# In the matter of Sudalagunta Sugars Limited

> NCLT judgment dated 2024-09-20. Citation: TCN-2024-NCLT-00577. The Operational Creditor (OC) filed an application under Section 9 of the IBC against the…

- **Court:** NCLT
- **Order date:** 20 Sept 2024
- **Citation:** TCN-2024-NCLT-00577
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/sudalagunta-sugars-limited-533934a9

## Summary

### Background

The Operational Creditor (OC) filed an application under Section 9 of the IBC against the Corporate Debtor (CD) for unpaid wheeling and banking charges. The dispute arose from a Power Purchase and Wheeling Agreement (PP&WA) entered into on January 29, 2000, under which the OC provided services for surplus power generated by the CD. The charges were based on APERC tariff orders, and despite several demand notices, the CD failed to make payments, leading to the initiation of insolvency proceedings.

## Facts

M/s Southern Power Distribution Company of AP Limited (Operational Creditor or OC), a distribution company, and M/s Sudalagunta Sugars Limited (Corporate Debtor or CD), which operated an 8 MW bagasse-based power plant, entered into a Power Purchase and Wheeling Agreement (PP&WA) on January 29, 2000. Under this agreement, the OC provided wheeling and banking services for the surplus power generated by the CD. The OC had been raising wheeling and other charges on the CD since FY 2002-2003 as per the tariff orders issued by APERC from time-to-time. These charges were set by an APERC order dated March 24, 2002, which was challenged in the Andhra Pradesh High Court. The High Court initially set aside the APERC order, but the Supreme Court restored it on November 29,

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## Issues and analysis

### Issue 1: Whether the application filed by the Operational Creditor is barred by limitation under Section …

**Ratio:** Section 56(2) of the Electricity Act, 2003, which imposes a two-year limitation for

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**Reasoning:** The NCLT agreed with the OC that Section 56(2) of the Electricity Act, 2003, is not

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**Interpretation:** The court interpreted 'consumer' in Section 56(2) of the Electricity Act, 2003,

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**Application:** Since the Corporate Debtor was receiving wheeling services for its surplus

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** Southern Power…; M/s Southern…
- **Respondents:** Sudalagunta…; M/s Sudalagunta…
- **Advocates:** For Operational…; Ms Saravani…; +1 more

## Timeline

- **January 29, 2000 — Agreement…**: M/s Southern Power Distribution Company of AP Limited (OC) and M/s Sudalagunta Sugars…
- **March 24, 2002 — APERC Or…**: An APERC order was issued setting the wheeling and banking charges, which was later…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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