IRP/RP can ask for continuation of the supply of such goods and services which are critical to protect and preserve the value of the Corporate Debtor and manage the operations of such Corporate Debtor as a going concern.
- Corporate Debtor’s (“CD”) electricity was disconnected 3 months prior to commencement of the CIRP. The Power Supply Agreement (“PSA”) was still in force at the time of commencement of the CIRP.
- The CD was constrained to run its unit through a diesel generator, which was increasing costs and impacting profits. The IRP asked for reconnection of the electricity supply so a ‘better’ resolution plan could be obtained for the CD as per the intent of the Insolvency and Bankruptcy Code 2016 (“IBC”).
- The electricity supplier had already submitted its claim before the Resolution Professional (“RP”) with respect to pre-CIRP electricity dues, and such claim was already admitted by the RP. vAs the deemed date of termination of the PSA did not occur before commencement of the CIRP, it could not occur during the moratorium period by virtue of prescribed definition of ‘essential supplies’ and the protection granted to the CD during the moratorium period under the IBC.
- NCLAT upheld order of the NCLT directing restoration of electricity, stating that the electricity dues in the CIRP period shall be paid by the CD whereas the settlement and payment of pre-CIRP dues shall be done qua the finally approved resolution plan, or in liquidation, as may be the case.
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Damodar Valley Corporation vs Karthik Alloys Limited and Another (Company Appeal (AT) (Insolvency) No. 13 of 2021) – NCLAT
