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2021 (3) TMI 1054 - Tri - Companies LawEligibility of promoter to participate in the Resolution Process - an advertisement in Form-G was issued on 17.02.2020 inviting EOI to submit Resolution Plan for the Corporate Debtor - Section 29A of the Code - HELD THAT - It is not in dispute that the Corporate Debtor came within the definition of Medium Enterprise w.e.f 01.07.2020 by virtue of the relevant notification. Thus, the Applicant as the promoter (suspended Director) of the Corporate Debtor becomes a promoter of a Medium Enterprise w.e.f. 01.07.2020. Admittedly, on 01.07.2020 the CIRP had not come to an end. The Notification dated 26.06.2020 became effective within the currency of the CIRP process. The expression at the time of submission of the resolution plan appearing in clause (c) of section 29A of the Code came to be inserted w.e.f. 06.06.2018. The eligibility of a person for taking part in any process or activity within the Code has to be taken into consideration as per the timeline provided in the Code for such activity or participation. Clause (c) provides that the person may be ineligible or otherwise as on the date of submission of the resolution plan . The CIRP in the instant case ordinarily expired on 21.03.2020. IA No. 973 of 2020 for extension (of 116 days) was filed on 18.03.2020. The Applicant was freed from the ineligibility prescribed under Clause (c) of Section 29A w.e.f. 01.07.2020, well within the period of CIRP and within the period when a person/entity could submit Resolution Plan to the CoC of the Corporate Debtor - Application allowed.
Issues Involved:
1. Extension of Corporate Insolvency Resolution Process (CIRP) period. 2. Exclusion of lockdown period from CIRP. 3. Eligibility of the suspended promoter to submit a Resolution Plan under the revised MSME definition. Detailed Analysis: 1. Extension of Corporate Insolvency Resolution Process (CIRP) period: The CIRP of the Corporate Debtor commenced on 23.09.2019, with an initial period of 180 days set to expire on 21.03.2020. Due to various delays, including the late appointment of the Resolution Professional (RP) and the nationwide lockdown, the RP sought an extension of 116 days beyond the initial 180 days. The Tribunal acknowledged the adverse impact of the pandemic on the CIRP and allowed the extension of the CIRP period by 90 days from the date of the order, which includes the extension and exclusion sought by the RP. 2. Exclusion of lockdown period from CIRP: The RP cited the nationwide lockdown due to the Covid-19 outbreak as a significant factor in the delay of the CIRP. The Tribunal referred to the orders of the Hon'ble Supreme Court and the Hon'ble NCLAT, which extended the period of limitation and excluded the lockdown period from the CIRP timeline. Consequently, the Tribunal found it appropriate to exclude the pandemic phase from the CIRP period, thereby allowing the RP's application for exclusion of the lockdown period. 3. Eligibility of the suspended promoter to submit a Resolution Plan under the revised MSME definition: The suspended promoter of the Corporate Debtor sought an extension of 45 days to submit a Resolution Plan, citing the changes in the categorization of MSMEs effective from 01.07.2020. The Tribunal noted that the Corporate Debtor came within the definition of Medium Enterprise from 01.07.2020, and Section 240A of the Code exempts MSMEs from certain ineligibility criteria under Section 29A. The Tribunal held that the promoter became eligible to submit a Resolution Plan from 01.07.2020, within the ongoing CIRP period. Therefore, the Tribunal allowed the promoter to submit a Resolution Plan within 30 days from the date of the order, with the CoC to consider the plan if submitted within the stipulated time. Order: - IA No. 973 of 2020 and IA No. 1504 of 2020 are allowed, extending the CIRP period by 90 days from the date of the order. - IA No. 1306 of 2020 is allowed, permitting the promoter to submit a Resolution Plan within 30 days. The CoC shall consider the plan in accordance with the law. No order as to costs.
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