NCLAT upheld the primacy of the IBC over the Electricity Act and ruled that pre-CIRP electricity dues stood extinguished as PSPCL had failed to claim them during the resolution process.
On 25-02-2025, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Yogesh Khanna (Judicial Member) and Mr. Ajai Das Mehrotra (Technical Member), held that pre-CIRP electricity dues cannot be claimed from the Successful Resolution Applicant if the creditor failed to submit its claim during the resolution process. The Tribunal affirmed that the approved resolution plan constitutes a full and final settlement of all such dues under Section 60(5)(c) and Section 238 of the IBC, overriding the provisions of the Electricity Act, 2003.
Punjab State Power Corporation Limited ("PSPCL") filed an appeal challenging the order of the National Company Law Tribunal (NCLT), Chandigarh, in IA No. 164/2021 in CP (IB) No. 102/Chd/Chd/2018, dated July 5, 2023. The application had been filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) by Akums Lifesciences Limited (formerly Parabolic Drugs Limited), the Corporate Debtor. The NCLT had nullified the outstanding electricity dues payable to PSPCL for the period prior to the initiation of the Corporate Insolvency Resolution Process (CIRP). The CIRP against the Corporate Debtor had commenced on August 23, 2018, and the resolution plan had been approved on January 12, 2021. The management and control of the company had been transferred to the Successful Resolution Applicant (SRA), who subsequently sought the restoration of the electricity connection. PSPCL, however, had demanded payment of ₹3,87,96,889 in outstanding electricity dues. The SRA, after approval of the resolution plan, had already made payments to operational creditors whose claims had been admitted by the Resolution Professional.
In the impugned order, the NCLT held that the resolution plan, having been approved by the Adjudicating Authority, had settled all pre-CIRP dues. PSPCL had failed to file its claim before the Resolution Professional, and the approved resolution plan had explicitly stated that the amounts allocated to operational creditors constituted a full and final settlement of their claims. Consequently, the NCLT concluded that PSPCL’s claim for pre-CIRP dues did not subsist and directed that the outstanding dues be nullified. Aggrieved by the order, PSPCL filed an appeal before the National Company Law Appellate Tribunal (NCLAT).
The NCLAT, in its decision, reaffirmed that disputes regarding the supply of electricity and arrears of electricity dues, when related to the insolvency resolution of the Corporate Debtor, fall within the jurisdiction of the NCLT under Section 60(5)(c) of the IBC due to the overriding effect of Section 238 of the IBC. The Tribunal relied on its previous decision in Madhya Gujarat Vij Company Ltd. v. Kalptaru Alloys Pvt. Ltd. and the Supreme Court’s ruling in Paschimanchal Vidyut Vitran Nigam Limited v. Raman Ispat Private Limited, REEDLAW 2023 SC 07609, both of which affirmed that IBC provisions prevail over sectoral regulations, including those under the Electricity Act, 2003. The Tribunal also referred to the Meghalaya High Court’s decision in Reliance Infratel Limited and Another v. State of Meghalaya and Others, REEDLAW 2024 Mgl 06508, which upheld the primacy of the IBC over electricity laws.
The NCLAT further held that since PSPCL had not filed its claim before the Resolution Professional during the CIRP, it could not now demand payment for pre-CIRP dues from the Successful Resolution Applicant. The approved resolution plan was binding on all stakeholders, including PSPCL, and had already provided for the settlement of operational creditors' claims. In light of these findings, the NCLAT upheld the NCLT's order, dismissing PSPCL's appeal and reiterating that pre-CIRP claims not filed during the insolvency process stand extinguished upon the approval of the resolution plan.
Ms. Shivani Verma, Advocate, represented the Appellant.
Mr. Dilip Kumar Niranjan, Mr. Karmveer and Mr. Nikhil Kumar Singh, Advocates, appeared for the Respondent.
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