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2022 (10) TMI 203 - Tri - Insolvency and BankruptcySeeking directions upon the CoC and the RP to forthwith allow the applicant to make EMD of Rs. One Crore and to consider the resolution plan submitted by the applicant - freezing of bank accounts of applicant - HELD THAT - The present situation has arisen mainly because of the plan being submitted without the requisite EMD. Even though the plan has been submitted and even considered by the CoC but was termed as non-compliant primarily due to lack of deposition of the EMD as required. Noting the fact that after initial contentions of exemption, the applicant had offered to deposit the necessary EMD, the present case essentially can be seen as the one seeking for condoning of delay in depositing the Earnest Money. When the CoC had decided not to entertain the plan submitted by the applicant, it is not understood as to why the same was considered and commented on in an off handed manner by the CoC in the 7th meeting. Keeping in mind the main objective of the Code which is the maximization of the value of the Corporate Debtor vis- -vis the facts and circumstances of the case - matter remanded back to CoC and RP to consider the resolution plan submitted by the applicant subject to depositing of required EMD of Rs.One Crore within two days from the date of order. Appeal allowed by way of remand.
Issues:
1. Consideration of exemption for EMD deposit by MSMEs under the Insolvency and Bankruptcy Code. 2. Delay in depositing Earnest Money Deposit (EMD) by the applicant. 3. CoC's refusal to consider the resolution plan due to non-compliance with EMD requirements. 4. Legal provisions and judgments related to MSME exemption from EMD submission. 5. Relief sought by the applicant for reconsideration of the resolution plan by CoC. Analysis: 1. The applicant, an Ex. Promoter of the Corporate Debtor, sought directions to allow EMD deposit and consider the resolution plan. The applicant claimed MSME exemption for EMD submission based on privileges extended to MSMEs in the Indian economy. 2. The applicant submitted the plan within the due date but did not deposit EMD, citing MSME exemption. The CoC refused to consider the plan due to lack of EMD. The applicant later offered to deposit EMD through a third party due to frozen bank accounts. 3. The RP and CoC emphasized the importance of EMD submission for consideration of the resolution plan. The RP represented to CoC that the applicant was ineligible due to non-compliance with EMD requirements. 4. Legal arguments included references to the Swiss Ribbons judgment and NCLAT decisions regarding MSME exemptions from EMD submission. The applicant relied on circulars and judgments supporting EMD exemptions for MSMEs. 5. The Tribunal analyzed the situation, noting the applicant's willingness to deposit EMD and the value of the resolution plan compared to others. The Tribunal reverted the matter to CoC and RP for reconsideration, subject to EMD deposit within two days, condoning the delay in depositing EMD. 6. The Tribunal directed CoC to consider the plan on its merits, without influence from the condoned delay. The order disposed of the application, emphasizing the need for prompt action by CoC and RP without extending the resolution process further. This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive understanding of the legal proceedings and decisions made by the Tribunal.
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