Obtaining of MSME Certificate After CIRP Initiation Bars Promoters of CD to Submit Resolution Plan u/s 29A | NCLAT

Case Details: Hari Babu Thota, Resolution Professional of Shree Aashraya Infracon Ltd., In re - [2023] 156 taxmann.com 115 (NCLAT-Chennai)

Judiciary and Counsel Details

• • M. Venugopal, Judicial Member & Ms Shreesha Merla, Technical Member
  • Anant Merathia, Adv. for the Appellant.

Facts of the Case

In the instant case, the CIRP was initiated against the corporate debtor and the appellant was appointed Resolution Professional (RP). The Resolution plan for the revival of the corporate debtor was submitted by the promoters of the corporate debtor.

The CoC authorized the RP to submit the said resolution plan to the Adjudicating Authority (NCLT). Accordingly, the NCLT directed the appellant to file a copy of the MSME registration certificate of the corporate debtor on the basis of which promoters of MSME had claimed their eligibility to submit a resolution plan as per section 29A, read with section 240A of the IBC.

The NCLT rejected the resolution plan approved by the CoC on the ground that the resolution applicants were not eligible under section 29A, read with section 240A of the IBC.

Thereafter, the appellant filed an appeal before the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.

The appellant submitted that the resolution applicant was not disqualified as per primary conditions specified under section 29A of the IBC.

It was noted that an MSME certificate was obtained subsequent to the initiation of CIRP and, thus, such certificate was required to be ignored and resolution applicants were not eligible under 29A, read with section 240A of the IBC.

NCLAT Held

The NCLAT held that since such an unauthorized certificate application could not be considered, the NCLT had rightly rejected the resolution plan.

List of Cases Reviewed

• • Digamber Anandrao Pingle v. Shrikant Madanlal Zawar [Comp. App. (AT) (Ins.) No. 43-43A/2021, dated 9-7-2021] (para 8) followed.
  • Hari Babu Thota, Resolution Professional for Shree Aashraya Infra-Con. Ltd., In re [2023] 156 taxmann.com 114 (NCLT – Bang.) (para 9) affirmed [See Annex].

List of Cases Referred to

• • Arun Kumar Jagatramka v. Jindal Steel & Power Ltd. [2021] 125 taxmann.com 244/165 SCL 652 (SC) (para 5)
  • Arcelormittal India (P.) Ltd. v. Satish Kumar Gupta [2018] 98 taxmann.com 99/150 SCL 354 (SC) (para 6)
  • Digamber Anandrao Pingle v. Shrikant Madanlal Zawar [Comp. App. CAT (Ins) No. 43-43A of 2021, dated 9-7-2021] (para 8).