Tribunal Directs Electricity Distribution Licensee to Segregate Pre- and Post-CIRP Dues and Prohibits Disconnection of Essential Power Supply to Corporate Debtor Amid Insolvency Resolution Process
In a significant decision dated September 18, 2026, the National Company Law Tribunal (NCLT), Ahmedabad Bench, delivered a pivotal judgment in the matter of NPV Insolvency Professional Private Limited (Interim Resolution Professional of Mehsana Dairy and Food Products Limited) versus Uttar Gujarat Vij Company Limited, addressing the issue of electricity supply and recovery of dues during the Corporate Insolvency Resolution Process (CIRP).
The Interim Resolution Professional (IRP) for Mehsana Dairy and Food Products Limited filed an interlocutory application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ("IBC") seeking directions against the electricity distribution licensee for refund or adjustment of an amount paid under compulsion to avoid disconnection of electricity supply during the moratorium period. The IRP contended that electricity is an essential service, and supply cannot be disconnected for recovery of pre-CIRP dues. It was further argued that pre-CIRP electricity dues must be claimed through the insolvency resolution process and not by coercive measures like disconnection.
Facts revealed that the CIRP against the Corporate Debtor commenced on June 25, 2026, invoking the moratorium under Section 14 of the IBC, which prohibits any recovery action outside the insolvency process. Despite being informed of the CIRP, the electricity supplier initiated steps to disconnect supply over unpaid dues from the pre-CIRP period. To prevent disconnection and safeguard perishable inventory (notably, dairy products and ice-cream stock valued at Rs. 60-70 lakhs), the IRP paid a sum of Rs. 26,40,809.54 corresponding to pre-CIRP electricity charges. The supplier later issued a composite bill covering both pre- and post-CIRP periods, which became the subject of contention for proper segregation and payment treatment.
The Respondent, Uttar Gujarat Vij Company Limited, argued it had contractual and statutory rights to recover dues and that the moratorium protects only the Corporate Debtor and not its directors or guarantors. They also referred to precedents underscoring the necessity for utilities to recover arrears to maintain financial health and infrastructure investment.
After hearing both parties and reviewing relevant Supreme Court judgments, including K.C. Ninan v. Kerala State Electricity Board & Ors., Anjali Rathi v. Today Homes Infrastructure Pvt. Ltd., and others, the Tribunal clarified critical aspects:
1. Electricity is an essential/critical supply under Section 14(2) and 14(2-A) of the IBC and Regulation 32 of the CIRP Regulations, 2016. During the moratorium, the electricity distribution licensee cannot disconnect or interrupt supply to recover pre-CIRP dues.
2. Pre-CIRP dues must be filed as claims in the insolvency resolution process and cannot be recovered by direct coercive action. Payment made after CIRP commencement towards pre-CIRP dues does not change the liability's character.
3. The composite electricity bills covering periods before and after CIRP commencement must be segregated. Charges up to the insolvency commencement date (June 24, 2026) are pre-CIRP dues, while charges from June 25, 2026, onwards are CIRP-period dues payable as insolvency costs.
4. The moratorium applies strictly to the Corporate Debtor and does not extend to individual directors or guarantors. However, this order does not decide any independent liabilities of such individuals.
5. The Respondent was directed to furnish a detailed breakup of the electricity bill within 15 days and adjust payments already made towards post-CIRP dues only. Disconnection solely for recovery of pre-CIRP dues during the moratorium is prohibited.
The Tribunal emphasized that the moratorium under Section 14 of the IBC remains operative unless specifically vacated or stayed, dismissing submissions that the CIRP was in abeyance due to the National Company Law Appellate Tribunal (NCLAT) order restraining the constitution of the Committee of Creditors.
This ruling reinforces the protection of essential services during insolvency proceedings, balancing the rights of operational creditors and safeguarding the Corporate Debtor's assets and going concern status.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - During moratorium, electricity being essential/critical supply cannot be discontinued for recovery of pre-CIRP dues - Pre-CIRP electricity dues must be dealt with through insolvency claims process - Payment made after CIRP commencement towards pre-CIRP electricity consumption does not change the character of the liability - Electricity charges for post-CIRP period remain payable and composite bill must be segregated into pre-CIRP and CIRP-period dues.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 14(2), 14(2-A), 18, 53, 60(5); Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulation 32; Electricity Act, 2003 (referenced in context).
