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TMI Blog2021 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the reason given by the Appellant that the Appellant will be providing suitable Net Worth Certificate issued by the Chartered Accountant at the time of submission of Resolution Plan, as it will be done with other Investors. Further, the Appellant in its Written Submissions at Para 5 has stated the reasons regarding Net Worth criteria of ₹ 2 Crores stated that the appellant was unable to submit the same on account of the wrongful disqualification under Section 29A(e) which rendered the Appellant ineligible to submit the Resolution Plan/EOI. Taking into consideration the Appellant s Averments (as recorded by the Resolution Professional in his order dated 20.11.2020) this Tribunal permits the Appellant to file/submit Net Worth Certificate to the Resolution Professional and the Resolution Professional may consider the same. It is unequivocal that the Corporate Debtor is an MSME and as held by this Tribunal that it is not necessary for the Promoters to compete with other Resolution Applicants to regain the control of the Corporate Debtor - It is apt to mention that the Appellant in Grounds of Appeal stated that the Appellant is ready to bring ₹ 45 Crore in various for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Plan was submitted by the Appellant to consider as a promoter of the Corporate Debtor on the ground that the Corporate Debtor is an MSME and the Appellant is eligible to participate in the Resolution Plan. However, the Resolution Professional rejected the plan on two grounds. a. the Appellant does not meet the eligibility norm as per Section 25(2)(h) of I B Code, prescribing the Net Worth of ₹ 2 Crores by the COC. b. The Director Identification Number (DIN) of the Appellant is under default and not eligible as per Section 29(A)(e) of the Code, 2016. Challenging the above rejection of the Appellant s Resolution Plan, the Appellant filed the application being IA/33/2021. The Learned Adjudicating Authority passed the Impugned Order by observing at Para 9 and 10 as under: 9. A perusal of the MSME Certificate attached with the typed set filed by the Respondent would go on to show that the said certificate was only obtained on 19.12.2020. Thus, it can be seen that the Applicant is trying to play a fraud upon this Tribunal, in order to gain backdoor entry to the assets of the Corporate Debtor in the guise of projecting themselves as MSME. Further, Section 240A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Hon ble High Court of Madras and the status of the Appellant i.e. Director is active as per MCA Portal, however, the same was not considered either by the Resolution Professional or by the Learned Adjudicating Authority. In support of the contention the Learned Counsel filed the Judgment of the Hon ble High Court of Madras at Page 62 of Volume 1. 8) The Learned Counsel further submitted that the criteria prescribed i.e. minimum net worth of ₹ 2 Crore cannot be made applicable to the Corporate Debtor since the Corporate Debtor is an MSME Enterprise as per the Certificate issued by the Government of Tamil Nadu, Department of Industries and Commerce dated 28.05.2013 and subsequently, the certificate was also issued by the Government of India Ministry of Micro, Small and Medium Enterprises, recognizing the Corporate Debtor as MICRO Enterprise vide Certificate dated 19.12.2020. Hence, the status of the Corporate Debtor is an MSME. In this regard, the Learned Counsel relied upon the Judgment of this Appellate Tribunal dated 04.07.2019 passed in Company Appeal (AT)(INS) No.203 of 2019 in the matter of Saravana Global Holdings Ltd. ors. v Bafna Pharmaceuticals Ltd. an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and no order was obtained from the ROC in respect of removing the name of the Appellant from the list of Default Directors. Therefore, the plan of the Appellant was not considered. Further, the Appellant filed an application before the Ministry of Micro, Small and Medium Enterprises and availed a certificate dated 19.12.2020 with regard to the status of the Corporate Debtor as Micro Enterprise subsequent to the initiation of CIRP against the Corporate Debtor, therefore the same has not been considered. 13) The Learned Counsel submitted that as per Regulations 36(A) of I B (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 stipulates that only interested and eligible prospective Resolution Applicants entitled to submit Resolution Plans. Further the Learned Counsel submitted that the Commercial Wisdom of Committee of Creditors (COC) cannot be interfered by relaxing the minimum eligibility criteria as fixed by the COC under Section 25(2)(h) of I B Code, 2016. 14) In view of the reasons as stated above, the Learned Counsel submitted that the appeal is devoid of merits and requested the Tribunal to dismiss the same. Analysis/Appraisal 15) Heard th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grounds: a. (He does not meet the eligibility norm as per Section 25(2)(h) of prescribed Net Worth) b. His DIN is under the default Directors list and hence he is disqualified to act as a Director under the Companies Act, 2013 (18 of 2013). Accordingly, he is not eligible as per Section 29A(e). The Resolution Professional also recorded the response of the Appellant whereat the Appellant in response to ground No.(a) stated that he will be providing suitable Net Worth Certificate, issued by the Chartered Accountant at the time of submission of Resolution Plan as it will be done in case of other Investors. However, the Resolution Professional has taken a stand that at the time of presenting the EOI Application, the Applicant/Appellant does not have the required Net Worth, hence the response was rejected and stated that he shall not be considered in the Final List of eligible Resolution Applicants. With regard to ground No.(b) (i.e. disqualified as Director), the Appellant by way of response to the above objection stated that the Appellant had already applied to the Competent Authority for the reactivation of the DIN based on the decision by the Division Bench of the M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor was already a medium enterprise pursuant to the certificate issued by the Government of Tamil Nadu. The Government of India issued classification of enterprise and revised the turnover of Micro, Small and Medium Enterprises. As stated supra, the Corporate Debtor was already classified as a Medium Enterprise as early as 28.05.2013. This Tribunal observes from the Impugned Order that the Adjudicating Authority has not given any finding on Net Worth criteria of the Appellant. However, in the written submissions of the Appellant vide Diary No.856 dated 16.11.2021 it is stated that the Appellant is ready to file his Net Worth Certificate even as on today, which would qualify the Appellant to act as Resolution Applicant for the Corporate Debtor. 21) The Legal point for consideration is that an Amendment was brought to Section 240-A of the IBC, 2016, whereby some of the clauses of the Provisions of this Code not made applicable to Micro, Small and Medium Enterprises. The said provision thus reads as under: 240-A Application of this Code to Micro, Small and Medium Enterprises i) Notwithstanding anything to the contrary contained in this code, the provisions of claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant does not meet the eligibility norms as prescribed by the COC. 28) This Tribunal considering the Judgment in Saravana Global Holdings Ltd. and Anr v Bafna Pharmaceuticals Ltd. and Ors. in Company Appeal CA (AT) (INS) No.203 of 2019 dated 04.07.2019 NCLAT, Principal Bench whereby this Tribunal held at para 20, 21 and 22: 20. The Committee of Creditors is to consider the feasibility, viability and such other requirements as has been specified by the Board. If it proposes maximization of the assets and is found to be feasible, viable and fulfil all other requirements as specified by the Board, the company being MSME, it is not necessary for the Committee of Creditors to follow all the procedures under the Corporate Insolvency Resolution Process. For example, if case is settled before the constitution of the Committee of Creditors or in terms of Section 12A on the basis of offer given by Promoter, in such case, all other procedure for calling of application of Resolution Applicant, etc. are not followed. If the promoter satisfies all the creditors and is in a position to keep the Corporate Debtor as a going concern, it is always open to Committee of Creditors to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. 32) In any event, it is unequivocal that the Corporate Debtor is an MSME and as held by this Tribunal that it is not necessary for the Promoters to compete with other Resolution Applicants to regain the control of the Corporate Debtor. 33) It is apt to mention that the Appellant in Grounds of Appeal stated that the Appellant is ready to bring ₹ 45 Crore in various forms and settle the liabilities and stated that this amount is much more than the submissions made by other two applicants in the first Expression of Interest and submitted that the same has been communicated to the Resolution Professional several times. 34) Further, this Tribunal, keeping in view of the object of the Code that the Maximization of the Value of the Assets of Corporate Debtor is to be kept in mind in achieving its object. To give an opportunity to regain the control of the Corporate Debtor, the Management/Promoters/Erstwhile Directors of the Corporate Debtor being an MSME, not necessary to compete with other Resolution Applicants. Conclusion: 35) Having considered the facts and legal position as explained above, this Tribunal is of the view that the Appellant has made out a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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