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TMI Blog2021 (6) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... d facts of the above I.A are concerned. 3. Learned Counsel for the Appellant submitted that the Corporate Debtor filed Application under Section 10 of Insolvency and Bankruptcy Code (IBC) and the Application was admitted by the Adjudicating Authority on 11.01.2018. 4. By virtue of admission the Adjudicating Authority appointed IRP and the IRP taken over the charge and conducted the proceedings. While so the IRP issued Expression of Interest (EOI) on 15.02.2018 and only one application received from M/s Growfast Global. However, they have not filed any Resolution Plan to the EOI. Thereupon the Second EOI was issued on 09.08.2018 and in pursuance thereof one M/s Indsur Gears Ltd. filed application along with other applicants. However, none of the Prospective Resolution Applicant(PRA) submitted a Resolution Plan. In view of the situation in 7th CoC held on 26.10.2018 a Resolution was passed for Liquidation of the Corporate Debtor by approving 97.37% of the Voting Share. 5. The RP filed I.A No. 461 of 2018 for liquidation of the Corporate Debtor and the Adjudicating Authority passed order liquidating the Corporate Debtor on 28.08.2019. 6. The Learned Counsel submitted that the RP a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated the Corporate Debtor was not falling in the criteria/classification of MSME. The amendment came during the liquidation process. 12. Learned Counsel submitted that the Hon'ble NCLT, grossly misunderstood the entire Application on the presumption that the Appellants have sought any relief on the basis of retrospective implementation of the notification dated 01.06.2020. On the contrary, the Appellants have sought implementation of the notification only prospectively knowing very well that the notification dated 01.06.2020 is effective prospectively and not retrospectively. 13. Learned Counsel submitted that the Hon'ble Adjudicating Authority failed to take into notice the Written Submissions dated 28.09.2020 in which the Appellants had very much clarified its case precisely and also given the gist of the arguments in its concluding portion of the Written Submissions. 14. Learned Counsel further submitted that the case of the Appellants is simple that at the time of filing the Application by the Corporate Debtor under Section 10 of the IBC on 11.01.2018 there was no restriction on the promoter to give the Resolution Plan and there is no restriction under Section 230 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in both the Judgments held that "Preamble of the Code provide that liquidation is the last resort and it is duty of the RP/liquidator to explore all possibilities to keep the unit as going concern and take steps for revival within the ambit of the Code and liquidation of assets per- se would only be resorted if these steps are not possible." 21. Learned Counsel relied upon the Judgment of this Tribunal in the matter of 'S.C. Sekaran vs Amit Gupta & Ors.', Appeal No. 495 & 496 of 2018' and in the matter of 'Siva Rama Krishna Prasad vs S Rajendra, Official Liquidator of M/s Krishna Industrial Corporation Ltd. & Ors.', Appeal No. 751 & 752 of 2020'and in the matter of 'Y Shivram Prasad vs S. Dhanapal & Ors.' Company Appeal (AT) (Ins) No. 224 of 2018 dated 27.02.2019has observed that even after pushing the Corporate Debtor into liquidation, Promoter/Ex- Director of the Corporate Debtor can take recourse to Section 230 of the Companies Act, 2013 by submitting a scheme for revival of the Corporate Debtor, subject of course to eligibility of the applicant. 22. In view of the facts of law the Learned Counsel prayed this Bench to allow the Appeal by setting aside the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal of Rs. 1,54,50,000/-(One crore fifty four lakh and fifty thousand) being highest amongst all the bidders and the same was accepted and approved by the liquidator. The Successful Bidder has paid 25% of the bid amount and the balance amount is to be paid on or before 30.03.2021 and after receipt of total sale consideration, the sale certificate shall be issued in favour of the Successful bidder. 28. Heard the Learned Counsel appearing for the Respective parties, perused the pleadings, documents and Citations relied upon by them. 29. The Learned Adjudicating Authority vide its impugned order dated 15.10.2020 observed that the Appellant was not an MSME as on the date of filing of Application under Section 10 of the IBC and does not fall under the criteria MSME. The relevant Paragraph 21 of the impugned order is reproduced here under: "21) Under the facts and circumstances, as discussed herein above, the Corporate Debtor at this stage cannot claim to be fall under the classification of MSME and take the benefit of MSME, in view of amendment vide notification issued on 01.06.2020, w.e.f. 01.07.2020, by having its retrospective effect when admittedly on the date of filing appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Adjudicating Authority. 33. However, the Government of India, issued notification dated 06.01.2020. Whereby an amendment was made in Regulation 2B of IBBI Regulations, 2016 by virtue of which the Appellant became in eligible to submit a scheme in the liquidation process of the Corporate Debtor. 34. It is an admitted fact that the Appellant/Promoters are not eligible to file even a scheme of arrangement under Section 230 of the Companies Act, 2013 by virtue of above notification issued by the Government of India. It is also an admitted fact that the Corporate Debtor do not fall under the category of MSME and therefore, the promoter cannot file Resolution Plan in the CIRP Process. 35. Subsequently, the Government of India vide notification dated 01.06.2020 has carried out certain changes in criteria for classification of Micro, Small and Medium Enterprises. 36. As per Section 7 of Micro, Small and Medium Enterprises Development Act,2006 the classification was as under: "7. Classification of enterprises.- (1) "Notwithstanding anything contained in section 11B of the Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central Government may, for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of the powers conferred by subsection (1) read with sub-section (9) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) and in supersession of the notification of the Government of India, Ministry of Small Scale Industries, dated the 29th September, 2006, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub- section (ii), vide S.O. 1642 (E), dated the 30th September 2006 except as respects things done or omitted to be done before such supersession, the Central Government, hereby notifies the following criteria for classification of micro, small and medium enterprises, namely:- (i) a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees; (ii) a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; (iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turn over does not exceed two hundred and fifty crore rupees. This notification shall come i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notification is with effect from 01.07.2020. It is an admitted fact that the Corporate Debtor pursuant to the said notification dated 01.06.2020 is eligible to file a scheme since it has qualified to be an MSME. We are of the view that since the liquidation process is still pending and during the pendency of the liquidation the Government of India issued notification dated01.06.2020 by amending Section 7 of the MSME Development Act, 2006 by enhancing the criteria. Therefore, the Company which is still under liquidation and the said notification is very well applicable to the Corporate Debtor and they are eligible to file a scheme. 43. The Learned Counsel for the Appellant relied upon the Judgments of the Hon'ble Supreme Court and this Tribunal. The Hon'ble Supreme Court in the matter of "Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors.- Writ Petition (Civil) No. 99 of 2018 dated 25th January, 2019"held as under: "11. .... What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an additional amount of Rs. 60 crores within a period of three months in terms of the understanding that was arrived at on 25th February, 2020. In order to enable the appellant to have one final opportunity to do so, we direct that the appellant shall, in order to demonstrate its bona fides deposit an amount of Rs. 50 crores upfront in terms of the understanding which was arrived at on 25th February,2020. The appellant is specifically placed on notice of the fact that should it fail to do so in whole or in part, the entire amount of Rs. 20 crores which has been deposited thus far, shall stand forfeited without any further recourse to the appellant. Accordingly, the following interim directions are issued: (i) The operation of the impugned order of the NCLAT dated 8th September, 2020 is stayed; (ii) The appellant shall, in order to demonstrate its ability to implement the Resolution Plan and in compliance with the understanding arrived at on 25th February, 2020 deposit an amount of Rs. 50 crores, on or before 10th January, 2021; and (iii) The auction of the properties of the Corporate Debtor shall remain stayed in the meantime." 45. This Tribunal in the matter of "S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ator, the liquidator is directed to act in accordance with law and observations of this Appellate Tribunal in " S.C. Sekaran vs. Amit Gupta & Ors." (Supra). It will be open to the members of 'M/s. Ashok Magnetics Limited' or the creditors to contact the liquidator for compromise or Arrangements in terms of Section 230. If it is found that the scheme is viable, feasible and maximise the assets of the 'Corporate Debtor' and balance the creditors, the liquidator will move application under Section 230 before the National Company Law Tribunal for appropriate order and directions. On failure, the liquidator will ensure to sell the 'Corporate Debtor' as a going concern in its totality, taking into consideration the interest of the employees of the 'Corporate Debtor'." 47. Further, this Tribunal in the matter of "Siva Rama Krishna Prasad vs. S. Rajendran" in Company Appeal(AT) (Insolvency) No. 751 and 752 of 2020 dated 04th September, 2020observed as under: "The Adjudicating Authority has rightly observed that even after pushing the Corporate Debtor into liquidation, Promoter/Ex- Director of the Corporate Debtor can take recourse to Section 230 of the Companies Act, 2013 by submitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 230 of the Companies Act, 2013 before the Adjudicating Authority i.e. National Company Law Tribunal, Chennai Bench, in terms of the observations as made in above. On failure, as observed above, steps should be taken for outright sale of the 'Corporate Debtor' so as to enable the employees to continue." Conclusion: 49. In view of the aforesaid reasons and it is settled law as per the decisions of the Hon'ble Supreme Court that the liquidation is only the last resort and as per the preamble of the IBC the main object of the Code is in resolving corporate insolvencies and not the mere recovery of monies due and outstanding. 50. For the foregoing reasons and relied upon the Judgments of the Hon'ble Supreme Court and this Tribunal we are of the view that the Appellant being eligible to submit a scheme by virtue of an amendment to Section 7 of Micro, Small and Medium Enterprises Development Act, 2006 vide notification dated 01.06.2020. Accordingly, we set aside the impugned order dated 15.10.2020 passed by the Adjudicating Authority in I.A. No. 496 of 2020 in CP (IB) No. 148/NCLT/AHM/2017. 51. We passed the following order: The Appellants are allowed to submit a schem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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