# M/S Dharti Agro Industries Pvt. Ltd v. The Managing Director, Pashchimanchal Vidyut Vitran Ltd. & Ors

- **Citation:** (2025) 9 ILRA 1112
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-09-18
- **Case number:** Writ - C No. 27040 of 2025
- **Bench:** Arindam Sinha, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-dharti-agro-industries-pvt-ltd-v-the-managing-director-pashchimanchal-53858
- **Pages:** 16

## Headnote

Whether as per Section 238 of IB Code, 2016,
the provisions of Electricity Act, 2003 and
Electricity
Supply
Code,
2005
would
be
overridden by Insolvency and Bankruptcy Code,
2016?

Head Notes
The Constitution of India, 1950-Article
226; The Insolvency and Bankruptcy Code,
2016-Section 238; The Electricity Act,
2003-Sections 173 & 174; The Electricity
Supply Code, 2005- PVVPL had already
participated in liquidation process and had
made their claim with the liquidator,
hence, it will not be open for the
respondents to recover outstanding dues
under the Electricity Act, 2003, specially
when IB Code, 2016 has been triggered. -
IB Code, 2016 will have overriding effect
over Electricity Act, 2003, the respondents
will get their outstanding dues only in the
liquidation
proceeding
-
Respondents
cannot avail two relief at the same time -
They have participated in the liquidation
proceedings
but
at
the
same
time
pressurizing the petitioner to pay dues of
the corporate debtor under the provisions
of
Electricity
Act-
Respondents
are
directed to install power connection in the
premises
of
the
petitioner-
Petition
allowed.

Held- Section 238 of IB Code, 2016 clearly
shows that it has overriding effect over other
Acts. Similar provision is also found in Electricity
Act, 2003. Since, IB Code, 2016 is later Act,
hence, it will have overriding effect on Electricity
Act, 2003 - Lex Posterior Devogat Priori. (E-15)
(Para 41, 42, 45)

Case Law Cited
Union of India vs. Shah Goverdhan L. Kabra
Teachers' College (2002) 8 SCC 228; UCO Bank
and another v. Dipak Debbarma and others
(2017) 2 SCC 385; Ahemdabad Electricity
Supply Company Ltd. vs. Gujarat Inns Pvt. Ltd.,
2004 (3) SCC 587; Southern Power Distribution
Company of Telengana Ltd. through Its CMD &
Ors vs. Gopal Agarwal & Ors. passed in Civil
Appeal No.1918 of 2016; Paschimanchal Vidyut
Vitran Nigam Ltd. vs. Raman Ispat Private Ltd.
AIR 2023 SC 3501; Civil Appeal No.5556 of
2023- "Tata Power Western Odisha Distribution
Limited (TPWODL) & Anr. vs. Jagannath Sponge
Private
Limited";
M/s
Uttrakhand
Power
Corporation Limited Versus M/s Shyam Baba
Developers & Builders Pvt. Ltd., Company
Appeal (AT) No.346 of 2023; K.C. Ninan v.
Kerala State Electricity Board and others,
2023 SCC Online SC 663 : (2023) 9 S.C.R.
637; Ghanshyam Mishra and sons Pvt. Ltd.
through
the
authorized
signatory
vs.
Edelweiss
Asset
Reconstruction
Company
Limited through the director and others,
(2021)
21
SC
196;
Sundaresh
Bhatt,
Liquidator of ABG Shipyard v. Central Board of
Indirect Taxes and Customs, 2022 SCC Online
SC
1101; Duncans Industries
Ltd.
A.J.
Agorchem, (2019) 9 SCC 725: AIR 2019
Supreme
Court
5472;
M/s
Innoventive
Industries Ltd. vs. ICICI Bank, (2018) 1 SCC
407; CIT vs. Monnet Ispat and Energy Ltd.,
(2018) 18 SCC 786.; M/s Platinum Rent A Car
(India) Private Limited vs. M/s Quest Offices,
Limited (Company Appeal (AT) (CH) (Ins)
No.448 of 2022); K. Kishan vs. Vijay Nirman
Company Private Limited, (2018) 17 SCC 662

List of Acts
The Constitution of India, 1950; The Insolvency
and Bankruptcy Code, 2016; The Electricity Act,
2003; The Electricity Supply Code, 2005

List of Keywords
Lex Posterior Devogat Priori; IB Code has
overriding effect over Electricity Act ; Corporate
debtor under Electricity Act;

Case Arising From
Respondent nos.1 to 3 are refusing to grant
electricity connection to the petitioner on the
ground that there was electricity dues against
the erstwhile owner and the dues has to be
recovered from the premises as per provision of
Electricity Act, 2003 and the Electricity Supply
Code, 2005 and unless and until the same is
cleared,
electricity
connection
cannot
be
granted.

Appearances for Parties
Counsel for Petitioner(s) : Ashish Kumar,
Deepak Kumar Pandey, Sandeep Pandey
Counsel for Respondent(s) : Kartikeya Saran
1114 INDIAN LAW REPORTS ALLAHABAD SERIES

## Text

_Characters 0–39,909 of 52,069. This is a partial read: ask again with offset=39909 for what follows._

1112 INDIAN LAW REPORTS ALLAHABAD SERIES
judgment of the court other than a Court
Small Causes shall contain a concise
statement of the case, the points for
determination, the decision thereon and the
reasons for such decision. The judgment
cannot be held to lay down that it is open to
the Appellate Authority to affirm the
finding recorded by the trial court on a
question of fact by a mere observation that
the trial Court had arrived at that finding
"for good reasons" as has been done in the
instant case by the lower appellate court."

36. In view of the aforesaid decision
and the provisions of Order 41 Rule 31 CPC
read with sub - section (1) of section 10 of the
Act, the Appellate Authority to required to
apply its mind to the facts of the case, state
the questions involved in the case and decide
the same giving its own reason for the
decision. In the present case, the appellate
authority failed to discharge its duty and has
dismissed the judgment and order dated
29.04.2002 and 01.10.2002 by recording its
general expression of inference with the
Prescribed Authority written and quoting any
reason at would amount from the judgment of
the appellate authority.

37. Thus the judgment and order
passed by the appellate authority does not
fulfills the requirements of provisions of
sub section (1) of Section 38 of the Act
read with order 41 Rule 31 CPC and same,
therefore, liable to be set aside.

38. The other points raised by
learned Senior Counsel is that the appellate
authority while rejecting the restoration
application has not considered the grounds
taken in the application and without taking
into consideration the facts found that no
ground has been made out to interfere in the
judgment and order dated 29.04.2002,
therefore, the order passed on the application
on 01.10.2002 is per se illegal and is liable to
be set aside by this Court. The prescribed
authority while remanding the matter has not
taken
into
consideration
the
question
involved while remanding the matter and in a
very cursory manner has passed the order.
Both the courts below have committed
manifest error of law in passing the impugned
orders.

39. In view of the foregoing
discussion, the impugned orders dated
1.10.2002, 29.4.2002 and 24.2.2000 are
hereby quashed. The writ petition succeeds
and is allowed.

40. The prescribed authority is
directed to decide the objection filed by the
petitioner in accordance with law and in the
mean time, the prescribed authority shall not
lease out the surplus land to any person.

41. No order as to costs.
----------
(2025) 9 ILRA 1112
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 18.09.2025

BEFORE

THE HON'BLE ARINDAM SINHA, J.
THE HON'BLE PRASHANT KUMAR, J.

Writ - C No. 27040 of 2025

M/S Dharti Agro Industries Pvt. Ltd.
 ...Petitioner
Versus
The Managing Director, Pashchimanchal
Vidyut Vitran Ltd. & Ors. ...Respondents

Counsel for the Petitioner:
Ashish Kumar, Deepak Kumar Pandey,
Sandeep Pandey

Counsel for the Respondents:
Kartikeya Saran
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1113
Issue for Consideration
Whether as per Section 238 of IB Code, 2016,
the provisions of Electricity Act, 2003 and
Electricity
Supply
Code,
2005
would
be
overridden by Insolvency and Bankruptcy Code,
2016?

Head Notes
The Constitution of India, 1950-Article
226; The Insolvency and Bankruptcy Code,
2016-Section 238; The Electricity Act,
2003-Sections 173 & 174; The Electricity
Supply Code, 2005- PVVPL had already
participated in liquidation process and had
made their claim with the liquidator,
hence, it will not be open for the
respondents to recover outstanding dues
under the Electricity Act, 2003, specially
when IB Code, 2016 has been triggered. -
IB Code, 2016 will have overriding effect
over Electricity Act, 2003, the respondents
will get their outstanding dues only in the
liquidation
proceeding
-
Respondents
cannot avail two relief at the same time -
They have participated in the liquidation
proceedings
but
at
the
same
time
pressurizing the petitioner to pay dues of
the corporate debtor under the provisions
of
Electricity
Act-
Respondents
are
directed to install power connection in the
premises
of
the
petitioner-
Petition
allowed.

Held- Section 238 of IB Code, 2016 clearly
shows that it has overriding effect over other
Acts. Similar provision is also found in Electricity
Act, 2003. Since, IB Code, 2016 is later Act,
hence, it will have overriding effect on Electricity
Act, 2003 - Lex Posterior Devogat Priori. (E-15)
(Para 41, 42, 45)

Case Law Cited
Union of India vs. Shah Goverdhan L. Kabra
Teachers' College (2002) 8 SCC 228; UCO Bank
and another v. Dipak Debbarma and others
(2017) 2 SCC 385; Ahemdabad Electricity
Supply Company Ltd. vs. Gujarat Inns Pvt. Ltd.,
2004 (3) SCC 587; Southern Power Distribution
Company of Telengana Ltd. through Its CMD &
Ors vs. Gopal Agarwal & Ors. passed in Civil
Appeal No.1918 of 2016; Paschimanchal Vidyut
Vitran Nigam Ltd. vs. Raman Ispat Private Ltd.
AIR 2023 SC 3501; Civil Appeal No.5556 of
2023- "Tata Power Western Odisha Distribution
Limited (TPWODL) & Anr. vs. Jagannath Sponge
Private
Limited";
M/s
Uttrakhand
Power
Corporation Limited Versus M/s Shyam Baba
Developers & Builders Pvt. Ltd., Company
Appeal (AT) No.346 of 2023; K.C. Ninan v.
Kerala State Electricity Board and others,
2023 SCC Online SC 663 : (2023) 9 S.C.R.
637; Ghanshyam Mishra and sons Pvt. Ltd.
through
the
authorized
signatory
vs.
Edelweiss
Asset
Reconstruction
Company
Limited through the director and others,
(2021)
21
SC
196;
Sundaresh
Bhatt,
Liquidator of ABG Shipyard v. Central Board of
Indirect Taxes and Customs, 2022 SCC Online
SC
1101; Duncans Industries
Ltd.
A.J.
Agorchem, (2019) 9 SCC 725: AIR 2019
Supreme
Court
5472;
M/s
Innoventive
Industries Ltd. vs. ICICI Bank, (2018) 1 SCC
407; CIT vs. Monnet Ispat and Energy Ltd.,
(2018) 18 SCC 786.; M/s Platinum Rent A Car
(India) Private Limited vs. M/s Quest Offices,
Limited (Company Appeal (AT) (CH) (Ins)
No.448 of 2022); K. Kishan vs. Vijay Nirman
Company Private Limited, (2018) 17 SCC 662

List of Acts
The Constitution of India, 1950; The Insolvency
and Bankruptcy Code, 2016; The Electricity Act,
2003; The Electricity Supply Code, 2005

List of Keywords
Lex Posterior Devogat Priori; IB Code has
overriding effect over Electricity Act ; Corporate
debtor under Electricity Act;

Case Arising From
Respondent nos.1 to 3 are refusing to grant
electricity connection to the petitioner on the
ground that there was electricity dues against
the erstwhile owner and the dues has to be
recovered from the premises as per provision of
Electricity Act, 2003 and the Electricity Supply
Code, 2005 and unless and until the same is
cleared,
electricity
connection
cannot
be
granted.

Appearances for Parties
Counsel for Petitioner(s) : Ashish Kumar,
Deepak Kumar Pandey, Sandeep Pandey
Counsel for Respondent(s) : Kartikeya Saran
1114 INDIAN LAW REPORTS ALLAHABAD SERIES
(Delivered by Hon'ble Prashant Kumar, J.)

1. Mr. Ashish Kumar, learned counsel
appears
for
the
petitioner
and
Mr.
Kartikeya
Saran,
learned
Additional
Advocate General appears for the Staterespondents.

2. The factual matrix of the case
which has given rise to instant dispute are
as under :-

 The
petitioner
is
a
private
company engaged in trading of steel
products at Delhi. The petitioner came
across an advertisement in the newspaper
dated 13th/14th April, 2022 wherein
auction
purchasers
were
invited
to
participate in the online auction sale of
immovable assets of M/s Chaudhary Ingots
Pvt. Ltd. on ?as is where is whatever there
is basis?. Apparently, the company, i.e. Ms.
Chaudhary Ingots P.Ltd. had gone into
insolvency but COC did not approve the
resolution plan and thereafter, the company
had gone into liquidation. Under the
direction of NCLT, Allahabad auction
seller/Liquidator Sandeep Goel called for
online auction of the assets of the debtor
company, to be conducted by a company
known as M/s Link Star Infosys Pvt. Ltd.

3.
The
petitioner,
who
was
interested in buying immovable assets of
the debtor company, had deposited earnest
money of Rs.30 lakhs as fixed by the
auctioneer, and participated in the auction
wherein the reserved price was fixed at
Rs.284.39
lakhs.
During
auction
proceedings against the reserved price
Rs.284.39 lakhs, the petitioner had given
bid of Rs.518.39 lakhs. His bid being the
highest, he was declared successful bidder.
As per the auction conditions at the end of
the day of auction, the balance amount was
to be paid by the purchaser to the
Liquidator. The petitioner paid the full
amount, towards full and final payment of
the auction money. Thereafter, the sale
certificate was issued on 7th July, 2022 in
favour of the petitioner and the possession
letter was also issued on 27th July, 2022 for
the
immovable
properties
of
M/s
Chaudhary Ingots Pvt. Ltd. Later on, the
title deed/sale deed was also executed on
29th May, 2024 of the auctioned property
in the name of the petitioner.

4.
Thereafter,
the
petitioner
company
had
applied
for
electricity
connection on the said property but the
same was refused by respondent no.1 on
the ground that there was certain dues by
the erstwhile owner on the premises and
unless and until the same is cleared, no
electricity connection can be granted to the
petitioner. The petitioner made number of
representations to the respondent but could
not get any relief. On the contrary,
respondent nos.1 to 3 asked the petitioner
to deposit Rs.4,92,69,142, outstanding
electricity dues of the erstwhile company.

5. Aggrieved by the demand to pay
outstanding dues of the erstwhile company,
the petitioner moved a writ petition before
this Court being Writ C No.9142 of 2025
(M/s Dharti Agro Industries v. The
Managing Director, PVVNL). This writ
petition was disposed of vide order dated
10th April, 2025. The said order is
reproduced below :

 "1.
Heard
learned
counsel
appearing on behalf of the petitioner and
the learned counsel appearing on behalf of
the respondents.

 2. This is a writ petition under
Article 226 of the Constitution of India
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1115
wherein the writ petitioner has prayed for
the following reliefs:

 "(i) Issue a writ order or
direction in the nature of mandamus
directing the respondent Pashchimanchal
Vidyut Vitran Nigam Ltd (PVVNL) to
install the power connection of 10 KW at
the petitioner's premises situated at Vill:
Vehelna, Meerut Road, Muzaffar Nagar,
U.P.
Pincode-251003
within
certain
stipulated period of time as this Hon'ble
Court may deem fit and proper considering
the facts and circumstances of the case.

 (ii) Issue a writ order or direction
in the nature of mandamus in the nature of
mandamus commanding the respondent
no.1 to take decision on the representation
of the petitioner dated: 29.08.2024 and
14.09.2024 in light of decision rendered by
Hon'ble Apex Court in Civil Appeal No.
1918 of 2016 Southern Power Distribution
Company of Telengana Ltd through its
CMD & ORS Versus Gopal Agarwal &
ORS within certain stipulated period of
time as this Hon'ble Court may deem fit
and proper considering the facts and
circumstances of the case.

 iii) Issuance of other appropriate
instruction/instructions,
order/orders,
direction/directions in light of the facts and
circumstances of this case to compensate
the loss of petitioner's investment of
approx.
Rs.5.55
Crore
made
since
Apr/May-2022, which has intentionally
entangled into unwarranted dispute from
the last 30-31 months by the officers
working under control of the respondent
no.1."

 3. Counsel appearing for the
petitioner submits that the he is not
pressing the relief No.(iii).
 4. Upon perusal of the record and
and after hearing counsel appearing on
behalf of the parties, we are of the view
that respondents authority should grant an
opportunity of hearing to the petitioner
with regard to connection to be given to the
petitioner.
The
respondents
authority
should consider the judgement of the
Supreme Court with regard to non recovery
of payments from the present owner with
regard to the dues of the erstwhile owner
when the property is bought through
liquidation process. The petitioner shall be
at liberty to produce the judgement of the
Supreme Court before the respondents
authority. The respondents authority is
directed to consider the said judgment, and
thereafter, pass a reasoned order in
accordance with law within a period of six
weeks from date. If the authority finds that
the electricity connection should be granted
to the petitioner, it shall grant the same
expeditiously without any delay.

 5. With the aforesaid directions,
the writ petition is disposed of."

6. In response to the aforesaid
order, the petitioner made representation on
15th April, 2025. However, no decision
was taken, so the petitioner again made a
fresh representation on 15th May, 2025, in
which a decision was taken whereby
respondent no.3 rejected the representation
and held that petitioner had to pay
Rs.4,041,92,94/- to get the electricity
connection as there was electricity dues
outstanding against the property. Aggrieved
by the order, the petitioner had filed the
instant writ petition seeking following
reliefs :-

 "(i) issue a writ, order or
direction in the nature of certiorari
quashing
the
impugned
order
dated
1116 INDIAN LAW REPORTS ALLAHABAD SERIES
15.05.2025
passed
by
respondent
no.3/Executive
Engineer,
(SS)
Pashchimanchal Vidyut Vitran Nigam Ltd.
(PVVNL) Near Sport Stadium, Numais
Ground, Muzaffar Nagar, U.P.-251001.

 (ii) issue a writ, order or
direction in the nature of mandamus
directing the respondent Pashchimanchal
Vidyut Vitran Nigam Ltd. (PVVNL) to
install the power connection of 10 KW at
the petitioner?s premises situated at Vill:
Vehelna, Meerut Road, Muzaffar Nagar,
U.P.
Pincode-251003
within
certain
stipulated period of time as this Hon?ble
Court may deem fit and proper considering
the facts and circumstances of the case.

 (iii) issue any other writ or
direction as this Hon?ble Court may deem
fit and proper considering the facts and
circumstances of the case."

 ARGUMENT
ON
BEHALF
OF THE PETITIONER

7. Counsel for the petitioner
submitted that the erstwhile owner of the
property namely, M/s Chaudhary Ingots
Pvt. Ltd. seems to have outstanding
electricity dues of Rs.492.69 lakhs and
respondent nos.1 to 3 are refusing to grant
electricity connection to the petitioner on
the ground that there was electricity dues
against the erstwhile owner and the dues
has to be recovered from the premises as
per provision of Electricity Act, 2003 and
the Electricity Supply Code, 2005 and
unless and until the same is cleared,
electricity connection cannot be granted.

8. Learned counsel further submits
that the petitioner has bought the property
in an online auction held by the liquidator
under Insolvency and Bankruptcy Code,
2016 (hereinafter referred as IB Code for
the sake of brevity). He further submits that
IB Code, 2016 is a special Act dealing with
the entire subject of insolvency, bankruptcy
and winding up of companies. He further
submitted that respondents had participated
in the liquidation proceeding and had made
a claim. Their claim would be decided by
the liquidator and the same would be paid
as per the mechanism set up under the IB
Code.

9. He further submitted that the
provisions of Section 173 and 174 of
Electricity Act, 2003 read with Electricity
Supply Code, 2005 would not prevail over
the provisions of IB Code, 2016 as IB
Code, 2016 is a later enactment. As per
Section 238 of IB Code, 2016, the
provisions of Electricity Act, 2003 and
Electricity Supply Code, 2005 would be
overriden by Insolvency and Bankruptcy
Code, 2016.

10. He further submits that when
there is overlapping of two enactments, the
doctrine of pith and substance has to be
applied to find true nature of Legislation.
To buttress his argument, he has placed
reliance on decision of Hon'ble Supreme
Court in the matter of Union of India vs.
Shah Goverdhan L. Kabra Teachers?
College (2002) 8 SCC 228 and UCO
Bank and another v. Dipak Debbarma
and others (2017) 2 SCC 385.

11. The counsel for the petitioner
has placed reliance on the ratio laid down
in the matter of Ahemdabad Electricity
Supply Company Ltd. vs. Gujarat Inns
Pvt. Ltd., 2004 (3) SCC 587, wherein it
has been held that the auction purchaser
cannot be denied power supply due to nonpayment of arrears by the erstwhile
company.
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1117
12. He further placed reliance on
the ratio laid down by Hon?ble Supreme
Court in the matter of Southern Power
Distribution Company of Telengana Ltd.
through Its CMD & Ors vs. Gopal
Agarwal & Ors. passed in Civil Appeal
No.1918 of 2016 wherein the Court has
held as follows:-

 "..The High Court relied upon
the judgment in Isha Marbles(supra) to
grant relief to the First Respondent. It was
held in the said judgement that an auction
purchaser cannot be called upon to clear
the past arrears. It was also held that a
power connection to an auction purchaser
cannot be withheld for the dues of the past
owner.

 "..NESCO v. Raghunath Paper
Mills (P) Ltd., (2012) 13 SCC 479, the
purchaser in an auction sale conducted by
the official liquidator on ?as is where is?
and ?whatever there is? basis was found
not liable for payment of the electricity
arrears. In the said case an advertisement
was issued by the official liquidator for sale
of moveable and immoveable property of
M/s Konark Paper and Industries Limited
on ?as is where is? and whatever there is?
basis. The auction purchaser applied for a
fresh electricity connection to its unit which
was denied on the ground of non payment
of arrears by the past owner. After
considering the judgments in Ahemdabad
Electricity Company (supra) and Isha
Marbles (supra), this Court held that the
request of the auction purchaser for a fresh
connection could not have been rejected."

13. He further submitted that
Hon'ble Supreme Court has dealt with
identical
situation
in
Paschimanchal
Vidyut Vitran Nigam Ltd. vs. Raman
Ispat Private Ltd. AIR 2023 SC 3501
wherein Court has held that the electricity
supply company (i.e. respondent herein) by
virtue of Electricity Supply Code, 2005 and
as per agreement between the parties,
wherein charge was created on the assets of
the corporate debtor, but in case of
Insolvency Proceedings the respondent
herein (the electricity supply company)
would be a secured creditor towards its
corporate debtor and its claim would be
classified as per provision prescribed in
section 53 of IB Code, 2016 i.e. as per
?waterfall mechanism?. In paragraph 52 of
the judgment, the Court has held as held as
follows:-

 "52. The views expressed by the
present judgment finds support in the
decision reported as Sundaresh Bhatt,
Liquidator of ABG Shipyard v. Central
Board of Indirect Taxes and Customs. In
that case, Section 142A of the Customs Act
1962 was in issue authorities had submitted
that dues payable to it were to be treated as
'first charge' on the property of the
assessee concerned in the resolution
process, it was argued that the Customs
Act, 1962 acquired primacy and had to be
given effect to. This court, after noticing the
overriding effect of Section 238 of the IBC,
held as follows:

 55. For the sake of clarity
following questions, may be answered as
under:

 (a) Whether the provisions of the
IBC would prevail over the Customs Act,
and if so, to what extent?

 The IBC would prevail over the
Customs Act, to the extent that once
moratorium is imposed in terms of Sections
14 or 33(5) of the IBC as the case inay be,
the respondent authority only has a limited
1118 INDIAN LAW REPORTS ALLAHABAD SERIES
jurisdiction
to
assess/determine
the
quantum of customs duty and other levies.
The respondent authority does not have the
power to initiate recovery of dues by means
of sale/confiscation, as provided under the
Customs Act.

 (b) Whether the respondent could
claim title over the goods and issue notice
to sell the goods in terms of the Customs
Act when the liquidation process has been
initiated"

 It was further held that Section
238 of this Code shall override provisions
of Electricity Supply Code, 2005 and the
Electricity Act, 2005. The Hon'ble Supreme
Court in the present judgment had relied
upon Sundaresh Bhatt, Liquidator of ABG
Shipyard v. Central Board of Indirect
Taxes and Customs, wherein, it was held
that owing to Section 238 of the IBC, the
Code would prevail over the Customs Act,
1962. Similarly, in Duncans Industries Ltd.
v. AJ Agrochem, Section 16G of the Tea
Act, 1953, which required prior consent of
the Central Government (for initiation of
winding up proceedings) was held to be
overridden by the IBC. In view of the
same, the Court, in the present case held
that Section 238 of the IBC overrides the
provisions of the Electricity Act, 2003,
despite the former containing two specific
provisions, which opens with non-obstante
clauses (i.e., Sections 173 and 174 of the
2003 Act).

14. He further submitted that the
respondent herein (PVVNL) undoubtedly is
a government corporation but it cannot be
strictly said to be government participation
as their functions are replicated by other
private entities, i.e. supply of electricity,
generation, transmission and distribution of
electricity. The private entities are also
entitled to hold licenses, hence, dues of
PVVNL cannot be said to be government
dues in the strict sense as per Section
53(1)(f) of the IBC.

15. He further submitted that in
Civil Appeal No.5556 of 2023- "Tata
Power
Western
Odisha
Distribution
Limited (TPWODL) & Anr. vs. Jagannath
Sponge Private Limited". The power
company was insisting for payment of
arrears of its dues. The Hon'ble Supreme
Court relied on the earlier judgment passed
in "Paschimanchal Vidyut Vitran Nigam
Ltd." (supra) and has held as follows:-

 "In our opinion, the legal issue is
covered by the judgment of this Court in
"Paschimanchal Vidyut Vitran Nigam Ltd.
vs. Raman Ispat Private Limited and
Others" and the order of this Court in
"Southern Power Distribution Company of
Andhra
Pradesh
Limited
vs.
Gavi
Siddeswara Steels (India) Pvt. Ltd. and
Another.
The
appellant
Tata
Power
Western
Odisha
Distribution
Limited
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."

16. He further submitted that in
M/s Uttrakhand Power Corporation
Limited
Versus
M/s
Shyam
Baba
Developers
&
Builders
Pvt.
Ltd.,
Company Appeal (AT) No.346 of 2023
the judgment rendered by Hon'ble Apex
Court in K.C. Ninan v. Kerala State
Electricity Board and others, 2023 SCC
Online SC 663 : (2023) 9 S.C.R. 637 has
been considered and it was held that K.C.
Ninan's case (supra) passed in Civil Appeal
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1119
No 2109-2110 of 2004 was not applicable
as aforesaid judgment is not in reference to
liquidation proceeding where electricity
authority has filed any claim.

17. Counsel for the petitioner
submits that Insolvency and Bankruptcy
Code superseded the Indian Electricity Act
or Rules framed therein that Section 238 of
IB Code, 2016 will override the provisions
of section 173, 174 of Electricity Act, 2003
read with Electricity Supply Code, 2005.

ARGUMENT ON BEHALF OF
RESPONDENT

18. Mr. Kartikeya Saran, learned
Additional Advocate General assisted by
Mr. S.C. Upadhyay, learned Standing
Counsel appears on behalf of Staterespondent nos.1, 2 and 3 and stated that in
the field of supply of electricity, the
provisions of Electricity Act, 2003 is fully
applicable.

19. He submitted that on plain
reading of the aforesaid sections clearly
shows that provisions of Electricity Act,
2003 would have primacy over all laws
including IB Code, 2016. He added that the
provisions of the Electricity Act, 2003
shows that the Act, 2003 is a special Act
with
non-obstante
clause
and
has
overriding effect over any other law. He
further submitted that as far as recovery of
electricity
dues
are
concerned,
the
Electricity Act, 2003 lays down a special
mechanism, and hence, the role of
electricity supply by PVVNL (respondent
nos.1 to 3) would not be subordinate or
subject to priority claims mechanism under
IB Code, 2016, hence, the respondents can
recover the dues from the petitioner, which
was over the immovable property bought
by the petitioner.
20. He next submitted that the
mechanism
for
speedy
recovery
of
electricity has to be given full effect and for
this he has placed reliance on a judgment
passed by Hon'ble Supreme Court in the
matter of K.C. Ninan (supra) wherein
Court has held as follows:

 "107. Consequently, in general
law, a transferee of the premises cannot be
made liable for the outstanding dues of the
previous owner since electricity arrears do
not automatically become a charge over
the premises. Such an action is permissible
only where the statutory conditions of
supply
authorise
the
recovery
of
outstanding
electricity
dues
from
a
subsequent
purchaser
claiming
fresh
connection of electricity, or if there is an
express provision of law providing for
creation of a statutory charge upon the
transferee."

ANALYSIS

21. Heard learned counsel for the
parties and perused the record.

22. The relevant provisions of the
Electricity
Act,
2003
are
quoted
hereunder:-

 "Section 56. (Disconnection of
supply in default of payment): -- (1) Where
any person neglects to pay any charge for
electricity or any sum other than a charge
for electricity due from him to a licensee or
the generating company in respect of
supply, transmission or distribution or
wheeling of electricity to him, the licensee
or the generating company may, after
giving not less than fifteen clear days?
notice in writing, to such person and
without prejudice to his rights to recover
such charge or other sum by suit, cut off
1120 INDIAN LAW REPORTS ALLAHABAD SERIES
the supply of electricity and for that
purpose cut or disconnect any electric
supply line or other works being the
property of such licensee or the generating
company through which electricity may
have been supplied, transmitted, distributed
or wheeled and may discontinue the supply
until such charge or other sum, together
with any expenses incurred by him in
cutting off and reconnecting the supply, are
paid, but no longer:

 Provided that the supply of
electricity shall not be cut off if such person
deposits, under protest, -

(a) an amount equal to the sum
claimed from him, or

 b) the electricity charges due
from him for each month calculated on the
basis of average charge for electricity paid
by
him
during
the
preceding six months, whichever is less,
pending disposal of any dispute between
him and the licensee.

 (2)
Notwithstanding
anything
contained in any other law for the time
being in force, no sum due from any
consumer, under this section shall be
recoverable after the period of two years
from the date when such sum became first
due unless such sum has been shown
continuously as recoverable as arrear of
charges for electricity supplied and the
licensee shall not cut off the supply of the
electricity.

 x x x x

 Section 173. Inconsistency in
laws. Nothing contained in this Act or any
rule or regulation made thereunder or any
instrument having effect by virtue of this
Act, rule or regulation shall have effect in
so far as it is inconsistent with any other
provisions of the Consumer Protection Act,
1986 (68 of 1986) or the Atomic Energy
Act, 1962 (33 of 1962) or the Railways Act,
1989 (24 of 1989)

 Section
174.
Act
to
have
overriding effect.-Save as otherwise in
section 173, the provisions of this Act shall
have
effect
notwithstanding,
anything
inconsistent therewith contained in any
other law for the time being in force or in
any instrument having effect by virtue of
any law other than this Act.

 Section 175. Provisions of this
Act to be in addition to and not in
derogation of other laws- The provisions of
this Act are in addition to and not in
derogation of any other law for the time
being in force."

23. By virtue of Section 181(2)(x) of
the 2003 Act, State Commissions are
empowered to frame regulations. Section
50 empowers the State Commissions to
frame the "Electricity Supply Code" to
provide for recovery of electricity charges,
disconnection of supply of electricity for
non-payment, etc. In the present case, the
Uttar Pradesh State Commission had
framed the U.P. Electricity Supply Code,
2005. The relevant Clause 4.3 (f) (iv) of the
Code is reproduced hereunder:

 "The outstanding dues will be
first charge on the assets of the company,
and the licensee shall ensure that this is
entered
in
an
agreement
with
new
applicant."

 Clause 6.15 of the 2005 Code
lays that recovery of arrears shall be in
accordance with the provisions of the Uttar
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1121
Pradesh
Government
Electrical
Undertakings (Dues Recovery) Act, 1958:

 "
Clause
6.15
Recovery
of
Arrears

 (a) The payments due to the
Licensee shall be recovered as per
provision of Section 56 of the Act, and
arrears of land revenue as per the
provisions
of
the
U.P.
Government
Electrical Undertaking (Dues Recovery)
Act, 1958, as amended from time to time.
(b) Notwithstanding anything contained in
any other law for the time being in force,
no sum dre from any consumer shall be
recoverable after the period of two years
from the date when such sum became first
due unless such sum has been shown
continuously as recoverable as arrear of
charges of electricity supplied, and the
licensee shall not cut off the supply of the
electricity.

 (Explanation: The date from
which such charges becomes 'first due',
needs to be correctly interpreted. If as a
result of regular meter reading/inspection
of installation of consumer, such charges /
penalties levied as per this code or tariff
schedule, shall become first due after 15
days of receipt of such a bill by consumer,
and such bill shall be provided to the
consumer not later than two billing cycle
for that category of consumer)."

24. These provisions in the 2003
Act and the U.P. Electricity Supply Code
form the legal framework for recovery of
dues by various kinds of licensees under
the 2003 Act.

25. As previously stated, the corporate
debtor had entered into an agreement with
PVVNL for supply of electricity on 14-02-2010
which provided that outstanding electricity dues
would constitute a 'charge' on its assets, which
was in accordance with Clause 4.3(f) (iv) of the
2005 Code. Clause 8 of the agreement also
mentioned that the parties would be governed
by the provisions of the Electricity Act, 2003.

26. The issue as to whether arrears of
electricity can become a charge or encumbrance
over the premises has been decided in the
matter of K.C. Ninan (supra) wherein it has
been held as under?-

 "117. In light of the above
discussion, we are of the opinion that the
electricity utilities can create a charge by
framing subordinate legislation or statutory
conditions of supply enabling recovery of
electricity
arrears
from
a
subsequent
transferee. Such a condition is rooted in the
importance of protecting electricity which is a
public good. Public utilities invest huge
amounts of capital and infrastructure in
providing electricity supply. The failure or
inability to recover outstanding electricity dues
of the premises would negatively impact the
functioning of such public utilities and
licensees. In the larger public interest,
conditions are incorporated in subordinate
legislation whereby Electric Utilities can
recoup electricity arrears. Recoupment of
electricity arrears is necessary to provide
funding and investment in laying down new
infrastructure and maintaining the existing
infrastructure. In the absence of such a
provision, Electric Utilities would be left
without any recourse and would be compelled
to grant a fresh electricity connection, even
when
huge
arrears
of
electricity
are
outstanding. Besides impacting on the financial
health of the Utilities, this would impact the
wider body of consumers.

 341.
Taking
all
facts
and
circumstances into consideration, including
1122 INDIAN LAW REPORTS ALLAHABAD SERIES
the lapse of more than two decades since
the appeals were filed before this Court
and the equities arising in favour of one
party or the other, we direct the Electric
Utilities to waive the outstanding interest
accrued on the principal dues from the date
of application for supply of electricity by
the auction purchasers."

27. The Hon'ble Supreme Court
while deciding the abovementioned case of
K.C. Ninan (supra) had confined its ratio
on the Electricity Act and the Supply Code
but had no opportunity to deal with the
situation wherein there was a conflict
between the two enactments, hence, the
ratio laid down by the Hon?ble Supreme
Court in the matter of K.C. Kinnan (supra)
would only be applicable, when there is
dues outstanding by the previous owner,
but not if the property was settled by a
proceeding under the IB Code.

INSOLVENCY
&
BANKRUPTCY CODE, 2016

28. The Bankruptcy Law Reforms
Committee
Report,
2015
had
made
following recommendation :-

 "The
Committee
has
recommended to keep the right of the
Central and State Government in the
distribution waterfall in liquidation at a
priority below the unsecured financial
creditors in addition to all kinds of secured
creditors for promoting the availability of
credit and developing a market for
unsecured
financing
(including
the
development of bond markets). In the long
run, this would increase the availability of
finance, reduce the cost of capital, promote
entrepreneurship
and
lead
to
faster
economic growth. The Government also
will be the beneficiary of this process as
economic growth will increase revenues.
Further,
efficiency
enhancement
and
consequent greater value capture through
the proposed insolvency regime will bring
in additional gains to both the economy
and the exchequer."

 ***************************
***************** "For the remaining
creditors who participate in te collective
action of Liquidation, the Committee
debated on the waterfall of liabilities that
should hold in Liquidation in the new
Code. Across different jurisdictions, the
observation is that secured creditors have
first priority on the realizations, and that
these are typically paid out net of the costs
of insolvency resolution and Liquidation. In
order to bring the practices in India in-line
with the global practice, and to ensure that
the objectives of this proposed Code is met,
the
Committee
recommends
that
the
waterfall in Liquidation should be as
follows:

 1. Costs of IRP and liquidation.
 2.
Secured
creditors
and
Workmen dues capped up to three months
from the start of IRP.

 3. Employees capped up to three
months.

 4. Dues to unsecured financial
creditors, debts payable to workmen in
respect of the period beginning twelve
months
before
the
liquidation
commencement date and ending three
months
before
the
liquidation
commencement date;

 5. Any amount due to the State
Government and the Central Government
in respect of the whole or any part of the
period of two years before the liquidation
9 All. M/S Dharti Agro Industries Pvt. Ltd. Vs. The Managing Director, Paschimanchal Vidyut
 Vitran Ltd. & Ors.
1123
commencement date; any debts of the
secured creditor for any amount unpaid
following the enforcement of security
interest

 6. Remaining debt

 7. Surplus to shareholders." 23

29. Thereafter, Insolvency and
Bankruptcy Code, 2016 was enacted with
an objective of unifying legal regime on
commercial
insolvency
wherein
if
corporate debtor defaults in payment of the
debt, the creditor (both financial and
operational)
can
initiate
insolvency
proceeding, if the value of the debt crosses
a particular amount. Once the insolvency
proceeding
has
been
initiated
the
adjudicating
authority
only
has
to
determine whether there is existence of a
default. Once the adjudicating authority is
convinced that there is a default, it initiates
insolvency proceeding. The Committee of
Creditors (hereinafter referred to as COC
for the sake of brevity) decides whether
Resolution Plan should be initiated or the
corporate debtor company may be put into
liquidation.

30. Section 33 of IB Code, 2016
lays down provision for initiation of
liquidation. Once the liquidation process is
initiated, Liquidator is appointed to carry
out liquidation process. The powers and
duties of the Liquidator are prescribed by
Section 35 of IB Code, 2016, which
includes verification of claim of the
creditors, evaluation of assets of the
corporate debtor. The Liquidator has to
issue public announcement to creditors and
other persons to submit their claims in
relation to corporate debtor within 30 days
of initiation of liquidation process. After
receipt of the claim, the Liquidator has to
verify the claims and for that he may ask
evidence for the purpose of verification.
The adjudicating authority also does not
have
power
to
evaluate
commercial
decision of COC and once COC has
decided for liquidation, the liquidation
process has to begin. Section 53 of
Insolvency and Bankruptcy Code, 2016
lays down a mechanism for distribution of
assets.

31. Section 238 of IB Code
establishes the overriding effect of the
Code, stating that the provisions of the
Code will take precedence over any other
enactment which is inconsistent or in
conflict of the Code.

 Section
238
of
IB
Code:
Provisions of this Code to override other
laws

 "The provisions of this Code
shall have effect, notwithstanding anything
inconsistent therewith contained in any
other law for the time being in force or any
instrument having effect by virtue of any
such law."

32. In the Rajya Sabha debates, on
29th July, 2019, when the Bill for
amending IB Code came up for discussion,
there were certain issues raised by certain
Members. While replying to the issues
raised by certain Members, the Hon'ble
Finance Minister stated thus:

 "IBC has actually an overriding
effect. For instance, you asked whether IBC
will override SEBI. Section 238 provides
that
IBC
will
prevail
in
case
of
inconsistency between two laws. Actually,
Indian courts will have to decide, in
specific cases, depending upon the material
before them, but largely, yes, it is IBC.[?]
1124 INDIAN LAW REPORTS ALLAHABAD SERIES
 There is also this question about
indemnity
for
successful
resolution
applicant. The amendment now is clearly
makingit binding on the Government. It is
one of the ways in which we providing that.
The Government will not are raise any
further claim. The Government will not
make any further claim after resolution
plan is approved. So, that is going to be a
major, major sense of assurance for the
people who are using the resolution plan.
Criminal matters alone would individuals
and not company. There will be against
successful resolution will be no criminal
proceedings against successful resolution
applicant for fraud by previous promoters.
So, I hope that is absolutely clear. I would
want all the hon. be proceeded against ??
criminal proceedings applicant. There
Members to recognize this message and
communicate further that this Code,
therefore, gives that comfort to all new
bidders.