Southern Power Distribution Company Of ... vs Kalpataru Steel Rolling Mills Ltd & Ors
- CitationCompany Appeal (AT) (Insolvency) No. 1078 of 2020
Ratio decidendi
The rule this decision rests on
Where a resolution plan has been approved under the Insolvency and Bankruptcy Code, a statutory regulation under the Electricity Act requiring payment of outstanding dues before a fresh connection can be given does not render the plan contravene "any of the provisions of the law for the time being in force" under Section 30(2)(e), because Section 238 gives the Code overriding effect over inconsistent law and so such a regulation cannot be pressed against the plan. An electricity supplier's claims for dues, including pre-CIRP dues, are operational debts that must be dealt with through the insolvency process under the Code; the supplier cannot insist on recovery of such dues outside the plan as a condition of restoring supply, and the decision of the Supreme Court in Srigdhaa Beverages, which concerned an auction sale under the SARFAESI Act and no provision of the Code, does not govern a case under the Code.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order dated 14.02.2020 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in C.A.931(PB)/2019 in (IB)-563(PB)/2018]
IN THE MATTER OF:
Southern Power Distribution Company of Andhra Pradesh Ltd. Rep. by its Chairman & Managing Director Besides Srinivasa Kalyana Mandapam, Tiruchanoor Road, Tirupathi-517 501 Andhra Pradesh ...Appellant
Versus
1. Kalptaru Steel Rolling Mills Ltd. Through its Director Mr. Lalit Kumar Purva, (Member of the Monitoring Committee & New director after Resolution, DIN 01261638) At: Shiv Sadan, Opp: NCC Apartments, Outer Ring Road, B. Narayanapura, Bangalore - 560016. Karnataka
2. Andhra Bank Through its General Manager Having Head Office at 5-9-11, Dr. Pattabhi Bhavan, Saifabad Hyderabad - 500004 and also Having address at Assets Recovery Branch, 1st Floor, Andhra Bank Building, Sultan Basar, Koti, Hyderabad - 500095
3. Andhra Pradesh State Financial Corporation Plot OS No. 2, 2nd Cross, 3rd Road, Industrial Park, Auto Park, Vijayawada - 520007 Through its Authorised Signatory ...Respondents
Cont'd.../ -2-
Present: For Appellant: Mr. Rakesh K. Sharma, Mr. Nishant Sharma, Advocates. For Respondents: Mr. Anoop Prakash Awasthi, Ms. Prapti Singh, Mr. Parthivi Ahuja, Advocates for R-1. Mr. P.B.A. Srinivasan, Mr. Parth Tandon, Mr. V. Aravind, Advocates for R-2.
JUDGMENT
ASHOK BHUSHAN, J.
This Appeal has been filed against the order dated 14.02.2020
passed by the Adjudicating Authority (National Company Law Tribunal),
Principal Bench, New Delhi allowing C.A. No. 931(PB)/2019 filed in
Company Petition (IB)-563(PB)/2018. Brief facts giving rise to this Appeal
are:
(i) CIRP was initiated by order dated 14.08.2018 of the
Adjudicating Authority against the Corporate Debtor -
Kalptaru Steel Rolling Mills Ltd.
(ii) By order dated 14.02.2020, Resolution Plan was approved by
the Adjudicating Authority.
2. The Appellant's case in the Appeal is that the Adjudicating Authority
has not examined Clause 8.4 of General Terms and Conditions of Supply
followed by the Appellant approved by Andhra Pradesh Electricity
Regulatory Commission. The Adjudicating Authority has no jurisdiction to
waive the electricity dues recoverable from the premises. It is submitted
Company Appeal (AT) (Insolvency) No. 1078 of 2020 -3-
that the electricity dues cannot be waived in the Resolution Plan. In the
Appeal reliance has been placed on the judgment of Hon'ble Supreme Court
in "Telangana State Southern Power Distribution Company Ltd. &
Anr. vs. M/s Srigdhaa Beverages, 2020 SCC OnLine SC 478". It is
submitted that previous dues cannot be waived and Appellant is entitled
to insist for payment of previous dues before restoration of electricity
supply.
3. The issues which have been raised by the Appellant in this Appeal
are fully covered by the judgment of this Tribunal in "Company Appeal
(AT) (Ins.) No.62 of 2022, Damodar Valley Corporation vs. Dimension
Steel and Alloys & Ors., decided on 23.05.2022". In the above case
the approval of plan was challenged on various grounds. One of the ground
raised was that Appellant was entitled to claim unpaid dues as per West
Bengal Electricity Regulatory Commission (Electricity Supply Code)
Regulations, 2013. In the above judgment in paragraphs 14 to 17 following
has been laid down:
"14. There is no question of the claim of Appellant still existing pertaining to pre-CIRP period, which claim was filed before the Resolution Professional, after the approval of the Resolution Plan.
15. The submission, which has been much pressed by learned Senior Counsel for the Appellant that there has been contravention of Statutory Regulations, as the Plan breaches the provision of
Company Appeal (AT) (Insolvency) No. 1078 of 2020 -4-
Section 30, sub-section (2) (e). Section 30, sub- section (2) (e) provides:
"30. Submission of resolution plan.
(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan -
(e) does not contravene any of the provisions of the law for the time being in force."
16. We may at this stage also refer to the Statutory Regulations 4.6.1 and 4.6.4, which are to the following effect:
"4.6.1 If the power supply to any consumer remains disconnected continuously for a period of one hundred and eighty day's where the disconnection has been effected in compliance with any of the provisions of the Act or Regulations, the agreement of the licensee with the consumer for supply of electricity shall be deemed to have been terminated with consequential effect on expiry of the said period of one hundred and eighty days. This will be without prejudice to such other action or the claim that may arise from the disconnection of supply or related issues therefor. On termination of the agreement, the licensee shall have the right to remove the service line and other installations through which electricity is supplied to the consumer.
4.6.4 Notwithstanding anything contained contrary elsewhere in these Regulations were deemed termination of agreement has taken place, then on the basis of application for any consumer new service connection can only be provided in the same premises if the outstanding dues against the deemed terminated consumer is cleared along with the late payment surcharge."
17. There can be no quarrel with the Statutory Regulations of the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013. In Regulation 4.6.4, it is
Company Appeal (AT) (Insolvency) No. 1078 of 2020 -5-
contemplated that new service connection can only be provided in the same premises if the outstanding dues against the deemed terminated consumer is cleared, but the said Regulations cannot be pressed in service, when the Resolution Plan has been approved in the CIRP under the Code. The Code has been given overriding effect, on any other inconsistent law under Section 238. When any statutory provision including the provisions of West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013 are overridden, the question of contravention of such provision does not arise. In event, the submission of learned Senior Counsel is accepted that all laws in force, including the Regulations in question have to be followed in the Resolution Plan and any contravention shall violate Section 30, sub-section (2) (a) & (e), the provision of Section 238 shall become redundant. From the conjoint reading of the provisions of Code, it is clear that in event any provision is not overridden by Section 238, Resolution Plan cannot contravene any existing law."
4. We may also refer to another judgment of this Tribunal in "Company
Appeal (AT) (Ins.) No.961 of 2021, Eastern Power Distribution
Company of Andhra Pradesh Limited. Vs. Maithan Alloys Limited &
Ors., decided on 26.05.2022", where this Tribunal had occasion to
consider the judgment of Hon'ble Supreme Court in "Telangana State
Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa
Company Appeal (AT) (Insolvency) No. 1078 of 2020 -6-
Beverages" (supra). Referring to the judgment of Hon'ble Supreme Court
following was stated in Paragraph 17:
"17. It is to be noted that the Hon'ble Supreme Court in the above case was considering the Auction Sale under SARFAESI Act, 2002. No provision of IBC were under consideration of the Hon'ble Supreme Court. In the IBC proceedings, the electricity supplier is also an Operational Creditor who files claim for its operational debt as well as the charges during the CIRP period. IBC deals with the claims and require for payment of the claim of the electricity service provider under Section 53 of the Code in a liquidation proceeding. Regulation formed under Electricity Act, 2003 fastening liability on the Successful Auction Purchaser in the Liquidation Proceedings will be in conflict with the provision of the IBC. IBC having been given overriding effect under Section 238, any contrary provision in any other statute under Electricity Act, 2003 shall be overridden. Therefore, it shall not be open for the Appellant to contend that Appellant shall recover the entire pre- CIRP and post-CIRP dues from the Successful Auction Purchaser in pursuance of Regulation 8.4, as noticed above. The Appellant is entitled to recover its dues under the IBC proceedings."
5. We, thus, are of the view that judgment of Hon'ble Supreme Court in
"Telangana State Southern Power Distribution Company Ltd. & Anr.
Company Appeal (AT) (Insolvency) No. 1078 of 2020 -7-
vs. M/s Srigdhaa Beverages" (supra) does not help the Appellant in facts
of the present case.
6. We do not find any good ground to interfere with the order dated
14.02.2020 passed by the Adjudicating Authority approving the Resolution
Plan. There is no merit in the Appeal. The Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical)
NEW DELHI
13th December, 2022
Archana
Company Appeal (AT) (Insolvency) No. 1078 of 2020
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