TaxTMI 
TaxTMI 
2024 (10) TMI 508
X X X X Extracts X X X X
X X X X Extracts X X X X
.... under Section 54(C) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') by the Corporate Debtor, namely, Sudal Industries Limited (hereinafter referred to as 'the first appeal') and CA (AT) (Ins) No. 1420 of 2023, filed against the order dated 10.08.2023 by which an application bearing I.A. No. 3021 of 2023 in CP (IBPP) No. 01/MB-IV/2022 filed by the Resolution Professional on 13.07.2023 under Section 54K(15) of the Code r/w Regulation 49(1) of the IBBI (Pre-packaged Insolvency resolution process) Regulation, 2021 (in short 'Regulations') for the approval of the base resolution plan, has been allowed (herein after referred to as 'the second appeal'). 2.The first appeal came up for preliminary hearing on 26.05.2023 in which the following order was passed:- Learned Counsel for the Appellant submits that the Adjudicating Authority committed error in interpreting Section 11A(4) of the Insolvency & Bankruptcy Code, 2016 while proceeding with the pre pack CIRP and declined to consider the Section 7 Application which was much prior in point of time. Submissions need scrutiny. Issue notice to the Respondents through Speed Post as well as Email. Requisites along with process f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed Section 11A to the Code. 8.After coming into force of the Act, 2021 w.e.f 04.04.2021, the Corporate Debtor filed an application under Section 54(C) of the Code for initiation of the PPIRP in respect of the CD. This application was assigned CP (IBPP) No. 01/MB-IV/2022 and was transferred to NCLT, Mumbai -IV where Section 7 application filed by the Appellant was already pending. 9.It is pertinent to mention that the application under Section 54(C) of the Code was filed by the Corporate Debtor on 04.09.2022. 10.The Tribunal, instead of deciding the application filed under Section 7 of the Code by the Appellant, chose to decide the application filed under Section 54(C) of the Code to which the Appellant raised the objection by referring to Section 11A(4) of the Code, however, the said objection was overruled by the Tribunal and the application filed under Section 54(C) of the Code was admitted by the impugned order dated 20.04.2023 and moratorium was imposed as well as the Resolution professional named in the application was appointed. 11.The Impugned order dated 20.04.2023 is challenged by the Appellant before this Court by way of the first appeal. 12.It is pertinent to mentio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on stems from its intent to displace the existing promoter(s) from its management than to resolve the Corporate Applicant, as the promoters of the Corporate debtor are entitled to seek restoration of control under resolution in CIRP in precedence over any other applicant. Accordingly, this Bench feels that its application CP(IB) 63 (MB) 2021 is not in accordance with the intent and object of the code and deserve to be dealt with accordingly. In view of this, this Bench feels that the CP(IB) 63 (MB) 2021 is not maintainable as being against the basic intent and purport of the Code. 5.10. This Bench finds that section 11A (4) is clear and unambiguous and makes it clear that rule of precedence as provided in sub-section (1) to （3) does not apply to application(s) filed prior introduction of PIRP regime in the code. Further, this Bench finds the intent of legislature to allow the management of MSMEs to restore its control as contemplated under section 240A of the Code providing waiver of clause (c)to (h) of section 29A in case of MSMEs where the promoters are otherwise qualified u/s remaining clauses of section 29A of the Code. On the harmonious construction of provisions of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nything contained in sections 7, 9 and 10, the Adjudicating Authority shall first dispose of the application under section 54C. (3) Where an application under section 54C is filed after fourteen days of the filing of any application under section 7 or section 9 or section 10, in respect of the same corporate debtor, the Adjudicating Authority shall first dispose of the application under section 7or section 9 or section 10. (4) The provisions of this section shall not apply where an application under section 7 or section 9 or section 10 is filed and pending as on the date of the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2021." 20.Since the facts are not much in dispute, therefore, the case rests upon the interpretation of Section 11A, therefore, we shall be discussing all the provisions of Section 11A of the Code. 21.Section 11A is divided into four parts. Section 11A talks of disposal of applications under Section 54C and under Section 7 or 9 or 10 of the Code. The legislature has provided the mechanism for deciding the application under Section 54C vis a vis the applications filed under Section 7 or 9 or 10. If we talk about Section 11A(1) which is ....