This case pertains to the precedence and priority of ...

Insolvency Code Clash: Tribunal Error on Application Precedence Between Section 54C and Section 7 Under IBC.

October 11, 2024

Case Laws     IBC     AT

This case pertains to the precedence and priority of consideration between an application filed u/s 54(C) and Section 7 of the Insolvency and Bankruptcy Code (IBC) against the same Corporate Debtor. The key points are: Section 11A(2) mandates precedence to an application u/s 54C if already pending, or if filed within 14 days of a Section 7/9/10 application. However, Section 11A(3) provides an exception, giving precedence to Section 7/9/10 applications if the Section 54C application is filed after 14 days. Crucially, Section 11A(4) states that Section 11A shall not apply where a Section 7/9/10 application was filed and pending before the commencement of the IBC (Amendment) Act, 2021. In the present case, the Section 7 application was filed on 09.12.2020, before the 2021 Amendment on 04.04.2021, while the Section 54C application was filed much later on 04.09.2022. Thus, Section 11A(4) applies, and the Tribunal erred in giving precedence to the Section 54C application over the earlier Section 7 application. Consequently, the order initiating PPIRP based on.

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