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2021 (6) TMI 1076 - Tri - Companies LawRejection of the Resolution Plan by the Resolution Professional - HELD THAT - A perusal of the MSME Certificate attached with the typed set filed by the Respondent would go on to show that the said Certificate was only obtained on 19.12.2020. Thus, it can be seen that the Applicant is trying to play a fraud upon this Tribunal, in order to gain backdoor entry to the assets of the Corporate Debtor in the guise of projecting themselves as MSME. Further, section 240A of the IBC, 2016 exempts applicability of only section 29A(c) and 29A(h) in terms of eligibility to be a resolution applicant as a medium level enterprise under MSME Development Act, 2006. In the present case, the Applicant suffers disqualification under Section 29A(e) and unfortunately, such a protection is not being granted to the Applicant/Corporate Debtor, under Section 240A of IBC, 2016 who claims themselves to be an MSME. In any case, the Applicant suffers disqualification under Section 29A(e) of IBC, 2016. The Applicant, being the Promoter/suspended Director of the Corporate Debtor is trying to stall the process of CIRP on the guise of projecting themselves as MSME and thereby trying to gain a backdoor entry to the assets of the Corporate Debtor. This Adjudicating Authority is of the considered view that the Respondent was right in rejecting the Application of the Applicant for the Resolution Plan - Application dismissed.
Issues:
1. Early listing of an Application seeking relief for rejection of a Resolution Plan. 2. Eligibility of a promoter/suspended Director as a resolution applicant. 3. Rejection of Resolution Plan based on eligibility criteria and disqualification under Companies Act, 2013. 4. Claim of MSME status by the Applicant and its impact on eligibility as a resolution applicant. 5. Allegations of fraudulent representation by the Applicant to gain entry to assets of the Corporate Debtor. Issue 1: Early listing of Application seeking relief for rejection of Resolution Plan The Applicant sought early listing of an Application to address the rejection of the Resolution Plan. However, the Tribunal noted that the timing of the hearing had made this prayer irrelevant as the matter was already scheduled for a later date, rendering the request infructuous. Issue 2: Eligibility of a promoter/suspended Director as a resolution applicant The Resolution Professional (RP) rejected the Resolution Plan submitted by the Applicant, citing non-compliance with minimum eligibility criteria. The Applicant failed to meet the prescribed net worth requirement and was disqualified as a Director under the Companies Act, 2013. The Committee of Creditors (CoC) set specific criteria for prospective Resolution Applicants, leading to the rejection of the Applicant's plan. Issue 3: Rejection of Resolution Plan based on eligibility criteria and disqualification under Companies Act, 2013 Despite the Applicant's responses to the RP's objections, including promises to rectify the deficiencies, the RP upheld the rejection of the Resolution Plan on grounds of non-compliance with eligibility norms. The Applicant's failure to provide documentation to address disqualification under the Companies Act, 2013, further solidified the rejection. Issue 4: Claim of MSME status by the Applicant and its impact on eligibility as a resolution applicant The Applicant claimed MSME status to circumvent disqualification under specific sections of the Insolvency and Bankruptcy Code. However, the Tribunal found the Applicant's attempt to obtain MSME status post-initiation of Corporate Insolvency Resolution Process (CIRP) as a fraudulent tactic to gain undue advantage, as the protection under Section 240A did not extend to the disqualification faced by the Applicant. Issue 5: Allegations of fraudulent representation by the Applicant to gain entry to assets of the Corporate Debtor The Respondent accused the Applicant of attempting to manipulate the CIRP process by falsely claiming MSME status. The Tribunal, citing legal precedents, dismissed the Applicant's claims and upheld the rejection of the Resolution Plan, concluding that the Applicant's actions aimed at gaining unauthorized access to the Corporate Debtor's assets were unjustifiable. The Tribunal dismissed the Applications seeking relief, emphasizing the lack of legal grounds for interference. This detailed analysis of the judgment highlights the key legal issues addressed by the Tribunal concerning the rejection of the Resolution Plan and the Applicant's attempts to challenge the decision based on eligibility criteria, disqualification, and alleged fraudulent representation.
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