Approval of Resolution Plan does not extinguish proceedings intended to protect or enhance the Corporate Debtor’s assets.

The Appellant (PCKL) challenged two orders of the Maharashtra Electricity Regulatory Commission (MERC) dated 27th and 28th April 2015.

The dispute arose regarding the commercial settlement of deviations in power supply by M/s Global Energy Pvt. Ltd. (GEPL) to BESCOM. While the Commission had previously directed that the transaction be governed by the Final Balancing and Settlement Mechanism (FBSM), MSEDCL (Respondent No. 2) charged higher temporary tariffs based on standby power agreements.

During the pendency of these appeals, GEPL underwent Corporate Insolvency Resolution Process (CIRP), and a resolution plan was approved by the NCLT on 3rd July 2024.

MSEDCL contended that since the claims were pre-CIRP liabilities against GEPL, the appeals became infructuous under the "Clean Slate Principle" of the IBC.

The court primarily applied the "Clean Slate Principle" as envisaged under Sections 30(2), 31, and 32A of the Insolvency and Bankruptcy Code (IBC), 2016, which mandates that once a resolution plan is approved, a successful applicant takes over the corporate debtor free from past undisclosed encumbrances and claims.

The Tribunal further relied on Supreme Court precedents interpreting Section 31 of the IBC, which clarify that while claims against the corporate debtor stand extinguished, this principle does not bar proceedings intended to protect or enhance the assets/rights of the corporate debtor against third parties.

The Tribunal analyzed the pleadings and found that the thrust of the appeals was directed against the legality of the MERC orders and the actions of MSEDCL/MSLDC, rather than GEPL.

The Tribunal observed that the "Clean Slate" doctrine protects the corporate debtor from liabilities but doesn't extinguish its rights to recover money from third parties.

It was reasoned that if the Appellant succeeds, the outcome would not fasten any liability on GEPL; instead, it would require MSEDCL to reimburse excess charges to GEPL, thereby benefiting the corporate debtor.

Consequently, the approval of the resolution plan does not render the appeals infructuous as the litigation involves seeking a refund from a third party (MSEDCL) that would potentially enhance the assets of the corporate debtor.

The court ruled that the "Clean Slate Principle" is inapplicable because the adjudication would not result in a liability for the corporate debtor but could result in a benefit. The Tribunal ordered the proceedings to continue on merits and listed the matter for hearing on 13.08.2026.