M/S Reliance Projects And Property Management Services Limited vs State Of U.P. And 25 Others

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WRIC No. - 32408 of 2023

HIGH COURT OF JUDICATURE AT ALLAHABAD
WRIT - C No. - 32408 of 2023

…..Petitioner(s)
Versus
State of U.P. and 25 others
…..Respondent(s)

Court No. - 1

(Per Swarupama Chaturvedi, J.)
For the convenience of exposition, this common order is divided into the
following parts:-

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WRIC No. - 32408 of 2023

I
Introduction

India, praying for issuance of several orders and directions in the nature
of writ of certiorari and mandamus. Main relief sought in the petition is
for order or direction in the nature of certiorari quashing the impugned

to 6, especially the impugned demands to the extent they relate to
alleged electricity dues for the period prior to 22.12.2022 when the
resolved company was effectively commenced.

mandamus commanding the respondents to de-seal the mobile tower
sites as detailed in the writ petition and to restore electricity supply to all
disconnected sites. A further direction has been prayed for requiring the
respondents to act in accordance with Section 31(1) of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as “IBC”) and the

Ruchi Soya Industries Ltd. v. Union of India & Ors., (2022) 6 SCC
343 .

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mandamus declaring that the approved resolution plan dated 25.11.2019
is binding on all stakeholders and that no liability survives in respect of
any debts, claims or dues arising prior to 22.12.2022, including those of
statutory authorities. Consequential reliefs have been prayed for
restraining the respondents from taking any coercive steps pursuant to
the impugned demands and Recovery Certificates, and for a direction to
grant new electricity connections in respect of existing and pending
applications for mobile tower sites, subject to compliance with
applicable conditions.

and rejoinder affidavits have also been filed by the petitioner. With the
consent of learned counsel for the respective parties, the writ petition
was taken up for final hearing and is being disposed of by this judgment.
II
Factual Matrix

that the insolvency petition under Section 9 of the IBC was admitted
against Reliance Infratel Ltd. (hereinafter referred to as “RITL”) by the
National Company Law Tribunal, Mumbai (hereinafter referred to as

order imposed the moratorium and appointed the Interim Resolution
Professional (hereinafter referred to as “IRP”), as on 18.05.2018,
consequently the Corporate Insolvency Resolution Process (hereinafter
referred to as “CIRP”) got commenced.

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WRIC No. - 32408 of 2023

referred to as the "First Public Announcement") inviting all the creditors
of RITL to submit proof of claims. Meanwhile the NCLT order dated
15.05.2018, admitting the insolvency petition got challenged in National
Law Company Appellate Tribunal (hereinafter referred to as the
“NCLAT”), where the NCLT order got stayed by an order dated
30.05.2018, but later on, the petition got withdrawn on 30.04.2019 and
consequently CIRP got re-commenced as per IBC.

referred to as the "Second Public Announcement") inviting all the
creditors to submit proof of claims. It is an undisputed fact that
respondent authorities have not submitted any claim before the
Resolution Professional during CIRP for which the impugned demand
notices are being issued. On 24.05.2019 IRP prepared the Information
Memorandum and the Committee of Creditors (hereinafter referred to as
“CoC”) of RITL was constituted.

Professional (hereinafter referred to as “RP”). As per procedure
prescribed under IBC, the RP published Form G containing a detailed
invitation for expression of interest (hereinafter referred to as "EOI") to
which Reliance Projects & Property Management Services Ltd.
(hereinafter referred to as “RPPMSL”) responded positively.

addressed to all State Electricity Boards, Distribution Companies, and
other respondents informing them of the CIRP and calling for claims.

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WRIC No. - 32408 of 2023

resolution plan, which got approved by the CoC on 02.03.2020 and

dated 03.12.2020. The order passed by the NCLT was assailed in

dated 10.08.2021.

some stakeholders before NCLAT, which stayed the distribution of the
total resolution amount to certain parties due to inter-creditor disputes.

approved by NCLT got ultimately upheld.

application to deposit the Total Resolution Amount in an escrow account
towards successful implementation of the resolution plan. Thereafter on
22.12.2022, minutes of the meeting of the CoC noted that all steps of the
implementation in the resolution plan were completed.

NCLT, Mumbai and the order dated 07.08.2023 passed by the NCLT,
Ahmedabad under Sections 230-232 of the Companies Act, 2013, RITL
stood merged into the Petitioner Company with effect from 22.12.2022.
Hence, records demonstrate that pursuant to the approval of the
resolution plan, RPPMSL took over RITL on 22.12.2022, claimed as
“effective date”.

Respondent Nos.3 to 6 have issued recovery certificates and raised

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WRIC No. - 32408 of 2023
demands against RITL in respect of electricity dues pertaining to the
period prior to the effective takeover date. The Respondents also
disconnected electricity for some mobile towers while insisting upon
payment of the entire amount, along with interest and penalty, as a
precondition for reconnection.

Article 226, challenging mainly the demand notices issued by the
respondent authorities. Although there are various prayers made in the
petition, during hearing counsel appearing from respective parties agreed
that the main point of contest was the demand notice, to the extent that

and also the fact as which date would be considered as effective date,
date of approval of resolution plan by NCLT or the date when the
resolved company effectively commenced.
III
Submissions on behalf of Petitioner

Sri Vedant Agarwal, Sri Madhav Kanoria and Sri Adtiya Swaroop,
learned counsel for the petitioner. At the outset, Sri Sinha, learned Senior
Advocate submitted that a public announcement was made by the IRP
upon commencement of the CIRP, inviting all creditors to submit their
respective claims, and in addition, RP also send letters to all the
DISCOMs (licensees) informing commencement of CIRP, still no claim
was filed by the respondents during CIRP.

creditors mentioned in the resolution plan, and argued that despite such

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public announcement and individual letters, none of the DISCOMs
submitted any claim before the RP. He submitted that the CoC
unanimously approved the resolution plan, which came to be approved

unsuccessfully assailed before the NCLAT and further before the
Supreme Court, where the challenge culminated in dismissal of the

Committee of Reliance Infratec Ltd. And Others, order dated

approving of the resolution plan.

the resolution plan at any stage by asserting their alleged claims before
any forum. Sri Sinha had also submitted that on 22.12.2022, the new
management took over the company in terms of the approved resolution
plan upon payment of the resolution amount into the designated account.
Learned Senior Advocate emphasized that till the above-mentioned date,
no demand had been raised by any of the DISCOMs, although,
according to him, electricity supply to certain mobile towers had been
disconnected in part even prior to and during the CIRP period.

finality and the new management assumed control that the respondent
DISCOMs raised demands towards electricity charges pertaining to the
period prior to the CIRP and also for the period prior to the date of
effective takeover. Sri Sinha submitted that, in view of Section 31 of the
IBC, such claims, not having been submitted before the RP, stood
extinguished. In support, reliance was placed on the judgment of the

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WRIC No. - 32408 of 2023

to contend that once a resolution plan was approved, the successful
resolution applicant could not have been burdened with past liabilities,
and permitting such claims would defeat the very scheme of the
enactment. It was, thus, submitted that the impugned demand notices and
consequential recovery proceedings were liable to be quashed.

after 22.12.2022 were concerned, the petitioners were ready and willing
to pay the same, subject to restoration of electricity connections to
enable operation of the mobile towers. He further submitted that the
liability of the petitioner, if any, would arise only from 22.12.2022, when
the new management has taken over and claimed this date to be effective
date (hereinafter 22.12.2022 shall be referred to as ‘effective date’ for
convenience).

2.1.2, submitted that an “Interim Monitoring Committee” was
constituted post-approval of the resolution plan by the NCLT,
comprising the RP, nominees of financial creditors and nominees of the
petitioner company, for which the petitioner had also contributed a sum
of Rs. 100 crores.

the effective takeover date, no liability of the erstwhile corporate debtor
could survive in respect of any dues prior thereto. He had invited the

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WRIC No. - 32408 of 2023
attention of the Court to the minutes of the meeting of the Interim
Monitoring Committee/ Committee of Management, particularly agenda
item no. B2, to indicate that the Effective Date has been recorded as
22.12.2022, being the date on which the resolution amount stood
deposited in the escrow account maintained with the State Bank of India.
It was, thus, submitted that the petitioner had already discharged
liabilities from the said date onwards and no prior dues, therefore,
remained recoverable.

issued by the Resolution Professional, wherein it has been stated that the
resolution plan would be deemed to have become effective upon deposit
of the entire resolution amount in the designated account. In further
support of his submissions, reliance has been placed upon the judgment

contend that all claims not forming part of the resolution plan stand
extinguished and that the successful resolution applicant is entitled to get
the company as a “clean slate.”

of the resolution amount, and not from the date of approval of the
resolution plan by NCLT as the order continued to be under litigation,
which was a situation not under control of the petitioner. He further
contended that the resolution plan was binding upon all stakeholders and
on the point as to from when the liability would have arisen, it was
clearly provided under the plan and, therefore, the demand was to to

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WRIC No. - 32408 of 2023
raised only after the effective date, which was date of takeover and not
the date of NCLT order in the facts of this case considering the years
long time gone under litigation due to which the resolution plan could
not get implemented.

statutory dues of the erstwhile RITL, stood extinguished on the effective

resolution applicant could be burdened by uncertain past liabilities of
corporate debtor as it would defeat the object of the IBC.

provisions IBC override the Electricity Act, 2003 and any subordinate
legislation framed thereunder. He argued that the respondents, having
failed to submit their claims despite due notice, were precluded from
raising the same at later stage and the petitioner had, in any case, already
incurred substantial expenditure exceeding Rs. 75 crores towards
electricity dues for operational towers during the CIRP and Interim
Monitoring Committee period, and no liability can be fastened in respect
of non-operational towers or towards interest and penalty for the prior
period.

division bench of the High Court of Meghalaya at Shillong in
Meghalaya Power Distribution Corporation Limited (MePDCL) v. M/s

resolution plan and the High Court had restrained the authorities from
raising old electricity dues pertains to the corporate debtor while holding

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WRIC No. - 32408 of 2023
that all debts not included in the plan prior to the effective date would be
deemed to be extinguished.
IV
Submissions on behalf of Respondents

by Sri Udit Chandra, learned counsel for the respondent Power
Corporation, Sri Krishna Agrawal, learned counsel for respondent no.2,
Sri Mukesh Kumar Singh, learned counsel for respondent no.4, Sri
Baleshwar Chaturvedi, learned counsel for respondent no.5, Sri Ankit
Prakash, learned counsel appearing for respondent no.6. Since
submissions advanced by learned counsel appearing for contesting
respondents were similar as well as overlapping, we consider it
appropriate to record it altogether, as the issues involved are common.

Senior Counsel, at the outset fairly submitted that the legal position,
insofar as extinguishment of claims not submitted before the RP was
concerned, it stood settled against respondents. He submitted that where
a creditor, including the Government or its instrumentalities, had failed
to lodge its claim in the CIRP and the resolution plan had came to be
approved by the NCLT, the provisions of Section 31(1) of the Insolvency
and Bankruptcy Code, 2016 would operate to extinguish such claims,
and any recovery in respect thereof would not be sustainable in law. He
further submitted, in all fairness, that this position stood conclusively
settled by a catena of judgments of the Supreme Court, including the

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contention regarding the “Effective Date.” He submitted that the liability
of the petitioner could not have been confined to the date of transfer of

instead must relate back to the date of approval of the resolution plan by

that the order of the NCLT approving the resolution plan, in unequivocal
terms, stipulated that the plan shall be effective from the date of the
order itself.

of the plan, to submit that the approval order clearly manifested the
intention that the plan would come into force from the date of such
approval and not from any subsequent date of transfer of assets or
payment.

Monitoring Committee, as referred to by the petitioner, was merely a
facilitative mechanism for implementation of the resolution plan and did
not, in any manner, defer or alter the date from which the plan became
operative. He contended that, in view of the proviso to Section 31(1) of
the IBC, the Adjudicating Authority was required to satisfy itself
regarding the feasibility and implementation of the plan and may issue
necessary directions for its effective execution. According to him, such
directions cannot be construed as postponing the operative date of the
plan, and once the NCLT has clearly directed that the plan shall be
effective from the date of its order, no other interpretation was
permissible.

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WRIC No. - 32408 of 2023

funds or procedural steps, including transfer of money into an escrow

between financial institutions or directions issued by the Supreme Court,
would not have the effect of altering the effective date of the resolution
plan. He submitted that these were consequential steps towards
implementation and cannot determine the date from which liabilities are
to be reckoned.

Goyal submitted that the said judgment did not address the issue as to
whether the effective date of a resolution plan was the date of approval
by NCLT or the date of transfer of management. According to him, the
observations therein could not be read to draw any inference that the
effective date would be the date of transfer of control, and any such
interpretation would amount to reading beyond the ratio of the judgment.
He further submitted that any directions in the said judgment relating to
the date of transfer were traceable to the powers of the Supreme Court
under Article 142 of the Constitution of India and could not be treated as
a binding declaration of law on the issue.

supplemented the submissions by placing reliance upon the terms of the
resolution plan itself, particularly clause 1.2.6, to contend that the plan
expressly provided that it shall be effective from the date of approval by
the NCLT.

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U.P. Electricity Supply Code, 2005, the outstanding electricity dues
constitute a “first charge” on the assets, and therefore, any subsequent
applicant or entity seeking reconnection was liable to clear such dues. It
was urged that by virtue of such statutory charge, the respondent
DISCOMs would become secured creditors, and such security interest,
being created by operation of law, could not be extinguished under IBC.

the meaning of Section 14(2) of the IBC, if the petitioner continued to
consume electricity during the moratorium period for maintaining the
corporate debtor as a going concern, the corresponding dues would
necessarily be payable.

for restoration of electricity supply at a disconnected premises amounts
to “reconnection” and not a fresh connection, and therefore, the
respondent authorities are entitled to insist upon clearance of past arrears
as a condition precedent for such reconnection.

contend that if a resolution plan failed to account for statutory dues or
ignored a statutory first charge created by law, the same would be legally
untenable and ought not to have been approved by the Adjudicating
Authority. Accordingly, it was submitted that the respondent authorities

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are within their rights to enforce recovery of such dues and to insist upon
payment as a precondition for restoration of electricity supply.
V
Points for Determination

advanced on behalf of the parties, the following points arise for
determination:
(i) Whether IBC overrides the electricity laws and regulations,
thereby barring the respondent authorities from raising demands
for the pre-resolution period after the resolution plan is duly
approved and implemented.
(ii) Whether the respondent authorities could raise demand for
their statutory dues after implementation of resolution plan, while
they have neither filed their claim during CIRP nor objected to
the resolution plan before NCLT.
(iii) Whether there can be any liability, which was not mentioned
in the resolution plan, can be imposed upon petitioner for the
duration prior to the effective date of the implementation of the
plan, in the facts and circumstances of the case.
(iv) Whether the impugned demands, recovery certificates and

VI
Discussion and Analysis

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“14.7. Predictability and finality are thus essential to
maintaining a robust insolvency regime. Judicial intervention
beyond the narrow statutory confines undermines both
predictability and finality. Recognising this, the IBC
deliberately confines judicial review to strict statutory
compliance under Sections 30(2) and 61(3). Respecting these
limits will preserve the economic sense of the IBC and ensure
that insolvency remains a predictable, time-bound, and market-
driven process.”

review over an approved resolution plan under the IBC is very limited,
and that the commercial wisdom of the CoC is not open to judicial
scrutiny, especially at the stage when the resolution plan is already
implemented, we proceed to examine issues arising for determination in
these petitions.
(i) Overriding Effect of the IBC over Electricity Laws.

Code, 2016 (IBC) and the Electricity Act, 2003 arises for consideration
in the present case. Learned counsel for the petitioner has drawn
attention to Section 238 of the IBC, which contains a non obstante clause
asserting the overriding effect of the Code over all other laws in force.

reliance upon Sections 173 and 174 of the Electricity Act, 2003 to
contend that the said enactment has an overriding effect in certain
circumstances. In this backdrop, it becomes necessary to examine the
scope and interplay of the aforesaid provisions to determine which
statute would prevail in the event of inconsistency.

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played by Section 31 of the IBC, which indicates that an approved
resolution plan is binding on all stakeholders, including governmental
and statutory authorities. Section 31 (1) of the IBC is reproduced below
for easy reference:

Authority is satisfied that the resolution plan as approved by
the committee of creditors under sub-section (4) of section 30
meets the requirements as referred to in sub-section (2) of
section 30, it shall by order approve the resolution plan which
shall be binding on the corporate debtor and its employees,
members, creditors, including the Central Government, any
State Government or any local authority to whom a debt in
respect of the payment of dues arising under any law for the
time being in force, such as authorities to whom statutory
dues are owed.] guarantors and other stakeholders involved

Provided that the Adjudicating Authority shall, before passing
an order for approval of resolution plan under this sub-section,
satisfy that the resolution plan has provisions for its effective
implementation.”
(emphasis supplied)

enactments are irreconcilably inconsistent, the later enactment must
prevail to the extent of such inconsistency. This principle of
interpretation of statutes is generally applicable in a situation where two
enactments appear to operate in the same field but got enacted in
different timeline. It is a settled rule of statutory interpretation is that
where there is a conflict between two statutes, the Court must first

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attempt a harmonious construction, however, where such reconciliation
is not possible, the later enactment would prevail as per above-
mentioned maxim.

consolidate and amend the laws relating to insolvency resolution,
specifically focussing on revival of corporate debtors in a time-bound
manner. The scheme of the Code would be rendered unworkable if past
liabilities, not forming part of the resolution plan, were permitted to be
raised by claimants relying upon any other Statute.

IBC, we consider it appropriate to refer to its preamble, which was also

was enacted to consolidate and amend the laws relating to reorganisation
and insolvency resolution of corporate persons, partnership firms, and
individuals in a time-bound manner, keeping in view maximisation of
assets value. It further seeks to balance the interests of all stakeholders
while providing a waterfall mechanism for payment of dues.

the Code and established legal principles, there remains no doubt that in
the event of inconsistency between the IBC and any other statutes,
including sector-specific enactments such as the Electricity Act, 2003,
the provisions of the IBC would prevail.

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status of electricity dues in the context of the IBC and held that the IBC
overrides the provisions of the Electricity Act, 2003, as section 238 of

further held that:
“53. Rainbow Papers [STO v. Rainbow Papers Ltd., (2023) 9
SCC 545] did not notice the“waterfall mechanism” under
Section 53-the provision had not been adverted to or extracted
in the judgment. Furthermore, Rainbow Papers [STO v.
Rainbow Papers Ltd., (2023) 9 SCC 545] was in the context of
a resolution process and not during liquidation. Section 53, as
held earlier, enacts the waterfall mechanism providing for the
hierarchy or priority of claims of various classes of creditors.
The careful design of Section 53 locates amounts payable to
secured creditors and workmen at the second place, after the
costs and expenses of the liquidator payable during the
liquidation proceedings. However, the dues payable to the
government are placed much below those of secured creditors
and even unsecured and operational creditors. This design was
either not brought to the notice of the Court in Rainbow Papers
[STO v. Rainbow Papers Ltd., (2023) 9 SCC 545] or was
missed altogether. In any event, the judgment has not taken
note of the provisions of IBC which treat the dues payable to
the secured creditors at a higher footing than dues payable to
the Central or the State Government.”
….
57. Similarly, in Duncans Industries Ltd. v. AJ Agrochem
[Duncans Industries Ltd. v. AJ Agrochem, (2019) 9 SCC 725 :
(2019) 4 SCC (Civ) 669] , Section 16-G of the Tea Act, 1953
which required prior consent of the Central Government (for
initiation of winding-up proceedings) was held to be overridden

overrides the provisions of the Electricity Act, 2003 despite the

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latter containing two specific provisions which open with non

law with respect to primacy of IBC, is identical with the
position discussed in ABG Shipyard Liquidator [ABG Shipyard
Liquidator v. Central Board of Indirect Taxes & Customs,
(2023) 1 SCC 472 : (2023) 1 SCC (Civ) 251] and Duncans
Industries [Duncans Industries Ltd. v. AJ Agrochem, (2019) 9
SCC 725 : (2019) 4 SCC (Civ) 669] [refer also : Innoventive
Industries [Innoventive Industries Ltd. v. ICICI Bank, (2018) 1
SCC 407 : (2018) 1 SCC (Civ) 356] , CIT v. Monnet Ispat &
Energy Ltd. [CIT v. Monnet Ispat & Energy Ltd., (2018) 18
SCC 786 : (2019) 3 SCC (Civ) 252] , Ghanashyam Mishra &
Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.
[Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset
Reconstruction Co. Ltd., (2021) 9 SCC 657 : (2021) 4 SCC
(Civ) 638] , and Jagmohan Bajaj v. Shivam Fragrances (P)
Ltd. [Jagmohan Bajaj v. Shivam Fragrances (P) Ltd., 2018
SCC OnLine NCLAT 413] ].”
(emphasis supplied)

of judgements as it was fairly submitted by Sri Goyal learned senior
counsel but some of the respondents’ counsel continued submission on
this issue and, therefore, the issue require consideration.

case, where it held that:

524 (SC); 2023 SCC OnLine SC 842.] and the order of this

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Comp Cas-OL 213 (SC), order dated September 6, 2023 in
Civil AppealNos. 5716 and 5717 of 2023.] . The appellant-
Tata Power Western Odisha Distribution Ltd. 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 by the corporate debtor for the grant of an
electricity connection in her/his name.”

State Governments and any other local authority, following its earlier

“102.1. That once a resolution plan is duly approved by the
adjudicating authority under sub-section (1) of Section 31, the
claims as provided in the resolution plan shall stand frozen and
will be binding on the corporate debtor and its employees,
members, creditors, including the Central Government, any
State Government or any local authority, guarantors and other
stakeholders. On the date of approval of resolution plan by the
adjudicating authority, all such claims, which are not a part of
resolution plan, shall stand extinguished and no person will be
entitled to initiate or continue any proceedings in respect to a
claim, which is not part of the resolution plan.”

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on entertaining claims after the resolution plan had been accepted by the
CoC. Supreme Court was of the view that the finality after undergoing
the due process under IBC could not be easily interfered with by the
adjudicating authority.

held that:
“all the dues including the statutory dues owed to the Central
government, any State Government or any local authority, if
not a part of the resolution plan, shall stand extinguished and
no proceedings could be continued in respect of such dues for
the period prior to the date on which the adjudicating authority
grants its approval under Section 31 of the IB Code.”

Limited Vs. Prescribed Authority and 4 others, order dated 24.04.2026

“76. The principle established by the Supreme Court in the
aforementioned judgments is that a successful resolution
applicant must be permitted to take over the corporate debtor
on a “clean slate” the entity should be free from past liabilities
except those specifically preserved in the Resolution Plan. The
IBC is based on the principle that upon approval of a
Resolution Plan, the corporate debtor emerges from insolvency

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in a renewed form, with its past liabilities crystallised and
confined strictly to those recognised in the Resolution Plan.”

CoC, which was not taken into consideration by the CoC. As such, this
Court came to a finding that the satisfaction arrived at by the
adjudicating authority under Section 31 of the Code was vitiated.

dues of corporate debtor, the High Court of Meghalaya at Shillong has

“Then under section 31, the resolution plan goes for approval
to the adjudicating authority. The adjudicating authority has a
concurrent duty of satisfying itself that inter alia the plan
provides for payment of the debts of operational creditors.
Thereafter, the adjudicating authority which is the NCLT
approves the resolution plan. Section 60 provides that during
pendency of the resolution plan before the adjudicating
authority or NCLT, any application is to be made before it.
Such an application under section 60 (5) (c) includes one for
determination to any question with regard to insolvency
resolution. Under Section 61 an appeal from a decision of the
NCLT lies before the appellate authority (NCLAT). Such appeal
under section 61(2) has to be filed within 30 (thirty) days of the
decision of the NCLT, the Appellate Tribunal may extend such
time by a maximum period of 15 days. A further appeal lies

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under section 62 of the Supreme Court within 45 days which
may be further extended by 15 days and no more.”

CIRP period, the High Court of Meghalaya at Shillong referred various
judgements of the Supreme Court on the issue and thereafter held in in
Meghalaya Power Distribution Corporation Limited (MePDCL)

“On a proper interpretation of this judgment till such time as a
resolution plan is declared as invalid it would be presumed to
be valid and all debts not included in the plan prior to the
effective date would be deemed to be extinguished.”
It was further held that:
“In my opinion, unless any contrary order is brought from a
competent jurisdiction declaring invalidity of the resolution
plan, the plan as approved by NCLT is valid and binding on all
stakeholders.
In the facts and circumstances of this case the said alleged
debts of the first respondent to the appellant are not included in
the resolution plan as approved by the adjudicating authority,
NCLT on 3rd December, 2020. Therefore, those debts before

deemed to have been extinguished.
Therefore, I pass an order of injunction restraining the
appellant from taking steps or from enforcing its demand notice
dated 12th June, 2023.”

respondents could have challenged the resolution plan if they had any

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grievance but after opting to neither file claim nor challenging the
resolution plan, respondents have lost the opportunity and the old claim
of corporate debtor is extinguished in facts of the case.
(iii) Date of commencement of the liability

liability starts for the payment of dues to the respondents. It is argued by
the petitioner that the “effective date” of the resolution plan should be
considered in the facts of the present case. The petitioner contends that
the “Effective Date” is 22.12.2022, being the date on which the
successful resolution applicant took over the management of the
corporate debtor upon deposit of the resolution amount and actual
implementation of the plan. On the other hand, the respondents submits
that the resolution plan, having been approved by the NCLT on
03.12.2020, became effective from that date itself, and all consequences,
including fastening of liability, must be from the date of NCLT order
approving the resolution plan.

03.12.2020 and was thereafter challenged in appeal before NCLAT and
travelled upto Supreme Court and then got finally upheld. In the
circumstances the NCLT order could not be implemented in the
meanwhile and that lead to put the resolution plan implementation on
hold. It is also not in dispute that the actual change of management and
operational control took place on 22.12.2022 upon completion of
procedural formalities, including deposit of the resolution amount and
implementation steps undertaken thereafter under the supervision

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mechanism provided in the plan. It can also not be denied that there was
no possibility of the resolution plan to become effective till the amount
was deposited as per procedural requirement.

since it is closely linked with the commencement of liabilities of the
successful resolution applicant as per clause 1.2.6 of the resolution plan.
While the approval of the resolution plan by the NCLT confers legal
sanction upon the plan, its operational implementation, including
transfer of management and discharge of obligations under the plan, may
occur subsequently in accordance with its terms and the implementation
framework contemplated therein as the decision of CoC is final being the
commercial wisdom and there cannot be judicial review to the clause
which has specified the effective date in resolution plan itself, which got
approved by the NCLT.

therefore it becomes the point for determination as to whether mere
approval of the resolution plan is sufficient to fix the date for imposition
of liability even if the implementation thereof gets over delayed, or
whether such liability can only arise upon actual implementation and
transfer of control in terms of the resolution framework. This issue
necessarily requires examination of the terms of the resolution plan
itself, the implementation mechanism envisaged therein, and the legal
effect of approval under Section 31 of the IBC.

manner specified in sub-section 1.2.8 and payment of the Interim

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Management Costs in accordance with this resolution plan, the
Corporate Debtor or the resolution applicant or its Affiliates shall have
no liability. For ready reference, Clause 1.2.6 is reproduced as below:-
“1.2.6 Upon payments in the manner specified in sub-section
1.2.8 below and payment of the Interim Management Costs in
accordance with this Resolution Plan, the Corporate Debtor
or the Resolution Applicant or its Affiliates shall have no
liability towards:
(a) any Stakeholder of the Corporate Debtor,
including any Creditor whether Financial Creditors,
Employees, Workmen, Government and/or Statutory
Authorities, Other Operational Creditors,
shareholders or any other stakeholder and all claims
and liabilities of any nature whatsoever (whether
claimed or unclaimed, admitted or not, due or
contingent, asserted or un-asserted, crystallised or
uncrystallised, known or unknown, disputed or
undisputed) of the Corporate Debtor for any period
up to the Effective Date towards the Creditors and
other Stakeholders of the Corporate Debtor shall be
extinguished and settled, upon payment of the Total
Resolution Amount on the Effective Date, on and
with effect from the NCLT Approval Date; and
b)...”

the liability of the Resolution Applicant was intended to commence, but
in the resolution plan itself it is also stipulated that all claims against the
Corporate Debtor would stand extinguished upon payment of the total
resolution amount on the effective date. However, despite this clear
framework, the Plan could not be implemented within the contemplated
timeline, as the final payment itself was delayed due to challenges raised
to the resolution plan. The issue of final payment could be resolved only
after the interim order dated 30.11.2022 was passed by the Supreme

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WRIC No. - 32408 of 2023

order dated 21.11.2022 passed by the NCLAT Court-I, Mumbai Bench,
Maharashtra, that the amount be deposited in an escrow account to be
opened with the State Bank of India. It was only thereafter effective
steps toward implementation of the resolution plan were taken,
culminating in the successful resolution of the Corporate Debtor as a
new entity with effect from 22.12.2022 upon completion of all
formalities.

forced to bear the financial burden due to such delay caused because the
NCLT order approving resolution plan got challenged before appellate
Courts. To substantiate it, we would rely upon the Latin legal maxim,

shall prejudice anyone. In the facts of this case, occasional interim orders
delayed the effective date, which is to be considered as per clause
mentioned in the resolution plan regarding commencement of liabilities
and therefore, Court is to come forward to protect such litigant relying
upon above maxim.

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WRIC No. - 32408 of 2023

matters arising under the Code as soon as possible, we cannot
shut our eyes to the fact that a large volume of litigation has
now to be handled by both the aforesaid Tribunals. What

matter arising out of Section 31 of the Code beyond the time-

SCC (Cri) 372 : 1988 Supp (1) SCR 1] , SCR at p. 71). It is
also true that the time taken by a Tribunal should not set at
naught the time-limits within which the corporate insolvency
resolution process must take place. However, we cannot forget
that the consequence of the chopper falling is corporate death.
The only reasonable construction of the Code is the balance to
be maintained between timely completion of the corporate
insolvency resolution process, and the corporate debtor
otherwise being put into liquidation. We must not forget that the
corporate debtor consists of several employees and workmen
whose daily bread is dependent on the outcome of the
corporate insolvency resolution process. If there is a resolution
applicant who can continue to run the corporate debtor as a
going concern, every effort must be made to try and see that
this is made possible. [ Regulation 32 of the Insolvency and
Bankruptcy Board of India (Liquidation Process) Regulations,
2016, states that the liquidator may also sell the corporate

construction of this statute would therefore lead to the result
that, where a resolution plan is upheld by the appellate
authority, either by way of allowing or dismissing an appeal
before it, the period of time taken in litigation ought to be

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WRIC No. - 32408 of 2023
tardy in decision-making. This is only to say that in the event of

application beyond the period of 270 days, the time taken in
legal proceedings to decide the matter cannot possibly be
excluded, as otherwise a good resolution plan may have to be
shelved, resulting in corporate death, and the consequent
displacement of employees and workers.”
(emphasis supplied)

date of implementation of the resolution plan is the date when the funds

approval date being the date to commence liability would amount to
interference with the wisdom of the CoC in the facts of this case because
the plan accepted by the NCLT has expressly mentioned that the
effective date would be the date of deposit. For ready reference, Agenda
Item No. B-15, reads as below:-
“Dissolution of the Monitoring Committee pursuant to the
completion of the implementation of the Resolution Plan.
The Monitoring Committee was informed that pursuant to
resolution plan dated November 25, 2019 (as amended from
time to time till January 13, 2020) submitted by Reliance
Projects and Property Management Services Limited through
its division Infrastructure Projects ("RPPMSL" and the plan
is referred to as the "Resolution Plan") during the corporate
insolvency resolution process of the Company, as duly
approved by the committee of creditors of the Company and
subsequently by the Hon'ble National Company Law
Tribunal, Mumbai Bench ("NCLT") vide order dated
December 3, 2020 and all the steps of the implementation
stated in the Resolution Plan of RPPMSL (including

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reconstitution of Board) have been completed on the Effective
Date, i.e. December 22, 2022.
The distribution of the Total Resolution Amount (as defined
under the Resolution Plan) to the relevant
stakeholders/creditors of the Company shall be carried out in
terms of the Escrow Agreement dated December 22, 2022.
Accordingly, it is informed that all actions / correspondence
in relation to any matters/affairs of the Company shall
henceforth be undertaken by the reconstituted board of
directors of the Company, and the Monitoring Committee
shall be divested of its powers and responsibilities and shall
cease to exist with effect from the Effective Date i.e.
December 22, 2022 in accordance with the terms of the
Resolution Plan, without the requirement of any further
action or deed in this regard.”

effective date which is expressly mentioned in the resolution plan,
which was approved by CoC in its commercial wisdom, approved
by NCLT and upheld by Supreme Court. Recording in NCLT order
that it is effective from the date of the order is to be read
harmoniously as well as purposefully as the moment resolution plan
is approved by the NCLT, everything written in the resolution plan
becomes binding on all stakeholders. NCLT cannot intend to
interfere in the provision made in the resolution plan as per
established legal principle and, therefore, the NCLT order could
have been read as the date per the resolution plan, if the amount was
deposited as per clause 1.2.8 schedule and had not got delayed the
implementation of the plan due to litigation.

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implementation of resolution plan got over delayed due to the
situation beyond the control of the petitioner, we consider it
appropriate to apply the principle laid down by the Supreme Court

Supreme Court has excluded the time taken in the litigation, we
hold that the date on which the petitioner could effectively
implement the resolution plan after depositing complete resolution
amount, the liability shall arise from that date. Otherwise, putting
the uncertain, unexpected, unclaimed burden on the resolved entity
will be against the principles on which the insolvency law is based.
(iv) Legality of Impugned Demands and Coercive Measures

sustainability of the impugned demands, recovery certificates, and
consequential coercive actions taken by the respondent authorities
because the petitioner has made prayer against the said actions primarily
on the ground that the demands pertain to the electricity dues relating to
the period prior to Effective Date of the resolution plan, and therefore
stand extinguished in view of Section 31 of the IBC if the claim is not
being filed during CIRP. It is further contended that once the resolution
plan has attained finality, which binds all stakeholders, and hence no
recovery proceedings in respect of pre-CIRP dues can be maintained,
much less enforced by coercive measures.

by contending that the electricity dues constitute statutory dues protected

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WRIC No. - 32408 of 2023
under the applicable Electricity Supply Code and that such dues form a
first charge on the premises. It is further urged that electricity being an
essential service, recovery of arrears cannot be ignored, and
disconnection or reconnection are permissible only under the Electricity
Act, particularly where dues remain outstanding against the premises in
question for any reason.

the approved resolution plan and the statutory scheme under the IBC, the
respondents could lawfully raise and enforce demands relating to the
duration prior to the effective date, and whether coercive measures such
as disconnection of electricity supply and sealing of operational mobile
tower sites can be justified in law.

between the binding effect of the resolution plan under Section 31, the
overriding effect under Section 238 of the Code, and the statutory
powers claimed by the electricity distribution companies under the
Electricity Act and the Supply Code, which has been discussed in issue
(i) where we have concluded that the IBC has overriding effect over
Electricity Act and other related laws.

could raise the demand for the period prior to the effective date or when
the complete resolution amount was not deposited and the plan was yet
to be implemented. This issue has been analysed already above as point
(ii) where we have concluded that the respondents who have not filed
their claim during CIRP, cannot raise any demand as the claim has got

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WRIC No. - 32408 of 2023
extinguished such a right after the plan, resolution plan got approved by
the NCLT and remained undisputed by such a department till the
effective date. Considering facts of this case, where the plan is already
implemented, raising the demand subsequently would be against all
settled legal principles of insolvency laws.

the approval of the resolution plan stand extinguished, the respondents
are precluded from enforcing any such claims, and the liability of the
petitioner cannot be fastened prior to the Effective Date as determined in
accordance with the resolution plan in the facts of the case.

where rights and obligations of stakeholders are required to be
determined strictly in accordance with the approved resolution plan and
its implementation structure. The binding nature of the resolution plan,
once it attains finality under Section 31 of the Code, necessarily governs
the rights of all stakeholders, including operational creditors and
statutory authorities, subject to the contours of the plan itself. But the
principle of exclusion of time taken in the litigation is not alien to the
insolvency law but it is available to the petitioner and not to the
respondents in the fact of the case.

phase can be discerned in the facts of this case. The first pertains to pre-
CIRP dues, which are required to be filed before the RP during the CIRP,
failing this, or if not provided for in the approved resolution plan, such
dues stand extinguished. The second phase covers the CIRP period itself,

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WRIC No. - 32408 of 2023
where regular operational cost gets presented as CIRP costs, and get
placed before the CoC, and these costs are payable on timely basis or in
terms of the approved plan, but this also extinguishes, if neither paid
during CIRP nor mentioned in the plan. The third phase commences
from the date of approval of resolution plan when the monitoring
committee takes over, which settles all operational and transitional costs
till the effective date of the resolution plan. The final phase is when the
corporate debtor emerges as a clean slate, notwithstanding continuity in
its name or change of name.

phases cannot be enforced after the resolution plan is implemented. It is
only liabilities arising in the final phase that can be validly claimed, and
the petitioner would be bound to comply with the provisions of the
Electricity Act, 2003 and other applicable laws in respect of obligations
accruing from the effective date onwards.

the resolution plan, including assumption of management and
operational control, is not merely a formal consequence of approval but
is intrinsically linked to the execution steps contemplated under the plan.
The determination of the point at which liabilities crystallise must,
therefore, be guided by the scheme of implementation as reflected in the
resolution framework and the actual transition of control in terms
thereof, especially when the delay in the implementation was due to
pending considerations before one or another Courts.

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WRIC No. - 32408 of 2023

must necessarily be tested on the anvil of the finality accorded to the
resolution process and the statutory mandate governing its binding
effect. Coercive steps undertaken in deviation of the approved resolution
framework cannot be sustained if they are found to travel beyond the
permissible scope of recovery as envisaged under the IBC framework.

liability, if any, attributable to the petitioner are required to be examined
in the light of the settled legal position governing the sanctity of the
resolution process and the statutory finality attached thereto under IBC
and therefore impugned demand notices pertaining to the duration prior
to CIRP, during CIRP, monitoring phase, and further upto the effective
date of implementation cannot be sustained in law.
VII
Conclusion

of the factual matrix, the submissions advanced by learned counsel for
the parties, and the settled legal position governing the field, this Court
is of the considered view that the impugned actions of the respondent
authorities cannot be sustained in law as IBC has overriding effect. The
claims sought to be enforced pertain to the period pre- CIRP, during
CIRP, monitoring phase and further upto the period till effective date for
which no claim was filed by respondents. These claims are extinguished
in terms of Section 31 of the IBC as well as express provisions made in
the resolution plan and hence are not enforceable against the petitioner.

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binding on all stakeholders, including statutory authorities, and operates
on a clean slate principle as recognised in law. The respondent
authorities, therefore, could not have proceeded to raise or enforce
demands which are extinguished, nor could they have resorted to
coercive measures for recovery of such extinguished claims.

not considered in this order as the main point in this case has been the
date from which the liability could be imposed upon the petitioner and
once that is being determined as the “effective date” when the final
amount was deposited as per resolution plan, consequential action may
follow. And for this reason if there is any demand pre-effective date, then
the same cannot be claimed being extinguished claim and if the demand
is regarding post resolution plan approval then the parties have got
remedy under Electricity Act, except the fact that the dues or arrears on
premises cannot be demanded any more as per Electricity Act dues for
the overriding effect of IBC.

impugned Recovery Certificates and Kruki proceedings, upto the extent
of demand being made prior to the effective date 22.12.2022, cannot be
sustained in law and are liable to be set aside.

notices and consequential requisites and action are quashed. However,
respondent authorities are at the liberty to issue fresh demand notice for

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any dues, which may have occurred for the post-effective date i.e.
22.12.2022 in accordance with law.

(Swarupama Chaturvedi,J.) (Ajit Kumar,J.)

Digitally signed by :-
VIKRAM GUPTA
High Court of Judicature at Allahabad