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2021 (7) TMI 456 - AT - Insolvency and BankruptcyLiquidation of Corporate Debtor - it is submitted by the respondent that the Corporate Debtor was not an MSME and during the pendency of the CIRP, Appellant procured the MSME Certificate without authority, copy of which has been filed in the Appeal - HELD THAT - Although the Appellant heavily banked upon his efforts made to settle with the Operational Creditor and also with other creditors so as to bring about the withdrawal under Section 12(A) of IBC and also relied heavily on his efforts to show that the Appellant was trying to bring through a resolution plan filed by him and his resolution plan was required to be accepted, fact remains that the record does not show that Resolution Plan, as such of the Appellant, was approved by CoC by any given majority. Section 9 application was admitted on 19th July, 2018 and Liquidation order passed by the Adjudicating Authority on 11th December, 2020. This is more than two years of time. Clearly, if in the time prescribed under Section 12 of IBC resolution was not reached in the given time, liquidation is the only consequence which had to follow and which has been ordered though belatedly. There is yet another factor which is relevant and it is found that the Appellant has obtained Annexure-A-3 an MSME Certificate for which application had been made on 5th March, 2019. Clearly, CIRP with regard to the Corporate Debtor started on 19th July, 2018 and on 5th March, 2019 the Corporate Debtor was under the management of IRP/RP - After CIRP was initiated former Promoter/ Director cannot suppress from IRP/RP and apply for MSME Certificate and tide over ineligibility under Section 29A of the IBC. The Appeal is disposed of.
Issues:
Appeal against liquidation order, rejection of resolution plan, applicability of Section 29A of IBC, allegations against ex-promoter, MSME status, pending application under Sections 43, 66, and 65 of IBC. Analysis: 1. The appeal was filed against the order directing liquidation of the Corporate Debtor and rejecting the appellant's resolution plan, claiming the Corporate Debtor's MSME status and the appellant's eligibility to file a resolution plan. 2. The appellant detailed the initiation of CIRP, efforts to settle under Section 12(A) of IBC, and submission of a resolution plan, which was ultimately objected to by the Resolution Professional. 3. The Adjudicating Authority observed that the appellant was hit by Section 29A of IBC due to fraudulent transactions and failure to pay amounts promised earlier, leading to liquidation proceedings. 4. The appellant contended that the liquidation order was premature, as an application under Sections 43, 66, and 65 of IBC was pending, challenging the observations made under Section 29A. 5. The tribunal acknowledged the appellant's settlement efforts but noted the lack of CoC approval for the resolution plan within the prescribed time, leading to the liquidation order. 6. The tribunal addressed the appellant's MSME certificate obtained during CIRP without IRP/RP consent, citing the need to prevent backdoor entries post-CIRP initiation. 7. The tribunal disregarded the observations under Section 29A, emphasizing the pending application's formal decision and rejected the claim of MSME status, declining to direct the Liquidator based on the appellant's assertions. 8. The appeal was disposed of without setting aside the impugned order, emphasizing the need for a formal decision on the pending application and ignoring baseless allegations against the Resolution Professional.
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