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TMI Blog2020 (2) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... nsolvency and Bankruptcy Code, 2016 (IBC - in short) on behalf of the Corporate Debtor as Applicant on the basis of Board Resolution and the Application under section 10 was admitted by the Adjudicating Authority on 26th April, 2018. After initiation of the CIRP process, Respondent - Resolution Professional issued (Annexure A-3) "Invitation for Expression of Interest and Submission of Resolution Plan" with regard to the Corporate Debtor. The invitation specified last date to submit EOI by 12 Noon of 18.08.2018. It is stated for the Appellant that the Appellant sent e-mail dated 18.08.2018 (Annexure A-9 - Page 135) to the Resolution Professional. The contents of which read as under:-
"Amit Gupta X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent on the last date of submitting EOI. The Resolution Professional stated in the Affidavit that the e-mail was received at 11:50:58 on 18th August, 2018. (Although Respondent stated this in the Affidavit, the copy of e-mail filed at Annexure A-9 Page - 135 filed by the Appellant himself shows the date and time of the e-mail to be "Sat, Aug 18,2018 at 12:07 PM"). The Resolution Professional claimed before the Adjudicating Authority that the e-mail had only attached copy of PAN Card and Income Tax Returns for the 3 years and the same was not in accordance with the requirements of document for submission of expression of interest and such deficiencies were informed to the Appellant. The other averments made against the Resolution Professional were also resisted including the claim that there were employees in the Company. Respondent claimed that the Corporate Debtor had only the Agency of Tata Motors which also was terminated in August, 2017, for which documents were filed. 6. Before Adjudicating Authority, the Appellant filed Rejoinder Affidavit (Annexure A-5 - Page 118) and additional Affidavit (Annexure A-6 - Page 124). In the Affidavit given, the Appellant tried to refer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above), the Adjudicating Authority in the Impugned Order analysed section 7 and 8 of MSME Act. It may be recalled that the Appellant himself in the CA 259 of 2018 relied on sections 7 and also section 8 of MSME Act to claim that section 8 had given option to the existing enterprise if it was micro or small enterprise to submit memorandum under section 8, when the Act came into force. The Adjudicating Authority observed in Para - 18 of Impugned Order:- "If the person who established the enterprises, is not exercised the option of filing the memorandum with the specified authority under sub-section (3) or (4) of section 8, then the person who is running the enterprises, is not entitled for the benefits under the MSME Act."' 9. Adjudicating Authority then referred to the acknowledgement which had been filed and reproduced note from the acknowledgement issued by the Authority under MSME that,- "Issue of this acknowledgement does not confer any legal right. It is mandatory for the entrepreneur to obtain No Objection/License/Permit required under legal obligation under the laws of Central Government/State Government /Administrators of UT/Court Orders." On this basis, the Adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at matter were referred to arbitration. The reference was made in terms of provisions of section 18 of MSME Act. RIL assailed the decision of the Council to make a reference claiming that at the material time, GCIL was not registered under the MSME Act and was not a supplier as defined under section 2(n) of the said Act and so the Council had no jurisdiction to refer the subject to the arbitration. In Para - 26, Hon'ble High Court observed as under:- "26. As noticed above, there is no dispute that GCIL would fall within the definition of micro/small enterprise even at the material time when it had executed the contract with RIL. GCIL is a company and the services provided by GCIL are clearly services rendered by a micro/small enterprise and, therefore, GCIL - being engaged in supply of services rendered by a micro/small enterprise - would fall within the fourth category of entities that are included as a 'supplier': that is, a company, co-operative society, trust or a body engaged in selling goods produced by micro or small enterprises or rendering services provided by such enterprises. It is not necessary for such entities to have filed the Memorandum under section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded. Explanation 2.-It is clarified that the provisions of section 29B of the Industries (Development and Regulation) Act, 1951 (65 of 1951), shall be applicable to the enterprises specified in sub-clauses (i) and (ii) of clause (a) of sub-section (1) of this section. (2) The Central Government shall, by notification, constitute an Advisory Committee consisting of the following members, namely:- (a) the Secretary to the Government of India in the Ministry or Department of the Central Government having administrative control of the small and medium enterprises who shall be the Chairperson, ex officio; (b) not more than five officers of the Central Government possessing necessary expertise in matters relating to micro, small and medium enterprises, members, ex officio; (c) not more than three representatives of the State Governments, members, ex officio; and (d) one representative each of the associations of micro, small and medium enterprises, members, ex officio. (3) The Member-Secretary of the Board shall also be the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Industries (Development & Regulation) Act, 1951, Central Government has powers to exempt any industrial undertaking in public interest from applying all or any of the provision of that Act, subject to conditions as it may think fit. The learned Counsel for the Appellant has not been able to show us as to how Resolution Professional when he receives expression of interest could be expected to go into accounts and other factors or facts and go into Notifications to apply law and hold under which classification an applicant would or not fall. It is not shown how Resolution Professional with time bound milestones fixed in IBC can decide if or not the Corporate Debtor fits into classifications under section 7 or is not covered by MSME Act at all. The Appellant pointed out an old acknowledgement of submission of Form to the concerned Authority under MSME on 30th March, 2009 but has not shown what happened thereafter. Counsel for the Resolution Professional at the time of arguments referred to Memorandum Certificates being issued by the authorities under MSME Act which clearly record the name of the concerned enterprise including whether it was in manufacturing, services or it was micr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, 2018 (Annexure A-9) from the Appellant at 11:50:58 hours, the document filed by the Appellant himself shows that it was received/sent after 12 o' clock. In terms of Clause - 6 of Regulation 36-A, even if such e-mail was to be categorized as an expression of interest, it would require to be rejected. Apart from this, if Sub-Clause - 7 of Regulation 36-A is seen, it requires that the expression of interest shall be unconditional and should be accompanied by undertakings, records, information as specified in Sub-Clauses 'a' to 'g'. One of the requirements for the prospective Resolution Applicant is giving undertaking that it meets the criteria specified by the Committee under Clause 'h' Sub-section (2) of section 25. We have already reproduced the e-mail dated 18th August, 2018. It can hardly be said to be complying with any of the requirements as provided under IBC. No doubt the RP sent the Appellant e-mail (Annexure A-10) that the COC had discussed and found the e-mail not to be in conformity with the requirements asked for and also the provisions of IBC. We have gone through the expression of interest (Annexure A-3), it is apparent that the requireme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification etc. applies. Under sections of MSME Act, even if getting Memorandum Certificated for a given enterprise may be optional, if advantage is to be taken of MSME Act, the Applicant must take pains to get the Memorandum Certificate to seek benefits under IBC. 19. The learned Counsel for the Appellant relied on the Judgement in the case of Saravana Global Holdings Ltd. v. Bafna Pharmaceuticals Ltd. [2019] 108 taxmann.com 358/155 SCL 240 (NCL - AT) to submit that in that matter benefit was given to the Corporate Debtor when it was claimed that it was MSME. If para 8 and para 19 of that Judgement are seen, the Resolution Professional in that matter had confirmed that the Resolution Applicant therein was an MSME and was eligible under section 29-A of IBC. That being not the case in present matter and there being disputes of facts being raised, the Appellant cannot take benefit of the said Judgement. 20. When this Appeal was filed, and the Appellant claimed that the Corporate Debtor was MSME by Interim Order dated 3rd September, 2019, this Tribunal had directed that during the pendency of the Appeal, the Order will not come in the way of Appellant submitting a Resolution Plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was against the provisions of law. This also, we find was subsequent to 6th June, 2018 when Sub-section (3) of section 10 of IBC was substituted and Clause 'c' came to be added. By this amendment to move Application under section 10, the Corporate Debtor was now required to file special Resolution passed by shareholders of the Corporate Debtor or Resolution passed by at least 3/4th of the total partners of the Corporate Debtor, as the case may be, approving filing of the Application. This Tribunal has already observed in the matter of Umesh Aggarwal v. Ricoh India Ltd. in Company Appeal (AT) (Insolvency) No. 621 of 2018 in para - 11 where it was observed:- "11. We have already noticed that the prior approval of the shareholders in the AGM has been substituted by the amendment made on 6th June, 2018, which is not applicable in the present case as it was admitted earlier in May, 2018." 22. Under the statutory law, the requirement to get a special Resolution passed by AGM or EGM was provided on 6th June, 2018 in section 10 of IBC vide Second Amendment Act, 2018 and thus, we do not find that the admitting of proceedings under section 10 in the present matter on 26th Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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