# In the matter of The National Sewing Thread Co. Ltd. vs. The Superintending Engineer & Ors.

> HC judgment dated 2024-06-07. Citation: TCN-2024-HC-00074. The National Sewing Thread Co. Ltd. (undergoing Post Insolvency Resolution under IBC) filed a writ…

- **Court:** HC
- **Order date:** 7 Jun 2024
- **Citation:** TCN-2024-HC-00074
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/the-national-sewing-thread-co-ltd-vs-the-superintending-engineer-ors-841f6e0c

## Summary

### Background

The National Sewing Thread Co. Ltd. (undergoing Post Insolvency Resolution under IBC) filed a writ petition against TANGEDCO, challenging a demand notice for unpaid electricity charges. The petitioner, a public limited company registered under the MSME Act, had availed financial assistance from Indian Overseas Bank (IOB) but suffered losses, leading to its loan being classified as NPA. IOB assigned the debt to Alchemist Asset Reconstruction Company Ltd., which initiated CIRP against the petitioner under Section 7 of the IBC. An Interim Resolution Professional (IRP) was appointed, and a resolution plan was approved by the Committee of Creditors (CoC) and the NCLT on 06.12.2021. The resolution plan primarily benefited the financial creditor, with operational creditors

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## Facts

The National Sewing Thread Co. Ltd., a public limited company registered under the MSME Act, faced financial difficulties and its loan from Indian Overseas Bank (IOB) was classified as NPA. IOB assigned the debt to Alchemist Asset Reconstruction Company Ltd., which initiated Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC. A resolution plan was approved by the NCLT on 06.12.2021, primarily benefiting the financial creditor, while operational creditors were to receive only 1% of their claims. TANGEDCO, to which the petitioner owed Rs.32,86,061/- for unpaid electricity charges from June 2019, issued a demand notice dated 19.01.2022. The petitioner argued that these dues were extinguished under the approved resolution plan. TANGEDCO disconnected

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## Issues and analysis

### Issue 1: Whether the demand for arrears of electricity charges by TANGEDCO from the petitioner, after the …

**Ratio:** The 'Clean Slate Theory' (CST) as evolved by the Supreme Court in Ghanashyam Mishra &

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**Reasoning:** The court reasoned that the petitioner, being an MSME corporate debtor, had participated

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**Interpretation:** The court interpreted the 'Clean Slate Theory' as not being an automatic

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**Application:** The court applied the above principles to the facts of the case and held that

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## Parties

- **Judges:** N. Sesha…
- **Respondents:** The National…; The Superintending…

## Timeline

- **2006-01-01 — MSME Act Regi…**: The petitioner company…
- **2017-03-24 — Debt Assi…**: IOB assigned the debt of the petitioner-company to M/s. Alchemist Asset Reconstruction…

## 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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