# In the matter of NRC Limited vs. State of Maharashtra and Anr.

> HC judgment dated 2022-09-30. Citation: TCN-2022-HC-00019. NRC Limited, formerly National Rayon Corporation Limited, underwent a Corporate Insolvency…

- **Court:** HC
- **Order date:** 30 Sept 2022
- **Citation:** TCN-2022-HC-00019
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/nrc-limited-vs-state-of-maharashtra-and-anr-649bbd64

## Summary

### Background

NRC Limited, formerly National Rayon Corporation Limited, underwent a Corporate Insolvency Resolution Process (CIRP) initiated by Punjab National Bank (PNB) due to unpaid debts. The CIRP was triggered after NRC Ltd was declared sick in 2009 and faced electricity disconnection by Maharashtra State Electricity Distribution Company Limited (MSEDCL) due to unpaid dues. A Resolution Plan was approved by the National Company Law Tribunal (NCLT), but MSEDCL, claiming significant outstanding electricity arrears, sought to recover these dues, asserting that it was not bound by the Resolution Plan as it had not submitted its claim within the stipulated time during the CIRP. MSEDCL also rejected NRC Ltd's application for a new electricity connection, demanding payment of the

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## Facts

NRC Limited, formerly National Rayon Corporation Limited, faced financial difficulties leading to its declaration as a sick company in July 2009. This resulted in a lockout from November 15, 2009, and cessation of operations. MSEDCL disconnected electricity supply on April 18, 2016, due to unpaid dues. Punjab National Bank (PNB) initiated Corporate Insolvency Resolution Process (CIRP) against NRC Ltd on June 28, 2018, under Section 7 of the IBC. The NCLT admitted the petition on November 27, 2018, triggering a moratorium. MSEDCL issued a notice on December 7, 2018, demanding Rs. 13,39,81,830/- towards unpaid electricity dues. MSEDCL did not submit its claim by the IRP's deadline of December 17, 2018, or within the extended period until March 5, 2019. Adani Properties

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## Issues and analysis

### Issue 1: Whether MSEDCL's claim for past electricity dues is extinguished due to its failure to submit the …

**Ratio:** The Supreme Court's decision in Ghanashyam Mishra & Sons Pvt Ltd v Edelweiss Assets

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**Reasoning:** The court reasoned that MSEDCL had the opportunity to present its claims before the IRP

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**Interpretation:** The court interpreted the Ghanashyam Mishra ruling to mean that the legislative

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**Application:** The court applied the ratio of Ghanashyam Mishra to the facts of the case,

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## Parties

- **Judges:** G.S.P…; Gauri G…
- **Appellants:** NRC Lim…
- **Respondents:** NRC…; State of Maharasht…

## Timeline

- **2009-07-01 — NRC Ltd decla…**: NRC Ltd was declared sick under the provisions of the Sick Industrial Companies (Special…
- **2009-11-15 — Lockout de…**: NRC Ltd's previous management declared a…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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