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TMI Blog2025 (3) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... unal, Jaipur Bench (hereinafter referred to as "Adjudicating Authority") in IA No. 283/JPR/2023 in CP No. (IBPP)-01/54C/JPR/2022. The Adjudicating Authority vide the impugned order permitted the Respondents, Chief Engineer (Commercial), Ajmer Vidyut Vitran Nigam Ltd. (Respondent No.1), to bill and recover Fuel Surcharge (FS) and Special Fuel Surcharge (SFS) from M/s Shree Rajasthan Syntex Ltd. (Appellant), for periods prior to the admission of the Company in Pre-Packaged Insolvency Resolution Process (PPIRP). 2. It is the contention of the appellant that this order was passed despite the approval of the Base Resolution Plan of the Appellant on 22.08.2023. The Appellant contends that the impugned order contravenes the principles of the Insolvency and Bankruptcy Code, 2016, particularly Section 31(1), which provides for a "clean slate" after the approval of a resolution plan. The Appellant challenges the legal and financial implications of the said order, contending that the Respondents failed to file their claims within the prescribed period and are now attempting to recover dues contrary to the provisions of the Code. Brief facts of the case 3. M/s Shree Rajasthan Syntex Ltd./Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it binding on all stakeholders, including government authorities. 9. The Adjudicating Authority on 14.06.2024, passed the impugned order, allowing the Respondents to recover Fuel Surcharge and Special Fuel Surcharge for the period prior to insolvency admission. On 27.06.2024, the Respondent No. 1 sent a demand letter requiring payment of Rs. 1,79,66,332/- within 90 days, relying on the impugned order. The Appellant, aggrieved by the decision, filed the present appeal under Section 61(1) of the Insolvency and Bankruptcy Code, 2016. Submissions of appellant 10. Learned Sr. Counsel for the Appellant states that the present appeal arises out of the impugned order dated 14.06.2024 passed by the National Company Law Tribunal, Jaipur Bench ("Ld. NCLT"), whereby the Ld. NCLT has erroneously permitted the Respondent No. 1 to raise demands towards Fuel Surcharge ("FS") and Special Fuel Surcharge ("SFS") pertaining to a period prior to the initiation of the Pre-Packaged Insolvency Resolution Process ("PPIRP"). The Fuel Surcharge and Special Fuel Surcharge were pre-insolvency claims and should have been filed as part of the resolution process. 11. The counsel submitted that the Ld. NCLT h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated in the resolution process. Therefore, any claims that were not submitted in compliance with the PPIRP framework stand extinguished. 19. The Hon'ble Supreme Court has consistently held that once a resolution plan is approved, no further claims can be entertained. The reliance of the Ld. NCLT on Prem Cottex Vs. Uttar Haryana Bijli Vitran Nigam [2021 SCC Online SC 870], is wholly misplaced as the said judgment does not override the explicit statutory mandate of Section 31 of the IBC. 20. While passing the Impugned Order, the Ld. NCLT has wrongly placed reliance on the above judgment as the said judgment was delivered in the context of Section 56(2) of the Electricity Act, 2003. 21. It is most humbly submitted that the proviso to section 56(2) of Electricity Act, 2003 is in complete contraventions to the provisions of Section 31 of IBC which unequivocally states that after approval of Plan, any claim which is not part of plan shall stand extinguished. Further, the Ld. NCLT has failed to consider that the IBC is a complete code in itself and has an overriding effect over the other laws which are inconsistent with the provisions of IBC by the virtue of Section 238 of IBC. He stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank of India Vs Resolution Professional JEKPL Private Limited. f) Judgment passed by this Hon'ble Appellate Tribunal (Chennai Bench) Edelweiss Asset Reconstruction Company Limited v. V Mahesh & Ors., Company Appeal (AT) (CH) (INS) No. 226 of 2021. 24. Counsel for the Appellant states that the demand for Rs.2,23,97,641/- towards SFS and Rs.63,82,275/- towards FS pertains to the period prior to the approval of the Resolution Plan and, therefore, stands extinguished in accordance with the "clean slate" doctrine. In this regard he cited the Judgment of Hon'ble Supreme Court in Essar Steel India Ltd. (CoC) v. Satish Kumar Gupta (supra), which has reaffirmed that all prior claims against a corporate debtor, which are not accounted for in the approved resolution plan, cannot be enforced post-approval. 25. Counsel for the Appellant submitted that despite repeated opportunities, Respondent No. 1 failed to file any claims for FS and SFS during the PPIRP. Having failed to assert their claim at the appropriate stage, the Respondents are now estopped from raising any fresh demands. Furthermore, Regulation 88 of the RERC (Terms and Conditions for Determination of Tariff) Regulations, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and precedents include: i. Sections 61 and 62 of the Electricity Act, 2003, which outline tariff determination and recovery principles. ii. Section 142 of the Electricity Act, 2003, which provides penalties for non-compliance with orders and directions of regulatory authorities. iii. The RERC Order dated 01.09.2022, which directed the appellant to pay its dues in a structured manner. 30. The counsel for respondent invited attention to the Judgment of Hon'ble Supreme Court in Prem Cottex vs. Uttar Haryana Bijli Vitran Nigam Ltd. [(2021) 20 SCC 200] which has clarified that under Section 56 of the Electricity Act, 2003, the obligation to pay arises when the bill is raised, regardless of when the consumption occurred. The appellant's attempt to categorize the dues as past liabilities is thus legally unsustainable. 31. The Counsel for the Respondent further submitted that the appellant had been making instalment payments as per the directives of the Hon'ble RERC until April 2023. However, after securing a blanket stay order against disonnection dated 13.06.2023 from the Adjudicating Authority, the appellant ceased making further payments. Instead, the appellant now seeks extin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant be dismissed with costs, as it is based on misleading claims and inconsistent assertions. Analysis and findings: 37. We have heard the Ld. Counsels for Appellant and Respondents in detail. We have also gone through the voluminous documents submitted by both parties and also their written submissions. 38. This appeal has been filed consequent upon the order of Adjudicating Authority in I.A. No. 283/JPR/2023 in Company Petition bearing C.P. (IBPP) -01/54C/JPR/2022. The findings in the impugned order are extracted below: "17. The bone of contention pertaining to SFS and FS between the parties is whether the complete liability towards the SFS and the FS pertains to pre-PPIRP period or not. In other words, the issue boils down to whether the complete liability towards SFS which is to be recovered in the coming five years and the FS was due and payable prior to the commencement of the PPIRP. 18. The Hon'ble Apex Court in the case of Prem Cottex Vs. Uttar Haryana Bijli Vitran Nigam Ltd. 2021 SCC OnLine SC 870 wherein it was observed that: "Though the liability to pay arises on the consumption of electricity, the obligation to pay would arise only when the bill is ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the aforementioned directions, the I.A. bearing No. 283/JPR/2023 stands is disposed off." 39. The main issue in this appeal is whether the Respondents, Ajmer Vidyut Vitran Nigam Ltd. (AVVNL), can recover Fuel Surcharge (FS) and Special Fuel Surcharge (SFS) from the Appellant, Shree Rajasthan Syntex Ltd., even though these charges relate to a period before the insolvency process began. The Appellant argues that these charges were erased once the resolution plan was approved, while the Respondents maintain that these are statutory charges and must be paid. 40. To decide this case, we have to address two issues: i. Do FS and SFS count as pre-insolvency liabilities that were erased when the resolution plan was approved under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC)? ii. In this matter of recovery of FS and SFS, is there a conflict between Electricity Act, 2003 and IBC, 2016 or both can be harmoniously interpreted? We would examine both these issues in detail in subsequent paras. Can FS and SFS Claims be Extinguished Under IBC? 41. The first question is whether FS and SFS charges were erased under IBC when the resolution plan was approved. The Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion in Form-P10. The respondents submit that the CD has a running account with the Respondents in which payments are made in tranches and reconciliation is done from time to time between CD and Respondents. He further cites letter dated 08.11.2024 from CD to Respondents in this regard. The Respondent submits that they did not file any claim subsequent to publication of Form P10 on account of FS and SFS as these charges become due only after the bill is raised by the Discom. 46. The question here is what is the stage at which electricity charges become due and payable as per the provisions of Electricity Act. Section 56 of the Electricity Act, 2003 has the relevant provision in this regard. This question has been answered by Hon'ble Supreme Court in Prem Cottex (supra). The relevant paras 9, 10, 11 of the Judgment are extracted below: "9. Section 56 of the Electricity Act, 2003 reads as under: "56. Disconnection of supply in default of payment.-(1) Where any person neglects to pay any charge for electricity or any sum other than a charge for electricity due from him to a licensee or the generating company in respect of supply, transmission or distribution or wheeling of ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become "first due only after the bill is issued" even though the liability would have arisen on consumption. In the instant case the liability of FS/SFS relates to the prior period of 2013-2018 but the payment would become due, only after the bills are raised by the distribution company. 48. It is therefore clear that the stand of Respondents No. 1 & 2 that entire assessed amount of FS & SFS had not become due, as no invoice/bill for the same was raised by the distribution company is in accordance with the provisions of the Electricity Act. 49. It is important to understand the genesis of SFS. The SFS was imposed on Electricity Distribution Companies of Rajasthan, as a result of dispute with M/s Adani Power Rajasthan Ltd. (APRL), which was running a coal based thermal power plant with an installed capacity of 1320 MW at Kawai, Rajasthan. The power generated by the Kawai plant was to be purchased by 3 electricity distribution companies of Rajasthan viz. Jaipur Vidyut Vitran Nigam Ltd. (JVVNL), Ajmer Vidyut Vitran Nigam Ltd. (AVVNL) and Jodhpur Vidyut Vitran Nigam Ltd. (JdVVNL). These three electricity distribution companies are collectively referred to as Rajasthan Discoms. APRL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the appeal filed by APRL and rejected the appeal filed by Rajasthan Urja Vikas Nigam Limited (RUVNL) which conducts Power trading business of Rajasthan Discoms. On 14.10.2019, Rajasthan Discoms filed a review petition no. 7 of 2019 in Appeal No. 202 of 2018 for reviewing the order of Hon'ble APTEL dated 14.09.2019. 55. Subsequently, looking at the importance of the matter and time constraints the Discoms decided to file appeal in Hon'ble Supreme Court. RUVNL also filed Appeal no. 8625-8626 of 2019 on dated 08.11.2019 before the Hon'ble Supreme Court against the order dated 14.09.2019 of APTEL on the RUVNL. The Rajasthan Discoms were also a party to the aforesaid civil appeal. 56. The Hon'ble Supreme Court in the order dated 31.08.2020 rejected the appeal of the petitioner and held: "(ii) Applicability of change in law ".......58. We find similarity in the present case as well as the Energy Watchdog. The factual matrix was similar with the present case. We find that the RERC and the APTEL have recorded the concurrent finding on facts. We find no ground to interfere. No substantial question of law is involved. It was held in Energy Watchdog, that change in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner, the balance payable amount would be Rs.3048.63 crores) along with interest as per the applicable SBAR for the relevant years, which should not exceed 9% per annum (to be compounded annually), from the date the amount became due till the date of actual payment....." 59. Consequent upon the aforesaid order of Hon'ble Supreme Court the Rajasthan Discoms paid an amount of Rs. 5996.44 Crores to M/s APRL towards variations in variable cost of power procured from APRL in the period of May, 2013 onwards. 60. Subsequently, the Discoms in their petition to RERC for tariff revision stated that such variation in power purchase cost is beyond the control of Discoms and it is treated as an uncontrollable parameter in the RERC tariff regulations. 61. The RERC based on petition filed by Discoms under Section 62 (4) of the Electricity Act, 2003 read with Regulation 88 of RERC to recognize the additional power purchase cost incurred in order to comply with the orders of Hon'ble Supreme Court in the matter of change in law and allow recovery of additional power purchase cost through Special Fuel Surcharge Adjustment (FSA) passed the tariff order on 01.09.2022. The operating part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Commissions based on Section 61 and 62 of the Electricity Act, 2003. Any organizations or person involved in activities relating to generation, transmission or distribution of electricity has to abide by the orders/ directions of the Regulatory Commission. Failing which they are liable for punishment under Section 142 of the Act as extracted below: "Section 142 - Punishment for non-compliance of directions by Appropriate Commission In case any person, who is required under this Act to comply with any order or direction given under this Act by the Appropriate Commission, fails to do so, he shall be liable to: (a) a penalty which may extend to one lakh rupees for each contravention; (b) in case of continuing failure, with an additional penalty which may extend to six thousand rupees for every day during which the failure continues after the first contravention." 64. In view of Section 142, we further note that the respondents had no option, but to comply with the orders of RERC regarding payment of FS & SFS by the consumers. The installments of FS were decided by RERC at an earlier occasion. Accordingly, The bills for SFS and FS are sent to the consumers along with monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stallment payments directed by the RERC, but later changed their stance to avoid further liability. 67. We also note that in their letter dated 08.11.2024, the appellant acknowledged that FS and SFS charges billed after 19.04.2023, though related to an earlier period, remain unpaid. They stated that between 19.04.2023 and 30-06-2023, they made payments amounting to Rs.2,63,00,640/- and an additional payment of Rs.39,09,678/- on 21.09.2023. They also admitted that their account is a running account, and payments are made in tranches. The letter further claims that, as per reconciliations on 27.03.2024 and 22.10.2024, all dues except FS and SFS have been settled. A copy of the letter is extracted below : Ref : SRSL/DPR/CAD/534 Dated : 8th Nov, 2024 Shree Rajasthan Syntex Limited (Division: Shree Rajasthan Texchem) Post Box No.5,Village Udaipura, Simalwara Road, DUNGARPUR -314 001 (Rajasthan) INDIA 70148 20700 E-mail: info@srsl in Web: www.srsl.in Kind Attn : Superintending engineer (Comml.) Ajmer Vidyut Vitran Nigam Ltd. Vidyut Bhawan Panchsheel Nager Ajmer 305004 Ref : your Letter ref no : AVVNL/CE(HQ)/SR.AO(COMMl.)/2024/D.2000 Dated 29.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments and selective admissions indicate an effort to mislead the Tribunal by presenting differing claims in different contexts. 69. The appellant has cited several Judgments of Hon'ble SC and this Appellate Tribunal in support of their claim. The applicability of these Judgments to the present factual matrix has been examined. We now discuss the same: i. In 'Ghanshyam Mishra and Sons Pvt. Ltd. Vs Edelweiss Asset Reconstruction Company Ltd., (2021) 9 SCC 657; decided by Hon'ble Supreme Court, the matter related to financial claims that existed before the approval of a resolution plan and were either included in the plan or canceled under IBC. In the instant matter, FS and SFS charges arise from the orders of the RERC and would become due only after the bills are issued by the Discom. These are statutory dues under the Electricity Act and SFS arises from the orders of Hon'ble Supreme Court and is payable in future after the bills for the same are issued by Discom such prospective claims cannot be eradicated under IBC. ii. The decision of Hon'ble Supreme Court in 'Pioneer Urban Land and Infrastructure Ltd. & Anr. Vs Union of India, (2019) 8 SCC 416' related to the rights of ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nges in power purchase cost beyond the control of Discoms and the same is treated as an uncontrollable parameter in tariff regulations. The Fuel Surcharge and Special Fuel Surcharge in the present case have arisen due to variation in fuel cost. Further, in case of SFS due to change in law as decided by Hon'ble Supreme Court. It is due to peculiarities in the instant matter that the final decision about amount payable to ARPL and subsequent manner of recovery of arrears from consumers had to be decided at the level of Hon'ble Supreme Court and manner of recovery from end consumer was finalized by the RERC. FS and SFS are in our view statutory charges as decided by RERC and are payable only after the bill is raised in monthly instalments as decided by RERC consequent to final decision of Hon'ble Supreme Court. 71. We also note that FS/SFS though related to earlier period could not have been claimed in one instalment under PPIRP, as in this case the obligation to pay arises only after the bill is raised. We agree with the contention of Respondent in this regard that he could not have filed the claim for FS/SFS as it would be violative of Hon'ble SC's order and Section 142 of the Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tariff order. The SF and SFS dues would arise in future only after the bill is raised by the Discoms. This is similar to any operational debt, where the obligation to pay by CD arises after the bill/invoice is submitted by the Operational Creditor. We find no conflict between the provisions of IBC in this regard vis-à-vis provisions of Electricity Act 2003 on the facts specific to present matter. 76. We have also seen from the findings of Hon'ble Supreme Court in Pioneer (supra), wherein a three Judge Bench of Hon'ble SC held that in the context of RERA it is to be read harmoniously with the Code. It is only in the event of conflict that the Code will prevail over the RERA. It is therefore, clear that, for an override to take effect, there must be a clear and direct conflict between the provisions of both statutes. Section 238 of the IBC provides an overriding effect, stating that the provisions of the IBC shall have effect notwithstanding anything inconsistent in any other law. However, this override applies only in cases where there is an actual inconsistency between the provisions of the IBC and another statute. 77. In the present case, the appellant has not identified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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