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TMI Blog2021 (12) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... 158/IB/2018, whereby and whereunder the Adjudicating Authority dismissed the application of the Appellant on the ground that the Appellant suffers a disqualification under Section 29(A)(e) of the I&B Code, 2016 and observed that the Appellant trying to gain a backdoor entry on the guise of presenting themselves as MSME. Appellant's Submissions :- 2) Shri P.H. Arvind Pandian, Learned Senior Counsel appeared for the Appellant submitted that the Appellant filed IA/500/2021 in CP/158/IB/2018 for an early hearing of IA/33/2021, however, the Hon'ble NCLT passed the above Impugned Order in both the IAs without considering the documents and submissions of the Appellant on the points placed before it. 3) The Learned Counsel for the appellant submitted that the IA/33/2021 filed by the Appellant before the Learned Adjudicating Authority (NCLT, Chennai Bench) challenging the rejection of the Resolution Plan vide order dated 20th November 2020 by the Resolution Professional. The Resolution Plan was submitted by the Appellant to consider as a promoter of the Corporate Debtor on the ground that the Corporate Debtor is an MSME and the Appellant is eligible to participate in the Resolution Plan. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net worth of Rs. 2 Crore is concerned, it is submitted that the Appellant has invested all his life earnings and properties worth Rs. 10.5 Crores in the company. The Appellant also provided the collateral security of his only house for the loan raised by the Corporate Debtor amounting Rs. 1.75 Crores and the cost of the land of the Corporate Debtor is worth Rs. 4.05 Crores. 6) The Learned Counsel submitted that the above investment and the properties can be considered as net worth of the Appellant and requested the Resolution Professional to consider the Plan of the Appellant. 7) The Learned Counsel further submitted that with regard to second point i.e. the Appellant is disqualified to act as a Director under the Companies Act, 2013 and he is not eligible as per Section 29(A)(e) of the Code, 2016. In this regard, the Learned Counsel submitted that the status of the DIN of the Appellant has been restored/reactivated pursuant to the directions of the Hon'ble High Court of Madras and the status of the Appellant i.e. Director is active as per MCA Portal, however, the same was not considered either by the Resolution Professional or by the Learned Adjudicating Authority. In support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Applicants those who have Net Worth of Rs. 2 Crore can submit their Resolution Plans. 12) He further submitted that the Appellant is not met the criteria as prescribed, therefore, the Resolution Professional rejected the plan as one of the grounds. Further the Appellant was disqualified as Director therefore, he is not eligible as per Section 29(A)(e) of the I&B code. On the above two grounds the application of the Appellant was rejected. However, the Appellant by his e-mail dated 18.11.2020 addressed to the Resolution Professional informing that the minimum eligibility criteria will be provided at the time of submission of Resolution Plan by an investor and relied upon the Judgment of the Hon'ble High Court of Madras in respect to the disqualification as Director. However, the Resolution Professional rightly taken a stand that the eligibility criteria had to be complied with at the time of presenting the application and no order was obtained from the ROC in respect of removing the name of the Appellant from the list of Default Directors. Therefore, the plan of the Appellant was not considered. Further, the Appellant filed an application before the Ministry of Micro, Small and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2020 to the Resolution Professional. The Resolution Professional vide its e-mail dated 20.11.2020 communicated to all the Resolution Applicants the Provisional List of eligible Resolution Applicants to all the participants in the EOI. It appears that the Resolution Professional after receipt of Resolution Applications, scrutinized the applications and called for objections. The Appellant vide its letter dated 18.11.2020 submitted his reply to the objections raised by the Resolution Professional. The Resolution Professional communicated the Provisional List of eligible Resolution Applicants vide above order dated 20.11.2020 in which the reasons have been recorded by the Resolution Professional rejecting the application. The reasons as recorded in the order of the Resolution Professional dated 20.11.2020 is as follows: "The Application of Mr.C. Raja John, was rejected on the following two grounds: a. (He does not meet the eligibility norm as per Section 25(2)(h) of prescribed Net Worth) b. His DIN is under the 'default' Directors list and hence he is disqualified to act as a Director under the Companies Act, 2013 (18 of 2013). Accordingly, he is not eligible as per Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istrar of Companies, Tamil Nadu has to comply with the order and reactivate the DIN of the Appellant. Therefore, the Appellant had rightly brought to the notice of the Learned Adjudicating Authority with regard to his reactivation of DIN and the Learned Adjudicating Authority failed to consider the same. Further, the Learned Adjudicating Authority failed to consider the status of the Corporate Debtor as Medium Enterprise by virtue of the Certificate issued by the Government of Tamil Nadu, Department of Industries and Commerce dated 28.05.2013. The Appellant applied for the Status of the Corporate Debtor as Micro Enterprise and the Government of India had issued certificate in respect of Corporate Debtor treating it as Micro Enterprise vide Certificate dated 19.12.2020. Though the Government of India issued the Certificate on 19.12.2020, however the status of the Corporate Debtor was already a medium enterprise pursuant to the certificate issued by the Government of Tamil Nadu. The Government of India issued classification of enterprise and revised the turnover of Micro, Small and Medium Enterprises. As stated supra, the Corporate Debtor was already classified as a Medium Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision the duties have been envisaged under the Code to be carried out by the Resolution Professional and accordingly the Resolution Professional can Laid down certain criteria for inviting the prospective Resolution Applicants who will fulfill such criteria. However, the same need to be done with the approval of Committee of Creditors. However, this Tribunal is not going into the issue with regard to the duties to be exercised by the Resolution Professional or the Committee of Creditors. 27) It is seen that the Committee of Creditors in their COC dated 22.10.2020 prescribed the criteria with regard to the net worth of the resolution applicant should be at least Rs. 2 crore. Basing on the decision taken in the COC the Expression of Interests called for and the Appellant's application was rejected on 20th November 2020 on the ground that the Appellant does not meet the eligibility norms as prescribed by the COC. 28) This Tribunal considering the Judgment in Saravana Global Holdings Ltd. and Anr v Bafna Pharmaceuticals Ltd. and Ors. in Company Appeal CA (AT) (INS) No.203 of 2019 dated 04.07.2019 NCLAT, Principal Bench whereby this Tribunal held at para 20, 21 and 22: "20. The Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason given by the Appellant that the Appellant will be providing suitable Net Worth Certificate issued by the Chartered Accountant at the time of submission of Resolution Plan, as it will be done with other Investors. Further, the Appellant in its Written Submissions at Para 5 has stated the reasons regarding Net Worth criteria of Rs. 2 Crores stated that the appellant was unable to submit the same on account of the wrongful disqualification under Section 29A(e) which rendered the Appellant ineligible to submit the Resolution Plan/EOI. Taking into consideration the Appellant's Averments (as recorded by the Resolution Professional in his order dated 20.11.2020) this Tribunal permits the Appellant to file/submit Net Worth Certificate to the Resolution Professional and the Resolution Professional may consider the same. 32) In any event, it is unequivocal that the Corporate Debtor is an MSME and as held by this Tribunal that it is not necessary for the Promoters to compete with other Resolution Applicants to regain the control of the Corporate Debtor. 33) It is apt to mention that the Appellant in Grounds of Appeal stated that the Appellant is ready to bring Rs. 45 Crore in various f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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