Sanjiv Kumar Gupta AND State of Telangana and 3 Ors.
Statutory dues, including electricity arrears, that were not claimed in the insolvency process stand extinguished and cannot be recovered from a purchaser in an auction under the IBC; the SARFAESI decision in Srigdhaa Beverages does not apply, and under section 56(2) of the Electricity Act the arrears were in any case time-barred.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-13
The petitioner bought an industrial unit at Jeedimetla in a liquidation auction and received a registered sale deed in 2021. In 2025 the power utility demanded ₹2,64,364 of arrears from 2008-09. The High Court held that the dues had been extinguished under the IBC and were also barred by limitation.
What happened
The petitioner bought premises No. D-4, Phase-IV Extension, IDA Jeedimetla, Hyderabad, of 2,917.33 sq. yards, from M/s Victory Transformers and Switchgears Ltd. in an auction on 21 February 2020 conducted by the insolvency professional; the sale certificate was issued on 2 September 2020 and the Official Liquidator executed a registered sale deed on 24 June 2021. The company had gone into liquidation by an NCLT order of 29 October 2019. On 26 July 2025 respondent 3 issued a demand notice for ₹2,64,364 with surcharges towards FSA charges for 2008-09. The petitioner replied on 11 August 2025. The respondents relied on TSSPDCL v. Srigdhaa Beverages, (2020) 6 SCC 404 and clause 8.4 of the terms of supply, under which a seller must clear dues before selling, and said a purchaser on an 'as is where is, whatever there is' basis bears the dues.
Questions before the court
- Can the power utility recover pre-sale arrears of 2008-09 from the purchaser of a unit in an IBC liquidation auction?
Why the court ruled this way
The petitioner relied on Mamta Binani v. Kolkata Municipal Corporation (Calcutta High Court) and Ghanashyam Mishra and Sons v. Edelweiss Asset Reconstruction, (2021) 9 SCC 657, under which claims not part of an approved plan stand extinguished and bind the State and local authorities (paragraph 11), and on Sri Sai Baba Cellulose v. State of Telangana on the two-year limit (paragraph 12). The respondents relied on Srigdhaa Beverages, which dealt with an auction under the SARFAESI Act on an 'as is where is' basis (paragraph 17). The Court held that under Ghanashyam Mishra, statutory and governmental dues not presented before the liquidator or resolution professional stand extinguished, and a claim cannot be made later (paragraph 18). The rights of an auction purchaser under the SARFAESI Act and under the IBC are not similar, so Srigdhaa Beverages cannot be relied on (paragraph 19). The respondents had not submitted their claim for the arrears before the resolution professional, so they could make no claim against the auction purchaser (paragraph 20). The arrears were of 2008-09 while the notice was issued in 2025, after about sixteen years; under section 56(2) of the Electricity Act the limitation is two years, even a supplementary demand for mistake is barred, so the notice was unsustainable on limitation as well (paragraph 21).
Controlling point
The demand notice was unsustainable both because the dues stood extinguished in the insolvency process and because of limitation.
Order and next steps
The writ petition was allowed and the demand notice of 26 July 2025 was set aside. The respondents were directed not to disconnect the power supply to the petitioner's unit pursuant to the notice. There was no order as to costs, and pending miscellaneous petitions stood closed.
Practical implications
A purchaser at an IBC liquidation or resolution sale who gets a demand for the previous owner's statutory dues should check whether the utility filed a claim in the process, and also test the claim against the two-year limit in section 56(2).
Limits of this ruling
- The result rests on the dues not having been claimed in the insolvency process and on limitation; the judgment distinguishes SARFAESI auctions, where Srigdhaa Beverages still applies.
Law and judgment source
- Insolvency and Bankruptcy Code, 2016, section 31(1)
- Electricity Act, 2003, sections 43 and 56(2)
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Source checked: 2026-10-13 · Judgment paragraphs: paragraphs 1–22 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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