{"id":392259,"date":"2026-08-04T11:00:35","date_gmt":"2026-08-04T05:30:35","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=392259"},"modified":"2026-08-04T15:14:10","modified_gmt":"2026-08-04T09:44:10","slug":"calcutta-high-court-clean-slate-principle-electricity-dues","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2026\/08\/04\/calcutta-high-court-clean-slate-principle-electricity-dues\/","title":{"rendered":"Electricity supply is fundamental to revival of business operations: Calcutta HC applies Clean Slate principle; rejects late payment surcharge demand"},"content":{"rendered":"
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Calcutta High Court:<\/span> The Single Judge Bench of Ravi Krishan Kapur, J. held that after approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). West Bengal State Electricity Distribution Company Limited (WBSEDCL) cannot deny the petitioner electricity on the ground that the petitioner must extinguish the pre-CIRP electricity dues and related Late Payment Surcharge (LPSC). Applying the clean slate principle, the Court prohibited WBSEDCL from insisting on such payments before granting electricity supply.<\/p>\n

The Court firmly held that the respondent-WBSEDCL cannot deny the petitioner electricity on the ground that the petitioner must extinguish the claim for Late Payment Surcharge (LPSC). Electricity supply is fundamental to the revival of the business operations of the petitioner. The Court allowed the petition declaring the impugned demand for Late Payment Surcharge, arbitrary and without legal authority.<\/p>\n

Background<\/h3>\n

The petitioner is the successful resolution applicant of a resolution plan submitted before the National Company Law Tribunal (NCLT) relating to India Pulp & Paper Private Limited (the corporate debtor). The corporate insolvency resolution process (CIRP) was initiated in terms of an order passed by the NCLT dated 22 July 2022 as amended on 27 July 2022. Pursuant to the resolution plan, the petitioner by letters dated 29 January 2025 and 12 February 2025, respectively had requested WBSEDCL to provide construction power to the premises of the petitioner.<\/p>\n

WBSEDCL by a response dated 6 May 2025, demanded that outstanding electricity dues payable by the corporate debtor be paid by the petitioner as a pre-condition to any fresh electricity connection. WBSEDCL required that the petitioner pay an amount of ₹ 1,29,73,806.48 on account of outstanding electricity charges and a further sum of ₹ 1,27,00,838.30 as on 18 December 2024 on account of LPSC before effecting any new connection.<\/p>\n

The petitioner aggrieved by the impugned communication, filed a writ petition on the ground that in view of the resolution plan, WBSEDCL had no lawful authority to claim any amount on account of outstanding electricity charges or on account of LPSC. During the course of hearing and in the written notes of submissions, WBSEDCL opted not to press the claim of outstanding electricity charges.<\/p>\n

The petitioner contended that in view of the IBC, no claim on account of outstanding electricity charges or LPSC could be demanded. Upon approval of the resolution plan, all claims not explicitly provided for in the resolution plan, including the respondent’s residual operational and statutory dues, stood legally extinguished by operation of law on the ground of the “clean slate principle”. It was further contended that in any event, the claim of an account of LPSC is contrary to the admitted records. The bill dated August 2 2022 raised by Respondent 2 and the report filed by WBSEDCL would demonstrate that the pre-disconnection outstanding dues of WBSEDCL already included LPSC indicating that the demand on account of LPSC arose prior to the CIRP timeline. In support of such contentions, the petitioner relies on Essar Steel (India) Ltd. Committee of Creditors<\/span> v. Satish Kumar Gupta<\/span>, (2020) 8 SCC 531<\/a>, West Bengal State Electricity. Co. Ltd.<\/span> v. Vasavi Industries. Ltd., 2022 SCC OnLine Cal 1918<\/a>, Tata Power Western Odisha Distribution Ltd.<\/span> v. Jagannath Sponge (P) Ltd.<\/span>, 2023 SCC OnLine SC 2442<\/a>, Damodar Valley Corporation<\/span>. v. Chinar Steel Segments Centre (P) Ltd.<\/span>, 2024 SCC OnLine SC 2780<\/a>.<\/p>\n

The Court also relied on Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657, which held that upon approval of a resolution plan, all claims not provided for in the plan, including statutory dues owed to the Central or State Government or any local authority, stand extinguished, and no proceedings in respect of such dues for the period preceding approval can be continued.<\/p>\n

Under the Resolution Plan, out of a total plan amount of ₹30,92,72,166, only ₹10,00,272 had been allocated towards full and final satisfaction of operational and statutory creditors’ claims, with WBSEDCL’s own claim sanctioned at nil.<\/p>\n

WBSEDCL contended that the LPSC was legally recoverable because the surcharge became payable only when the demand was made after completion of the insolvency process. It argued that under the applicable tariff regulations, LPSC is dynamic in nature and depends upon the continuing period of delay in payment. According to WBSEDCL, although the principal dues could no longer be recovered, the surcharge continued to accrue independently until payment was made. It further contended that the statutory protection available during the moratorium period under Section 14 IBC did not permanently extinguish liabilities that crystallised after expiry of the moratorium. Relying on various judicial precedents, including Prem Cottex<\/span> v. Uttar Haryana Bijli Vitran Nigam Ltd.<\/span> (2021) 20 SCC 200<\/a> and Shree Rajasthan Syntex Ltd.<\/span> v. Chief Engineer Commercial Ajmer<\/span>, 2025 SCC OnLine NCLAT submitted that LPSC became payable only after a valid demand and therefore survived the resolution plan.<\/p>\n

Decision and Analysis<\/h3>\n

The High Court carefully examined the documentary evidence. It noted that the electricity bill dated 2 August 2022, issued prior to initiation of the CIRP, already included an LPSC component amounting to ₹2,15,859.01. The report filed by WBSEDCL itself also acknowledged that the outstanding dues before disconnection included the surcharge. The electricity connection had been disconnected pursuant to a notice dated 16 August 2022, shortly after initiation of the insolvency proceedings. On these admitted facts, the Court concluded that WBSEDCL’s argument that the LPSC was first triggered only on 6 May 2025 was factually incorrect and contrary to its own records. The surcharge had already accrued and been demanded well before commencement of the insolvency proceedings.<\/p>\n

The Court relying on the judgement of the case in Committee of Creditors of Essar Steel India Ltd<\/span> v. Satish Kumar Gupta<\/span> and West Bengal Statte Electricity Distribution Co. Ltd.<\/span> v. Sri Vasavi Industries Ltd.<\/span>, noted that in view of the resolution plan duly approved by the NCLT, any relief or concession to the corporate debtor with regard to the outstanding electricity charges or LPSC connected thereto prior to the CIRP cannot be reopened in such an indirect and circuitous manner. The petitioner who was the successful resolution applicant and had taken over the corporate debtor company on the basis of the “clean slate principle” cannot be saddled with the hydra heads of pre-CIRP dues of the corporate debtor popping up.<\/p>\n

The Court held that there was no merit in the contention of WBSEDCL that though the earlier dues are not recoverable on account of outstanding electricity charges, the claim for LPSC (for the pre-CIRP stage) can still be demanded from the petitioner. The finalisation of the resolution plan and the approval thereof by the NCLT extinguishes all dues of any kind whatsoever raised for the period prior to the pre CIRP stage and which have not been provided for in the resolution plan. The Court further relying on the case Gagan Ferrotech Limited v. West Bengal Electricity Regulatory Commission<\/span>, held that since the relief and concession to the corporate debtor with regard to electricity and waiver in respect of minimum demand charges was expressly recorded in the resolution plan, the demand on the petitioner for LPSC as a pre-condition for reconnection of electricity was arbitrary and without authority of law.<\/p>\n

The Court after placing its reliance on the case of Tata Power Western Odisha Distribution Ltd. (TPWODL)<\/span> v. Jagannath Sponge Pvt. Ltd.<\/span> and EMC Ltd.<\/span> v. State of Rajasthan<\/span>, highlighted that the LPSC by its very nature was statutorily payable on the failure of a consumer to pay an outstanding amount on account of electricity charges on the due date. Admittedly, since it occurred in 2022 prior to the CIRP proceedings and has been running since then. If the amount on account of outstanding electricity dues is extinguished, it would be illogical to suggest that any amount could be recoverable on account of LPSC arising in respect of the same period. This would also negate the clean slate principle. The entire contention of WBSEDCL that LPSC can only be levied after the payment was made, was without any legal basis and contrary to the records of WBSEDCL.<\/p>\n

The Court rejected WBSEDCL’s reliance on Prem Cottex and related judgments. It explained that those decisions interpreted Section 56(2)<\/a>, Electricity Act, 2003<\/a>, which deals with recovery of escaped assessments and delayed billing. In those cases, the electricity authorities had initially committed billing errors or applied incorrect tariffs, leading to subsequent supplementary demands. The Supreme Court was therefore concerned with determining when such amounts first became due for purposes of limitation under Section 56(2). The present case involved an entirely different factual situation. Here, WBSEDCL had already raised bills including the LPSC before commencement of the insolvency proceedings. There had been no billing mistake, escaped assessment or delayed computation. Consequently, the precedents interpreting Section 56(2) had no application.<\/p>\n

Similarly, the Court distinguished the earlier decision in Jayashree Steel<\/span>, holding that its factual matrix concerning recovery through invocation of bank guarantees differed materially from the present dispute. Any recovery or part payment through invocation of bank guarantee furnished by the corporate debtor has no connection with the recovery of dues on account of LPSC and does not constitute a fresh cause of action or extend the period of limitation. Such logic is also in consonance with settled accounting principles. The due date for charging LPSC cannot be interpreted in such a distorted manner.<\/p>\n

The Court firmly held that the respondent-WBSEDCL cannot deny the petitioner electricity on the ground that the petitioner must extinguish the claim for LPSC. Electricity supply is fundamental to the revival of the business operations of the petitioner. WBSEDCL was hence prohibited from raising any demand either on account of outstanding electricity charges prior to the CIRP or the connected LPSC which had been triggered prior to the CIRP proceedings against the petitioner. The Court therefore allowed the petition declaring the impugned demand for LPSC, arbitrary and without legal authority.<\/p>\n

[Pinax Paper Mills (P) Ltd.<\/span> v. State of West Bengal<\/span>, WPA 10983 of 2025, decided on 24-6-2026<\/span>]<\/p>\n

*Judgment authored by: Justice Ravi Krishan Kapur<\/span><\/strong><\/p>\n\n

Advocates who appeared in this case :<\/p>\n

For the Appellant:<\/span> Jishnu Saha, Senior Advocate, Ishaan Saha, Meenakshi Manot, Ram Ratan Modi, Dipankar Das, Sanjana Nandi, Shreya Bhatia, M. Pal Bhattacharjee, Advocates<\/p>\n

For the Respondent:<\/span> Jishnu Chowdhury, Senior Advocate, Chayan Gupta, Aritra Basu, Sandip Dasgupta, Avirpoop Mitra, Advocates<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A paper mill’s new owner took over under an approved resolution plan, but the electricity board still wanted over ₹2.5 crore in old dues and surcharges before switching the power back on. The Calcutta High Court said the clean slate principle doesn’t have exceptions for electricity bills.<\/p>\n","protected":false},"author":67544,"featured_media":392260,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,10],"tags":[111387,111388,111389,111391,2513,111382,30596,22814,111384,55899,111390,111386,111392,22064,28264,60587,57083,41012,111383,111385,30228,43847],"class_list":["post-392259","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-2020-8-scc-531","tag-2022-scc-online-cal-1918","tag-2023-scc-online-sc-2442","tag-2025-scc-online-nclat","tag-Calcutta_High_Court","tag-clean-slate-principle","tag-corporate-debtor","tag-corporate-insolvency-resolution-process","tag-electricity-charges","tag-electricity-connection","tag-extinguish-liabilities","tag-fresh-electricity-connection","tag-fundamental-to-revival-of-business","tag-insolvency-and-bankruptcy-code","tag-insolvency-process","tag-justice-ravi-krishan-kapur","tag-late-payment-surcharge","tag-moratorium-period","tag-outstanding-electricity-dues","tag-pre-condition","tag-resolution-plan","tag-section-14-ibc"],"yoast_head":"\nCalcutta HC: Clean Slate Principle Extends to Electricity Dues | SCC Times<\/title>\n<meta name=\"description\" content=\"Observing that electricity supply is fundamental to revival of business operations, Calcutta HC applies Clean Slate principle to electricity dues and rejects late payment surcharge demand\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.scconline.com\/blog\/post\/2026\/08\/04\/calcutta-high-court-clean-slate-principle-electricity-dues\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Electricity supply is fundamental to revival of business operations: Calcutta HC applies Clean Slate principle; 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