Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2020 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (2) TMI 1077 - AT - Insolvency and BankruptcyRevision of Resolution plan - direction to revise expression of interest (EOI) issued and float new revised EOI by making changes suggested and extending date - section 10 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- It is stated for the Appellant that section 240A was inserted in the IBC with effect from 6th June, 2018 and provided that notwithstanding anything to the contrary contained in the Code, the provisions of Clause 'c' and 'h' of section 29A shall not apply to the Resolution Applicant in respect of Corporate Insolvency Resolution Process of any Micro, Small and Medium Enterprise - the Adjudicating Authority found that the Applicant had failed to establish that Corporate Debtor was MSME. It also observed that the Applicant had not raised any such issue of being MSME before COC (Committee of Creditors) and that issue was raised when CIRP (Corporate Insolvency Resolution Process) period was to expire. It also found that the Appellant had not raised any concrete Resolution Plan before COC. In the present matter, the Resolution Professional has raised disputes with regard to the claim of MSME. Even in the Reply (para - 12) filed in this Appeal, issue has been raised with regard to the claim to be small enterprise and reference is being made to the valuation report. Under section 29B of the Industries (Development & Regulation) Act, 1951, Central Government has powers to exempt any industrial undertaking in public interest from applying all or any of the provision of that Act, subject to conditions as it may think fit. The learned Counsel for the Appellant has not been able to show us as to how Resolution Professional when he receives expression of interest could be expected to go into accounts and other factors or facts and go into Notifications to apply law and hold under which classification an applicant would or not fall. It is not shown how Resolution Professional with time bound milestones fixed in IBC can decide if or not the Corporate Debtor fits into classifications under section 7 or is not covered by MSME Act at all - Section 7 itself shows that the Central Government has to "classify" any class or classes or enterprises either as micro or small or medium on the basis of parameters fixed in section 7. The Appellant has not brought on record that the Corporate Debtor has been classified by Central Government and if yes, under which parameter. In the Summary Procedure under IBC, the Resolution Professional and Adjudicating Authority are not expected to go into accounts and investigate if and in which category an application falls under section 7 examining Notifications under Explanation 2 or sub-section 9 of section 7 of MSME Act. There is no reason why, looking to the nature of proceedings under the IBC the prospective Resolution Applicant who claims eligibility on the basis that the Corporate Debtor is MSME, should not provide necessary Memorandum Certificate. The Resolution Professional cannot be going into investigations and enquiries and findings whether or not a Corporate Debtor falls under the classifications of MSME and Adjudicating Authority is also not expected to make such investigations, enquiries on such evidence or give findings on such issues, which may not be accurate without assistance of an opposite side or Government Counsel bringing forth which or the other Notification etc. applies. Under sections of MSME Act, even if getting Memorandum Certificated for a given enterprise may be optional, if advantage is to be taken of MSME Act, the Applicant must take pains to get the Memorandum Certificate to seek benefits under IBC - Under the statutory law, the requirement to get a special Resolution passed by AGM or EGM was provided on 6th June, 2018 in section 10 of IBC vide Second Amendment Act, 2018 and thus, it is not found that the admitting of proceedings under section 10 in the present matter on 26th April, 2018 (which was prior in time) to be bad. The Counsel for Respondent submitted that the Appellant having moved section 10 Application with his shareholding of 93.30% got the CIRP put into motion and enjoyed the protection which moratorium attracts to the Corporate Debtor and having taken advantage, is now trying to wriggle out on some or the other ground as Resolution Plan with benefit of haircut has not come forward and is creating obstructions in the CIRP process. We find substance in submissions of Counsel for Respondent. Process of IBC cannot be allowed to be abused under section 10 of IBC. Appeal dismissed - decided against appellant.
|