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TMI Blog2021 (2) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... lution plan to itself i.e. for Bhandari Deepak Industries Private Limited. This is not permissible under the Scheme of I B Code, 2016. The applicant has not disputed the fact of submission of EOI by the corporate debtor itself, i.e. Bhandari Deepak Industries Private Limited itself, and not by its promoters, i.e. Mr. Deepak Bhandari and Mrs. Anita Bhandari. It is also not the case of the applicant at any stage that submitting the EOI on behalf of the corporate debtor Bhandari Deepak Industries Private Limited was a mistake and that the actual persons submitting the EOI were Mr. Deepak Bhandari and Mrs. Anita Bhandari, the promoters of the corporate debtor. Once a CP is admitted, the corporate debtor is to be represented by the RP alone and none else such as Suspended Directors of the Board of the corporate debtor. Therefore, we do not find any illegality in the RP rejecting the EOI submitted on behalf of the corporate debtor, M/s Bhandari Deepak Industries Private Limited itself. Admittedly, the corporate debtor Bhandari Deepak Industries Private Limited is an undischarged insolvent and an undischarged insolvent is ineligible to be the resolution applicant under Clause (a) of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or CP) Regulations, 2016, the RP published Form G dated 02.02.2020 inviting EOI from the prospective resolution applicants. The applicant being promoter of an Enterprise categorized under Micro, Small and Medium Enterprises (MSME) pursuant to publication of Form G submitted its EOI vide e-mail dated 22.02.2020 (Annexure A-5). The first respondent-RP vide e-mail dated 24.02.2020 rejected the EOI submitted by the applicant by giving certain reasons (Annexure A-6). The applicant vide e-mail dated 26.02.2020 clarified the queries or concerns of the first respondent/RP and provided the certificate issued by the Joint Director of Industries, Baddi (Annexure A-7). It is averred that inspite of the same and inspite of the subsequent e-mails/clarifications submitted by the applicant, the first respondent/RP illegally rejected the EOI of the applicant. Hence, the IA. 4. Heard Mr. Anand Chhibbar, the learned senior counsel for the applicant, Mr. Arora Vishwas Kumar, the learned counsel for respondent No.1/RP and Ms. Parmeet Kaur, the learned counsel for the respondent No. 2-Canara Bank and perused the pleadings on record. 5. It is the case of the applicant that the corporate debtor is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares or instruments convertible into equity shares, prior to the insolvency commencement date. Explanation II - For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority under this Code; d) has been convicted for any offence punishable with imprisonment (i) for two years or more under any Act specified under the Twelfth Schedule; or (ii) for seven years or more under any law for the time being in force: Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I; e) is disqualified to ac ..... 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Provided further that the expression related party shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date; Explanation II-For the purposes of this section, financial entity shall mean the following entities which meet such criteria or conditions as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:- (a) a scheduled bank; (b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding; (c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classes of enterprises classified as such under sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).] 7. The impugned Annexure A-6 e-mail dated 24.02.2020 whereunder the first respondent/RP rejected the EOI of the applicant reads as under:- YOUR EXPRESSION OF INTEREST TO SUBMIT THE RESOLUTION PLAN FOR BHANDARI DEEPAK INDUSTRIES PRIVATE LIMITED, HAS BEEN REJECTED FOR THE FOLLOWING REASONS: A. On preliminary scrutiny of your expression of interest, it is observed that the expression of interest has been submitted on behalf of Bhandari Deepak Industries Private Limited that is the corporate debtor and you have signed it as Suspended Director of the same. Please be informed that as per Section 17 of the Insolvency Bankruptcy Code, 2016 (as amended to date), the powers of the Board of Directors of the corporate debtor are suspended and are now exercised by the undersigned Resolution Professional. It is further submitted for your information that only the Resolution Professional can act and execute in the name and on behalf of the Corporate Debtor (i.e. Bhandari Deepak Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmit resolution plan. This is for your information please. Please note that your objections, if any must reach the undersigned on or before the date specified for the same in the Form G. 8. It is clear that the first reason given by the RP for rejection of the EOI submitted by the applicant is that the EOI was not submitted by the applicant in his individual capacity as a promoter of the corporate debtor, but the same was submitted on behalf of the corporate debtor M/s Bhandari Deepak Industries Private limited. Clauses (c) and (h) of Section 29A disentitles a promoter of a corporate debtor to be a resolution applicant of the same corporate debtor. Section 240A exempts the applicability of the disqualifications under Clauses (c) and (h) of Section 29A. That means Section 240A exempted the promoters of the MSME to be the resolution applicants of the same corporate debtor for which the resolution plans are sought to be invited. Section 240A has not exempted the corporate debtor itself, even though it happens to be an MSME, to be a resolution applicant to itself. In the present case, M/s Bhandari Deepak Industries Private Limited which is the corporate debtor itself submit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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