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TMI Blog2020 (2) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... evelopment (MSMED) Act, 2006 mat is applicable to the facts on hand. Section 8 states, any person who intends to establish micro or small enterprises is given discretion to file memorandum of Micro Small Enterprise with such authority as may be specified by the State Government under sub-section 4 of section 8 or the Central Government under sub-section (3) of section 8. A similar discretion is also given to medium enterprises engaged in providing or rendering services, whereas a medium enterprise engaged in manufacture production of goods is not given such discretion to file memorandum of enterprises with the prescribed authority is under sub-section (3) or sub-section 4 of section 8 - The proviso to section 8(1) also says that a small scale industry that obtained a registration certificate may also at his discretion, file memorandum, even it is i established before the commencement of MSME Development Act, 2006. The proviso (b) says, an industry engaged in the manufacturer or production of goods pertaining to any industry specified in the Fist Schedule to the Industries (Development and Regulation) Act, 1951 having investment in plant and machinery of more than one crore rup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roj Rajware, Technical Member Ms. Gunjan Jadwani, Adv. for the Applicant. Saurabh Basu, Adv. for the Respondent. ORDER Saroj Rajware, This application (CA No.259/2018) is filed by the Promoter, Director of M/s Varanasi Auto Sales (hereinafter called as Corporate Debtor) U/s 60(5) read with section 20(2)(e) of the Insolvency Bankruptcy Code, 2016 read with rule II of NCLT Rules, seeking certain directions to the Resolution Professional to conduct the Corporate Insolvency Resolution Process (CIRP) in accordance with the provision of I B Code. 2. The facts in brief that are germane for the disposal of this application are as follows. i. Corporate Debtor is undergoing CIRP, by virtue of an order passed by this Adjudicating Authority on 26.04.2018 on the basis of a petition filed by the Corporate Debtor/Corporate Applicant U/s 10 of the IBC. ii. Applicant averred in the application that the Resolution Professional (RP) is not conducting the CIRP in accordance with the provisions of IBC. Some of the instances stated by the applicant are as follows :- (a) That the eligibility criteria and terms and conditions stipulated in the invitation seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of MSMEs vide Report March, 2018 and recommended that since usually only promoters of an MSMEs are likely to be interested in acquiring it, applicability of section 29A has been restricted only to disqualify wilful defaulters from bidding for MSMEs. It is submitted that the Resolution professional has failed to incorporate the exclusion provided under section 240A of the IB Code, 2016 and thus, it is for this reason as well as EOI floated is defective and needs to be floated again with requisite amendments. (f) That the Annexure F- Undertaking for No Disqualification under section 29A of the IBC of EOI does not have the exclusion as per section 240A of the IB Code, 2016. Hence, the said undertaking is stipulated under Annexure F is defective and not in accordance of the provision of IB Code, 2016. (g) it is submitted that the EOI floated is defective and not in accordance with the provision of IB Code, 2016. It is for these reasons that the Applicant crave leave of this Hon'ble Tribunal to direct the Resolution Professional to revise the EOI in the light of the aforementioned submissions and float the revised EOI accordingly. iii. It is further stated that applicant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CP No.(IB)64/ALD/2017 was filed U/s 10 of the IBC by the Corporate Debtor himself. It is stated that the sole business of the Corporate Debtor was to act as a dealer of TATA Motors Limited and it was terminated. It is denied that the Corporate Debtor is having more than 80 employees. 6. It is stated that the applicant is frivolously claiming that Corporate Debtor comes under the category of MSME without any supporting registration details. It is stated that on the last day for submission of E.O.I i.e. on 18.08.2018 at 12:00 noon, email was sent sent by the applicant at 11.58 which is as follows :- Dear Mr. Yogesh, I, Amit Gupta s/o Late Mr. Jag Mohan Gupta is interested to bid for resolution of M/s Varanasi Auto Sales Limited. Kindly enlist my name for the same. Thanking you, With Regards , The said email has got attachments of PAN card and Income Tax Returns of three years. According to the RP, the said email letter is not in accordance with the requirements of documents for submission of Expression of Interest and such deficiency was intimated to the applicant. 7. RP denied the allegation that the objections and suggestions of the members of Committee of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor is MSME and therefore section 29A of the IBC is not applicable in view of section 240A of the IBC. Section 29A of the IBC deals with, Persons not eligible to be Resolution Applicant. Section 240A exempts Micro, Small and Medium Enterprises from the purview of clause (c) (h) of section 29A. It is the contention of the applicant that the Corporate Debtor is a MSME. 13. Section 7 of the MSME Development Act, 2006 deals with classification of enterprises. section 7(1)(a) deals with enterprises engaged in the manufacturer or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951. section 7(1)(b) deals with enterprises engaged in providing or rendering of services. The Corporate Debtor in the case on hand, is engaged in providing or rendering of services. Therefore, it is section 7(1)(b) of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 mat is applicable to the facts on hand. 14. Section 8 of the Act reads as follows :- 8. Memorandum of micro, small and medium enterprises.- (1) Any person who intends to establish,- (a) a micro or small enterprise, may, at his discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government under sub-section (3) of section 8. A similar discretion is also given to medium enterprises engaged in providing or rendering services, whereas a medium enterprise engaged in manufacture production of goods is not given such discretion to file memorandum of enterprises with the prescribed authority is under sub-section (3) or sub-section 4 of section 8. 16. The proviso to section 8(1) also says that a small scale industry that obtained a registration certificate may also at his discretion, file memorandum, even it is i established before the commencement of MSME Development Act, 2006. The proviso (b) says, an industry engaged in the manufacturer or production of goods pertaining to any industry specified in the Fist Schedule to the Industries (Development and Regulation) Act, 1951 having investment in plant and machinery of more than one crore rupees but not exceeding ten crore rupees and, in pursuance of a notification of the Government of India in the erstwhile Ministry of Industry (Department of Industrial Development) within 180 days from the commencement of this Act, file the memorandum, in accordance with the provisions of MSME Act. 17. The contention of lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire, Applicant raised such issue without bringing concrete Resolution plan before CoC. 21. In view of the finding that, applicant is not able to establish that corporate debtor comes under the MSME, It cannot urge that it is within the knowledge of the RP that the Corporate Debtor is MSME. Moreover, applicant even in its email dated 18.08.2018 did not state that it is MSME Even thereafter, applicant did not bring to the notice of the RP that it is MSME. Moreover, it is not on the ground that applicant is disqualified U/s 29A, its offer to bid for resolution of the Corporate Debtor is rejected. The RP did not act upon the email dated 18.08.2018 issued by the applicant on the ground that the requirements of documents for submission of expression of interest have not been furnished inspite of such deficiencies were intimated to the applicant. 22. Therefore, the averment of the applicant that expression of interest issued by the applicant without mentioning the exemption U/s 240A of the IBC cannot be taken as a ground to ask the RP to treat the Corporate Applicant as a prospective Resolution Applicant, unless and until it is established that applicant being a Promoter Director ..... X X X X Extracts X X X X X X X X Extracts X X X X
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