Case Note & Summary
The dispute arose between a statutory distribution licensee and a corporate debtor undergoing Corporate Insolvency Resolution Process (CIRP). The Appellant, Eastern Power Distribution Company of Andhra Pradesh Limited, was aggrieved by an order of the National Company Law Tribunal (NCLT) dismissing its application for recovery of electricity charges during the moratorium period. The Corporate Debtor, Impex Metal & Ferro Alloys Limited, was placed under CIRP due to default in payments. The Appellant contended that electricity supply is an essential service protected under the Insolvency and Bankruptcy Code, 2016 (I&B Code), and thus it was entitled to recover the dues. The NCLT had previously acknowledged the Appellant's right to claim CIRP costs for electricity supplied during the moratorium. However, the Appellant's application was dismissed for non-prosecution due to the absence of its counsel. The Appellant filed a restoration application, arguing that the dismissal was due to the negligence of its previous counsel, who failed to appear in court. The Tribunal analyzed the circumstances surrounding the counsel's absence and the ethical obligations under the Bar Council of India Rules. It concluded that the Appellant should not be penalized for the counsel's deliberate inaction and that the restoration application should be considered on its merits. The Tribunal ultimately reversed the dismissal and allowed the Appellant to pursue its claim for electricity charges during the CIRP period.
Headnote
A) Insolvency Law - Moratorium on Essential Services - Recovery of Electricity Charges - Insolvency and Bankruptcy Code, 2016, Section 14 - The Appellant, a distribution licensee, sought recovery of electricity charges during the moratorium period imposed under CIRP. The Tribunal held that electricity is an essential service and the Appellant is entitled to recover the charges as CIRP costs (Paras 3-11). B) Legal Representation - Counsel's Negligence - Restoration of Application - NCLT Rules, Rule 48 - The Tribunal considered the implications of counsel's absence leading to dismissal for non-prosecution. It was held that the Appellant should not suffer due to the deliberate inaction of the counsel, and the application for restoration was warranted (Paras 20-26).
Issue of Consideration
Whether the dismissal of the application for want of prosecution due to counsel's absence can be reversed and whether the appellant is entitled to recover electricity charges during the moratorium period.
Final Decision
The Tribunal allowed the restoration application, quashed the dismissal order of 08.11.2023, and directed that the application I.A. No. 1061 of 2021 be considered on its own merits.
Law Points
- Electricity Act
- 2003
- Insolvency and Bankruptcy Code
- 2016
- moratorium
- essential services
- CIRP costs
- counsel's negligence
