Southern Power Distribution Company of Andhra Pradesh Ltd vs Kalptaru Steel Rolling Mills Ltd

Ashok Bhushan, J.

This Appeal has been filed against the order dated 14.02.2020 passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi allowing C.A. No. 931(PB)/2019 filed in Company Petition (IB)-563(PB)/2018. Brief facts giving rise to this Appeal are:

(i) CIRP was initiated by order dated 14.08.2018 of the Adjudicating Authority against the Corporate Debtor - Kalptaru Steel Rolling Mills Ltd.

(ii) By order dated 14.02.2020, Resolution Plan was approved by the Adjudicating Authority.

The Appellant’s case in the Appeal is that the Adjudicating Authority has not examined Clause 8.4 of General Terms and Conditions of Supply followed by the Appellant approved by Andhra Pradesh Electricity Regulatory Commission. The Adjudicating Authority has no jurisdiction to waive the electricity dues recoverable from the premises. It is submitted that the electricity dues cannot be waived in the Resolution Plan. In the Appeal reliance has been placed on the judgment of Hon’ble Supreme Court in “Telangana State Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa Beverages, 2020 SCC OnLine SC 478”. It is submitted that previous dues cannot be waived and Appellant is entitled to insist for payment of previous dues before restoration of electricity supply.

The issues which have been raised by the Appellant in this Appeal are fully covered by the judgment of this Tribunal in “Company Appeal (AT) (Ins.) No.62 of 2022, Damodar Valley Corporation vs. Dimension Steel and Alloys & Ors., decided on 23.05.2022”. In the above case the approval of plan was challenged on various grounds. One of the ground raised was that Appellant was entitled to claim unpaid dues as per West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013. In the above judgment in paragraphs 14 to 17 following has been laid down:

“14. There is no question of the claim of Appellant still existing pertaining to pre-CIRP period, which claim was filed before the Resolution Professional, after the approval of the Resolution Plan.

The submission, which has been much pressed by learned Senior Counsel for the Appellant that there has been contravention of Statutory Regulations, as the Plan breaches the provision of Section 30, sub-section (2) (e). Section 30, sub-section (2) (e) provides:

“30. Submission of resolution plan.

(2) The resolution professional shall examine each resolution plan received by him to confirm that each resolution plan –

(e) does not contravene any of the provisions of the law for the time being in force.”

We may at this stage also refer to the Statutory Regulations 4.6.1 and 4.6.4, which are to the following effect:

“4.6.1 If the power supply to any consumer remains disconnected continuously for a period of one hundred and eighty day’s where the disconnection has been effected in compliance with any of the provisions of the Act or Regulations, the agreement of the licensee with the consumer for supply of electricity shall be deemed to have been terminated with consequential effect on expiry of the said period of one hundred and eighty days. This will be without prejudice to such other action or the claim that may arise from the disconnection of supply or related issues therefor. On termination of the agreement, the licensee shall have the right to remove the service line and other installations through which electricity is supplied to the consumer.

4.6.4 Notwithstanding anything contained contrary elsewhere in these Regulations were deemed termination of agreement has taken place, then on the basis of application for any consumer new service connection can only be provided in the same premises if the outstanding dues against the deemed terminated consumer is cleared along with the late payment surcharge.”

There can be no quarrel with the Statutory Regulations of the West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013. In Regulation 4.6.4, it is contemplated that new service connection can only be provided in the same premises if the outstanding dues against the deemed terminated consumer is cleared, but the said Regulations cannot be pressed in service, when the Resolution Plan has been approved in the CIRP under the Code. The Code has been given overriding effect, on any other inconsistent law under Section 238. When any statutory provision including the provisions of West Bengal Electricity Regulatory Commission (Electricity Supply Code) Regulations, 2013 are overridden, the question of contravention of such provision does not arise. In event, the submission of learned Senior Counsel is accepted that all laws in force, including the Regulations in question have to be followed in the Resolution Plan and any contravention shall violate Section 30, sub-section (2) (a) & (e), the provision of Section 238 shall become redundant. From the conjoint reading of the provisions of Code, it is clear that in event any provision is not overridden by Section 238, Resolution Plan cannot contravene any existing law.”

We may also refer to another judgment of this Tribunal in “Company Appeal (AT) (Ins.) No.961 of 2021, Eastern Power Distribution Company of Andhra Pradesh Limited. Vs. Maithan Alloys Limited & Ors., decided on 26.05.2022”, where this Tribunal had occasion to consider the judgment of Hon’ble Supreme Court in “Telangana State Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa Beverages” (supra).  Referring to the judgment of Hon’ble Supreme Court following was stated in Paragraph 17:

“17. It is to be noted that the Hon’ble Supreme Court in the above case was considering the Auction Sale under SARFAESI Act, 2002. No provision of IBC were under consideration of the Hon’ble Supreme Court. In the IBC proceedings, the electricity supplier is also an Operational Creditor who files claim for its operational debt as well as the charges during the CIRP period. IBC deals with the claims and require for payment of the claim of the electricity service provider under Section 53 of the Code in a liquidation proceeding. Regulation formed under Electricity Act, 2003 fastening liability on the Successful Auction Purchaser in the Liquidation Proceedings will be in conflict with the provision of the IBC. IBC having been given overriding effect under Section 238, any contrary provision in any other statute under Electricity Act, 2003 shall be overridden. Therefore, it shall not be open for the Appellant to contend that Appellant shall recover the entire pre-CIRP and post-CIRP dues from the Successful Auction Purchaser in pursuance of Regulation 8.4, as noticed above. The Appellant is entitled to recover its dues under the IBC proceedings.”

We, thus, are of the view that judgment of Hon’ble Supreme Court in “Telangana State Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa Beverages” (supra) does not help the Appellant in facts of the present case.

We do not find any good ground to interfere with the order dated 14.02.2020 passed by the Adjudicating Authority approving the Resolution Plan. There is no merit in the Appeal. The Appeal is dismissed.