 Interpretation of “essential goods and services” under Section 14 (2) of the Code.

 Upon commencement of a CIRP, declaration of a moratorium one of the first steps.

 CD kept as a going concern and assets are not eroded- basic objectives of a
moratorium.
 Section 14(2) read with Regulation 32.
 Water, electricity, telecommunication and IT services cannot be terminated.
 Section 14 (2A) inserted through the 2020 Amendment – when RP considers goods or
services essential to the going concern status of the CD.
 Early interpretation – very strict. ICICI Bank case – essential supplies cannot be used
for making profits. Sundaresh Bhat- electricity was being used as input, so supply
disconnected.
 Expansion of Scope – Canara Bank case and Shyam Pradhan case (insurance). Aircel
India case – telecom license.
 ILC Report 2018 and 2020. Factors considered by RP – whether easily replaceable
and whether direct nexus with going concern status of the CD.
 Gujarat Urja Vikas Nigam Ltd. – sole contract cannot be terminated only on grounds
of insolvency. Harish Taneja – dues had to be paid for inputs under Section 14 (2A),
or else, could be terminated.
 Sandeep Khaitan – reiterated Section 14 (2A).
 Issues – guidelines for determination of essential supplies by the RP, no guarantee for
default, other issues – past payments risk and one-size-fits-all approach.
 Differences between Section 14 (2) and Section 14 (2A).