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2023 (12) TMI 1255 - SC - Insolvency and BankruptcyQualification of Resolution Applicant - Promotor of the company - Application for Resolution Plan dismissed on the ground that the promoters could not have presented the plan - ineligibility to continue as a Resolution Professional - ineligibility to be considered as Board is liquidator of the corporate debtor - whether the appellant had erred in putting up a plan that was not in consonance with law for consideration of the adjudicating authority? HELD THAT - As per the factual scenario on record, there is no per say disqualification under Section 29A - it is pointed out that the plea based on Section 240A needs the opinion of this Court as there are a number of such cases arising and the orders earlier passed are being followed. The common submission thus, is that while interpreting Section 240A, the reason for carving out an exception in micro, small and medium industries is set out on the date of application for making the bid as the crucial date. The submission is that while for some other aspects the initiation of the CIRP proceedings would be the cut off date, the same would not apply in the case of Section 240A, in view of the statement by the Minister themselves while introducing the amendment Bill. The statement of the Minister is looked into for purposes of a cut off date that there is no other specific provision providing for cut off date which submits that it should be the date of application of making a bid. Thus, to opine that it is the initiation of the CIRP proceedings which is the relevant date, cannot be said to reflect the correct legal view and thus, it is constrained to observe that the law laid down in DIGAMBAR ANANDRAO PINGLE VERSUS SHRIKANT MADANLAL ZAWAR, SHRIKANT MADANLAL ZAWAR, VANDANA GARG LIQUIDATOR M/S PINGLE BUILDERS PVT. LTD., STATE BANK OF INDIA, VIJAYA BANK, M/S SOORAJMULL BAIJNATH PVT. LTD. 2021 (7) TMI 456 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI case by the Tribunal is not the correct position in law and the cut off date will be the date of submission of resolution plan - Thus, even on this count, the plan submitted in question will not incur the disqualification. The petition before the Adjudicating Authority would stand restored to National Company Law Tribunal for reconsideration
Issues Involved:
1. Eligibility of the resolution applicant under Section 29A of the Insolvency and Bankruptcy Code, 2016. 2. Applicability of MSME status under Section 240A of the Code. Summary: Issue 1: Eligibility under Section 29A of the Code The Supreme Court examined whether the resolution applicant was disqualified under the primary conditions specified under Section 29A of the Insolvency and Bankruptcy Code, 2016. The Court reviewed clauses (c), (g), and (h) of Section 29A, which apply to promoters and guarantors. It was found that: - Clause (c) was inapplicable as there were no bank dues or outstanding amounts that would classify the account as a non-performing asset (NPA). - Clause (g) was irrelevant as no order had been passed by the adjudicating authority regarding any identified preferential transaction. - Clause (h) did not apply to the given scenario. Thus, the promoter of the company was not disqualified under Section 29A from presenting the resolution plan. Issue 2: Applicability of MSME Status under Section 240A of the Code The Court addressed whether the corporate debtor's lack of MSME status at the commencement of CIRP proceedings disqualified the resolution applicant under Section 29A. The Court referred to Section 240A, which exempts MSMEs from the disqualifications under clauses (c) and (h) of Section 29A. The Court emphasized that the "notwithstanding clause" in Section 240A indicates that the disqualification should not be incurred if the MSME certificate is obtained before the submission of the resolution plan. The Court found that the correct legal view is that the relevant date for MSME status is the date of submission of the resolution plan, not the initiation of CIRP proceedings. Conclusion: The Supreme Court set aside the impugned orders of the NCLT dated 28.02.2023 and NCLAT dated 02.06.2023, allowing the appeal. The Court held that the resolution applicant was not disqualified under Section 29A, and the MSME status could be considered at the time of submission of the resolution plan. The case was remanded to the National Company Law Tribunal for reconsideration, and any consequential actions taken by the IBBI against the appellant were nullified.
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