Tata Power Western Odisha Distribution ... vs Jagannath Sponge Pvt. Ltd

[Arising out of Order dated 18.04.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Cuttack Bench, in IA(IB) No. 14/CB/2023 arising out of CP(IB) No. 1174/KB/2018 in TP No. 34/CTB/2019]

IN THE MATTER OF:

1. TATA POWER WESTERN ODISHA DISTRIBUTION LIMITED (TPWODL) Through Chief Executive Officer Electrical Division, Rajgangpur, Dist. Sundergarh Odisha - 770017 Telephone: Email: tpwodl@tpwesternodisha.com

2. THE EXECUTIVE ENGINEER TATA POWER WESTERN ODISHA DISTRIBUTION LIMITED (TPWODL) Having its Registered Office at: Burla, Dist. SAMBALPUR Odisha - 768017 Telephone : 0663-2431984 Email: tpwodl@tpwesternodisha.com ...Appellants

Versus

1. JAGANNATH SPONGE PRVIATE LIMITED, Through its director Sh. Arun Kumar Gaindhar, Having its Registered Office at; Panda Colony, Bisra Dahar Road, Rourkela, Dist. Sundergarh, Odisha - 770017 Email: jagannathspongepvtltd@gmail.com ...Respondents

Cont'd.../ -2-

Present:

For Appellant: Mr. Anupam Lal Das, Sr. Advocate, Mr. Hasan Murtaza, Ms. Nikita Thapar, Advocates For Respondents: Ms. Ankita Patnaik, Advocate

JUDGMENT

ASHOK BHUSHAN, J.

1. This Appeal has been filed against the Order dated 18th April, 2023

passed by National Company Law Tribunal, Cuttack Bench, Cuttack

(hereinafter referred to as "The Adjudicating Authority") in IA(IB) No.

14/CB/2023 arising out of CP(IB) No. 1174/KB/2018.

2. Brief facts of the case necessary to be noticed for deciding this

Appeal are:-

i. On an application filed under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as "The Code")

against the Jagannath Sponge Private Limited, Corporate

Insolvency Resolution Process (CIRP in short) was initiated vide

Order dated 20th April, 2019 of the Adjudicating Authority.

ii. The Resolution Plan was submitted in the CIRP of the

Corporate Debtor by one M/s Omkara Asset Reconstruction

Company which plan was approved by the Adjudicating Authority

vide Order dated 06th August, 2021. The Appellant vide Letter dated

19th July, 2022 was informed that Resolution Plan has been

Company Appeal (AT) (Insolvency) No. 777 of 2023 -3-

approved by the Adjudicating Authority. The Appellant filed

C.A.(AT) Insolvency No. 1404 of 2022 challenging the Order dated

06th August, 2021 which Appeal was withdrawn by the Appellant

on 25th November, 2022.

iii. The Respondent vide Letter dated 05th August, 2022

requested the Appellant to supply electricity with CD 550KVA to its

units. The Appellant informed the Respondent of outstanding

arrears of Electricity dues amounting to Rs. 13,46,19,931/-. The

Respondent filed an Application before the Adjudicating Authority

I.A.(IB) 14/2023 seeking direction to Appellant to provide electricity

connection to the two units and set aside the demand of arrears of

electricity dues. The Adjudicating Authority heard the parties and

framed following two points for consideration:

"1. Whether letter dated 08.12.2022 of 2nd respondent demanding Rs. 13,46,19,931/- against the applicant is valid?

2. Whether the applicant is entitled for service connection?"

iv. The Adjudicating Authority took the view that Resolution

Plan having been approved which is binding, the claim of Appellant

against the Successful Resolution Applicant of arrears is not valid.

The Adjudicating Authority noted that the Appellant did not file any

claim in the Insolvency Resolution Process of the Corporate Debtor.

Adjudicating Authority by the Impugned Order issued following

directions:

Company Appeal (AT) (Insolvency) No. 777 of 2023 -4-

"1. It is hereby declared that the amount of Rs.

13,46,19,931/- claimed by the respondents in their impugned letter dated 08.12.2022 addressed to applicant is not valid and not enforceable as against the corporate debtor/successful resolution applicant.

2. The 2nd Respondents is directed to consider the service connection application of the applicant submitted by the successful resolution applicant or any other person on its behalf, in accordance with the code/regulation without insisting to make any payment/arrears in whatever nature payable by the corporate debtor prior to 06.08.2021."

v. Aggrieved by the said order, the Appellant has come up in the

Appeal.

3. Learned Counsel for the Appellant in support of Appeal contends

that electricity dues of the Appellant required to be paid before Electricity

Connection can be given to the Respondent. It is submitted that

electricity was disconnected of the Corporate Debtor in the year 2013 and

the two related power supply agreements were terminated with effect from

03.10.2013 and with effect from 01.02.2015. The total arrears of

electricity against the Corporate Debtor were Rs. 13,56,19,931/- which is

required to be paid. It is submitted that there being no proper publication

by the Resolution Professional, Appellant could not file its claim in the

CIRP Process.

4. Learned Counsel for the Respondent refuting the submission of the

Appellant contends that Appellant having not filed its claim, its pre-CIRP

Company Appeal (AT) (Insolvency) No. 777 of 2023 -5-

dues has been extinguished and in the Resolution Plan the Adjudicating

Authority has already issued direction that electricity distribution

company shall not raise any demand for reference to the past dues.

5. We have considered the submissions of Learned Counsel for the

parties and have perused the record.

6. The Adjudicating Authority in several paragraphs while dealing with

point no. 1 and 2 has extracted the part of the Resolution Plan under the

waivers, reliefs and exemptions, Sl. No., which refers as follows:

Sl Waivers, Reliefs Orders thereon No. and Exemptions sought from NCLT The Hon'ble NCLT The electricity be pleased to give distribution or issue necessary companies shall not directions, raise any demand instructions to the with reference to

relevant electricity the past dues. They board to give the shall, however, exemption to the treat the application Corporate Debtor that shall be filed from making by the corporate payment towards debtor, as a new reconnection connection and charges of power. collect charges as applicable for a new connection, without any coercion or precondition to pay the past dues.

7. There is no dispute to the fact that Appellant did not file any claim

of its Pre-CIRP dues of Rs. 13,46,19,931/-. The Adjudicating Authority

has rightly relied on Judgment of "Ghanashyam Mishra and Sons Pvt.

Company Appeal (AT) (Insolvency) No. 777 of 2023 -6-

Ltd. through the Authorized Signatory vs. Edelweiss Asset

Reconstruction Company Limited through the Director & Ors.",

(2021 SCC OnLine SC 313). Paragraph 102.3 of the Supreme Court

Judgment is as follows:

"102.3 Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued."

8. The submission of the Appellant that there was no proper

publication of the announcement made by the Resolution Professional

has been dealt by the Adjudicating Authority in paragraph 8 of the Order.

The Adjudicating Authority has noted the provisions of Regulation and

has returned a finding that on the above submission of the Appellant plan

approval cannot be held to be vitiated. It is also to be noted that against

the plan approval order, Appellant filed an Appeal which was withdrawn

by the Appellant themselves. No contention by the Appellant challenging

the plan approval can be considered. The Adjudicating Authority while

approving the Plan having already issued directions that Electricity

Distribution Companies shall not raise any demand with reference to the

past dues, we see no error in the direction issued by the Adjudicating

Authority by the Impugned Order directing the Appellant to consider the

service connection application of the Applicant in accordance with the

Code/Regulation without insisting on making any payment of arrears

Company Appeal (AT) (Insolvency) No. 777 of 2023 -7-

prior to date of plan approval. No grounds have been made out to

interfere with the Impugned Order passed by the Adjudicating Authority.

There is no merit in the Appeal, the Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI 08th August , 2023

Basant B.

Company Appeal (AT) (Insolvency) No. 777 of 2023