2023 (9) TMI 664 - SCH - Insolvency and Bankruptcy

Recovery of arrears of electricity dues - waterfall mechanism - insistence on on payment of arrears for grant of an electricity connection can be done or not - overriding effect of IBC - Section 53 of the Code - HELD THAT - The electricity connection applied for or revival sought by the successful resolution applicant is not an asset or property. The observations from Embassy Property Developments Private Limited 2019 (12) TMI 188 - SUPREME COURT would confer jurisdiction on the tribunal constituted under the Code insofar as the appellant Southern Power Distribution Company of Andhra Pradesh Limited is insisting on payment of the dues of the corporate debtor for restoration/grant of the electricity connection. The dues of the corporate debtor have to be paid in the manner prescribed in the resolution plan as approved by the adjudicating authority. The resolution plan is approved when it is in accord with the provision of the Code. Thus the issue of corporate debtor dues falls within the fold of the phrase arising out of or in relation to insolvency resolution under section 60(5)(c) of the Code. There are no good ground and reason to interfere with the impugned judgment(s)/order(s) and hence the present appeals are dismissed.

Summary

Issues involved: Interpretation of provisions of the Insolvency and Bankruptcy Code, 2016 in relation to payment of arrears for grant of electricity connection.

Judgment Summary:

The Supreme Court held that the legal issue at hand is governed by a previous judgment of the Court. The appellant, a power distribution company, cannot demand payment of arrears for the grant of an electricity connection as per the waterfall mechanism. However, the successful resolution applicant must fulfill other requirements for the connection. Insisting on arrears payment would contradict the clean slate principle. The Court emphasized the overriding effect of the Code's provisions, specifically Section 53 regarding debt payment.

Regarding reliance on other judgments, the Court clarified that a case involving renewal of a mining lease does not fall under insolvency resolution matters. However, if government dues are finalized, they must be paid as per the approved resolution plan. The tribunal under the Code has jurisdiction if the power company insists on corporate debtor dues for electricity connection restoration.

Ultimately, the Court dismissed the appeals, finding no valid reason to interfere with the lower court's decision. Any pending applications were disposed of accordingly.