National Company Law Appellate Tribunal
Deepjot Arora And Anr vs Punjab State Power Corporation Limited on 8 August, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Ins.) No. 78 of 2025
IN THE MATTER OF:
Deepjot Arora & Anr. ...Appellants
Versus
Punjab State Power Corporation Ltd. & Ors. ...Respondents
Present:
For Appellants : Mr. Kunal Godhwani and Ms. Kinjal Chadha,
Advocates.
For Respondents : Mr. Naveen S Bhardwaj, Mr. Sachin Dubey,
Advocates for R-1 and 2.
Mr. Abhishek Anand, Mr. Karan Kohli and
Ms. Palak Kalra, Advocates for R-3.
ORDER
(Hybrid Mode) 08.08.2025: This appeal is against an impugned order dated 11.12.2024 passed by the Ld. National Company Law Tribunal, Chandigarh Bench. Vide the impugned order dated 11.12.2024, the Ld. NCLT has held as follows:-
"8.8. M/s Jai Durga Paper Mills Pvt. Ltd. has not had the electricity connection transferred in the name of Corporate Debtor nor has the name of the consumer been changed in the records of the Respondents No. 1 and 2.
8.9. The sale of Corporate Debtor was made on an "as is where is and whatever there is and without recourse" basis and the applicant had gone into the transactions with his eyes open and was aware of the liabilities attached to the impugned land. Therefore, the contention that the liabilities towards outstanding electricity dues have been waived because of liquidation are not sustainable.
8.15. A conspectus of the provisions and law laid down by Hon'ble Supreme Court reproduced above leads to the conclusion that the electricity supply can be disconnected when electricity dues are pending against the premises. Moreover, for consideration of an application for a fresh Cont'd.../--2-
electricity connection or for restoration of a disconnected connection, the distribution licensee can impose conditions for the payment of dues before granting a new connection or restoring the old electricity connection. The burden of recovery falls upon the owner/occupant of the premises, and the subsequent purchaser.
8.16. Thus, a combined reading of the Sale Certificate, the Statutory provisions and the Supply Code and ESIM indicates that the Applicant being a subsequent purchaser is liable for the clearance of dues of the property purchased by him in the Liquidation Sale.
8.17. Moreover, it is pertinent to note that the auction sale was on the "as is where is basis", therefore, it was bounden and onerous duty of the successful bidders/Applicants to check and verify the liability, if any, of the electricity supply department. Moreso, the name of the Corporate Debtor was changed without any notice or information to the concerned electricity board.
8.18 Thus, if at all the claim was not submitted by the Respondents no. 1 and 2, then also it would not debar them to get the arrears of electricity dues pending against the premises.
8.19. In view of the above discussions, we are of the considered view that the Applicant would be liable to pay the arrears of the electricity dues to PSPCL."
2. Appellant has come before this Appellate Tribunal challenging the impugned order. The arguments raised by the Ld. Counsel for the appellant is the Respondents No. 1 & 2 were aware of the change of the name of company viz. M/s Jai Durga Paper Mills Ltd. to M/s Saber Paper Boards Pvt. Ltd., which went into CIRP and later into liquidation and referred to the reply filed by Respondents no. 1 & 2 to the application under Section 60(5) read with Section 32A of the IBC, 2016.
3. Ld. Counsel for the appellant referred to paragraphs nos. 16, 17 of the reply to say the Department was actually aware of the change of the name Company Appeal (AT) (Ins.) No. 78 of 2025 -3- of the company from M/s Jai Durga Paper Mills Ltd. to M/s Saber Paper Boards Pvt. Ltd. and had annexed an undertaking (Annexure R/7) and a Memorandum of Association of M/s Saber Paper Boards Pvt. Ltd. (Annexure R/8) alongwith its reply, hence, it cannot be said the Department was never aware of the change of the name of the company from M/s Jai Durga Paper Mills Ltd. to M/s Saber Paper Boards Pvt. Ltd. More-so all payments of electricity dues were being made from the account of M/s Saber Paper Boards Pvt. Ltd. (supra).
4. On 09.07.2025 the Liquidator was directed to file an affidavit in terms of Paragraph 3 of the said order dated 09.07.2025 of this Tribunal.
Paragraph 3 is as follows:
"Admittedly on this reply, an order dated 30.08.2024 was passed by Ld. NCLT, Chandigarh Bench (Court-II) whereby a direction was given to the department to disclose the date on which such Undertaking and Memorandum of Association of M/s Saber Paper Boards Pvt. Ltd. was filed by the Corporate Debtor with the Department. An affidavit dated 30.09.2024 was thus filed by the Department wherein it was categorically stated there was no formal communication of the change of name of M/s Jai Durga Paper Mills Ltd. to M/s Saber Paper Boards Pvt. Ltd. and rather exposed their apprehension that the documents Annexure R/7 and Annexure R/8 were slipped in by the Corporate Debtor with the help of the staff of respondents. However, there is no reply filed by the Liquidator as to if there exist any record with the Corporate Debtor qua filing of this undertaking as well as Memorandum of Association with the Department or not. Let the Liquidator file a reply to this extent. The affidavit should also contain the fact in case the claim is allowed at this juncture, whether the Department would be in a position to get something under the water fall mechanism."
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5. An additional affidavit has been filed in terms of the above order dated 09.07.2025 of this Tribunal by Respondent No.3/Liquidator of M/s Saber Paper Boards Pvt. Ltd. and it notes on 27.12.1996 the Corporate Debtor was incorporated as M/s Jai Durga Paper Mills Pvt. Ltd. under the Companies Act, 1956 and thereafter its name was changed to M/s Saber Paper Boards Pvt. Ltd. Fresh certificate of incorporation is dated 23.08.2011. It is also noted in the affidavit dated 17.09.2024, on 10.12.2012 the suspended Board of Directors of the Corporate Debtor viz. Sh. Dinesh Soin had submitted an undertaking for transfer of deposit to electricity account of M/s Saber Paper Boards Pvt. Ltd. from M/s Jai Durga Paper Mills Ltd. It is also noted in the affidavit dated 17.09.2024 of Respondent No.3, the bank statements of the Corporate Debtor show the Corporate Debtor i.e. M/s Saber Paper Boards Pvt. Ltd. has been making payments of the bills through its bank account(s) to Respondents No. 1 & 2 from 28.11.2013 to 14.11.2017. It was in the year 2020, the CIRP was initiated against the Corporate Debtor.
6. We have also perused the reply of Respondents No. 1 & 2 filed to the appeal and it quote Rule 30 and Rule 40 of the ESIM, 2018, reproduced as under:
"30 CHANGE OF NAME/TITLE:
30.1 A consumer shall not, without the consent in writing of the Distribution Licensee, assign, transfer or part with the benefit of the agreement for obtaining a connection. The consumer shall also Company Appeal (AT) (Ins.) No. 78 of 2025 -5- not in any manner part with or create any partial or separate interest except in the event of:-
a) Change in partnership, (after supplying a certified copy of the new partnership deed and execution of a new agreement).
b) Change in the name of a company, (after supplying a certified copy of the new Memorandum of Association/ Articles of Association along with supporting documents and execution of a new agreement). A consumer may transfer the connection and its liabilities to any other person with the consent of the PSPCL. After obtaining such consent the transferee shall execute a new agreement on the A&A form and shall deposit the Security (consumption) and Security (meter) at the prevalent rates after accounting for the Security (consumption) and Security (meter) already deposited by the previous consumer with his consent. The new consumer shall also undertake to pay/bear the current and past outstanding liabilities of the old consumer or those detected in the future.
30.4 In the event of transfer of a property, the transferee shall submit an application in form PCL-CON (Annexure-15) along with A&A form and the following documents:-
a) Letter of consent of the previous owner for transfer of connection;
b) In the absence of a letter of consent, the transferee shall provide proof of ownership of premises. In case of partition, details thereof or a family partition deed if any, may be submitted;
c) In case the consent of the previous owner for transfer of the Security (consumption) cannot be produced, the applicant shall deposit Security (consumption) and Security (meter) at prevalent rates. He shall also be liable. to pay the outstanding dues, if any of the previous consumer;
d) In the case of land having an AP/AP-High-tech connection being jointly owned by more than one person and a part of the land along with the AP/AP-High-tech connection thereon being sold, the connection may be transferred in the name of the purchaser if all the co-sharers consent to such transfer and submit an affidavit duly attested by a Magistrate to that effect;
e) In the event where benefit of agreement for a connection is assigned to another person without the approval of the PSPCL, a notice shall be served upon the consumer requiring that transfer of the connection be sought as per the procedure prescribed above within 30 days of the service of notice. The connection shall be liable to be disconnected in case no application is submitted to the Distribution Licensee within the period indicated in the notice.
Company Appeal (AT) (Ins.) No. 78 of 2025 -6- 30.5 As soon as such a requisition is received, the JE should be directed to visit the premises of the consumer for re-rating the installation so that the new consumer is not held responsible for any alteration in the connected load which may have been effected by existing consumer without the sanction of the PSPCL. In addition to this the J.E. should check up that all the material and equipment of the PSPCL installed at the premises of the consumer is intact and has not been tampered with. 30.6 In case the J.E's report is satisfactory and there is no change in connected load, the new consumer shall be issued the demand notice for depositing difference in security (consumption)/ security(meter) and other outstanding charges, if any. He shall also be asked to give an undertaking to pay charges, of the original consumer if detected at a later stage by the audit/other agency etc. It should, however, be kept in view that the issuance of demand notice shall not be delayed by more than 2/3 days on the receipt of the application so that all the formalities in respect of change of name are completed within time specified in Reg-11.3 of Supply Code-2014.
30.7 After the new consumer complies with the demand notice, immediate action shall be taken to record the meter reading so that final bill for the old consumer is made out and a new account no. for the new consumer allotted and his account opened in the ledger for issuing him monthly/bimonthly bills. So far as the old consumer is concerned, the amount of the final bill or any other charges due from him shall be immediately recovered. In case the old consumer does not liquidate such arrears, these shall be payable by the new consumer as per the undertaking given by him.
30.8 Even though no physical disconnection or reconnection maybe involved in the process of change of name yet a disconnection order in respect of old consumer and a service connection order in the name of the new consumer shall be issued so that necessary entries are made in the account books. Steps shall simultaneously be taken to forward the A&A Form(s) to the competent authority for acceptance.
30.9 If the application for the change of name is received from such a person who after taking possession of the premises has been utilizing the electric connection, held in the name of old occupant, the change of name should only be effected after he pays the old outstanding dues."
"28. The Electricity Supply Code, 2024 has been notified by the Punjab State Electricity Regulatory Commission in terms of Section 50 of the Electricity Act, 2003. The relevant provisions of the Electricity Supply Code, 2018 are reproduced hereunder for the kind convenience of this Hon'ble Appellate Tribunal:
Company Appeal (AT) (Ins.) No. 78 of 2025 -7- "40. RECOVERY OF ELECTRICITY CHARGES FROM CONSUMERS (1) A distribution licensee may recover from a consumer any charges in respect of the supply of electricity as per General Conditions of Tariff and Schedules of Tariff. In addition, a consumer shall be liable to pay rent and/or other charges in respect of any electric meter or electrical plant provided by the distribution licensee as per Schedule of General Charges.
(3) Consumers shall also be liable to pay the amounts chargeable by way of taxes, duties, octroi, cess etc. as may be levied by the State Government or any other competent authority. (4) All consumers shall make payment for every billing cycle to the distribution licensee within the time specified in Regulation 41(15) at the notified offices of the distribution licensee or any other place or through any agency approved by the distribution licensee for the purpose or through approved digital mode.
5) The Fixed Charges shall be payable by a consumer even if no electricity is actually consumed. Fixed charges shall also be payable on reconnection for the period the connection remained disconnected due to default on the part of consumer. However, for any delay in re-connection by distribution licensee, the consumer shall not be liable to pay Fixed Charges for such period of delay. ...."
7. In furtherance of the above mentioned rules, it is submitted by the Ld. Counsel for the Department since the formalities as are required by the Rules aforesaid were not complete, hence, the name of M/s Jai Durga Paper Mills Ltd. was never changed in its records to M/s Saber Paper Boards Pvt. Ltd.
and as such the Department is not bound by orders passed in the CIRP of the Corporate Debtor and hence for grant of electricity connection, it had directed the auction purchaser to pay all electricity dues of M/s Jai Durga Paper Mills Ltd.
7A. Heard.
Company Appeal (AT) (Ins.) No. 78 of 2025
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8. In 'Punjab State Power Corporation Limited
vs. Akums Lifesciences Limited [Comp. App. (AT) (Ins.) No. 1258 of 2023]' this Tribunal held as under:-
"8. (v) In view of the provisions of Section 238 of IBC, 2016 and the guidelines given in the judicial decisions discussed above, we hold that provisions of the IBC, 2016 over ride the provisions of Electricity Act, 2003, and the issue of payment of pre-CIRP electricity dues of corporate debtor by the SRA is an issue which can be decided by the NCLT u/s 60(5)(c) of IBC, 2016
9. (i) Regarding the third issue, we find that the Successful Resolution Applicant has taken over the Corporate Debtor and its commitment made in the resolution plan does not include any payment towards the electricity dues of the Corporate Debtor. As per scheme of IBC, 2016 the creditors relating to pre-CIRP period are required to file claim before the Resolution Professional (RP) regarding the debt payable by the Corporate Debtor. In the present case, no claim was filed by the Appellant electricity company and there was no commitment in the resolution plan to pay any amount towards pre-CIRP electricity dues.
9. (ii) The Appellant has cited decision of Hon'ble Supreme Court in "K C Ninan v. Kerala State Electricity Board & Ors., 2023 SCC OnLine SC 663" in his favour, which recognises the authority of electricity company to seek payment of electricity arrears relating to a premises from successor owner of the premises. However, the said judgement does not deal with the resolution under IBC, 2016 wherein on approval of resolution plan all pre- existing debts, for which no claim is filed, are extinguished. Further, section 238 of IBC, 2016 specifically gives overriding effect to IBC, 2016 over other laws.
9. (iii) Once the resolution plan has been approved, the SRA cannot be foisted with any additional liability of the pre-CIRP period. In the judgments in the case of (a) Tata Power Western Odisha Distribution Ltd. (TPWODL) & Anr. Vs. Jagannath Sponage Pvt. Ltd., Civil Appeal No. 5556 of 2023 and (b) Southern Power Distribution Company of Andhra Pradesh Ltd. vs. Gavi Siddeswara Steels (India) Pvt. Ltd. and Another in Civil Appeal No. 5716-5717 of 2023, the Hon'ble Supreme Court has held that power distribution company cannot insist on the payment of arrears for the purpose of the restoration of the electricity connection and such a matter would fall within the ambit of Section 60(5)(c) of the IBC, 2016.
Company Appeal (AT) (Ins.) No. 78 of 2025 -9-
9. (iv) This Tribunal, in the case of Yarn Sales Corporation Vs. Punjab State Power Corporation Ltd. in Company Appeal (AT) (Ins.) No. 292 of 2024 has held that power distribution company cannot insist on payment of past dues to restore electricity. A similar view was taken by this Tribunal in the case of Twentyone Sugars Limited vs. Maharashtra State Electricity Distribution Co. Ltd. in Company Appeal (AT) (Ins.) No. 487 of 2023.
9. (v) In the present case the Appellant had not even filed its claim before the RP and it cannot be permitted to benefit from of its failure to file the claim and yet be paid pre-CIRP dues for restoring the electricity. The SRA had made payment under protest only under the compulsion to get the electricity restored and to make the Corporate Debtor to restart its business, which is one of the primary aim of the IBC, 2016. The Appellant is barred from seeking arrears of the amount that stands extinguished by operation of law as pre-condition to restoring the electricity connection. 10. We find that the impugned order nullifying the outstanding dues of electricity for the period prior to CIRP is correct in law and calls for no interference. We find no merit in the present appeal and the same is dismissed. All connected pending applications, if any, are disposed of. No order as to costs."
9. In 'Paschimanchal Vidyut Vitran Nigam Ltd. vs. HSA Traders & Ors.
[Comp. App. (AT) (Ins.) No. 527 of 2023]' the following was held:-
"18. We, thus, are of the view that submission raised by learned counsel for the Appellant that Successful Auction Purchaser was liable to pay the arrears of electricity dues which were dues of the erstwhile Corporate Debtor and without payment of said dues electricity connection cannot be granted are not in accord with the statutory scheme of IBC. The Adjudicating Authority did not commit any error in issuing direction in Para 16 of the impugned order, as extracted above, to energise the electricity connection without insisting on the payment of pre-CIRP dues. It is made clear that the Successful Auction Purchaser shall be liable to pay all dues for getting the new connection except the arrears of the electricity dues of Rs.39,15,625/- as was being claimed by the Appellant."
5716-5717 of 2023] the Hon'ble Supreme Court has held as under:
Company Appeal (AT) (Ins.) No. 78 of 2025 -10- "Delay condoned.
In our opinion, the legal issue is covered by the judgment of this Court in "Paschimanchal Vidyut Vitran Nigam Ltd. vs. Raman Ispat Private Limited and Others". The appellant Southern Power Distribution Company Of Andhra Pradesh Limited cannot insist on payment of arrears, which have to be paid in terms of the waterfall mechanism, for grant of an electricity connection. However, the successful resolution applicant will have to comply with the other requirements for grant of electricity connection. The clean slate principle would stand negated if the successful resolution applicant is asked to pay the arrears payable for the corporate debtor for the grant of an electricity connection in her/his name.
Reliance placed by the appellant - Southern Power Distribution Company of Andhra Pradesh Limited on the judgment of this Court in "K.C. Ninan vs. Kerala State Electricity Board and Ors" is inappropriate, as the said judgment does not deal with the provisions of the Insolvency and Bankruptcy Code, 2016. In terms of Section 238 of the Code, the provision(s) of the Code will have an overriding effect. The debt due has to be paid in terms of Section 53 of the Code. Accordingly, the decision in K.C. Ninan (supra) was distinguished in Paschimanchal Vidyut Vitran Nigam Ltd. (supra).
The electricity connection, applied for or revival sought by the successful resolution applicant is not an asset or property. The above-quoted observations from Embassy Property Developments Private Limited (supra) would confer jurisdiction on the tribunal constituted under the Code insofar as the appellant Southern Power Distribution Company of Andhra Pradesh Limited is insisting on payment the dues of the corporate debtor restoration/grant of the electricity connection. The dues of the corporate debtor have to be paid in the manner prescribed in the of for resolution plan, as approved by the adjudicating authority. The resolution plan is approved when it is in accord with the provision of the Code. Thus, the issue of corporate debtor dues falls within the fold of the phrase 'arising out of or in relation to insolvency resolution' under section 60(5) (c) of the Code."
11. Section 238 of the IBC, 2016 override ESIM, 2018 and since there exist an admission on the part of the Department that documents qua change of name to M/s Saber Paper Boards Pvt. Ltd. were available in its files and the payments of electricity bills was being made by M/s Saber Paper Boards Company Appeal (AT) (Ins.) No. 78 of 2025 -11- Pvt. Ltd. then the Department cannot be allowed to take a stand that its officials may have sneaked such documents in its files in connivance with the appellant. The fact is those documents were very much available in its record and the Department failed to file its claim in time. Their contention the Department was never aware of CIRP of M/s Saber Paper Boards Pvt.
Ltd., thus, cannot be accepted. The department was clearly at fault for not acting in time.
12. Further, admittedly per additional affidavit of the Liquidator if we assumedly allow admission of claim of the Department at this stage, then also per paragraph 9 of the affidavit there are no assets left of the CD for distribution under the water fall mechanism per Section 53 of the Code. All assets have since been sold and rather the claim(s) of Financial Creditor(s) who rank higher in priority rather were not fully satisfied.
13. In view of the law and facts discussed above, we are of the considered view, the impugned order dated 11.12.2024 needs to be set aside and thus we direct Respondents No. 1 & 2 to provide a new connection to the auction purchaser on payment of legal dues as are required for giving a new connection, without insisting for pre CIRP dues.
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14. The appeal stands disposed of in terms of the above. Pending I.As, if any are also disposed of.
[Justice Yogesh Khanna] Member (Judicial) [Mr. Indevar Pandey] Member (Technical) SA/MD Company Appeal (AT) (Ins.) No. 78 of 2025