Successful Auction Purchaser Cannot Forced to Pay Pre-CIRP Electricity Dues before Restoring Electricity Connection: NCLAT

The NCLAT (National Company Law Appellate Tribunal) has ruled that a successful auction purchaser cannot be forced to pay pre-CIRP (Corporate Insolvency Resolution Process) electricity dues before the restoration of electricity connection. The case arose when an auction purchaser of a distressed company was asked to clear the pre-CIRP electricity dues, which were incurred before the company entered the insolvency process. The NCLAT found that these dues were the responsibility of the company’s previous management and not the purchaser. The ruling reinforces the legal stance that, during the insolvency resolution process, the responsibility for debts incurred before the initiation of CIRP should lie with the company’s earlier management or its creditors, not the new purchaser. This decision provides relief to buyers of distressed companies, clarifying their position regarding liabilities.