9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (3) TMI 291 - AT - Insolvency and BankruptcyRejection of application filed u/s 54C of the Insolvency and Bankruptcy Code, 2016 (IBC) read with Rule 4 of the Insolvency and Bankruptcy (Pre-Packaged Insolvency Resolution Process) Rules, 2021 - rejection of application by entering into base Resolution Plan - HELD THAT - On looking into sub-section (4) of Section 54C, it provides that Adjudicating Authority shall, within a period of fourteen days of the receipt of the Application, by an order - (a) admit the application, if it is complete; or (b) reject the application, if it is incomplete. Further, the proviso provides that the Adjudicating Authority shall, before rejecting an Application, give notice to the Applicant to rectify the defect in the Application within seven days. The Adjudicating Authority in the impugned order itself has noticed the details of the Application and statutory compliances of the Application. The provisions of Section 54A and 54C, where under Section 54C, sub-section (4), the Adjudicating Authority is required to admit the Application, if it is complete or reject the Application, if it is incomplete. In paragraphs 10 to 16 of the impugned order, the Adjudicating Authority itself has noticed that all necessary compliances are fulfilled by the Corporate Debtor in filing Application under Section 54C. Thus, when accordingly to the Adjudicating Authority itself, all necessary compliances have been completed by the Corporate Applicant, whether the Adjudicating Authority could have entered into issue of Base Resolution Plan and reject the Application on the ground that Base Resolution Plan is not acceptable is a question to be answered. In the present case, the Adjudicating Authority has rejected 54C Application after entering into the merits of the Base Resolution Plan, which is not contemplated by statutory Scheme. The order of Adjudicating Authority, thus, rejecting the Application under Section 54C entering into Base Resolution Plan, is thus, contrary to the statutory Scheme of Chapter III-A and on this ground itself the order becomes unsustainable. Whether M/s WZ Enterprises Pvt. Ltd. could not have submitted the Base Resolution Plan along with the Corporate Applicant? - HELD THAT - Base Resolution Plan can very well be submitted by a Corporate Applicant individually or jointly with any other person. Thus, there are no illegality in submission of Resolution Plan by Corporate Applicant along with M/s WZ Enterprises Pvt. Ltd. the Financial Creditor of the corporate applicant. The Adjudicating Authority committed error in rejecting Application filed under Section 54C and the impugned order is unsustainable - appeal allowed.
Issues Involved:
1. Whether the Application under Section 54C of the Insolvency and Bankruptcy Code, 2016 (IBC) was complete and met all eligibility requirements. 2. Whether the Adjudicating Authority could reject the Application based on the merits of the Base Resolution Plan. 3. Whether the Base Resolution Plan was an attempt to circumvent SEBI Takeover Regulations. Summary: Issue 1: Completeness and Eligibility of Application under Section 54C of IBC The Appellant, a registered MSME, filed an Application for initiation of Pre-Packaged Insolvency Resolution Process (PPIRP) under Section 54C of the IBC. The National Company Law Tribunal (NCLT) Mumbai Bench-1 rejected the Application. The Appellant contended that the Application met all eligibility criteria under Section 54A and was complete in all respects. The Adjudicating Authority had acknowledged the statutory compliance of the Application, including the Corporate Debtor being a registered MSME, approval from Financial Creditors, and submission of necessary declarations and financial statements. Issue 2: Rejection Based on Merits of the Base Resolution Plan The Appellant argued that the Adjudicating Authority committed an error by adjudicating the Base Resolution Plan at the stage of admission under Section 54C, which should only consider the completeness of the Application. The Tribunal noted that the statutory scheme under Chapter III-A of IBC does not contemplate the consideration of the Base Resolution Plan at the admission stage. The approval of the Resolution Plan is within the domain of the Committee of Creditors (CoC) under Section 54K, and the Adjudicating Authority's role is limited to admitting or rejecting the Application based on its completeness. Issue 3: Circumvention of SEBI Takeover Regulations The Adjudicating Authority had rejected the Application on the grounds that the Base Resolution Plan was devised as a mechanism to transfer control to Mr. Ravindra Subhash Salunkhe, circumventing SEBI Takeover Regulations. The Appellant contended that the SEBI Regulations were amended on 31.05.2018 to exempt acquisitions under a Resolution Plan approved under Section 31 of IBC from the obligation under SEBI Takeover Code. The Tribunal found that the Adjudicating Authority did not consider this amendment and erroneously concluded that the Base Resolution Plan aimed to circumvent SEBI regulations. Conclusion The Tribunal concluded that the Adjudicating Authority erred in rejecting the Application under Section 54C by entering into the merits of the Base Resolution Plan, contrary to the statutory scheme of IBC. The Tribunal set aside the order dated 08.11.2023 and directed the Adjudicating Authority to reconsider the Application under Section 54C, sub-section (4) expeditiously, preferably within three months. The Appeal was allowed accordingly.
|
