Holding

Section 238 of the IBC overrides the Electricity Act, and PVVNL is a secured creditor whose dues rank above government dues but are governed by the priority hierarchy of Section 53 of the IBC.

Summary

Paschimanchal Vidyut Vitran Nigam Ltd (PVVNL) supplied electricity to Raman Ispat Pvt Ltd, which defaulted on payments. PVVNL attached the debtor's assets and, after the corporate insolvency resolution failed, the matter proceeded to liquidation under the Insolvency and Bankruptcy Code (IBC). PVVNL contended that sections 173 and 174 of the Electricity Act, 2003, with their non‑obstante clauses, gave its dues a higher priority than the IBC’s waterfall mechanism, while the liquidator argued that PVVNL was a secured creditor whose claim should be ranked under Section 53 of the IBC and not as a "government due". The Supreme Court held that Section 238 of the IBC overrides the Electricity Act, that PVVNL is a secured creditor (the charge created under the Uttar Pradesh Electricity Supply Code is valid), and that its dues rank above government dues but are subject to the priority scheme of Section 53. Consequently, the appeal was dismissed and the liquidator was directed to determine PVVNL’s claim within ten weeks.

Issues considered

Whether Section 238 of the Insolvency and Bankruptcy Code overrides the special provisions of the Electricity Act, 2003 (sections 173 and 174) concerning priority of electricity dues.
Whether the dues payable to PVVNL constitute "government dues" under Section 53(1)(f) of the IBC.
Whether PVVNL qualifies as a secured creditor under the IBC based on the charge created under the Uttar Pradesh Electricity Supply Code, 2005.
What is the appropriate rank of PVVNL’s claim in the IBC’s waterfall mechanism of Section 53.
Whether the non‑registration of the charge under Section 77 of the Companies Act, 2013 affects PVVNL’s claim in liquidation.

Legislation cited

Companies Act, 2013s. 3(31), s. 77, s. 78
Electricity Act, 2003s. 173, s. 174, s. 181(2)(x), s. 50, s. 56
General Clauses Act, 1897s. 3(60), s. 3(8)
Gujarat Value Added Tax Act, 2003s. 48
Insolvency and Bankruptcy Code, 2016s. 238, s. 3(30), s. 3(31), s. 52, s. 53, s. 77, s. 78
Uttar Pradesh Electricity Supply Code, 2005s. Clause 4.3(f)(iv), s. Clause 6.15
Uttar Pradesh Government Electrical Undertakings (Dues Recovery) Act, 1958

Subjects

insolvencybankruptcypriority of claimssecured creditorgovernment dueselectricity actSection 238waterfall mechanismchargeliquidationnon‑obstante clause

Judgment

[2023] 10 S.C.R. 1221 : 2023 INSC 625 1221

PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. A
v.
RAMAN ISPAT PRIVATE LIMITED & ORS.
(Civil Appeal Nos. 7976 of 2019)
JULY 17, 2023 B
[S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.]
Insolvency and Bankruptcy Code, 2016 – ss.238, 53 –
Overriding effect of s.238 – Distribution of assets u/s.53 – Dues
payable to secured creditors vis-à-vis Central or State Government–
C
Held: s.238, IBC overrides the provisions of the Electricity Act, 2003
despite the latter containing two specific provisions which open
with non-obstante clauses (ss.173 and 174) – Provisions of the IBC
treat the dues payable to secured creditors at a higher footing than
dues payable to Central or State Government– Electricity Act, 2003
– ss.173, 174. D
Insolvency and Bankruptcy Code, 2016 – s.53(1)(a)-(f) –
Waterfall mechanism – Priority of claims – Order of distribution of
assets – “government dues” – Corporate debtor entered into an
agreement with appellant-PVVNL for supply of electricity – PVVNL
raised bills for supply of electricity to the corporate debtor but E
dues remained unpaid – PVVNL attached the corporate debtor’s
properties – The Tehsildar, restrained transfer of property by sale,
donation or any other mode, and also created a charge on the
properties – Corporate debtor underwent resolution process which
was not successful and became subject to liquidation – District
F
Collector issued notice for recovery of outstanding dues – NCLT
directed Tehsildar to immediately release property in favour of the
liquidator of the corporate debtor for enabling its sale, and after
realisation of its value, for distributing the proceeds in accordance
with the IBC – Appeal rejected by NCLAT – PVVNL argued that
rights of electricity suppliers like PVVNL were not subordinate and G
subject to the ‘priority of claims’ mechanism under the IBC – Plea
of the liquidator that dues owed to PVVNL were technically owed to
the “government”, and thus occupied a lower position in the order
of priority of clearance – Held:”government dues” is not defined
in the IBC – It finds place only in the preamble – However, what
H
1221
1222 SUPREME COURT REPORTS [2023] 10 S.C.R.

A constitutes such dues is spelt out in the ‘waterfall mechanism’ u/
s.53(1)(e), which inter alia states that, “Any amount due to the Central
Government and the State Government including the amount to be
received on account of the Consolidated Fund of India and the
Consolidated Fund of the State” ranks lower in priority to the class
of creditors described in Clauses (a) to (d) of s.53(1) – There exists
B
a separate enumeration or specification of the Central Government
and State Government dues, as a class apart from other creditors,
including creditorswho may have secured interest (in respect of which
amounts may be payable tothem) – These dues are distinct and have
to be treated as separate from those owed to secured creditors –
C Further, PVVNL undoubtedly has government participation however,
that does not render it a government or a part of the ‘State Government’
– Its functions can be replicated by other entities, both private and
public – Therefore, dues or amounts payable to PVVNL do not fall
within the description of s.53(1)(f) – Uttar Pradesh Electricity Supply
Code, 2005 – General Clauses Act, 1897 – ss.3(8), 3(60).
D
Insolvency and Bankruptcy Code, 2016 – Scheme of –
Discussed.
Electricity Act, 2003 – Uttar Pradesh Electricity Supply Code,
2005 – Outstanding electricity dues, if a ‘charge’ on assets of
E corporate debtor – Circumstances in which such a ‘charge’ could
be constituted in law – Held: In K.C. Ninan v. Kerala State Electricity
Board, Supreme Court examined such circumstances and held that
the creation of a charge need not necessarily be based on an express
provision of the 2003 Act or plenary legislation, but could be created
by properly framed regulations authorized under the parent statute
F – Thus, in the present case, PVVNL rightly argued that by virtue of
Clause 4.3(f)(iv) of the Supply Code, read with the stipulations in
the agreement between the parties, a charge was created on the
assets of the corporate debtor – Order of the NCLT also reveals
that this position was accepted – This is evident from the order of
G the NCLAT which clarified that PVVNL also came under the
definition of ‘secured operational creditor’ as per law – This finding
was affirmed by the impugned order – Therefore, the conclusion
that PVVNL is a secured creditor cannot be disputed – Electricity.
Insolvency and Bankruptcy Code, 2016 – ss.52, 53(1)(e), (f)
H – Government debts, operational debts vis-à-vis dues owed to
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1223
ISPAT PRIVATE LIMITED & ORS.

unsecured financial creditors–Rationale for placing secured A
creditors who relinquish their security, higher in priority– Held:
The priority of claims, indicated in the hierarchy of preferences,
under the waterfall mechanism accords government debts [clause
(e)] and operational debts [clause (f)] lower priority than dues
owed to unsecured financial creditors – Further, debts owed to a
B
secured creditor, whenever such secured creditor “has relinquished
security in the manner set out in s. 52” receive a fairly high priority
(immediately after insolvency resolution process costs) – When the
secured creditor does not relinquish security, the priority of claim is
lower [s.53(1)(e)(ii)] in respect of “any amount unpaid following
the enforcement of security interest” – Amounts due to the C
government (i.e., payable into the Consolidated Fund of India or
Consolidated Fund of a State) are ranked in the same manner as
those of secured creditors who do not relinquish their security interest
[s.53(1)(e)(ii)]– Aforesaid rationale discussed.
Electricity Act, 2003 – ss.50, 56, 181(2)(x) – Uttar Pradesh D
Electricity Supply Code, 2005 – Clause 4.3 (f) (iv), Clause 6.15 –
Recovery mechanism under– Discussed– Uttar Pradesh Government
Electrical Undertakings (Dues Recovery) Act, 1958.
Insolvency and Bankruptcy Code, 2016 – s.53(1)(f) –
Constitution of India – Article 265 – “government dues” – Held: E
Dues payable or requiring to be credited to the Treasury, such as
tax, tariffs, etc. which broadly fall within the ambit of Article 265
are ‘government dues’ and therefore covered by s.53(1)(f) – Whereas,
dues payable to statutory corporations which do not fall within the
description “amounts due to the central or state government” for
instance amounts payable to corporations created by statutes which F
have distinct juristic entity but whose dues do not constitute
government dues payable or those payable into the respective
Consolidated Funds stand on a different footing.
Companies Act, 2013 – ss.77, 78, 3(31) – Plea of the liquidator
that without registration of charge u/s.77, the same was G
unenforceable under liquidation proceedings – Held: s.78 enacts
that when a company whose property is subject to charge, fails to
register it, the charge holder (or the person entitled to the charge
over the company’s assets) can seek its registration – s.3(31) defines
“security interest” in the widest terms – Liquidator cannot urge this H
1224 SUPREME COURT REPORTS [2023] 10 S.C.R.

A aspect at this stage, because of the concurrent findings of the NCLT
and the NCLAT that PVVNL is a secured creditor – Further, on facts,
it is not appropriate to rule on the submissions of the liquidator vis-
à-vis the fact of non-registration of charges u/s.77.
Interpretation of Statutes –Insolvency and Bankruptcy Code,
B 2016 – Gujarat Value Added Tax Act, 2003–Held: When an
enactment uses two different expressions, they cannot be construed
as having the same meaning – Reliance on Rainbow Papers case is
of no avail to the appellant and that judgment is to be confined to
its own facts.
C Dismissing the appeal, the Court
HELD: 1.1 The priority of claims, indicated in the hierarchy
of preferences, under the waterfall mechanism is therefore:
Firstly, insolvency resolution process costs and the liquidation
costs; Secondly, workmen’s dues for the period of 24 months
D preceding the liquidation commencement date and debts owed
to a secured creditor in the event such secured creditor has
relinquished security; Thirdly, wages and any unpaid dues owed
to employees other than workmen for the period of 12 months
preceding the liquidation commencement date; Fourthly, financial
debts owed to unsecured creditors; Fifthly, any amount due to
E the central government and the state government and debts owed
to a secured creditor for any amount unpaid following the
enforcement of security interest; Sixthly, any remaining debts
and dues; Seventhly, preference shareholders; and Eighthly equity
shareholders or partners. This hierarchy or order of priority thus
F accords government debts [clause (e)] and operational debts
[clause (f)] lower priority than dues owed to unsecured financial
creditors.Debts owed to a secured creditor, whenever such
secured creditor “has relinquished security in the manner set
out in section 52” receive a fairly high priority (immediately after
insolvency resolution process costs), whereas in other cases, i.e.,
G when the secured creditor does not relinquish security, the priority
of claim is lower [Section 53 (1) (e) (ii)] in respect of “any amount
unpaid following the enforcement of security interest”. Another
feature is that amounts due to the government (i.e., payable into
the Consolidated Fund of India or Consolidated Fund of a State)
H are ranked in the same manner as those of secured creditors
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1225
ISPAT PRIVATE LIMITED & ORS.

who do not relinquish their security interest [Section 53 (1) (e) A
(ii)]. [Paras 27 and 28][1244-C-G]
1.2 Section 52 gives an option to secured creditors to either
relinquish their security interest, in the liquidation process (the
procedure for which is prescribed in Regulations 21 and 21A of
the Liquidation Regulations), or proceed to enforce it. In case of B
the latter option, the secured creditor has to first indicate its
option, within the time prescribed (30 days, in Form C or D of
Schedule II to the Liquidation Regulations). The liquidator may
then, per Section 52 (3), permit the secured creditor to realize
such dues as are proved to exist, as security debts. Upon
clearance by the liquidator, the secured creditor may proceed to C
enforce its claim, under Section 52 (4). If there is resistance during
the process, the secured creditor may approach the NCLT
[Section 52 (5) and (6)]. Upon enforcement, any excess amount
realized should be tendered to the liquidator [Section 52 (7)]. It
is thus, apparent, that a secured creditor has to take a calculated D
decision, at the outset of the liquidation process, whether or not
to relinquish its secured interest. In case it does so, its dues
rank high in the waterfall mechanism. In case it chooses not to
relinquish its security interest, and instead proceeds to enforce
it without success or is unable to realize all its dues in the process
of enforcement, ithas to then perforce stand lower in priority, E
and await distribution of assets upon realization of the liquidation
estate, by the liquidator, vis-à-vis the balance of its dues. The
procedure envisioned, thus, takes a nuanced approach for the
recovery of a secured creditor’s dues. In case they opt to
relinquish the security, their priority is ranked high; in case, they F
seek to enforce such security, subject to intimation and
verification by the liquidator, they can proceed to do so. In the
event of short fall, they rank lower in priority. This appears to be
the reason, as is clear from the explanation provided in response
to comments as a result of Parliamentary debates in 2018, that
secured creditors opting not to relinquish their security interest G
are “presumed that such secured creditors have recovered most
of their dues by enforcement of their security outside the
liquidation proceedings”.27 There is sound logic in this, because
those opting to ‘stand out’ and enforce security interest, are
H
1226 SUPREME COURT REPORTS [2023] 10 S.C.R.

A permitted to do so; in the event of excess recovery, they have to
intimate and hand over such excess for distribution in liquidation
proceeding; in case they are unable to recover their dues, for
such of the dues as are outstanding, such secured creditors are
ranked low. The provisions of the IBC are carefully thought out,
and give options to secured creditors, and balance their interests
B
with those of other creditors in a liquidation proceeding.
[Paras 34-38][1249-F-G; 1250-A-F; 1251-A-B; 1256-B]
Moser Baer Karamchari Union thr. President Mahesh
Chand Sharma v. Union of India & Ors. (2023) SCC
OnLine SC 547 – referred to.
C
1.3 By virtue of Section 56 of the 2003 Act, in the event of
any person’s neglect “to pay any charge for electricity or any
sum other than a charge for electricity” payable “in respect of
supply, transmission or distribution or wheeling of electricity to
him” (after a clear fifteen days’ notice in writing) “and without
D prejudice to his rights to recover such charge or other sum by
suit”, a licensee (including a distribution licensee such as PVVNL)
is empowered to disconnect electricity supply to such consumer
or person. By virtue of Section 181(2)(x) of the 2003 Act, State
Commissions are empowered to frame regulations. Section 50
E empowers the State Commissions to frame the “Electricity Supply
Code” to provide for recovery of electricity charges, intervals
for billing of electricity charges, disconnection of supply of
electricity for non-payment, etc. These provisions in the 2003
Act and the respective Codes form the legal framework for
recovery of dues by various kinds of licensees under the 2003
F Act. In the present case, the Uttar Pradesh State Commission
had framed the 2005 Supply Code. Clause 6.15 of the 2005
Code enacts that recovery of arrears shall be in accordance with
the provisions of the Uttar Pradesh Government Electrical
Undertakings (Dues Recovery) Act, 1958. [Paras 39-41]
G [1256-B-G]
1.4 A recent ruling of this court in K.C. Ninan v. Kerala
State Electricity Board examined the circumstances in which such
a ‘charge’ could be constituted in law. This court held that the
creation of a charge need not necessarily be based on an express
H provision of the 2003 Act or plenary legislation, but could be
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1227
ISPAT PRIVATE LIMITED & ORS.

created by properly framed regulations authorized under the A
parent statute. In these circumstances, the argument of PVVNL
that by virtue of Clause 4.3(f)(iv) of the Supply Code, read with
the stipulations in the agreement between the parties, a charge
was created on the assets of the corporate debtor, is merited. A
careful reading of the impugned order of the NCLT also reveals
B
that this position was accepted. This is evident from the order of
the NCLAT which clarified that PVVNL also came under the
definition of ‘secured operational creditor’ as per law. This finding
was not disturbed, but rather affirmed by the impugned order. In
these circumstances, the conclusion that PVVNL is a secured
creditor cannot be disputed. [Paras 42, 43][1258-A-C] C
K.C. Ninan v. Kerala State Electricity Board 2023 SCC
Online SC 603 – relied on.
1.4 The counsel for the liquidator had submitted that dues
owed to PVVNL were technically owed to the “government”, and
thus occupied a lower position in the order of priority of clearance. D
The expression “government dues” is not defined in the IBC - it
finds place only in the preamble. However, what constitutes such
dues is spelt out in the ‘waterfall mechanism’ under Section
53(1)(e), which inter alia states that, “Any amount due to the
Central Government and the State Government including the
E
amount to be received on account of the Consolidated Fund of
India and the Consolidated Fund of the State” ranks lower in
priority to the class of creditors described in Clauses (a) to (d) of
Section 53(1). Thus, there exists a separate enumeration or
specification of the Central Government and State Government
dues, as a class apart from other creditors, including creditors F
who may have secured interest (in respect of which amounts may
be payable to them). The repeated reference of lowering of priority
of debts to the government, on account of statutory tax, or other
dues payable to the Central Government or State Government,
or amounts payable into the Consolidated Fund on account of
either government, in the various reports which preceded the G
enactment of the IBC, as well as its Preamble, means that these
dues are distinct and have to be treated as separate from those
owed to secured creditors. The Central Government and State
Government are defined by the General Clauses Act, 1897. The
H
1228 SUPREME COURT REPORTS [2023] 10 S.C.R.

A former is defined by Section 3(8), 32 and latter by Section 3 (60).
[Para 44][1258-D-G]
Shrikant v. Vasantrao & Ors. [2006] 1 SCR 496 –
referred to.
1.5 The specific mention of other class of creditors whose
B dues are statutory, such as dues payable to workmen or
employees, “the provident fund, the pension fund, the gratuity
fund” under Section 36(4), which excludes these enumerated
amounts from the liquidation, especially clarifies that not all dues
owed under statute are treated as ‘government’ dues. In other
words, dues payable to statutory corporations which do not fall
C
within the description “amounts due to the central or state
government” such as for instance amounts payable to corporations
created by statutes which have distinct juristic entity but whose
dues do not constitute government dues payable or those payable
into the respective Consolidated Funds stand on a different
D footing. Such corporations may be operational creditors or financial
creditors or secured creditors depending on the nature of the
transactions entered into by them with the corporate debtor. On
the other hand, dues payable or requiring to be credited to the
Treasury, such as tax, tariffs, etc. which broadly fall within the
ambit of Article 265 of the Constitution are ‘government dues’
E and therefore covered by Section 53(1)(f) of the IBC. PVVNL
undoubtedly has government participation. However, that does
not render it a government or a part of the ‘State Government’.
Its functions can be replicated by other entities, both private and
public. The supply of electricity, the generation, transmission,
F and distribution of electricity has been liberalized in terms of the
2003 Act barring certain segments. Private entities are entitled
to hold licenses. In this context, it has to be emphasized that
private participation as distribution licensees is fairly widespread.
For these reasons, it is held that in the present case, dues or
amounts payable to PVVNL do not fall within the description of
G Section 53(1)(f) of the IBC. [Paras 46, 47][1261-B-G]
Municipal Commissioner of Dum Dum Municipality & Ors.
v. Indian Tourism Development Corporation & Ors. 1995
(5) SCC 251 : [1995] 2 Suppl. SCR 433 – relied on.

H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1229
ISPAT PRIVATE LIMITED & ORS.

1.6 Section 53 enacts the waterfall mechanism providing for A
the hierarchy or priority of claims of various classes of creditors.
The careful design of Section 53 locates amounts payable to secured
creditors and workmen at the second place, after the costs and
expenses of the liquidator payable during the liquidation
proceedings. However, the dues payable to the government are
B
placed much below those of secured creditors and even unsecured
and operational creditors. This design was either not brought to
the notice of the court in Rainbow Papers or was missed altogether.
In any event, the judgment has not taken note of the provisions of
the IBC which treat the dues payable to secured creditors at a
higher footing than dues payable to Central or State Government. C
The Gujarat Value Added Tax Act, 2003 no doubt creates a charge
in respect of amounts due and payable or arrears. It would be
possible to hold [in the absence of a specific enumeration of
government dues as in the present case, in Section 53(1)(e)] that
the State is to be treated as a ‘secured creditor’. However, the
D
separate and distinct treatment of amounts payable to secured
creditor on the one hand, and dues payable to the government on
the other clearly signifies Parliament’s intention to treat the latter
differently- and in the present case, having lower priority. This
intention is also evident from a reading of the preamble to the Act
itself. When an enactment uses two different expressions, E
they cannot be construed as having the same meaning.
[Paras 49-51][1262-G-H; 1263-A-E]
State Tax Officer v. Rainbow Papers Ltd. [2022] 13 SCR
808 – distinguished.
Brihan Mumbai Mahanagarpalika & Anr. v. Willington F
Sports Club & Ors. [2013] 16 SCR 216 – referred to.
1.7 Section 238 of the IBC overrides the provisions of the
Electricity Act, 2003 despite the latter containing two specific
provisions which open with non-obstante clauses (i.e., Section
173 and 174). [Para 52][1263-F-G] G
Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central
Board of Indirect Taxes and Customs 2022 SCC Online
SC 1101; Duncans Industries Ltd. v. AJ Agrochem (2019)
9 SCC 725 : [2019] 12 SCR 830 – relied on.
H
1230 SUPREME COURT REPORTS [2023] 10 S.C.R.

A Innoventive Industries Ltd. v. ICICI Bank &Anr. [2017]
8 SCR 33; CIT v. Monnet Ispat& Energy Ltd. (2018) 18
SCC 786; Ghanashyam Mishra & Sons (P) Ltd. v.
Edelweiss Asset Reconstruction Co. Ltd. [2021] 13 SCR
737; Jagmohan Bajaj v. Shivam Fragrances Private
Limited 2018 SCC OnLine NCLAT 413 – referred to.
B
1.8 Section 78 enacts, that when a company whose property
is subject to charge, fails to register it, the charge holder (or the
person entitled to the charge over the company’s assets) can
seek its registration. Section 3 (31) of the IBC defines “security
interest” in the widest terms. In this court’s opinion, the liquidator
C cannot urge this aspect at this stage, because of the concurrent
findings of the NCLT and the NCLAT that PVVNL is a secured
creditor. [Para 55][1266-E]
Board of Trustees, Port of Mumbai v. Indian Oil
Corporation [1998] 2 SCR 774; Jitender Nath Singh v.
D Official Liquidator & Ors. [2012] 13 SCR 339; ICICI
Bank Ltd. v. Sidco Leathers Ltd. [2006] Supp 1 SCR
528; Jalgaon Janta Shakari Bank Ltd. v. Joint
Commissioner of Sales Tax, Nodal 9, Mumbai & Anr.
2022 SCC OnLine Bom 1767; The West Bengal State
Electricity Distribution Company Limited v. Sri Vasavi
E Industries Limited & Anr. 2022 SCC Online Cal 1918;
Union of India & Ors. v. Shah Goverdhan L. Kabra
Teachers’ College [2002] Supp 3 SCR 220; UCO Bank
& Anr. v. Dipak Debbarma & Ors. [2016] 11 SCR 723;
Swiss Ribbons (P) Ltd. v. Union of India (2019) 4 SCC
F 17 : [2019] 3 SCR 535; K. Shashidhar v. Indian Overseas
Bank [2019] 3 SCR 845; Committee of Creditors of Essar
Steel India Limited v. Satish Kumar Gupta & Ors. [2019]
16 SCR 275; Member, Board of Revenue v. Anthony Paul
Benthall [1955] 2 SCR 842 – referred to.
The Bankruptcy Law Reforms Committee Report, (2015),
G
Heading 5.5.8- Establishing Priority of Payout in
Liquidation; Report of the Insolvency Law Committee
(2020)- Heading 7.3- Realisation or Relinquishment
of Security Interest by a Secured Creditor (pg. 76) –
referred to.
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1231
ISPAT PRIVATE LIMITED & ORS.

Case Law Reference A
[1998] 2 SCR 774 referred to Para 7
[2022] 13 SCR 808 distinguished Para 9
[2012] 13 SCR 339 referred to Para 15
[2006] Supp 1 SCR 528 referred to Para 15 B
[2002] Supp 3 SCR 220 referred to Para 18
[2016] 11 SCR 723 referred to Para 18
[2017] 8 SCR 33 referred to Para 18
[2019] 3 SCR 535 referred to Para 18 C
[2019] 3 SCR 845 referred to Para 22
[2019] 16 SCR 275 referred to Para 22
[2006] 1 SCR 496 referred to Para 44
[1995] 2 Suppl. SCR 433 relied on Para 45 D
[1955] 2 SCR 842 referred to Para 51
[2013] 16 SCR 216 referred to Para 51
[2019] 12 SCR 830 relied on Para 52
(2018) 18 SCC 786 referred to Para 52 E
[2021] 13 SCR 737 referred to Para 52
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7976
of 2019.
From the Judgment and Order dated 15.05.2019 of the National F
Company Law Appellate Tribunal in CAAT No. 639 of 2018.
Pradeep Misra, Daleep Dhyani, Bhuwan Nchand, Suraj Singh,
Manoj Kumar Sharma, Advs. for the Appellant.
Arvind Kumar Gupta, Ms. Henna George, Ms. Shivani Sharma,
Ms. Purti Gupta, Advs. for the Respondents. G
The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. The appellant Paschimanchal Vidyut Vitran Nigam Limited
(hereinafter, “PVVNL”) is aggrieved by an order of the National
H
1232 SUPREME COURT REPORTS [2023] 10 S.C.R.

A Company Law Appellate Tribunal (hereinafter, “NCLAT”) 1 which
rejected its appeal against an order of the National Company Law
Tribunal, Allahabad (hereinafter, “NCLT”/ “Adjudicating Authority”), 2
which allowed an application directing the District Magistrate and
Tehsildar, Muzaffarnagar to immediately release property (which was
previously attached at the request of the appellant) in favour of the
B
liquidator of the respondent Raman Ispat Pvt. Ltd. (hereinafter, “corporate
debtor”) for enabling its sale, and after realisation of its value, for
distributing the proceeds in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016 (hereinafter, “IBC” / “Code”).
I. FACTS
C
2. The parties had entered into an agreement on 11.02.2010 for
supply of electricity. Clause 5 of the agreement provided that:
“The outstanding dues will be a charge on the assets of the
company. Before sale is made, the outstanding dues will be
D cleared and, (in) the alternative the deed to agreements/sale
will specifically mention the outstanding dues and the method
of its payment.”
3. PVVNL raised bills for supply of electricity to the corporate
debtor from time to time. Since the dues remained unpaid, PVVNL
E attached the corporate debtor’s properties by Order No. 1048, dated
12.01.2016. The Tehsildar, Muzaffarnagar by Order No. 1423F dated
23.01.2016, restrained transfer of property by sale, donation or any other
mode, and also created a charge on the properties. The corporate debtor
initially underwent resolution process under the IBC, however that process
was not successful. It therefore became subject to liquidation.
F
4. Under the final bill dated 27.01.2017, the total arrears due were
4,32,33,883/-. Of this, the District Collector issued notice for recovery
of outstanding dues to the tune of 2,50,14,080/-, by auction of movable
and immovable properties located at Khasara No. 0.4710, on 05.03.2018.
The liquidator alleged that unless the attachment orders of the District
G Collector, Muzaffarnagar and Tehsildar, Muzaffarnagar were set aside
by the NCLT, no buyer would purchase the property of the corporate
debtor due to uncertainty about the authority of the liquidator to sell the
property. The liquidator also took the plea that PVVNL’s claim would
1
Company Appeal (AT) (Insolvency) No. 639 of 2018, dated 15.05.2019.
H 2
C.A. No. 88/ALD/2018 in CP No. (IB) 23/ALD/2017, dated 21.08.2018.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1233
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

be classified in order of priority prescribed under Section 53 of the IBC, A
and PVVNL would be entitled to pro rata distribution of proceeds along
with the other secured creditors from sale of liquidation assets.
5. The liquidator’s position ultimately led the NCLAT to direct the
District Magistrate and Tehsildar, Muzaffarnagar to immediately release
the attached property in its favour so as to enable sale of the property, B
and after realisation of the property’s value, to ensure its distribution in
accordance with the relevant provisions of the IBC. The NCLAT also
endorsed NCLT’s reasoning that PVVNL fell within the definition of
‘operational creditor’, which could realize its dues in the liquidation
process in accordance with the law.
C
II. PVVNL’S ARGUMENTS
6. Mr. Pradeep Mishra, learned advocate for PVVNL, submitted
that Sections 173 and 174 of the Electricity Act, 2003 (hereinafter, “2003
Act”) had an overriding effect on all other laws except Consumer
Protection Act, 1986; the Atomic Energy Act,1962; and the Railway
Act, 1989. Being a special law relating to all aspects of electricity – D
generation, transmission, distribution and adjudication of disputes– it had
primacy over all other laws, including the IBC, which was a ‘general’
law dealing with corporate insolvency implemented much later. In terms
of the 2003 Act, and the regulations framed under it, including the Uttar
Pradesh Electricity Supply Code, 2005 (hereinafter, “2005 Code”), a E
special mechanism for recovery of electricity dues existed. The rights
of electricity suppliers like PVVNL, therefore, were not subordinate
and subject to the ‘priority of claims’ mechanism under the IBC.
Therefore, PVVNL could opt to independently stay out of the liquidation
process and recover its dues.
F
7. Learned counsel relied on the judgment of this court in Board
of Trustees, Port of Mumbai v. Indian Oil Corporation, 3 wherein this
court had ruled that port dues, under the Major Port Trust Act, 1963
overrode all other claims, including those of secured creditors in liquidation
proceedings. Learned counsel urged that Section 238 of IBC could not
override Sections 173 and 174 of the 2003 Act, since the latter (i.e. the G
Electricity Act) is a special enactment, and would prevail over the IBC,
which is a later general law, dealing with insolvency.
8. Counsel urged that provisions of the 2003 Act (Sections 42, 45
and 56) and the 2005 Code (Clauses 4.3 and 6.15), prescribed the
3
Board of Trustees, Port of Mumbai v. Indian Oil Corporation, 1998 (2) SCR 774. H
1234 SUPREME COURT REPORTS [2023] 10 S.C.R.

A mechanism for recovery of electricity charges. The 2003 Act being a
‘special Act’ with a non-obstante clause, would have an overriding effect
over the ‘general’ IBC law. This mechanism for speedy recovery of
electricity dues, had to be given full effect. Thus, the provisions of IBC
and the priority of claims under it in liquidation proceedings, were separate
and applied in respect of other amounts available for distribution, after
B
the recovery of electricity dues were permitted under the 2003 Act and
2005 Code.
9. Learned counsel also relied upon the decision of this court in
State Tax Officer v. Rainbow Papers Ltd.,4 in which this court held
that by virtue of a security interest created in favour of the government
C for tax claims under the Gujarat Value Added Tax Act, 2003, tax authorities
i.e., the government, was a secured creditor under the IBC. This court
held that if a resolution plan excluded such tax or statutory dues payable
to the government, it would not bein conformity with the provisions of
the IBC and, as such, would not be binding on the State.
D 10. Alternatively, the learned counsel submitted that electricity
dues were also ‘security interests’ in favour of electricity service
providers. He relied on the definition of ‘secured creditor’ which meant
“a creditor in favour of whom security interest is created.”5 Such
‘security interest’ was defined under the IBC as:
E “Right, title or interest or a claim in a property, created in
favour of, or provided for a secured creditor by a transaction
which secures payment or performance of an obligation and
includes mortgage, charge, hypothecation, assignment and
encumbrance or any other agreement or arrangement
F securing payment or performance of any obligation of any
person.” 6
11. ‘Claim in a property’ section of the definition could be invoked
when one secured payment or performance of any obligation under the
law. Additionally, the term “transfer” was defined under the IBC to mean:
G “Includes sale, purchase, exchange, mortgage, pledge, gift,
loan or any other form of transfer of right, title, possession
or lien.”7
4
State Tax Officer v. Rainbow Papers Ltd., 2022 (13) SCR 808.
5
Section 3 (30), IBC.
6
Section 3 (31), IBC.
H 7
Section 3 (34), IBC.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1235
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

12. It was urged that a reading of the definitions of ‘security interest’ A
and ‘transfer’ indicated that the intent of the IBC was to include, in the
concept of ‘security interest’, all claims, including statutory claims arising
in law, against the corporate debtor. Thus, obligations and statutory
charges were also ‘security interests’.
III. LIQUIDATOR’S ARGUMENTS B
13. Mr. Arvind Kumar Gupta, learned advocate appearing for the
liquidator, argued that under the IBC, creditors were classified either as
secured or unsecured. Further, a highlight of the IBC was the distinction
between the financial and operational creditors, and their differential
treatment with regards to recovery. He submitted that the Bankruptcy C
Law Reforms Committee Report,2015 and the UNCITRAL Legislative
Guide on Insolvency Law, stipulate that government dues were not given
priority under the IBC. This formed the backdrop of the legislation. In
fact, the Statement of Objects and Reasons to the IBC stipulates alteration
in the priority of payment of government dues.
D
14. It was argued that in terms of Section 52(3), before realization
of security interest by secured creditors, the liquidator had to verify the
existence of security interest from the records maintained by an
information utility or by such other means as may be specified by the
Insolvency and Bankruptcy Board of India (hereinafter, “Board / IBBI”).8
E
The existence of a security interest could be proved by a secured creditor
in terms of Regulation 21,IBBI (Liquidation Process) Regulations, 2016
(hereinafter, “Liquidation Regulations”).
15. Learned counsel submitted that the registration of any charge
was mandatory under Section 77 of the Companies Act, 2013
F
(corresponding to Section 125 of the erstwhile Companies Act, 1956). It
was highlighted that Section 48 of the Transfer of Property Act, 1882
(hereinafter, “TPA”) dealt with priority of rights, and inter-se priorities
amongst creditors prevailed in the distribution of assets in liquidation
proceedings. Counsel referred to this court’s judgments of Jitender Nath
Singh v. Official Liquidator & Ors.9 and ICICI Bank Ltd. v. Sidco G
Leathers Ltd.10

8
The Insolvency and Bankruptcy Board of India is established under Section 188 of
the IBC. Is powersare enumerated under Section 196.
9
Jitender Nath Singh v. Official Liquidator & Ors., 2012 (13) SCR 339.
10
ICICI Bank Ltd. v. Sidco Leathers Ltd., 2006 Supp (1) SCR 528 H
1236 SUPREME COURT REPORTS [2023] 10 S.C.R.

A 16. It was submitted that government dues were placed in the
‘waterfall mechanism’ under Section 53(1)(e)(i) of the IBC. Learned
counsel emphasized that even under the old Companies Act, 1956, Section
529A provided priority to the debts due to the secured creditors and the
workers, and Section 530 made payment of taxes subject to the priority
embodied in Section 529A. Similarly, priority of debts due to secured
B
creditors and workers was reflected under Section 326 of the Companies
Act, 2013.Section 327 made payment of taxes subject to the priority
embodied in Section 326. It was urged that Section 26E of the
Securitization of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter, “SARFAESI Act”) and Section 31B of the
C Recovery of Debts Due to Banks and Financial Institutions Act, 1993
(hereinafter, “RDDBFI Act”) accorded priority to secured creditors over
other dues. The Full Bench judgment of the Bombay High Court in
Jalgaon Janta Shakari Bank Ltd. v. Joint Commissioner of Sales
Tax, Nodal 9, Mumbai & Anr.,11 reinforced the priority accorded to
secured creditors under Section 26E of SARFAESI Act.
D
17. Learned counsel submitted that electricity dues did not enjoy
any priority, and cited High Court rulings, especially the judgment of the
Calcutta High Court in The West Bengal State Electricity Distribution
Company Limited v. Sri Vasavi Industries Limited & Anr.12 It was
submitted that creation of charge under a law was a matter of fact
E which had to be proved. In the present case, the statute (the 2005 Code)
merely enabled recovery of electricity dues as though they were recovery
of arrears of revenue. That did not result in the creation of ‘security
interest’ in favour of the appellant. Moreover, such interest was not
registered in accordance with the Liquidation Regulations and Section
F 77 of the Companies Act, 2013.
18. Learned counsel urged that in case of apparent overlapping
between the two entries, the doctrine of ‘pith and substance’ had to be
applied to find out the true nature of the legislation and the entry within
which it fell – reliance was placed on the decisions of Union of India
G & Ors. v. Shah Goverdhan L. Kabra Teachers’ College13 and UCO
11
Jalgaon Janta Shakari Bank Ltd. v. Joint Commissioner of Sales Tax, Nodal 9,
Mumbai & Anr., 2022 SCC OnLine Bom 1767.
12
The West Bengal State Electricity Distribution Company Limited v. Sri Vasavi Industries
Limited & Anr.,2022 SCC Online Cal 1918
13
Union of India & Ors. v. Shah Goverdhan L. Kabra Teachers’ College, (2002) Supp
H (3) SCR 220.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1237
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

Bank & Anr. v. Dipak Debbarma & Ors. 14. Having regard to this A
principle, IBC was thus a special law dealing with the entire subject
matter of insolvency, bankruptcy and winding up of companies. Its
provisions were later than those of the 2003 Act. Despite Sections 173
and 174 of the 2003 Act, by virtue of Section 238 of IBC, the provisions
of the latter would prevail and have overriding effect. It was submitted
B
that the law under IBC was constantly evolving since its inception in
2016. Reliance was placed on Innoventive Industries Ltd. v. ICICI
Bank & Anr.,15 and Swiss Ribbons (P) Ltd. v. Union of India16 which
upheld the IBC, and emphasized the overriding nature of the enactment,
by virtue of Section 238.
IV. ANALYSIS C

A. SCHEME OF THE IBC
19. The IBC was enacted with the objective of unifying the legal
regime on commercial insolvency. Upon a corporate debtor’s default 17
in repayment of a debt,18 the insolvency resolution process can be D
triggered when the value of the default crosses the statutory threshold
(Section 4); or it may be initiated by the corporate debtor itself or a
financial creditor or operational creditor (Section 6). IBC makes a
distinction between debts owed to both these classes of creditors. A
financial creditor has been defined under Section 5(7) as, “A person to
whom a financial debt is owed”. A “financial debt” is defined by E
Section 5(8) as a debt which is disbursed against consideration for the
time value of money. On the other hand, an operational creditor is one to
whom an operational debt is owed. “Operational debt” under Section
5(21) is “a claim in respect of provision of goods or services”.
20. Sections 7 and 8 of the IBC control the initiation of insolvency F
process by financial creditors and operational creditors respectively.
The corporate debtor can contest a debt within a stipulated time period.
The Adjudicating Authority has to determine the existence of a default
from the records of the information utility or on the basis of evidence
14
UCO Bank & Anr. v. Dipak Debbarma & Ors., (2016) (11) SCR 723. G
15
Innoventive Industries Ltd. v. ICICI Bank & Anr., (2017) 8 SCR 33.
16
Swiss Ribbons (P) Ltd. v. Union of India (2019) 4 SCC 17.
17
Default is defined in Section 3(12) in wide terms as, “Non-payment of debt when
whole or any part or instalment of the amount of debt has become due and payable and
is not paid by the debtor or the corporate debtor, as the case may be”.
18
Per Section 3(11), which states that a debt is, “A liability of obligation in respect of
a ‘claim’”. A ‘claim’ is inter alia defined under Section 3(6) as, “A right to payment”. H
1238 SUPREME COURT REPORTS [2023] 10 S.C.R.

A furnished by the creditors, and communicate the same to the corporate
debtor – this initiates the resolution process, which must be completed
within 180 days from the date of admission of the application (Section
12), and can be extended beyond 180 days for a further period of not
exceeding 90 days if the committee of creditors (hereinafter, “CoC”)
by a vote of 75% of voting shares so decides. Speedy resolution thus
B
forms the mainstay of the entire resolution process. Upon admission
of the application, a moratorium under Section 14 of the Code is to be
declared by the Adjudicating Authority followed by a public
announcement indicating the last date for submission of claims, along
with the details of the interim resolution professional (hereinafter,
C “IRP”). The management of the corporate debtor as a going concern
on the instructions of the CoC is vested in the IRP (and later under the
RP under Section 28), who is a trained person registered under Chapter
IV of IBC, per Section 17. The CoC’s decisions have to be taken by a
vote of not less than 75% of the voting share of financial creditors.
D Anyone interested or willing to put the corporate debtor back to its
rails can, under Section 30, submit a resolution plan to the RP, prepared
on the basis of an information memorandum. When such a plan is
approved by the CoC, the Adjudicating Authority has to record
satisfaction of the same – it then becomes binding on the corporate
debtor as well as its employees, members, creditors, guarantors and
E other stakeholders. Immediately upon approval of the resolution plan,
the moratorium order passed by the Authority under Section 14 ceases
to have effect.
21. When the resolution process does not yield any success, or no
application is received, and in certain other situations, the corporate debtor
F enters into the liquidation phase. This is provided by Section 33 of the
IBC, which is extracted below:
“Section 33 - Initiation of liquidation
(1) Where the Adjudicating Authority, —
G (a) before the expiry of the insolvency resolution process
period or the maximum period permitted for completion of
the corporate insolvency resolution process under section 12
or the fast track corporate insolvency resolution process
under section 56, as the case may be, does not receive a
resolution plan under sub-section (6) of section 30; or
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1239
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

(b) rejects the resolution plan under section 31 for the non- A
compliance of the requirements specified therein, it shall—
(i) pass an order requiring the corporate debtor to be
liquidated in the manner as laid down in this Chapter;
(ii) issue a public announcement stating that the corporate
debtor is in liquidation; and B

(iii) require such order to be sent to the authority with which
the corporate debtor is registered.
(2) Where the resolution professional, at any time during the
corporate insolvency resolution process but before C
confirmation of resolution plan, intimates the Adjudicating
Authority of the decision of the committee of creditors
2[approved by not less than sixty-six per cent. of the voting
share] to liquidate the corporate debtor, the Adjudicating
Authority shall pass a liquidation order as referred to in sub-
clauses (i), (ii) and (iii) of clause (b) of sub-section (1). D
Explanation- For the purposes of this sub-section, it is hereby
declared that the committee of creditors may take the decision
to liquidate the corporate debtor, any time after its constitution
under sub-section (1) of section 21 and before the
confirmation of the resolution plan, including at any time E
before the preparation of the information memorandum.
(3) Where the resolution plan approved by the Adjudicating
Authority 4[under section 31 or under sub-section (1) of
section 54L,] is contravened by the concerned corporate
debtor, any person other than the corporate debtor, whose F
interests are prejudicially affected by such contravention, may
make an application to the Adjudicating Authority for a
liquidation order as referred to in sub-clauses (i), (ii) and
(iii) of clause (b) of sub-section (1).
(4) On receipt of an application under sub-section (3), if the G
Adjudicating Authority determines that the corporate debtor
has contravened the provisions of the resolution plan, it shall
pass a liquidation order as referred to in sub-clauses (i), (ii)
and (iii) of clause (b) of sub-section (1).
H
1240 SUPREME COURT REPORTS [2023] 10 S.C.R.

A (5) Subject to section 52, when a liquidation order has been
passed, no suit or other legal proceeding shall be instituted
by or against the corporate debtor:
Provided that a suit or other legal proceeding may be instituted
by the liquidator, on behalf of the corporate debtor, with the
B prior approval of the Adjudicating Authority.
(6) The provisions of sub-section (5) shall not apply to legal
proceedings in relation to such transactions as may be notified
by the Central Government in consultation with any financial
sector regulator.
C (7) The order for liquidation under this section shall be deemed
to be a notice of discharge to the officers, employees and
workmen of the corporate debtor, except when the business
of the corporate debtor is continued during the liquidation
process by the liquidator.”
D 22. According to the judgment of this court K. Shashidhar v.
Indian Overseas Bank19 the Adjudicating Authority is, “obligated to
initiate liquidation process under Section 33(1) of the I&B Code.”
It was also held that the Parliament did not empower the Adjudicating
Authority “with the jurisdiction or authority to analyse or evaluate
E the commercial decision of the CoC much less to enquire into the
justness of the rejection of the resolution plan by the dissenting
financial creditors.” Thus, on occurrence of any eventuality specified
under Section 33, the liquidation process has to begin, as a matter of
course – there is no choice in the matter. Again, in Committee of
Creditors of Essar Steel India Limited v. Satish Kumar Gupta &
F Ors.,20 this court rejected the argument that the NCLT possessed any
discretionary jurisdiction with regard to initiation of liquidation proceedings,
upon an interpretation of Sections 30, 31(2) and 60(5)(c) of IBC.
23. Upon initiation of liquidation, a liquidator has to be appointed,
to carry out the liquidation process and manage other affairs of the
G corporate debtor. The RP, appointed to conduct the resolution process,
is ordinarily appointed as liquidator. The powers and duties of liquidator

19
K. Shashidhar v. Indian Overseas Bank, 2019 (3) SCR 845.
20
Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors.,
H 2019 (16) SCR 275.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1241
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

are prescribed by Section 3521 of the IBC. It includes verification of A
claims of creditors, evaluation of assets of the corporate debtor, carrying
on the business of the corporate debtor, taking into consideration the
assets of the corporate debtor, etc. The liquidator has to issue a public
announcement within 5 days from appointment in a prescribed format;
the purpose of public announcement is to call upon creditors and others
B
persons to submit their claims in relation to the corporate debtor. The
creditors of the corporate debtor have to send their claims within 30
days from the initiation of the liquidation process. After the receipt of
the claims, the liquidator has to verify the claims submitted by the creditors
(Section 39). The liquidator may also ask the creditors to submit any
evidence in relation to their claims for the purpose of verification. The C
liquidator is empowered to either admit or reject the claims on the basis
of due verification. If the liquidator rejects or admits a claim of a creditor,
the same has to be communicated to the creditor as well as the corporate
debtor within 7 days from such decision (Section 40). The liquidator has
to concurrently determine what constitutes the “liquidation estate”.
D
Section 36 (3) lists out the various assets and claims, etc. which form
the liquidation estate.22 After the admission of claims, the liquidator has
to determine the value of the claims, for the purpose of distribution of
assets of the corporate debtor.
21
"35. Powers and duties of liquidator.— (1) Subject to the directions of the Adjudicating E
Authority, the liquidator shall have the following powers and duties, namely:-
(a) to verify claims of all the creditors;
(b) to take into his custody or control all the assets, property, effects and actionable
claims of the corporate debtor;
********************* *********************
(d) to take such measures to protect and preserve the assets and properties of the
corporate debtor as he considers necessary; F
(e) to carry on the business of the corporate debtor for its beneficial liquidation as he
considers necessary;
(f) subject to section 52, to sell the immovable and movable property and actionable
claims of the corporate debtor in liquidation by public auction or private contract, with
power to transfer such property to any person or body corporate, or to sell the same in
parcels in such manner as may be specified:
Provided that the liquidator shall not sell the immovable and movable property or G
actionable claims of the corporate debtor in liquidation to any person who is not eligible
to be a resolution applicant;”
22
Section 36 (3) enumerates the liquidation estate as comprising of the following:
“(a) any assets over which the corporate debtor has ownership rights, including all
rights and interests therein as evidenced in the balance sheet of the corporate debtor or
an information utility or records in the registry or any depository recording securities
H
1242 SUPREME COURT REPORTS [2023] 10 S.C.R.

A 24. In terms of Regulation 47 of the Liquidation Regulations,
liquidation proceedings should be completed within 1 year from the date
of its initiation. This contrasts with the extendable time limit of 330 days,
for the resolution process under IBC.
25. During the insolvency resolution process, a secured creditor
B is not permitted to realize its dues by initiating any proceeding. This is by
virtue of Section 14 (1) (c) which enables the imposition of a moratorium
period, during which a secured creditor is precluded from bringing any
action to foreclose, recover or enforce any security interest. Secured
creditors’ rights are restored only in the event of failure of the insolvency
resolution process, at the stage of liquidation.
C
B. THE ‘WATERFALL MECHANISM’
26. Section 53 of the IBC, which contains the ‘waterfall
mechanism’, provides for the order of distribution of assets. It states as
follows:
D “(1) Notwithstanding anything to the contrary contained in
any law enacted by the Parliament or any State Legislature for the
time being in force, the proceeds from the sale of the liquidation assets
shall be distributed in the following order of priority and within such
period and in such manner as may be specified, namely:—
E (a) the insolvency resolution process costs and the liquidation
costs paid in full;

of the corporate debtor or by any other means as may be specified by the Board,
including shares held in any subsidiary of the corporate debtor;
(b) assets that may or may not be in possession of the corporate debtor including but not
F limited to encumbered assets;
(c) tangible assets, whether movable or immovable;
(d) intangible assets including but not limited to intellectual property, securities (including
shares held in a subsidiary of the corporate debtor) and financial instruments, insurance
policies, contractual rights;
(e) assets subject to the determination of ownership by the court or authority;
(f) any assets or their value recovered through proceedings for avoidance of transactions
G in accordance with this Chapter;
(g) any asset of the corporate debtor in respect of which a secured creditor has
relinquished security interest;
(h) any other property belonging to or vested in the corporate debtor at the insolvency
commencement date; and
(i) all proceeds of liquidation as and when they are realised.”
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1243
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

(b) the following debts which shall rank equally between and A
among the following:—
(i) workmen’s dues for the period of twenty-four months
preceding the liquidation commencement date; and
(ii) debts owed to a secured creditor in the event such secured
B
creditor has relinquished security in the manner set out in
section 52;
(c) wages and any unpaid dues owed to employees other than
workmen for the period of twelve months preceding the
liquidation commencement date;
C
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and among
the following:-
(i) any amount due to the Central Government and the State
D
Government including the amount to be received on account
of the Consolidated Fund of India and the Consolidated Fund
of a State, if any, in respect of the whole or any part of the
period of two years preceding the liquidation commencement
date;
E
(ii) debts owed to a secured creditor for any amount unpaid
following the enforcement of security interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
F
(h) equity shareholders or partners, as the case may be.
(2) Any contractual arrangements between recipients under
sub-section (1) with equal ranking, if disrupting the order of
priority under that sub-section shall be disregarded by the
liquidator.
G
(3) The fees payable to the liquidator shall be deducted
proportionately from the proceeds payable to each class
of recipients under sub-section (1), and the proceeds to
the relevant recipient shall be distributed after such
deduction.
H
1244 SUPREME COURT REPORTS [2023] 10 S.C.R.

A Explanation-For the purpose of this section—
(i) it is hereby clarified that at each stage of the distribution
of proceeds in respect of a class of recipients that rank
equally, each of the debts will either be paid in full, or will be
paid in equal proportion within the same class of recipients,
B if the proceeds are insufficient to meet the debts in full; and
(ii) the term “workmen’s dues” shall have the same meaning
as assigned to it in section 326 of the Companies Act, 2013
(18 of 2013).”
27. The priority of claims, indicated in the hierarchy of preferences,
C under the waterfall mechanism is therefore: Firstly, insolvency resolution
process costs and the liquidation costs; Secondly, workmen’s dues for
the period of 24 months preceding the liquidation commencement date
and debts owed to a secured creditor in the event such secured creditor
has relinquished security; Thirdly, wages and any unpaid dues owed to
D employees other than workmen for the period of 12 months preceding
the liquidation commencement date; Fourthly, financial debts owed to
unsecured creditors; Fifthly, any amount due to the central government
and the state government and debts owed to a secured creditor for any
amount unpaid following the enforcement of security interest; Sixthly,
any remaining debts and dues; Seventhly, preference shareholders; and
E Eighthly equity shareholders or partners. This hierarchy or order of
priority thus accords government debts [clause(e)] and operational debts
[clause(f)] lower priority than dues owed to unsecured financial creditors.
28. Debts owed to a secured creditor, whenever such secured
creditor “has relinquished security in the manner set out in section
F 52” receive a fairly high priority (immediately after insolvency resolution
process costs), whereas in other cases, i.e., when the secured creditor
does not relinquish security, the priority of claim is lower [Section 53
(1) (e) (ii)] in respect of “any amount unpaid following the enforcement
of security interest”. Another feature is that amounts due to the
G government (i.e., payable into the Consolidated Fund of India or
Consolidated Fund of a State) are ranked in the same manner as those
of secured creditors who do not relinquish their security interest [Section
53 (1) (e) (ii)].
29. The Bankruptcy Law Reforms Committee Report, 2015, which
led to the framing and later enactment of IBC, pertinently stated that:
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1245
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

“The Committee has recommended to keep the right of the A
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
B
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 C
insolvency regime will bring in additional gains to both the
economy and the exchequer.”
************* ************* *************
“For the remaining creditors who participate in the collective
action of Liquidation, the Committee debated on the waterfall D
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- E
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 F
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
G
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 commencement date; any
H
1246 SUPREME COURT REPORTS [2023] 10 S.C.R.

A debts of the secured creditor for any amount unpaid following
the enforcement of security interest
6. Remaining debt
7. Surplus to shareholders.”23
B 30. The explanation to this appears in the Report of the Insolvency
Law Committee (2020):24
“7.3. The Committee noted that the Code aims to promote a
collective liquidation process, and towards this end, it
encourages secured creditors to relinquish their security
C interest, by providing them second-highest priority in the
recovery of their dues, as under Section 53(1)(b). Thus, they
are not treated as ordinary unsecured creditors under the
Code, as they would have been under the Companies Act,
1956. It was noted that, to some extent, this provision intends
to replicate the benefits of security even where it has been
D relinquished, in order to promote overall value maximisation.
However, even if secured creditors realise their security
interest, they would only recover to the extent of their security
interest, and would claim any excess dues remaining unpaid
under Section 53(1)(e) of the liquidation waterfall. Thus, the
Committee was of the view that this provision could not have
E
been intended to provide secured creditors who relinquish
their security interest, priority of repayment over their entire
debt regardless of the extent of their security interest, as it
would tantamount to respecting a right that has never existed.
Further, if the “debts owed to a secured creditor” is not
F restricted to the extent of the security, there would be broad
scope for misuse of the priority granted under Section
52(1)(b), as even creditors who are not secured to the full
extent of their debt would rely on the mere fact of holding
any form of security, to recover the entire amount of their
unpaid dues in priority to all other stakeholders.
G
7.4. On the basis of the above discussion, the Committee
agreed that the priority for recovery to secured creditors under
23
The Bankruptcy Law Reforms Committee Report (2015), Heading 5.5.8 – Establishing
Priority of Payout in Liquidation.
24
Report of the Insolvency Law Committee (2020) – Heading 7.3 – Realisation or
H Relinquishment of Security Interest by a Secured Creditor (pg. 76).
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1247
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

Section 53(1)(b)(ii) should be applicable only to the extent of A
the value of the security interest that is relinquished by the
secured creditor. The Committee was of the opinion that this
issue stands clarified in terms of the reasoning provided above
and does not necessitate any further amendment to the
provisions of the Code.”
B
31. The Preamble to the IBC expressly recognizes the shift in the
law, with respect to ordering priority of claims, especially with respect to
government dues:
“An Act to consolidate and amend the laws relating to
reorganization and insolvency resolution of corporate persons, C
partnership firms and individuals in a time bound manner
for maximization of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the
interests of the stakeholders including alteration in the order
of priority of payment of Government dues and to establish
an Insolvency and Bankruptcy Board of India, and for matters D
connected therewith or incidental thereto.”
32. In response to the comments received on this aspect from
Parliamentary Debates on the Amendment Act in the Sixteenth Lok
Sabha Session in 2018, the Report of the Insolvency Law Committee
stated: E

“Section 53 of the Code places secured creditors who have
relinquished their security above unsecured financial
creditors. Thus, clear distinction has been drawn between
unsecured and secured creditors who join the liquidation
proceedings for the purpose of the payment waterfall in case F
of liquidation. Unsecured creditors are ranked above secured
creditors who have unpaid debts following enforcement of
securities as it is presumed that such secured creditors have
recovered most of their dues by enforcement of their security
outside the liquidation proceedings. Moreover, as stated in G
the BLRC Report, protection of dues of unsecured creditors
is intentional in order to encourage the market for corporate
bonds and other unsecured debt.
With respect to dues of workmen, they have been placed at
the highest priority along with secured creditors who have
H
1248 SUPREME COURT REPORTS [2023] 10 S.C.R.

A relinquished their security, second only to IRP costs under
the payment waterfall provided in section 53 of the Code.” 25
33. The rationale for placing secured creditors who relinquish
their security, higher in priority, is found upon a conjoint reading of Sections
52 and 53. Section 52 reads as follows:
B “Secured creditor in liquidation proceedings.
(1) A secured creditor in the liquidation proceedings may—
(a) relinquish its security interest to the liquidation estate and
receive proceeds from the sale of assets by the liquidator in
C the manner specified in section 53; or
(b) realise its security interest in the manner specified in this
section.
(2) Where the secured creditor realises security interest under
clause (b) of sub-section (1), he shall inform the liquidator
D of such security interest and identify the asset subject to such
security interest to be realised.
(3) Before any security interest is realised by the secured
creditor under this section, the liquidator shall verify such
security interest and permit the secured creditor to realise only
E such security interest, the existence of which may be proved
either—
(a) by the records of such security interest maintained by an
information utility; or
(b) by such other means as may be specified by the Board.
F
(4) A secured creditor may enforce, realise, settle, compromise
or deal with the secured assets in accordance with such law
as applicable to the security interest being realised and to the
secured creditor and apply the proceeds to recover the debts
due to it.
G
(5) If in the course of realising a secured asset, any secured
creditor faces resistance from the corporate debtor or any
person connected therewith in taking possession of, selling
or otherwise disposing of the security, the secured creditor
25
H Report of the Insolvency Law Committee (2018) (pg. 87).
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1249
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

may make an application to the Adjudicating Authority to A
facilitate the secured creditor to realise such security interest
in accordance with law for the time being in force.
(6) The Adjudicating Authority, on the receipt of an application
from a secured creditor under sub-section (5) may pass such
order as may be necessary to permit a secured creditor to B
realise security interest in accordance with law for the time
being in force.
(7) Where the enforcement of the security interest under sub-
section (4) yields an amount by way of proceeds which is in
excess of the debts due to the secured creditor, the secured C
creditor shall—
(a) account to the liquidator for such surplus; and
(b) tender to the liquidator any surplus funds received from
the enforcement of such secured assets.
D
(8) The amount of insolvency resolution process costs, due
from secured creditors who realise their security interests in
the manner provided in this section, shall be deducted from
the proceeds of any realisation by such secured creditors,
and they shall transfer such amounts to the liquidator to be
included in the liquidation estate. E
(9) Where the proceeds of the realisation of the secured assets
are not adequate to repay debts owed to the secured creditor,
the unpaid debts of such secured creditor shall be paid by
the liquidator in the manner specified in clause (e) of sub-
section (1) of section 53.” F
34. Section 52 gives an option to secured creditors to either
relinquish their security interest, in the liquidation process (the procedure
for which is prescribed in Regulations 21 and 21A of the Liquidation
Regulations26), or proceed to enforce it. In case of the latter option, the
26
G
The said provisions of the Liquidation Regulations read as follows:
“21. Proving security interest. The existence of a security interest may be proved by a
secured creditor on the basis of-
(a) the records available in an information utility, if any;
(b) certificate of registration of charge issued by the Registrar of Companies; or
(c) proof of registration of charge with the Central Registry of Securitisation Asset
Reconstruction and Security Interest of India. H
1250 SUPREME COURT REPORTS [2023] 10 S.C.R.

A secured creditor has to first indicate its option, within the time prescribed
(30 days, in Form C or D of Schedule II to the Liquidation Regulations).
The liquidator may then, per Section 52 (3), permit the secured creditor
to realize such dues as are proved to exist, as security debts. Upon
clearance by the liquidator, the secured creditor may proceed to enforce
its claim, under Section 52 (4). If there is resistance during the process,
B
the secured creditor may approach the NCLT [Section 52 (5) and (6)].
Upon enforcement, any excess amount realized should be tendered to
the liquidator [Section 52 (7)].
35. It is thus, apparent, that a secured creditor has to take a
calculated decision, at the outset of the liquidation process, whether or
C not to relinquish its secured interest. In case it does so, its dues rank
high in the waterfall mechanism. In case it chooses not to relinquish its
security interest, and instead proceeds to enforce it without success or
is unable to realize all its dues in the process of enforcement, it has to
then perforce stand lower in priority, and await distribution of assets
D upon realization of the liquidation estate, by the liquidator, vis-à-vis
the balance of its dues.
36. The procedure envisioned, thus, takes a nuanced approach
for the recovery of a secured creditor’s dues. In case they opt to relinquish
the security, their priority is ranked high; in case, they seek to enforce
E such security, subject to intimation and verification by the liquidator, they
can proceed to do so. In the event of short fall, they rank lower in priority.
This appears to be the reason, as is clear from the explanation provided
in response to comments as a result of Parliamentary debates in 2018,
that secured creditors opting not to relinquish their security interest are
“presumed that such secured creditors have recovered most of their
F dues by enforcement of their security outside the liquidation
proceedings”.27 There is sound logic in this, because those opting to

21A. Presumption of security interest. (1) A secured creditor shall inform the liquidator
of its decision to relinquish its security interest to the liquidation estate or realise its
security interest, as the case may be, in Form C or Form D of Schedule II:
G Provided that, where a secured creditor does not intimate its decision within thirty days
from the liquidation commencement date, the assets covered under the security interest
shall be presumed to be part of the liquidation estate.
(2) Where a secured creditor proceeds to realise its security interest, it shall pay as
much towards the amount payable under clause (a) and sub-clause (i) of clause (b) of
sub-section (1) of section 53, as it would have shared in case it had relinquished the
security interest.”
27
H Supra note 25.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1251
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

‘stand out’ and enforce security interest, are permitted to do so; in the A
event of excess recovery, they have to intimate and hand over such
excess for distribution in liquidation proceeding; in case they are unable
to recover their dues, for such of the dues as are outstanding, such
secured creditors are ranked low.
37. The recent judgment of this court, in Moser Baer Karamchari B
Union thr. President Mahesh Chand Sharma v. Union of India &
Ors28 had dealt with the waterfall provisions of the IBC at length, albeit
in the context of priority of claims of workmen’s dues. This court observed
as follows:
“66. …Sub-section (1) to Section 52 of the Code gives two C
options to a secured creditor. First, the secured creditor in a
liquidation proceeding may relinquish its security interest and
receive the proceeds from the sale of assets by the liquidator
in the manner specified in Section 53 of the Code. The second
option is to realise the security interest, but in the manner
specified in Section 52 of the Code. Sub-section (2) to Section D
52 of the Code states that where the secured creditor realises
the security interest, he shall inform the liquidator of such
security interest and identify the asset subject to such security
interest to be realised. The liquidator is to verify the security
interest and shall permit the secured creditor to realise such E
security interest, which is proved either by records of such
security interest maintained by an information utility, or by
such other means as may be specified by the Board. Sub-
section (4) to Section 52 of the Code states that the secured
creditor may enforce, realise, settle, compromise or deal with
the secured asset in accordance with such law as applicable F
to the security interest being realised and to the secured
creditor. The secured creditor is to accordingly apply the
proceeds to recover the debts due to him. We need not refer to
Sub-section (5) to Section 52 of the Code as it relates to the
action which the secured creditor may take if he faces G
resistance from the corporate debtor or any other person
connected therewith in taking possession of, selling or
otherwise disposing off the security. Sub-section (6) to Section
28
Moser Baer Karamchari Union thr. President Mahesh Chand Sharma v. Union of
India & Ors.,2023 SCC OnLine SC 547. H
1252 SUPREME COURT REPORTS [2023] 10 S.C.R.

A 52 of the Code applies when an adjudicating authority is in
receipt of an application Under Sub-section (5) to Section 52
of the Code. Sub-section (7) to Section 52 of the Code,
however, is important as it states that where on enforcement
of the security interest, an amount by way of proceeds is in
excess of the debts due to the secured creditor, the secured
B
creditor shall account for and pay the excess/surplus amount
to the liquidator from enforcement of such secured assets.
The amount of insolvency resolution process costs, due from
secured creditors who realise their security interests in the
manner provided in the section, are to be deducted from the
C proceeds of any realisation by such secured creditors. They
are to be transferred and included in the liquidation estate.
Sub-section (9) to Section 52 of the Code states that where
proceeds for realisation of the secured assets are not adequate
to repay the debts owed to the secured creditor, the unpaid
debts of such secured creditor shall be paid by the liquidator
D
in the manner specified in Clause (e) to Sub-section (1) to
Section 53 of the Code.
67. To protect the interest of the workmen where the secured
creditor does not relinquish its security interest to fall Under
Section 53 of the Code, Regulation 21A of the Insolvency
E and Bankruptcy Board of India (Liquidation Process)
Regulations, 2016 has been enacted, and it requires that the
secured creditor, who opts to realise its security interest as
per Section 52 of the Code, has to pay as much towards the
amount payable under the Clause (a) and Sub-clause (i) to
F Clause (b) of Sub-section (1) to Section 53 of the Code to the
liquidator within the time and the manner stipulated therein.
The workmen’s dues, even when the secured creditor opts to
proceed Under Section 52 of the Code, are therefore protected
in terms of Sub-clause (b) of Sub-section (1) to Section 53 of
the Code.
G
*******
69. We now turn our attention to Section 53 of the Code which
begins with a non-obstante Clause and states that
notwithstanding anything to the contrary contained in any
H law enacted by the Parliament or any State Legislature for
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1253
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

the time being in force, the proceeds from the sale of A
liquidation assets shall be distributed in the order of priority,
which is stipulated, and within such period and such manner
as may be specified. The consequence of Sub-section (1) to
Section 53 of the Code is that it will override the rights of
parties, including the secured creditor, when the said provision
B
applies. Section 53 of the Code is the complete and
comprehensive code which ensures collection of assets and
then provides the manner in which the creditors are to be
paid. Even the rights of the secured creditor falling Under
Section 53 of the Code to enforce, realise, settle, compromise
or deal with the secured assets as applicable to the security C
interest are diluted and compromised.
70. Clause (a) to Sub-section (1) to Section 53 deals with
insolvency resolution process costs and the liquidation costs
which are to be paid in full. No grievance or issue can be
raised in respect of the said clause. Clause (b) to Sub-section D
(1) to Section 53 states that the debts due in the form of
workmen’s dues for a period of twenty four months preceding
the liquidation commencement date and the debts owed to the
secured creditor in the event such secured creditor has
relinquished security in the manner set out in Section 52 of
the Code shall rank equally between and amongst the E
workmen and the secured creditors. The Explanation to Section
53 of the Code states that ‘workmen’s dues’ shall have the
same meaning as assigned to it in Section 326 of the
Companies Act, 2013. In other words, Explanation to Section
326 of the Companies Act, 2013 has been incorporated and F
applies to the waterfall mechanism as prescribed in Clause
(b) to Sub-section (1) to Section 53 of the Code. What is
significant here is that under Clause (b) to Sub-section (1) to
Section 53 of the Code, the workmen’s dues are for the period
of twenty-four months preceding the liquidation
commencement date. The liquidation commencement date, as G
defined in terms of Sub-section (17) to Section 5 of the Code,
is much earlier in point of time and need not coincide with
the date of winding up. This is in the interest of the workmen.
Clause (i) of Explanation to Section 53 of the Code states
that where the distribution of proceeds in respect of class of H
1254 SUPREME COURT REPORTS [2023] 10 S.C.R.

A recipients that rank equally, each of the debts would be paid
either in full or would be paid in equal proportion within the
same class of recipients, if the proceeds are insufficient to
meet the debts in full. Ex facie, the Clause is very just and
fair. It is to be noted that the wages and unpaid dues owed to
employees other than the workmen fall in Clause (c), which
B
is below Clause (b) to Sub-section (1) to Section 53 of the
Code. They are to be paid wages and unpaid dues only for a
period of twelve months preceding the liquidation
commencement date, and that too only if surplus funds are
available after making payment in terms of Clause (a) and
C (b) of Sub-section (1) to Section 53 of the Code. Clause (d)
of Sub-section (1) to Section 53 of the Code relates to financial
debts owed to unsecured creditors. The amounts due to the
Central Government and the State Government, etc., and the
debts owed to a secured creditor for any amount that remains
unpaid following the enforcement of security interest, have
D
been clubbed together in Clause (e) of Sub-section (1) to
Section 53 of the Code, and have to be ranked equally
between and among both of them. The remaining debts and
dues fall in Clause (f) of Sub-section (1) to Section 53 of the
Code. Preference shareholders fall under Clause (g) of Sub-
E section (1) to Section 53 of the Code, and equity shareholders
or partners fall under Clause (h) of Sub-section (1) to Section
53 of the Code. Sub-section (2) to Section 53 of the Code
states that any contractual arrangements between recipients
Under Sub-section (1) with equal ranking, if disrupting the
order of priority under the said Sub-section will be
F
disregarded by the liquidator.
71. The waterfall mechanism is based on a structured
mathematical formula, and the hierarchy is created in terms
of payment of debts in order of priority with several
qualifications, striking down any one of the provisions or
G rearranging the hierarchy in the waterfall mechanism may
lead to several trips and disrupt the working of the equilibrium
as a whole and stasis, resulting in instability. Every change
in the waterfall mechanism is bound to lead to cascading
effects on the balance of rights and interests of the secured
H creditors, operational creditors and even the Central and State
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1255
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

Governments. Depending upon the facts, in some cases, the A
waterfall mechanism in the Code may be more beneficial than
the hierarchy provided Under Section 326 of the Companies
Act, 2013 and vice-versa. Therefore, we hesitate and do not
accept the arguments of the Petitioners.
72. The Code is based on the organic evolution of law and is B
a product of an extensive consultative process to meet the
requirements of the Code governing liquidation. It introduced
a comprehensive and time-bound framework to maximise the
value of assets of all persons and balance the interest of the
stakeholders. The guiding principle for the Code in setting
the priority of payments in liquidation was to bring the C
practices in India in line with global practices. In the waterfall
mechanism, after the costs of the insolvency resolution process
and liquidation, secured creditors share the highest priority
along with a defined period of dues of the workmen. The
unpaid dues of the workmen are adequately and significantly D
protected in line with the objectives sought to be achieved by
the Code and in terms of the waterfall mechanism prescribed
by Section 53 of the Code. In either case of relinquishment or
non-relinquishment of the security by the secured creditor,
the interests of workmen are protected under the Code. In
fact, the secured creditors are taking significant hair-cut and E
workmen are being compensated on an equitable basis in a
just and proper manner as per Section 53 of the Code. The
Code balances the rights of the secured creditors, who are
financial institutions in which the general public has invested
money, and also ensures that the economic activity and revival F
of a viable company is not hindered because it has suffered
or fallen into a financial crisis. The Code focuses on bringing
additional gains to both the economy and the exchequer
through efficiency enhancement and consequent greater value
capture. In economic matters, a wider latitude is given to the
law- maker and the Court allows for experimentation in such G
legislations based on practical experiences and other
problems seen by the law-makers. In a challenge to such
legislation, the Court does not adopt a doctrinaire approach.
Some sacrifices have to be always made for the greater good,
and unless such sacrifices are prima facie apparent and ex H
1256 SUPREME COURT REPORTS [2023] 10 S.C.R.

A facie harsh and unequitable as to classify as manifestly
arbitrary, these would be interfered with by the court.”
38. It is hence clear that the provisions of the IBC are carefully
thought out, and give options to secured creditors, and balance their
interests with those of other creditors in a liquidation proceeding.
B C. RECOVERY MECHANISM UNDER THE 2003 ACT AND 2005 CODE
39. By virtue of Section 56 of the 2003 Act, in the event of any
person’s neglect “to pay any charge for electricity or any sum other
than a charge for electricity” payable “in respect of supply,
transmission or distribution or wheeling of electricity to him” (after
C a clear fifteen days’ notice in writing)”and without prejudice to his
rights to recover such charge or other sum by suit”, a licensee
(including a distribution licensee such as PVVNL) is empowered to
disconnect electricity supply to such consumer or person.
40. By virtue of Section 181(2)(x) of the 2003 Act, State
D 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, intervals for billing of electricity
charges, disconnection of supply of electricity for non-payment, etc.
These provisions in the 2003 Act and the respective Codes form the
E legal framework for recovery of dues by various kinds of licensees under
the 2003 Act. In the present case, the Uttar Pradesh State Commission
had framed the 2005 Supply Code. Clause 4.3 (f) (iv) of the 2005 Code
is relevant, which inter alia provides as follows:
“The outstanding dues will be first charge on the assets of
F the company, and the licensee shall ensure that this is entered
in an agreement with new applicant.”
41. Clause 6.15 of the 2005 Code enacts that recovery of arrears
shall be in accordance with the provisions of the Uttar Pradesh
Government Electrical Undertakings (Dues Recovery) Act, 1958:
G “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
H amended from time to time.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1257
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

(b) Notwithstanding anything contained in any other law for A
the time being in force, no sum due 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. B

(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 C
by consumer, and such bill shall be provided to the consumer
not later than two billing cycle for that category of consumer).”
42. As previously stated above, the corporate debtor entered into
an agreement with PVVNL for supply of electricity on 11.02.2010 which
provided that outstanding electricity dues would constitute a ‘charge’ on D
its assets.29 This was in accordance with Clause 4.3(f)(iv) of the 2005
Code. Clause 8 of the agreement30 also mentioned that the parties would
be governed by the 2003 Act.
43. A recent ruling of this court in K.C. Ninan v. Kerala State
Electricity Board31 examined the circumstances in which such a ‘charge’ E
could be constituted in law, and 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 F
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.”
29
Clause 5 of the agreement, extracted at paragraph 2.
G
30
Clause 8 of the agreement read as follows: “This agreement shall be governed by the
Electricity Act, 2003 with all its amendments, various other laws of India for the time
being in force, but not limited to various regulations of UPERC, as applicable to the
State of U.P. and shall be subject to the jurisdiction of the Court subordinate to High
Court of Judicature of Allahabad.”
31
K.C. Ninan v. Kerala State Electricity Board, 2023 SCC Online SC 603. H
1258 SUPREME COURT REPORTS [2023] 10 S.C.R.

A This court held that the creation of a charge need not necessarily
be based on an express provision of the 2003 Act or plenary legislation,
but could be created by properly framed regulations authorized under
the parent statute. In these circumstances, the argument of PVVNL
that by virtue of Clause 4.3(f)(iv) of the Supply Code, read with the
stipulations in the agreement between the parties, a charge was created
B on the assets of the corporate debtor, is merited. A careful reading of the
impugned order of the NCLT also reveals that this position was accepted.
This is evident from the order of the NCLAT which clarified that PVVNL
also came under the definition of ‘secured operational creditor’ as per
law. This finding was not disturbed, but rather affirmed by the impugned
C order. In these circumstances, the conclusion that PVVNL is a secured
creditor cannot be disputed.
44. The counsel for the liquidator had submitted that dues owed
to PVVNL were technically owed to the “government”, and thus occupied
a lower position in the order of priority of clearance. The expression
D “government dues” is not defined in the IBC - it finds place only in the
preamble. However, what constitutes such dues is spelt out in the
‘waterfall mechanism’ under Section 53(1)(e), which inter alia states
that, “Any amount due to the Central Government and the State
Government including the amount to be received on account of the
Consolidated Fund of India and the Consolidated Fund of the State”
E ranks lower in priority to the class of creditors described in Clauses (a)
to (d) of Section 53(1). Thus, there exists a separate enumeration or
specification of the Central Government and State Government dues,
as a class apart from other creditors, including creditors who may
have secured interest (in respect of which amounts may be payable
to them). The repeated reference of lowering of priority of debts to
F
the government, on account of statutory tax, or other dues payable to
the Central Government or State Government, or amounts payable
into the Consolidated Fund on account of either government, in the
various reports which preceded the enactment of the IBC, as well as
its Preamble, means that these dues are distinct and have to be treated
G as separate from those owed to secured creditors. The Central
Government and State Government are defined by the General Clauses
Act, 1897. The former is defined by Section 3(8),32 and latter by Section
32
(8) “Central Government” shall,—
(a) in relation to anything done before the commencement of the Constitution, mean the
Governor General or the Governor General in Council, as the case may be; and shall
H include,—
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1259
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

3 (60).33 The distinction between the governments has been recognized A
and maintained by previous decisions of this court. For instance, in
Shrikant v. Vasantrao & Ors.,34 this court underlined that while an
entity or corporation may be “State” under Article 12 of the Constitution
of India, nevertheless, its distinct entity, for other purposes, is always
maintained, and fact-dependent:
B
“Both may answer the definition of ‘State’ under Article 12
for the limited purpose of Part-III of the Constitution. Further,
the very inclusive definition of ‘State’ under Article 12 by
referring to Government of India, the Government of each of
(i) in relation to functions entrusted under sub-section (1) of section 124 of the C
Government of India Act, 1935, to the Government of a Province, the Provincial
Government acting within the scope of the authority given to it under that subsection;
and
(ii) in relation to the administration of a Chief Commissioner’s Province, the Chief
Commissioner acting within the scope of the authority given to him under sub-section
(3) of section 94 of the said Act; and
(b) in relation to anything done or to be done after the commencement of the Constitution, D
mean the President; and shall include,—
(i) in relation to functions entrusted under clause (1) of article 258 of the Constitution,
to the Government of a State, the State Government acting within the scope of the
authority given to it under that clause; 1***
(ii) in relation to the administration of a Part C State 2[before the commencement of the
Constitution (Seventh Amendment) Act, 1956], the Chief Commissioner or the Lieutenant
Governor or the Government of a neighbouring State or other authority acting within E
the scope of the authority given to him or it under article 239 or article 243 of the
Constitution, as the case may be; and
(iii) in relation to the administration of a Union territory, the administrator thereof
acting within the scope of the authority given to him under article 239 of the Constitution”.
33
(60) “State Government”,—
(a) as respects anything done before the commencement of the Constitution, shall mean, F
in a Part A State, the Provincial Government of the corresponding Province, in a Part
B State, the authority or person authorised at the relevant date to exercise executive
government in the corresponding Acceding State, and in a Part C State, the Central
Government; 1***
(b) as respects anything done 2[after the commencement of the Constitution and before
the commencement of the Constitution (Seventh Amendment) Act, 1956] , shall mean, in
a Part A State, the Governor, in a Part B State, the Rajpramukh, and in a Part C State, G
the Central Government;
(c) as respects anything done or to be done after the commencement of the Constitution
(Seventh Amendment) Act, 1956, shall mean, in a State, the Governor, and in a Union
territory, the Central Government; and shall, in relation to functions entrusted under
article 258A of the Constitution to the Government of India, include the Central
Government acting within the scope of the authority given to it under that article”
34
Shrikant v. Vasantrao &Ors ., 2006 (1) SCR 496 H
1260 SUPREME COURT REPORTS [2023] 10 S.C.R.

A the States and the local and other authorities, makes it clear
that a ‘State Government’ and a local or other authorities,
are different and that they fall under a common definition
only for the purpose of Part-III of the Constitution. This Court
has consistently refused to apply the enlarged definition of
‘State’ given in Part-III (and Part-IV) of the Constitution, for
B
interpreting the words ‘State’ or ‘State Government’ occurring
in other parts of the Constitution. While the term “State” may
include a State Government as also statutory or other
authorities for the purposes of part-III (or Part- IV) of the
Constitution, the term “State Government” in its ordinary sense
C does not encompass in its fold either a local or statutory
authority”.
45. The judgment of this court, in Municipal Commissioner of
Dum Dum Municipality & Ors. v. Indian Tourism Development
Corporation & Ors.,35 noticed that, “In the case of major public
D utilities, statutory corporations were created under different
enactments”, and went on to enumerate some examples such as Road
Transport Corporations, Electricity Boards under the Electricity Supply
Act, 1948 and so on. The court observed that:
“With a view to enable these statutory corporations and
E companies to carry on the activity which was hitherto carried
on by the governments, the relevant properties, assets and
liabilities were transferred to such new corporations. They
were supposed to operate on business lines, pay taxes and
justify their creation and constitution. These corporations,
whether created under the statute or registered under the
F Companies Act are distinct juristic entities owning their own
properties, having their own fund, capable of borrowing and
lending monies and entering into contracts like any other
corporation. In many cases, the entire share capital of these
corporations is owned by the Government whether Central
G or State. In some cases, the major share holding is of the
Government with some private share holding as well. In case
of some statutory corporations, the enactment creating them
did not provide for any share capital, though it was made a
35
Municipal Commissioner of Dum Dum Municipality & Ors. v. Indian Tourism
H Development Corporation & Ors., 1995 (5) SCC 251.
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1261
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

body corporate with all the necessary and incidental powers A
that go with such concept. The International Airports
Authority is one such corporation created under the Act with
no share capital but which has its own properties, its own
fund, accounts, employees and capable of lending and
borrowing and entering into contracts.”
B
46. The specific mention of other class of creditors whose dues
are statutory, such as dues payable to workmen or employees, “the
provident fund, the pension fund, the gratuity fund” under Section
36(4), which excludes these enumerated amounts from the liquidation,
especially clarifies that not all dues owed under statute are treated as
‘government’ dues. In other words, dues payable to statutory corporations C
which do not fall within the description “amounts due to the central or
state government” such as for instance amounts payable to corporations
created by statutes which have distinct juristic entity but whose dues do
not constitute government dues payable or those payable into the
respective Consolidated Funds stand on a different footing. Such D
corporations may be operational creditors or financial creditors or secured
creditors depending on the nature of the transactions entered into by
them with the corporate debtor. On the other hand, dues payable or
requiring to be credited to the Treasury, such as tax, tariffs, etc. which
broadly fall within the ambit of Article 265 of the Constitution are
‘government dues’ and therefore covered by Section 53(1)(f) of the E
IBC.
47. PVVNL undoubtedly has government participation. However,
that does not render it a government or a part of the ‘State Government’.
Its functions can be replicated by other entities, both private and public.
The supply of electricity, the generation, transmission, and distribution of F
electricity has been liberalized in terms of the 2003 Act barring certain
segments. Private entities are entitled to hold licenses. In this context, it
has to be emphasized that private participation as distribution licensees
is fairly widespread. For these reasons, it is held that in the present case,
dues or amounts payable to PVVNL do not fall within the description of G
Section 53(1)(f) of the IBC.
48. PVVNL had relied upon the decision Rainbow Papers (supra).
In that case, the issue involved was interpretation of Section 48 of the
Gujarat Value Added Tax Act, 2003 which enacted that any amount
payable towards tax or penalty by any person would constitute a ‘first H
1262 SUPREME COURT REPORTS [2023] 10 S.C.R.

A charge’ on the property of such dealer or person. The corporate debtor
had defaulted in payment of its tax dues and recovery proceedings had
been initiated. In the meanwhile, insolvency proceedings had commenced.
During the resolution process, the State tax authorities claimed that the
dues payable had to be accrued previously and relied upon Section 48, in
addition to Section 53 of the IBC. The State contended that the non-
B
obstante clause in the state enactment and the non-obstante clause in
the IBC operated at different fields, and the State had to be treated as a
‘secured creditor’ by virtue of Section 48 of the state act. This was
rejected by the NCLT and the NCLAT. However, this court took note of
Sections 30 and 31 of the IBC and certain other provisions and held that
C NCLT had erred in its observations. It was held that:
“56. Section 48 of the GVAT Act is not contrary to or
inconsistent with Section 53 or any other provisions of the
IBC. Under Section 53(1)(b)(ii), the debts owed to a secured
creditor, which would include the State under the GVAT Act,
D are to rank equally with other specified debts including debts
on account of workman’s dues for a period of 24 months
preceding the liquidation commencement date.
57. As observed above, the State is a secured creditor under
the GVAT Act. Section 3(30) of the IBC defines secured creditor
E to mean a creditor in favour of whom security interest is
credited. Such security interest could be created by operation
of law. The definition of secured creditor in the IBC does not
exclude any Government or Governmental Authority.
58. We are constrained to hold that the Appellate Authority
F (NCLAT) and the Adjudicating Authority erred in law in
rejecting the application/appeal of the appellant. As observed
above, delay in filing a claim cannot be the sole ground for
rejecting the claim.”
49. Rainbow Papers(supra) did not notice the ‘waterfall
G mechanism’ under Section 53 – the provision had not been adverted to
or extracted in the judgment. Furthermore, Rainbow Papers (supra)was
in the context of are solution process and not during liquidation. Section
53, as held earlier, enacts the waterfall mechanism providing for the
hierarchy or priority of claims of various classes of creditors. The careful
design of Section 53 locates amounts payable to secured creditors and
H workmen at the second place, after the costs and expenses of the
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1263
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

liquidator payable during the liquidation proceedings. However, the dues A
payable to the government are placed much below those of secured
creditors and even unsecured and operational creditors. This design was
either not brought to the notice of the court in Rainbow Papers(supra)or
was missed altogether. In any event, the judgment has not taken note of
the provisions of the IBC which treat the dues payable to secured
B
creditors at a higher footing than dues payable to Central or State
Government.
50. The Gujarat Value Added Tax Act, 2003 no doubt creates a
charge in respect of amounts due and payable or arrears. It would be
possible to hold [in the absence of a specific enumeration of government
dues as in the present case, in Section 53(1)(e)] that the State is to be C
treated as a ‘secured creditor’. However, the separate and distinct
treatment of amounts payable to secured creditor on the one hand, and
dues payable to the government on the other clearly signifies Parliament’s
intention to treat the latter differently - and in the present case, having
lower priority. As noticed earlier, this intention is also evident from a D
reading of the preamble to the Act itself.
51. According to the principles of statutory interpretation, when
an enactment uses two different expressions, they cannot be construed
as having the same meaning. It was held in Member, Board of Revenue
v. Anthony Paul Benthall36 that: E
“When two words of different import are used in a statute, in
two consecutive provisions, it would be difficult to maintain
that they are used in the same sense…”
This idea is reflected in a subsequent judgment in Brihan Mumbai
Mahanagarpalika & Anr. v. Willington Sports Club & Ors.37 F
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 Customs38. 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 G

36
Member, Board of Revenue v. Anthony Paul Benthall(1955) 2 SCR 842.
37
Brihan Mumbai Mahanagarpalika & Anr. v. Willington Sports Club & Ors., (2013)
(16) SCR 216.
38
Sundaresh Bhatt, Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and
Customs, 2022 SCC Online SC 1101. H
1264 SUPREME COURT REPORTS [2023] 10 S.C.R.

A 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
B 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
C 33(5) of the IBC as the case may be, the respondent authority
only has a limited 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.
D (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?
Answered in negative.
56. On the basis of the above discussions, following are our
E
conclusions:
(i) Once moratorium is imposed in terms of Sections 14 or
33(5) of the IBC as the case may be, the respondent authority
only has a limited jurisdiction to assess/determine the quantum
of customs duty and other levies. The respondent authority
F
does not have the power to initiate recovery of dues by means
of sale/confiscation, as provided under the Customs Act.
(ii) After such assessment, the respondent authority has to
submit its claims (concerning customs dues/operational debt)
in terms of the procedure laid down, in strict compliance of
G the time periods prescribed under the IBC, before the
adjudicating authority.
(iii) In any case, the IRP/RP/liquidator can immediately secure
goods from the respondent authority to be dealt with
appropriately, in terms of the IBC.”
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1265
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

Similarly, in Duncans Industries Ltd. v. AJ Agrochem39, Section A
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 a similar manner, it is held that Section 238 of
the IBC overrides the provisions of the Electricity Act, 2003 despite the
latter containing two specific provisions which open with non-obstante
B
clauses (i.e., Section 173 and 174). The position of law with respect to
primacy of the IBC, is identical with the position discussed in Sundaresh
Bhatt and Duncan Industries (supra) [refer also: Innoventive
Industries (supra), CIT v. Monnet Ispat & Energy Ltd.40, Ghanashyam
Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.41,
and Jagmohan Bajaj v. Shivam Fragrances Private Limited42]. C
53. In view of the above discussion, it is held that the reliance on
Rainbow Papers (supra) is of no avail to the appellant. In this court’s
view, that judgment has to be confined to the facts of that case alone.
D. EFFECT OF SECTION 77 OF THE COMPANIES ACT
D
54. Lastly, the liquidator had urged that without registration of
charge, the same was unenforceable under liquidation proceedings.
Section 77 of the Companies Act, 2013reads as follows:
“77. Duty to register charges, etc.—(1) It shall be the duty of
every company creating a charge within or outside India, on E
its property or assets or any of its undertakings, whether
tangible or otherwise, and situated in or outside India, to
register the particulars of the charge signed by the company
and the charge-holder together with the instruments, if any,
creating such charge in such form, on payment of such fees
and in such manner as may be prescribed, with the Registrar F
within thirty days of its creation: Provided that the Registrar
may, on an application by the company, allow such
registration to be made within a period of three hundred days
of such creation on payment of such additional fees as may
be prescribed: Provided further that if registration is not made G
within a period of three hundred days of such creation, the
company shall seek extension of time in accordance with
39
Duncans Industries Ltd. v. AJ Agrochem, (2019) 9 SCC 725.
40
(2018) 18 SCC 786
41
[2021] 13 SCR 737
42
2018 SCC OnLine NCLAT 413 H
1266 SUPREME COURT REPORTS [2023] 10 S.C.R.

A section 87: Provided also that any subsequent registration of
a charge shall not prejudice any right acquired in respect of
any property before the charge is actually registered.
(2) Where a charge is registered with the Registrar under sub-
section (1), he shall issue a certificate of registration of such
B charge in such form and in such manner as may be prescribed
to the company and, as the case may be, to the person in
whose favour the charge is created.
(3) Notwithstanding anything contained in any other law for
the time being in force, no charge created by a company shall
C be taken into account by the liquidator or any other creditor
unless it is duly registered under sub-section (1) and a
certificate of registration of such charge is given by the
Registrar under sub-section (2).
(4) Nothing in sub-section (3) shall prejudice any contract or
D
obligation for the repayment of the money secured by a
charge.”
55. Section 78 enacts, that when a company whose property is
subject to charge, fails to register it, the charge holder (or the person
entitled to the charge over the company’s assets) can seek its registration.
E
Section 3 (31) of the IBC defines “security interest” in the widest terms.
In this court’s opinion, the liquidator cannot urge this aspect at this stage,
because of the concurrent findings of the NCLT and the NCLAT that
PVVNL is a secured creditor.

F 56. The record further shows that after the NCLT passed its
order, the appellant preferred its claim on 10.04.2018. Based on that
application, the liquidator had filed an application before the NCLT for
modification of its order dated 21.08.2018, and contended that PVVNL
also came under the definition of ‘secured operational creditor’ in
realization of its dues in the liquidation proceedings as per law. The
G application sought amendment of the list of stakeholders. The application
was allowed. In view of these factual developments, this Court does not
consider it appropriate to rule on the submissions of the liquidator vis-a-
vis the fact of non-registration of charges under Section 77 of the
Companies Act, 2013.
H
PASCHIMANCHAL VIDYUT VITRAN NIGAM LTD. v. RAMAN 1267
ISPAT PRIVATE LIMITED & ORS. [S. RAVINDRA BHAT, J.]

V. CONCLUSION A
57. For the above reasons, it is held that the appeal deserves to
fail. At the same time, the liquidator is directed to decide the claim
exercised by PVVNL in the manner required by law. It shall complete
the process within 10 weeks from the date of pronouncement of this
decision, after providing such opportunity to the appellant, as is necessary B
under law.
58. The appeal is dismissed, subject to the above direction, without
order on costs.

Divya Pandey Appeal dismissed. C
(Assisted by : Shevali Monga, LCRA)

D

E

F

G

H