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TMI Blog2022 (9) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... g Authority by the impugned order directed the Respondent not to take over the Distribution Franchisee Agreement (DFA) and to continue to supply uninterrupted electricity to the Corporate Debtor and the Resolution Professional was directed to pay the outstanding dues during the CIRP period within 90 days. Aggrieved by the order insofar as it directed the Resolution Professional to pay the outstanding dues during the CIRP period, the Resolution Professional has come up in this Appeal. 3. The brief facts of the case necessary for deciding this Appeal are: (i) The Corporate Debtor Lavasa Corporation Limited entered into Distribution Franchisee Agreement ("DFA") with Maharashtra State electricity Distribution Company Limited (hereinafter referred to as "MSEDCL") on 15.03.2011, under which, the MSEDCL was to supply electricity at certain injection points from where the electricity was to further supplied to consumers in the township through distribution infrastructure of the Corporate Debtor. (ii) The DFA expired on 24.10.2019. The MSEDCL informed by letter dated 09.07.2021 about its intention not to renew the DFA and that it intends to take over the Distribution Franchisee of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant is directed to pay the outstanding dues to the Respondent during the CIRP period within 90 days from the date of pronouncement of the order and also the Respondent to supply uninterrupted connection of electricity to the Corporate Debtor to keep the Corporate Debtor as a going concern and not to takeover the Distribution Franchisee Agreement." (vii) The Resolution Professional aggrieved by only part of direction by which Resolution Professional was directed to pay outstanding dues to the Respondent during the CIRP period within 90 days has come up in this Appeal. 4. The learned Counsel for the Appellant challenging the above direction of the Adjudicating Authority directing for payment of electricity dues during the CIRP period has submitted that the Corporate Debtor lacks necessary funds to make complete payment to the Respondent and it has been making payment on monthly basis to the extent possible. It is submitted that Resolution Plan has already been approved by the Committee of Creditors ("CoC") and is pending consideration before the Adjudicating Authority and the Plan shall contemplates payment of residuary dues also. It is submitted that the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Adjudicating Authority was right in issuing direction to the Appellant to make payment of outstanding electricity dues during CIRP period within 90 days. The CIRP against Corporate Debtor has commenced on 30.08.2018 by order of the Adjudicating Authority and during the moratorium period the Respondent has continued to supply the electricity to the Corporate Debtor even though DFA came to an end on 24.10.2019, when Respondent issued notice to take over the Distribution Franchisee Agreement. Thereafter, the Resolution Professional filed the IA No.1661 of 2021 seeking the directions as noticed above. In the Application, which was filed by Resolution Professional, it was categorically pleaded that continuance of Franchisee Infrastructure is essential to maintain the value of the Corporate Debtor for the incoming Resolution Applicant. Consequently, the prayer was made by the Resolution Professional for direction to the Respondent to continue supplying electricity. The pleading in IA No.1661 of 2021 makes it clear that continuation of the electricity supply was necessary to maintain the value of the Corporate Debtor. 8. We need to notice the provisions of the Code to find out as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Objects and Reasons The Insolvency and Bankruptcy Code, 2016 (the Code) was enacted with a view to consolidate and amend the laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order or priority of payment of Government dues and to establish and Insolvency and Bankruptcy Board of India. 2. A need was felt to give the highest priority in repayment to last mile funding to corporate debtors to prevent insolvency, in case the company goes into corporate insolvency resolution process or liquidation, to prevent potential abuse of the Code by certain classes of financial creditors, to provide immunity against prosecution of the corporate debtor and action against the property of the corporate debtor and the successful resolution applicant subject to fulfilment of certain conditions, and in order to fill the critical gaps in the corporate insolvency framework, it has become necessary to amend certain provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply of electricity is necessary to make the value of Corporate Debtor as has been specifically pleaded in IA No.1661 of 2021 as noticed above, the Corporate Debtor is obliged to make payment 13. The submission of learned Counsel for the Appellant is that payment of electricity dues cannot be demanded by Respondent, since they are part of the CIRP cost and can be paid only at the conclusion of CIRP process, that is, after approval of the Resolution Plan. The above submission is clearly in conflict with the legislative scheme as delineated by Section 14(1) Explanation and Section 14(2-A). When the Corporate Debtor has opined that supply of electricity is essential and is to be continued by the Respondent, it is also under obligation to make payment of electricity dues of the CIRP period and direction issued by the Adjudicating Authority to make the payment of outstanding dues, cannot be faulted. The direction of Adjudicating Authority to continue the DFA, that is, to continue to supply the electricity was subject to payment of outstanding dues within 90 days as directed by the Adjudicating Authority. The Appellant cannot enjoy the benefit of direction of one part, that is, to conti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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