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TMI Blog2018 (9) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... ankruptcy Code, 2016 in respect of outstanding dues for supplies of electricity, in Form C prescribed under Insolvency and Bankruptcy Code (liquidation Process) Regulations, 2016. Applicant Mr Praveen Bansal is the liquidator appointed by order dated 31st January 2018. The corporate debtor had an agreement dated 11th February 2010 with Paschimanchal Vidyut Vitran Nigam Limited (from now on will referred as P.V.V.N.L) for supply of electrical energy. Clause 5 of the agreement provides that "The outstanding dues will be a charge on the assets of the company. Before sale is made the outstanding dues will be cleared and in the alternative, the deed to agreements/sale will specifically mention the outstanding dues and the methods of its payment." 2. The applicant contends that the Electricity Distribution Urban Division 1, Muzaffarnagar raised bills for supply of electrical energy to the corporate debtor from time to time to which corporate debtor was unable to pay due to losses suffered by the corporate debtor. As per the final bill dated 27th January 2017, total arrears works out to R. 4,32,33,883/-. 3. Since P.V.V.N.L. has provided electrical energy to the corporate debtor, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f liquidator. Since initiation of liquidation, Liquidator has not received any reply or claim form P.V.V.N.L. 10. It is further stated that the liquidator has a power to sale the movable, immovable and actionable claims of the corporate debtor in liquidation subject to Section 52, by public auction or private contract. The power to transfer the said property to any person or body corporate by sale is specified under Section 35(1) (F) of the Code. It is further stated "that a message is printed on the fronts of wall of the factory of the corporate debtor that By order of the Tehsildar Sadar, Muzaffarnagar with the property of Raman Ispat Private Limited has been attached and purchase of the same is illegal." 11. District Collector has issued notice dated 5th March 2018 for recovery of outstanding dues of Rs. 2,50,14,080/- for supply of electrical energy by auction of movable and immovable properties located at Khasara No. 0.4710. It is further stated that it is under his powers to sell the property of the corporate debtor. 12. It is further contended that unless the attachment orders of the District Collector, Muzaffarnagar and Tehsildar, Muzaffarnagar are set aside by this Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, nor it can be granted, and as such for the above mentioned reliefs the present application will not be maintainable. The Agreement for supply of electrical energy in favour of the Corporate Debtor dated 11.02.2010 was executed. Page 32 of the application clearly shows that the agreement is between the Paschimanchal Vidyut Vitaran Nigam Ltd., and M/s. Raman Ispat Private Ltd. The Paschimanchal Vidyut Vitaran Nigam Ltd., through its authorised signatory Mr Mahesh Chandra, Executive Engineer and of M/s. Raman Ispat Private Ltd through its authorised signatory Mr Ram Pal Singh executed the 6 agreement. Following paragraph of the agreement being relevant for the purpose is being quoted herein below: "1. The Licensee is, inter-alia, engaged in the business of supplying electricity and has been granted a license under the Indian Electricity Act,1910 and is presently a deemed licensee under Section 14, 1st provision of the Electricity Act,2003 (hereinafter referred to as the Act) for distribution and /or retail supply and/or bulk supply of energy to various consumers within its licensed areas." "3(I) Consumer shall abide and be bounded by all the terms and conditions of the Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no such direction can be issued. The prayer is totally misconceived and cannot be granted. We have heard the argument of both parties and perused the record. Admittedly the Corporate Debtor entered into an agreement dated 11-02-2010 with Paschimanchal Vidhyut Vitran Nigam Ltd. Clause 5 of the agreement provided that the outstanding dues will be a charge on the assets of the Company. Paschimnachal Vidhyut Vitran Nigam Ltd. raised a final bill of Rs. 4,32,33,883/- dated 27.01.2017 for supply of electricity to the corporate debtor, Arrears of the security deposit amounting to Rs. 64,43,000/-.The property owned by the Corporate Debtor has been attached by the District Collector, Muzaffarnagar vide its order no. 1048 dated 12-01-2016 and Tehildar, Muzaffarnagar vide its order no. 1423F dated 23-01-2016 and has prohibited to transfer the property by sale, donation or any other and create charge due to outstanding dues for supply of electrical energy by PVVNL. The law provides that the liquidator has a duty to form liquidation estate of the assets of the corporate debtor in accordance with section 36(1) of the Insolvency and Bankruptcy Code,2016, consolidate claims of creditors in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributed. Section 36(2) provides that the liquidator shall hold the liquidation estate as a fiduciary for the benefit of creditors. The liquidation value of assets of corporate debtor is lower than the claim amount of Union Bank of India and PVVNL. Assuming both parties are secured creditors, proceeds from the sale of liquidation assets after deduction of liquidation expenses will be distributed among Union Bank of India and PVVNL by section 53(1)(b) of IBC, 2016. Accordingly, both creditors will get the benefit in compliance of IBC, 2016. Clause 4.3(f) (i) of UP Electricity Supply Code, 2016 provides that both seller and purchaser will be either/or, jointly and severally liable to pay the outstanding electricity dues. In case the clause is implemented the realizable value of the assets will be liquidation value LESS outstanding electricity dues. Assuming both parties are secured creditors, proceeds from the sale of liquidation assets after deduction of liquidation expenses and outstanding electricity dues will be distributed among Union Bank of India and PVVNL by section 53(1)(b) of IBC, 2016. In this process, PVVNL will be able to realise more than what is entitled for distributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or meter, entry of distribution licensee or any person acting on his behalf for disconnecting supply and removing the matter, entry for replacing, altering or maintaining electric lines or electrical plants or meter and such other matters.] It is pertinent to mention that Hon'ble Supreme Court in case of Kanpur Electricity Supply Co. Ltd. v. LML Ltd., (2010) 6 SCC 165 at page 176 has held that "39. It is apparent that while passing the impugned order, the High Court lost sight of the said order of BIFR and confined itself to the provisions of Clauses 4.41 and 4.49 of the U.P. Electricity Supply Code, 2005 framed under Section 50 of the Electricity Act, 2003. If Respondent 1 Company is to revive, and, thereafter, survive, a certain amount of consideration has to be shown which was fully realised by the petitioners themselves, but they allowed themselves to be tied up in knots over compliance with the provisions of Clauses 4.41 and 4.49 which are rules framed for application in special cases in order to help industries which had fallen on difficult days, to recoup their losses and to bring their finances on an even keel." In the above mentioned case, the Hon'ble Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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