M/s. Rubberwood India Private Limited vs Kerala State Electricity Board Limited & Anr
IA(IBC)/12/KOB/2024 IN CP(IB)/26/KOB/2022
Facts:
1. CIRP was initiated vide order dated 17.05.2022 in CP(IB)/26/KOB/2022, against the Corporate Debtor Rubberwood India Private Limited . Since no resolution plan was received by the Corporate Debtor, by Order dated 15.12.2022 Tribunal passed an order for Liquidation of the Corporate Debtor
2. As per Section 35 of the IBC read with Regulations 32 and 33 of the IBBI (Liquidation Process) Regulations, 2016, the liquidator caused a public notice for the auction of the properties of the Corporate Debtor under Schedule I (5) of the IBBI (Liquidation Process) Regulation, 2016 on 12.09.2023 inviting prospective bidders to submit their bid. Reserve price fixed for the assets was Rs. 3,70,00,000/- and the date of the auction was scheduled on 12.10.2023.
3. It is stated that the owner of the property is the Rubber Board, a statutory body incorporated under the Rubber Act of 1947. It is stated that the Applicant qualified to submit the bid under the IB Code and participated in the E-Auction process by depositing an EMD of Rs.37 lakhs. The E-Auction was held on 12.10.2023 and this Applicant emerged as the successful bidder before the liquidation of the Corporate Debtor, Respondent No.1 had disconnected the electric supply service to the Corporate Debtor on the grounds of arrears of due. Respondent No.1 has filed its claim against such arrears before the Liquidator To the 1st Respondent, Kerala State Electricity Board Limited, to grant fresh connection to the Applicant without charging any outstanding dues of the Corporate Debtor.
Issue: Whether the Application can be allowed to direct the Respondent to grant fresh connection to the Applicant without charging any outstanding dues of the Corporate Debtor.?
Arguments:
Applicant:
1. Counsel submitted that after taking over the Land and Building, the Applicant approached the KSEB for reconnection/ fresh connection to the said premise in the name of the Applicant on 16.11.2023. However, Respondent No.1 vide letter dated 15.12.2023 refused to grant any connection to the Applicant on the ground of outstanding dues of the Corporate Debtor, Rubber Wood India Pvt Ltd despite filing Claim before the Liquidator. 8. It is stated that once the claim is filed before the Liquidator for past dues and arrears, any payment under the said claim shall be under Section 53 of the Insolvency and Bankruptcy Code, 2016
Respondent:
1. Counsel submitted that Applicant is an auction purchaser who stands on a different footing compared to a Successful Resolution Applicant. The terms and conditions of the public auction notice dated 12.09.2023 clearly show that the property is sold on an “as in where is” basis. The existence of an “as in where is “clause in auction agreements warns buyers about pending dues, requiring them to thoroughly investigate the nature of the property.
2. Counsel submitted that Applicant submitted a new application for the electricity connection before the 1st Respondent. However, the same was not considered by the 1st Respondent as the Applicant/Auction Purchaser had not cleared the arrears on the property. It was further submitted that once a Corporate Debtor is admitted into Liquidation, creditors are only entitled to claim under Section 53 of the Code and the assets of the corporate debtor, which are subject to claim shall be free from all encumbrances and charges for the successful purchaser of the property.
Decision: NCLT allowed the application.
Rationale:
1. NCLT held that both secured and unsecured government dues fall under the purview of Section 53 of the Code, forming a distinct and separate class within the legislative framework. It held that the financial loss to the 1st Respondent cannot be a ground to enforce its claim against the Applicant because the IBC is a complete code.
Order:
