Water Connection cannot be restored automatically to the successful resolution applicant

Status as on- 24/01/2023

The National Company Law Appellate Tribunal (NCLAT), Principal Bench while adjudicating an appeal filed in Maharashtra Industrial Development Corporation vs Bhadrashree Steel & Power Ltd & Ors has held that water connection cannot be automatically restored to a successful resolution applicant.

Background Facts

Ambey Iron Private Limited i.e., Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP). The Resolution Plan submitted by Bhadrashree Steel & Power Ltd i.e., Successful Resolution Applicant (hereinafter referred to as SRA) was approved by the Committee of Creditors and the Adjudicating Authority. Further, the Successful Resolution Applicant requested Maharashtra Industrial Development Corporation (hereinafter referred to as MIDC) for a new water connection to revive the operations at the plant of the Corporate Debtor.

Further, MIDC informed the SRA that the water connection could only be restored upon the payment of pending water and service charges up to the tune of Rs. 38,09,600/- The SRA filed an application for the restoration of the water supply. The Adjudicating Authority vide order dated 01.10.2021 held that the pending water and service charge of Rs 47,06,751/- stood extinguished as the same was before the institution of the CIRP. As per the Resolution Plan, the SRA was required to pay differential premiums and transfer charges of Rs 38,09,600/- to MIDC. The MIDC filed an appeal before NCLAT against the order dated 01.10.2021

Issue:

Whether water connection can be automatically restored to the Successful Resolution Applicant?

Decision held:

The Bench observed that the Adjudicating Authority had rightly rejected the claim of Rs. 47,06,751/-

The Bench further observed that “We only observe that there is no concept of automatic restoration of any water connection and a proper application is required to be made following procedure and only benefit Successful Resolution Applicant can claim is the extinguishment of the dues which are not part of the Resolution Plan.

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