The NCLAT, Principal Bench New Delhi observed that Section 11A(2) of the IBC says that precedence is to be given to an application if the application under Section 54C already pending and application under Section 7, 9 or 10 is filed or if the application under Section 7, 9 or 10 is pending and the application under Section 54C is filed within 14 days of the filing of the said application then the precedence has to be given to the said application but Section 11A(3) cast an exception as it provides that where an application under Section 54C is filed after fourteen days of the filing of the application under Section 7, 9 or 10 then it has not to be given precedence rather the precedence has to be given to the application filed under Section 7, 9 or 10 of the IBC.
It was held that if the application under Section 7, 9 or 10 is already filed and then the Act of 2021 came into being then the applicant filing the application under Section 54C cannot take the help of this Section.
Brief Facts:
The present appeals have been filed against order initiating Pre-Packaged Insolvency Resolution Process (‘PPIRP’), on an application filed under Section 54(C) of the Insolvency and Bankruptcy Code, 2016 (‘IBC’) and order with respect to the resolution plan which was allowed.
Contentions of the Appellant:
It was contended that Tribunal giving precedence and priority to the application filed under Section 54(C) of the IBC over and above the application filed under Section 7; much before the coming into force of amendment of the Act, 2021 has committed a patent error, therefore, the order challenged in the first appeal deserves to be set aside.
Observations of the Tribunal:
It was observed that Section 11A(2) of the IBC says that precedence is to be given to an application if the application under Section 54C already pending and application under Section 7, 9 or 10 is filed or if the application under Section 7, 9 or 10 is pending and the application under Section 54C is filed within 14 days of the filing of the said application then the precedence has to be given to the said application but Section 11A(3) cast an exception as it provides that where an application under Section 54C is filed after fourteen days of the filing of the application under Section 7, 9 or 10 then it has not to be given precedence rather the precedence has to be given to the application filed under Section 7, 9 or 10 of the IBC.
It was held that if the application under Section 7, 9 or 10 is already filed and then the Act of 2021 came into being then the applicant filing the application under Section 54C cannot take the help of this Section.
Applying this to present facts, it was ruled that Tribunal committed a patent error in taking up the application under Section 54C of the IBC over and above the application filed much earlier under Section 7 of the IBC and decided the same.
The decision of the Court:
Based on above findings, accordingly, the appeals were allowed.
Case Title: Jaldhara Properties and Trading Pvt. Ltd. v. Sudal Industries Ltd. & Anr.
Case No.: Company Appeal (AT) (Ins) No. 707 of 2023
Coram: Hon'ble Mr. Justice Rakesh Kumar Jain, Mr. Naresh Salecha, Mr. Indevar Pandey (Technical Members)
Advocates for Appellant: Advs. Mr. Shubhrato Chakraboti, Mr. Sumesh Dhawan, Shaurya Shyam
Advocates for Respondent: Mr. Gaurav Mitra, Aditya Singh, Vineet Gupta, Roy Chowdhury, Lavanya Pathak, Mr. Amar Dave, Abhinav Agrawal
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