Sec. 29A(1)(c) Sets 1-Year Post-NPA for Resolution Plan Scrutiny Based on Submission, Not CIRP Start Date | SC
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- Last Updated on 11 December, 2023
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Case Details: Hari Babu Thota, In re, - [2023] 157 taxmann.com 165 (SC)
Judiciary and Counsel Details
- Sanjay Kishan Kaul & Sudhanshu Dhulia, JJ
Facts of the Case
In the instant case, the Corporate Debtor went into Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 and consequently, the appellant was appointed as the resolution professional.
Subsequently, a resolution plan was presented before the NCLT by the appellant as propounded by promoters and approved by COC, the same was rejected by the NCLT on the ground that the resolution applicant was ineligible to submit a plan in terms of section 29A of the Insolvency and Bankruptcy Code, 2016.
Further, it was noted that in terms of section 29A(1)(c), a time frame, i.e., a period of one year should elapse from the date of classification as a non-performing asset (NPA).
Supreme Court Held
The Supreme Court observed that since there were no bank dues/outstanding which would at all invite a concept of NPA, much less a period of one year, the resolution applicant was not disqualified in terms of section 29A(1)(c).
Further, the cut-off date for determining whether the resolution applicant was disqualified in terms of Section 29A would be the date of submission of the resolution plan and not the date of commencement of CIRP.
The Supreme Court held that even if it was an NPA, the defect could be cured as set out in the proviso before submission of the resolution plan submitting plan a crucial date, thus impugned orders were to be set aside.
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