TMI Blog2021 (3) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of a person for taking part in any process or activity within the Code has to be taken into consideration as per the timeline provided in the Code for such activity or participation. Clause (c) provides that the person may be ineligible or otherwise as on the date of submission of the resolution plan . The CIRP in the instant case ordinarily expired on 21.03.2020. IA No. 973 of 2020 for extension (of 116 days) was filed on 18.03.2020. The Applicant was freed from the ineligibility prescribed under Clause (c) of Section 29A w.e.f. 01.07.2020, well within the period of CIRP and within the period when a person/entity could submit Resolution Plan to the CoC of the Corporate Debtor - Application allowed. - I.A. No. 973/MB/2020 I.A. No. 1504/MB/2020 I.A. No. 1306/MB/2020 C.P. (IB) No. 3141/MB/2018 - - - Dated:- 23-3-2021 - Janab Mohammed Ajmal, Hon ble Member (Judicial) Shri V. Nallasenapathy, Hon ble Member (Technical) For the Applicant : Mr Umang Mehta, Advocate i/b Taurus Legal (IA Nos. 973 of 2020 IA 1504 of 2020) Mr P. G. Sabnis, Advocate (IA No. 1306 of 2020) For the Respondents : Mr Umang Mehta, Advocate i/b Taurus Legal (IA 1306/2020) ORDER Per: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 116 days, in order to successfully complete the CIRP of the Corporate Debtor. However, due to the nationwide lockdown attributable to the Covid-19 outbreak the Application could not be proceeded. 8. Thereafter, in view of the exclusion of the lockdown period from the CIRP by virtue of Regulation 40C of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 vide Notification dated 20th April, 2020 (effective from 29th of March, 2020) coupled with the Order dated March 30, 2020 of the Hon ble NCLAT (in Suo Moto Company Appeal (AT) (Insolvency) No. 01 of 2020) and consequent upon the lockdown relaxation by the Government of Maharashtra, the RP commenced his duty with regard to CIRP. The RP submits that even in the present day Covid-19 circumstances and despite having limited resources he has been carrying out his duty to the best of his ability to bring about a successful resolution of the Corporate Debtor. 9. The RP submits that around 1st July, 2020, he received emails from six (6) parties to submit their EOI and thereafter received the Resolution Plans from the following Prospective Resolution Applicants (PRAs): i. Consortium of West Bengal Chemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... June, 2020. As per the amendment in the definition of MSME under the Micro, Small and Medium Enterprises Development Act, 2006, the Corporate Debtor comes within the purview of the revised definition of Medium Enterprises . Section 240A of the Code exempts MSMEs from application of clauses (c) and (h) of Section 29A which allows the promoters of MSMEs to bid for their own companies i.e., submit a Resolution Plan. 15. The said Promoter pursuant to the said Notification, being eligible to bid for the Corporate Debtor, sent an email on 03.08.2020 to the RP expressing his willingness to participate in the Resolution Process by submitting a Resolution Plan for the Corporate Debtor and also requested the RP to extend the submission of EOI by 2 months as the said Promoter did not have sufficient time to gather resources to prepare a Resolution Plan and also to make necessary arrangements for finances from external sources due to the ongoing pandemic situation and lockdown. 16. It is submitted that the RP by his email dated 17.08.2020 permitted the said Promoter to submit the Resolution Plan but insisted that the CIRP had to be completed within 330 days despite the Covid-19 related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that the main objective of the amendment in MSME Act, was to revive business enterprises in India, working of which are heavily disrupted due to the persisting nationwide lockdown attributable to the Covid-19 pandemic. However, by virtue of the said amendment, there has been no clarity or any amendment to Section 240A of the Code on the issue as to whether the Corporate Debtor falling under the ambit of the MSME post the commencement of CIRP against the Corporate Debtor, would entitle its suspended directors to avail its benefits to submit a Resolution Plan . Thus, the aforesaid issue as to whether the suspended directors can put forth the Resolution Plan before the CoC for voting is still unclear, ambiguous and not yet settled by the Adjudicating Authority. Therefore, the Tribunal may clarify the aforesaid issue and in accordance therewith the RP would proceed with the CIRP of the Corporate Debtor. 22. RP further submits that, vide his email dated 05.08.2020, he questioned the eligibility of the said Promoter. Also, without admitting the eligibility of the said Promoter under Section 29A of the Code, RP in consonance of the decision of the CoC in 7th meeting held on 11.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) This Hon ble Tribunal be pleased to direct the Respondent to extend by 45 days the timeline for submitting the Resolution Plan by the Applicant; C) Pending the hearing and final disposal of this Application, this Hon ble Court be pleased to stay further process of opening of bids from resolution applicants and proceedings pursuant thereto; D) For any other reliefs and orders as this Hon ble Tribunal may deem fit in the facts and circumstances of the case. 24. The averments made in IA 973 of 2020 and IA 1504 of 2020 would indicate that the outbreak of the pandemic has adversely impacted the progress of the CIRP as it has been on trade and commerce in the world in general and in our country in particular. Taking into consideration the overall situation the Hon ble Supreme Court and Hon ble NCLAT have passed the following Orders: The Hon ble Apex Court on 23.03.2020 in Suo Moto Writ Petition (C) No. 3/2020 passed the following order. This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2020, in our considered opinion can be allowed. 25. The Code underwent an amendment with effect from 06.06.2018 by Section 37 of the Act of 26 of 2018, wherein Section 240A was inserted. Sub-section (1) of Section 240A provided that clauses (c) (h) of Section 29A of the Code shall not apply to the Resolution Applicant(s) in respect of CIRP of any Micro, Small or Medium enterprises. Clause (c) (h) may profitably be quoted as under: 29A. Persons not eligible to be resolution applicant. A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person - (c) [at the time of submission of the resolution plan has an account,] or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset in accordance with the guidelines of the Reserve Bank of India issued under the Banking Regulation Act, 1949 (10 of 1949) [or the guidelines of a financial sector regulator issued under any other law for the time being in force,] and at least a period of one year has lapsed from the date of such classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 of 2020) as the promoter (suspended Director) of the Corporate Debtor becomes a promoter of a Medium Enterprise w.e.f. 01.07.2020. Admittedly, on 01.07.2020 the CIRP had not come to an end. The Notification dated 26.06.2020 became effective within the currency of the CIRP process. The expression at the time of submission of the resolution plan appearing in clause (c) of section 29A of the Code came to be inserted w.e.f. 06.06.2018. The eligibility of a person for taking part in any process or activity within the Code has to be taken into consideration as per the timeline provided in the Code for such activity or participation. Clause (c) provides that the person may be ineligible or otherwise as on the date of submission of the resolution plan . The CIRP in the instant case ordinarily expired on 21.03.2020. IA No. 973 of 2020 for extension (of 116 days) was filed on 18.03.2020. The Prospective Resolution Applicants submitted their Resolution Plans around 01.07.2020 by when the notification had become effective. The present Applicant thus had become eligible to put in a Resolution Plan on 01.07.2020. The CoC in its meeting on 02.09.2020 resolved to invite further revised reso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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