Applicant being an MSME would be eligible to submit a resolution plan for his own company: NCLT
- Blog|News|Insolvency and Bankruptcy Code|
- 2 Min Read
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- Last Updated on 24 August, 2021
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Case details: Brijendra Kumar Mishra, RP of Lakeland Chemicals (India) Ltd., In re - [2021] 129 taxmann.com 182 (NCLT - Mum.)
Judiciary and Counsel Details
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- Janab Mohammed Ajmal, Judicial Member and V. Nallasenapathy, Technical Member.
- Umang Mehta and P.G. Sabnis, Advs. for the Appearing Parties.
Facts of the Case
In respect of corporate debtor, Corporate Insolvency Resolution Process (CIRP) was initiated and Resolution Professional (RP) was appointed. The CIRP period was going to expire meanwhile, the applicant, and promoter of the corporate debtor expressed his willingness to participate in the resolution process by submitting a resolution plan.
However, the Resolution Professional (RP) rejected said application on the ground that in view of the bar contained under section 29A, where an applicant was not eligible to participate in the resolution process.
It was noted that the definition of MSMEs underwent a change vide. notification dated 26-6-2020 and as per the amended definition of MSME, the corporate debtor came within the purview of the revised definition of ‘medium enterprise’.
NCLT Held
Since, section 240A exempts MSMEs from the application of clauses (c) and (h) of section 29A and allowed promoters of MSME’s to bid for their own company, considering a change in law related to MSME’s, the applicant was freed from ineligibility prescribed under clause h of section 29A, well within the period of CIRP and within the period when a person/entity could submit Resolution Plan. Consequently, the applicant was allowed to submit a resolution plan to RP.
List of Cases Referred to
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- Committee of Creditors of Essar Steels India Ltd. v. Satish Kumar Gupta [2019] 111 taxmann.com 234 (SC) (para 19)
- Cognizance for Extersion of Limitation, In re [2020] 117 taxmann.com 66 (SC) (para 24).
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