NCLAT upheld the liability for Fuel Surcharge and Special Fuel Surcharge, ruling that statutory dues under the Electricity Act prevailed over the IBC’s clean slate principle.
On 11-03-2025, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Rakesh Kumar Jain (Judicial Member) and Technical Members Mr. Naresh Salecha and Mr. Indevar Pandey, heard an appeal along with connected IAs and held that Fuel Surcharge (FS) and Special Fuel Surcharge (SFS), being statutory dues under the Electricity Act, 2003, cannot be extinguished under the Insolvency and Bankruptcy Code, 2016. The tribunal ruled that since their liability arises only upon billing and they were not included in the approved resolution plan, such charges remain payable despite insolvency proceedings, affirming the primacy of the Electricity Act in this context.
The present appeal was filed by M/s Shree Rajasthan Syntex Ltd. under Section 61(1) of the Insolvency and Bankruptcy Code, 2016 ("Code"), challenging the order dated 14.06.2024, passed by the National Company Law Tribunal, Jaipur Bench ("Adjudicating Authority"). 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 the appellant for periods preceding its admission into the Pre-Packaged Insolvency Resolution Process (PPIRP). The appellant contended that this order was passed despite the approval of its Base Resolution Plan on 22.08.2023 and that the Respondents had failed to file their claims within the prescribed period, thereby rendering the subsequent demand in violation of Section 31(1) of the Code, which ensures a "clean slate" post-approval of a resolution plan.
The appellant, a public listed company engaged in manufacturing synthetic spun yarns, initiated PPIRP under Section 54C of the Code, which was admitted on 19.04.2023. The Resolution Professional (RP) invited claims from creditors via a public announcement dated 26.04.2023, but the Respondents failed to submit claims for FS and SFS during the prescribed period. Thereafter, bills were issued on 05.04.2023 and 05.05.2023, demanding substantial amounts for FS and SFS, including charges dating back to 2013-2018. The appellant challenged these demands under Section 60(5) of the Code, obtaining an interim order restraining the disconnection of electricity. The Committee of Creditors (CoC) approved the Base Resolution Plan, which was subsequently sanctioned by the Adjudicating Authority, making it binding on all stakeholders, including government entities.
Despite this, on 14.06.2024, the Adjudicating Authority allowed the Respondents to recover FS and SFS for the pre-insolvency period, following which a demand letter was issued requiring payment of Rs. 1,79,66,332/- within 90 days. The appellant argued that these claims should have been addressed within the resolution process and relied on the Supreme Court's ruling in Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., REEDLAW 2021 SC 04534, which held that claims not forming part of an approved resolution plan stand extinguished. It was further contended that the Electricity Act, 2003, could not override the provisions of the Code due to Section 238’s non-obstante clause and that the belated demand violated the Rajasthan Electricity Regulatory Commission (Terms and Conditions for Determination of Tariff) Regulations, 2019, which mandated quarterly computation of fuel surcharges.
The NCLAT, however, relied on the Supreme Court’s decision in Prem Cottex v. Uttar Haryana Bijli Vitran Nigam Ltd., ruling that the liability for FS and SFS arises only upon billing, not when the underlying period of consumption occurs. It upheld the Adjudicating Authority’s finding that FS and SFS, being statutory dues under the Electricity Act, 2003, could not be extinguished under the IBC. The Tribunal further held that these obligations persisted despite insolvency proceedings and had to be honored as per the billing schedule. The Corporate Debtor was directed to pay outstanding amounts within 90 days, while the Respondents were restrained from disconnecting electricity or imposing penalties during litigation. The NCLAT concluded that the Electricity Act prevailed in this case, rejecting the appellant’s reliance on various precedents, and dismissed the appeal.
Mr. Krishnendu Datta, Sr. Advocate, Mr. Anjaneya Mishra, Mr. Sahil, Mr. Nidish Gupta, Advocates, Mr. Prakul Khurana and Mr. Yash Tandon, Advocates, represented the Appellant.
Mr. Bipin Gupta, Advocate, appeared for Respondent No. 1 and Respondent No. 2.
Mr. Gaurav Mitra, Ms. Neha Agarwal and Ms. Lavanya, Advocates, appeared for Respondent No. 3.
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