-
ALSO READ
Rs 3-trillion new Discoms Reform Scheme: Why it might work this time?
Discoms' projected Rs 90,000 cr loss 'grossly inflated': Power ministry
Lenders terminate bankruptcy proceedings against Lavasa Corporation
NCLAT closes insolvency proceedings against Oyo and its subsidiary
'IBC is a road under construction,' says IBBI chairperson M S Sahoo
-
Ministry of Power has affirmed that insolvency proceedings can be initiated against state-owned electricity distribution as well as generation firms in case of default of payment by the creditors.
The ministry clarified its stand in a letter written to Secretary, Department of Legal Affairs, earlier this month.
The clarification came in reference to a case filed by Tamil Nadu Generation and Distribution Company (TANGEDCO) against ClRP (Corporate Insolvency Resolution Process) proceedings initiated by South lndia Corporation Pvt Ltd in High Court of Madras.
"As far as state-owned (power) distribution and generation company like TANGEDCO is concerned, it is clear that it a government company as defined under section 2 (45) of the Companies Act and would fall under Insolvency Code (IBC)," the ministry said in the letter.
The ministry also stated that TANGEDCO cannot be categorised as a government body formed by way of a statute for performing sovereign government function.
In fact, it is a government company formed under Companies Act 2013 and very much under the ambit of IBC as per Section 3(7) of the the Insolvency Code, it stated.
Therefore, a state-owned power distribution company can be taken to the National Company Law Tribunal (NCLT) under the IBC for default in payment.
A power sector expert said CIRP can be initiated against any state-owned discom but they generally make payment of the default amount before admission of the case in NCLT.
The outstanding dues of discoms have been a perennial issue plaguing the power sector for decades.
According to the PRAAPTI portal, the outstanding dues of power distribution firms are to the tune of Rs 1,21,830 lakh crore in November 2021 which includes overdues of Rs 99,385 crore.
The dues become overdue after non-payment for 45 days or more. Generally power gencos charge penal rate of interest on overdues from discoms.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU