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2023 (12) TMI 1255 - SC - Insolvency and Bankruptcy


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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