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2022 (9) TMI 1161 - Tri - Insolvency and BankruptcyPre-Packaged Insolvency Resolution Process - new procedure for resolving cases of Micro, Small and Medium Enterprises (MSME) under IBC - Section 54C of IBC (Pre-Packaged) - what is the role of the Adjudicating Authority when there is a Section 7 IBC petition filed and pending long before the present PPIRP application is filed? - HELD THAT:- This Adjudicating Authority is a creature of the statute and has to work within the framework of the IBC. It is seen from the objects and reasons of the amendment to the IBC which came into effect on 04.04.2021, the Parliament in its wisdom after having enacted the IBC Code, 2016 thought it fit to have an alternative mechanism by bringing in the concept of pre-package by way of an Amendment on 04.04.2021. On a reading of the objects and reasons, one factor is clearly discernible that the Government wanted a hybrid method of Insolvency Resolution Process which includes creditors in control (Section 7, 9 or 10) as well as debtors in control (PPIRP). The Government opted for the hybrid method by bringing this Ordinance. How the hybrid method should work? - HELD THAT:- While bringing the amendment into force the Parliament in its wisdom perceived a situation where the Adjudicating Authority will be faced with the dilemma as to how the matter should be resolved if there are applications are filed or pending under IBC & Chapter IIIA as the case may be. It is a situation of FC in control versus the CD in control - In order to ensure that the Adjudicating Authority does not face a logjam and to resolve the overlap, Section 11A was brought into force laying down the parameters as to how the Adjudicating Authority will deal with the cases of this nature. The pre-package application under Chapter III-A which has been filed on 12.07.2022, cannot take precedence over the Section 7 of IBC application which was filed on 21.10.2020, and remained pending though heard and reserved and re-heard on a number of occasions. The Section 7 IBC application filed and pending in the case will have to be given precedence over the pre-package application - Merely because there was a delay in the admission of CIRP proceedings in the Section 7 IBC application, this Tribunal finds no justification to allow the pre-package to take precedence. We are bound by the mandate of Section 11A(4). Further our view is fortified by reading the paragraph 3.16 (c) of Insolvency Law Committee Report which is already extracted earlier. It clarifies the object and intent behind Section 11A(4). The object of Section 11A is to guide the Adjudicating Authority to deal with applications of IBC-vs. Pre pack based on relevant dates as between them (Section 11A(1) (2) & (3) and to ensure that there is no clash between the applications filed prior to the Amendment dated 04.04.2021 and application filed after coming into force of the Amendment dated 04.04.2021 Various scenarios have been identified under Section 11A and the guiding principle has been given to the Adjudicating Authority. The guiding principle enjoined in Section 11A (1), (2), (3) & (4) is binding on this Adjudicating Authority. Therefore, there cannot be any deviation, however, much the real estate allottees' plead that it will be in their best interest. The PPIRP i.e. (IBPP)-02(PB)/2022 cannot be entertained in view of the pending Section 7 IBC petitions C.P. No. (IB)-1081(PB)/2020 & C.P. No. (IB)-1775(PB)/2018. Since the CD has already given the consent for admission of CIRP in the earlier proceedings as recorded and that, the debt and default is already admitted and recorded by this Tribunal in the earlier order dated 07.06.2021 recorded in para 10 above, which has not been modified or altered. The CD has also admitted debt and default as it is a pre condition for Chapter III-A petition. Therefore, there is no further enquiry needed on debt and default. The CD having conceded to debt and default both in terms of operational creditor earlier and real estate allottee presently, no further enquiry on debt and default is required. Petition dismissed.
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