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2018 (2) TMI 1836 - AT - Insolvency and BankruptcyInsolvency Resolution Process for Corporate Persons - whether the order of ‘Moratorium’ will cover the current charges payable by the ‘Corporate Debtor’ for supply of water, electricity etc. or not? - HELD THAT:- From sub-section (2) of Section 14 of the ‘I&B Code’, it is clear that supply of essential goods or services to the ‘Corporate Debtor’, as may be specified by the ‘Insolvency and Bankruptcy Board of India’, cannot be terminated or suspended or interrupted during the period of ‘Moratorium’. Regulation 31 relates to ‘Insolvency Resolution Process Costs’ whereas Regulation 32 relates to ‘Essential Supplies’. As per Regulation 31, the amounts due to suppliers of essential goods and services under Regulation 32 are to be included in the ‘Insolvency Resolution Process Costs’. It is clear that the amount as is due towards supply of essential goods and services, including electricity, water, telecommunication services and information technology services, if they are not a direct input to the output produced or supplied by the ‘Corporate Debtor’, require to be included towards ‘Insolvency Resolution Process Costs’ as per sub-section 13(e) of Section 5. From sub-section (2) of Section 14 of the ‘I&B Code’, it is also clear that essential goods or services, including electricity, water, telecommunication services and information technology services, if they are not a direct input to the output produced or supplied by the ‘Corporate Debtor’, cannot be terminated or suspended or interrupted during the ‘Moratorium’ period. From the provisions of ‘I&B Code’ and Regulations, we find that no prohibition has been made or bar imposed towards payment of current charges of essential services. Such payment is not covered by the order of ‘Moratorium’. Regulation 31 cannot override the substantive provisions of Section 14; therefore, if any cost is incurred towards supply of the essential services during the period of ‘Moratorium’, it may be accounted towards ‘Insolvency Resolution Process Costs’, but law does not stipulate that the suppliers of essential goods including, the electricity or water to be supplied free of cost, till completion of the period of ‘Moratorium’. Payment if made towards essential goods to ensure that the Company remains on-going as made in the present case for the month of December, 2017, such amount can be accounted towards ‘Insolvency Resolution Process Costs’, but it does not mean that supply of essential goods such as electricity to be supplied free of cost and the ‘Corporate Debtor’ is not liable to pay the amount till the completion of the period of ‘Moratorium’. If the ‘Corporate Debtor’ has no fund even to pay for supply of essential goods and services, in such case, the ‘Resolution Professional’ cannot keep the Company on-going just to put additional cost towards supply of electricity, water etc. In case the ‘Corporate Debtor’ (Company) is non-functional due to paucity of fund, and has become sick the question of keeping it on going does not arise. In absence of specific prohibition for payment of current charges and in view of the fact that the ‘Corporate Debtor’ has already paid the current electricity charges for the month of December, 2017, we pass the following orders: - (i) The ‘Resolution Professional’ will pay the outstanding current charges for supply of electricity for the month of September, 2017 and January, 2017 to the Appellant by 28th February, 2018. The current electricity charges for the month of October, 2017 and February, 2017 be paid by 16th March, 2018. The current charges towards the electricity for the month of November, 2017 and March, 2018 be paid by 15th April, 2018. (ii) The Appellant will not levy any late payment surcharges for delayed payment of current charges, nor disconnect the supply of electricity in view of sub-section (2) of Section 14 of the ‘I&B Code’.
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