APRL filed contempt petition before Hon'ble

Supreme Court against RUVNL for not complying with the directions of court

Company Appeal (AT) (Ins.) No. 1411 of 2024 -24-

in its Judgement dated 31.08.2020. The Hon'ble Supreme Court vide order

dated 25.02.2022 held that Rajasthan Discoms are liable to contempt for not

complying with Judgement of the court and directed Rajasthan

Discoms/RVUNL to make payment to ARPL along with interested calculated

at SBSR which should not exceed 9% per annum(with annual compounding).

Relevant extract of the Judgement are reproduced below:

"We, thus, direct the respondents to pay to the petitioner, the

principal amount (as per the terms/norms laid down in the

Judgement of this Court dated 31.08.2020) minus Rs.2426.81

crores deposited by the respondents in terms of the interim order

dated 29.10.2018 (which, as per the petitioner, the balance

payable amount would be Rs.3048.63 crores) along with interest

as per the applicable SBAR for the relevant years, which should

not exceed 9% per annum (to be compounded annually), from the

date the amount became due till the date of actual payment....."

59. Consequent upon the aforesaid order of Hon'ble Supreme Court the

Rajasthan Discoms paid an amount of Rs. 5996.44 Crores to M/s APRL

towards variations in variable cost of power procured from APRL in the period

of May, 2013 onwards.

60. Subsequently, the Discoms in their petition to RERC for tariff revision

stated that such variation in power purchase cost is beyond the control of

Discoms and it is treated as an uncontrollable parameter in the RERC tariff

regulations.

61. The RERC based on petition filed by Discoms under Section 62 (4) of

the Electricity Act, 2003 read with Regulation 88 of RERC to recognize the

Company Appeal (AT) (Ins.) No. 1411 of 2024 -25-

additional power purchase cost incurred in order to comply with the orders of

Hon'ble Supreme Court in the matter of change in law and allow recovery of

additional power purchase cost through Special Fuel Surcharge Adjustment

(FSA) passed the tariff order on 01.09.2022. The operating part of the order

vide para 14 and 15 is extracted below:

"14. Accordingly, the Commission, based on the material placed on record, orders as under:

i. Considering the financial hardship of the Discoms and at the same time to avoid tariff shock to the consumers, Commission deems it appropriate to consider 5 years repayment period to allow Discoms to recover the amount of Rs. 7438.58 Crores (5996.40 Cr principal amount & 1442.18 Cr interest component), on account of special FSA at the rate of Rs. 0.14/ unit from the consumers being billed on bimonthly basis in 30 equal installments and at the rate of Rs. 0.07/Unit from the consumers being billed on monthly basis in 60 equal installments. The FSA over this period will be recoverable on the consumption of Last Quarter of FY 2021-22 for all categories of consumers.

ii. The Discoms are directed to utilize the receipt on account of special FSA for repayment of loan taken by them for the purpose. Discoms are also directed to create a separate account head for this purpose and report the status of amount recovered as well as repayment of loan in each True up petition for consideration of the Commission. At the end of five years' period the Discoms shall file a detailed statement showing under recovery/over recovery from the special FSA, if any, which will be appropriately adjusted in true up of that year. iii. In case recovery of special FSA including variation in variable cost on account of other power stations exceeds the ceiling prescribed in the relevant Regulations, the Petitioners are at liberty to approach Commission through separate petition at appropriate time.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -26-

15. The petition stands disposed of in above terms."

62. The FSA referred to in the aforesaid order is commonly known as SFS

by the consumers and the same terminology is used by Discoms in their

electricity bills. It is clear from the sequence of events in preceding paragraphs

that the SFS has arisen as a result of Judgment of Hon'ble Supreme Court

based on change in law in terms of existing PPA between APRL and

RUVNL/Rajasthan Discoms. Based on the Judgment of Hon'ble Supreme

Court the RERC had laid down the manner and mode of recovery of the SFS.

The same was to be recovered @ Rs. 0.07 per unit from the consumers being

billed on monthly basis in 60 equal instalments.

63. We note that the electricity tariff is fixed by the Electricity Regulatory

Commissions based on Section 61 and 62 of the Electricity Act, 2003. Any

organizations or person involved in activities relating to generation,

transmission or distribution of electricity has to abide by the orders/

directions of the Regulatory Commission. Failing which they are liable for

punishment under Section 142 of the Act as extracted below:

"Section 142 - Punishment for non-compliance of directions by Appropriate Commission

In case any person, who is required under this Act to comply with any order or direction given under this Act by the Appropriate Commission, fails to do so, he shall be liable to:

(a) a penalty which may extend to one lakh rupees for each contravention;

(b) in case of continuing failure, with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after the first contravention."

Company Appeal (AT) (Ins.) No. 1411 of 2024 -27-

64. In view of Section 142, we further note that the respondents had no

option, but to comply with the orders of RERC regarding payment of FS & SFS

by the consumers. The installments of FS were decided by RERC at an earlier

occasion. Accordingly, The bills for SFS and FS are sent to the consumers

along with monthly bills for consumption of electricity as per the instalments

fixed by RERC. The amount of SFS or FS as decided can only be claimed in

accordance with the manner laid down in the tariff order. In this case RERC

has fixed that SFS be recovered from the consumers in 60 monthly

instalments @ Rs. 0.07 per unit. Similar orders have been issued in regard to

FS earlier.

65. As we have seen earlier, though the liability to pay arises on the

consumption of electricity, the obligation to pay would arise only when the bill

is raised by the licensee, hence, electricity charges would become "due" only

after the bill is issued, even though the liability would have arisen on

consumption. FS and SFS are not normal business debts but statutory

charges under the Electricity Act, 2003, which would arise only after the

bill is raised by the Discom to the consumer. IBC does not allow prospective

claims to be eradicated by approval of resolution plan. It is seen from the

records that FS and SFS charges have been paid upto April, 2023. The

appellant stopped paying the dues from May, 2023 onwards after obtaining

the interim protection against disconnection from Adjudicating Authority on

25.05.2023. The claim of the appellant for eradication of entire liability on

account of FS/SFS would not hold as the bills for subsequent period were not

issued by the respondent. Any amount which is due in future cannot be

eradicated by including the same in resolution plan. The FS/SFS charges

Company Appeal (AT) (Ins.) No. 1411 of 2024 -28-

which are statutory dues and become due only after the bill is submitted

cannot be eradicated by such resolution plan. We have also seen that the

amount which has been paid by the CD as per resolution plan has met the

existing liabilities of the CD and not the statutory dues which arise from the

orders of regulator under Electricity Act, 2003.

66. We have also noted that the appellant has taken inconsistent positions

regarding the payment of Fuel Surcharge (FS) and Special Fuel Surcharge

(SFS). In IA 283/2023, they did not claim that these dues were extinguished

but only requested that their electricity connection not be disconnected.

However, after obtaining a relief from Ld. AA on 25.05.2023 against the

disconnection the appellant stopped making installment payments and are

now arguing for the complete extinguishment of these dues. This is a clear

contradiction, as they had previously complied with the installment payments

directed by the RERC, but later changed their stance to avoid further liability.

67. We also note that in their letter dated 08.11.2024, the appellant

acknowledged that FS and SFS charges billed after 19.04.2023, though

related to an earlier period, remain unpaid. They stated that between

19.04.2023 and 30-06-2023, they made payments amounting to

Rs.2,63,00,640/- and an additional payment of Rs.39,09,678/- on

21.09.2023. They also admitted that their account is a running account, and

payments are made in tranches. The letter further claims that, as per

reconciliations on 27.03.2024 and 22.10.2024, all dues except FS and SFS

have been settled. A copy of the letter is extracted below:

Company Appeal (AT) (Ins.) No. 1411 of 2024 -29-

Company Appeal (AT) (Ins.) No. 1411 of 2024 -30-

68. However, this statement directly contradicts the affidavit filed by the

Resolution Professional (RP), who falsely claimed that FS had been paid. The

respondent's counter affidavit, filed on 12.11.2024, confirms that the amount

paid by the appellant totals to Rs. 79,31,227/- and excludes FS and SFS, as

the amounts paid do not match those reflected in Form-P10. This clearly

shows that the appellant is attempting to misrepresent facts to evade payment

obligations under the Electricity Act, 2003. Their changing arguments and

selective admissions indicate an effort to mislead the Tribunal by presenting

differing claims in different contexts.

69. The appellant has cited several Judgments of Hon'ble SC and this

Appellate Tribunal in support of their claim. The applicability of these

Judgments to the present factual matrix has been examined. We now discuss

the same:

i. In 'Ghanshyam Mishra and Sons Pvt. Ltd. Vs Edelweiss Asset

Reconstruction Company Ltd., (2021) 9 SCC 657; decided by Hon'ble

Supreme Court, the matter related to financial claims that existed

before the approval of a resolution plan and were either included in

the plan or canceled under IBC. In the instant matter, FS and SFS

charges arise from the orders of the RERC and would become due

only after the bills are issued by the Discom. These are statutory

dues under the Electricity Act and SFS arises from the orders of

Hon'ble Supreme Court and is payable in future after the bills for

the same are issued by Discom such prospective claims cannot be

eradicated under IBC.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -31-

ii. The decision of Hon'ble Supreme Court in 'Pioneer Urban Land and

Infrastructure Ltd. & Anr. Vs Union of India, (2019) 8 SCC 416' related

to the rights of homebuyers under IBC and their classification as

Financial Creditor. The Hon'ble Supreme Court also held that the

RERA is to be read harmoniously with the Code, as amended by the

Amendment Act. It is only in the event of conflict that the Code will

prevail over the RERA. Remedies that are given to allottees of

flats/apartments are therefore concurrent remedies, such allottees

of flats/apartments being in a position to avail of remedies under the

Consumer Protection Act, 1986, RERA as well as the triggering of

the Code. The ratio of Judgment supra does not apply to the present

case.

iii. Hon'ble Supreme Court in 'China Development Bank Vs. Doha Bank

Q.P.S.C. and Others, (2024) SCC OnLine SC 3829'- This case involved

financial claims under international loan agreements. The basic

dispute in the instant case related to whether the appellant was a

Financial Creditor or not u/s 5 (8) of the Code. The ratio of the

aforesaid case is not applicable in the present case. iv. Hon'ble Supreme Court in 'New Okhla Industrial Development

Authority v. Anand Sonbhadra, (2023) 1 SCC 724'- dealt with

classification of land lease entered by Noida Authority. It was held

that these leases are neither financial lease or capital lease. It is clear

that the ratio of aforesaid Judgment is not applicable in the present

case.

Company Appeal (AT) (Ins.) No. 1411 of 2024 -32-

v. 'Embassy Property Development Pvt. Ltd. v. State of Karnataka &

Ors., (2020) 13 SCC 308' - This case focused on government land

leases and jurisdictional issues under IBC, which is unrelated to the

factual matrix of the present case. Therefore, this case does not

support the appellant's argument.

vi. This Appellate Tribunal in 'Edelweiss Asset Reconstruction Company

Limited v. V Mahesh & Ors., Company Appeal (AT) (CH) (INS) No. 226

of 2021' -This case dealt with Corporate Guarantee and its

crystallization into debt. Since FS and SFS are statutory obligations,

this case does not support the appellant's argument.

vii. Export Import Bank of India Vs. Resolution Professional JEKPL Pvt.

Ltd., Company Appeal (AT) (Insolvency) No. 304 of 2017

This case dealt with whether the 'Counter Corporate Guarantor',

comes within the meaning of 'Financial Creditor' as defined under

Section 5(7) & (8) financial claims under IBC or not. These are not

relevant to the present factual matrix of the case.

70. Based on the discussion above, we note that FS/ SFS arise due to

changes in power purchase cost beyond the control of Discoms and the same

is treated as an uncontrollable parameter in tariff regulations. The Fuel

Surcharge and Special Fuel Surcharge in the present case have arisen due to

variation in fuel cost. Further, in case of SFS due to change in law as decided

by Hon'ble Supreme Court. It is due to peculiarities in the instant matter that

the final decision about amount payable to ARPL and subsequent manner of

recovery of arrears from consumers had to be decided at the level of Hon'ble

Company Appeal (AT) (Ins.) No. 1411 of 2024 -33-

Supreme Court and manner of recovery from end consumer was finalized by

the RERC. FS and SFS are in our view statutory charges as decided by RERC

and are payable only after the bill is raised in monthly instalments as decided

by RERC consequent to final decision of Hon'ble Supreme Court.

71. We also note that FS/SFS though related to earlier period could not

have been claimed in one instalment under PPIRP, as in this case the

obligation to pay arises only after the bill is raised. We agree with the

contention of Respondent in this regard that he could not have filed the claim

for FS/SFS as it would be violative of Hon'ble SC's order and Section 142 of

the Electricity Act, 2003. The obligations for payment in this case would arise

in future as per the direction of Hon'ble Supreme Court and tariff orders of

arrears.

72. We have also seen that none of judicial precedents cited by the

appellant is squarely applicable to the facts of this case. In view of discussion

above we also hold that the FS and SFS charges for which bill has not been

raised cannot be wiped out by the clean slate principle, as these are statutory

dues which would arise in future and liability to pay would come after the bill

is issued.

73. We now take up the second issue regarding the contention that the

Insolvency and Bankruptcy Code, 2016 (IBC) overrides the Electricity Act. In

this regard, Appellants have relied upon the judgement of Hon'ble SC in

Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Pvt. Ltd. & Ors.

[(2023) 10 SCC 60]. The aforesaid Judgment holds that Section 238 of the

IBC overrides the provisions of the Electricity Act, 2003 despite the latter

Company Appeal (AT) (Ins.) No. 1411 of 2024 -34-

containing two specific provisions, which open with non-obstante clauses i.e.

Section 173 and 174. The matter in aforesaid case related to liquidation

proceedings under the Code, where the appellant Discom held security

interest against a property of the respondent and which was attached on the

application of the appellant.

74. The issue involved in aforesaid appeal was whether order/judgment in

appeal, liable to be set aside i.e.:

i. Whether PVVNL was subject to proceedings under the Insolvency and

Bankruptcy Code, 2016 i.e. whether Sections 173 and 174 of the

Electricity Act, 2003 ("the 2003 Act") had an overriding effect?

ii. Whether arrears on account of supply of electricity by PVVNL could

be considered as government dues?

iii. Whether PVVNL was a secured operational creditor?

Dismissing the appeal, the Supreme Court held that the appellant was

subject to proceedings under the Code; the Court also did not agree with

the contention that the dues of PVVNL were government dues and lastly

Court agreed that PVVNL was a secured Operational Creditor and was

eligible to get their dues under water fall mechanism prescribed in Section

53 of the Code.

75. The issues in the present case are very different from the PVVNL

(supra). In the present case FS arises from the tariff order of RERC and SFS

arises from the Judgment of Hon'ble Supreme Court based on which the

RERC issued the tariff order. The SF and SFS dues would arise in future only

Company Appeal (AT) (Ins.) No. 1411 of 2024 -35-

after the bill is raised by the Discoms. This is similar to any operational debt,

where the obligation to pay by CD arises after the bill/invoice is submitted by

the Operational Creditor. We find no conflict between the provisions of IBC in

this regard vis-à-vis provisions of Electricity Act 2003 on the facts specific to

present matter.

76. We have also seen from the findings of Hon'ble Supreme Court in

Pioneer (supra), wherein a three Judge Bench of Hon'ble SC held that in the

context of RERA it is to be read harmoniously with the Code. It is only in the

event of conflict that the Code will prevail over the RERA. It is therefore, clear

that, for an override to take effect, there must be a clear and direct conflict

between the provisions of both statutes. Section 238 of the IBC provides an

overriding effect, stating that the provisions of the IBC shall have effect

notwithstanding anything inconsistent in any other law. However, this

override applies only in cases where there is an actual inconsistency between

the provisions of the IBC and another statute.

77. In the present case, the appellant has not identified any specific

provision of the Electricity Act that is in direct conflict with the IBC. A mere

assertion of overriding effect, without demonstrating any inconsistency, is

insufficient, as we have to follow the principle of harmonious construct

between the two legislations. We therefore, find the appellant's argument to

be devoid of merit.

78. In view of the above findings, the appeal is dismissed. The impugned

order dated 14.06.2024 is upheld, the Appellant is directed to pay the

Company Appeal (AT) (Ins.) No. 1411 of 2024 -36-

outstanding FS and SFS within 60 days. Failure to comply will result in

penalties as per the Electricity Act, 2003. There would be no order as to costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

SA

Company Appeal (AT) (Ins.) No. 1411 of 2024