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TMI Blog2022 (6) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... rmits Micro, Small and Medium Enterprises to participate in the resolution plan, seeking the following reliefs: a) stay the further proceedings by the Resolution professional (RP) until a Resolution Plan is placed before him or before this Hon'ble Tribunal by the Applicant within a stipulated time as may be granted by this Hon'ble Tribunal; and/or b) set aside the grounds as stated in paragraph (point No. 3) of the reply dated 03.05.2022 of the Resolution Professional and further direct the Resolution professional to allow the Applicant to submit Expression of Interest and subsequently the Resolution plan in view of the competency of the Applicant under section 240A of the Insolvency and Bankruptcy Code, 2016; and/or c) record the finding to the effect that provisions of section 240A of IBC, 2016 has overriding effect on section 25(2)(h) and/or section 29A of IBC, 2016, so far as the Micro, Small and Medium Enterprises sectors are concerned; and/or d) pass any further order/s in the facts and circumstances of the present case. 2. The Applicant submits that: 2.1 An application was filed under section 10 of the Insolvency and Bankruptcy Code, 2016 to initiate C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with Sec. 25(2)(h) of the Insolvency and Bankruptcy Code, 2016 are not complied by you. b) the list of prospective Resolution Applicants was already circulated and request for Resolution plan was also circulated. c) you are well aware about the timeline of the process under the Insolvency and Bankruptcy Code, 2016 even though after expire of time you are just sending the letter without complying the required stated in expression of interest published on 05.03.2022 2.9 The Applicant has cited the provisions of sections 25(1)(h), section 29A and section 240A of the Insolvency and Bankruptcy Code, 2016 in the matter: 2.10 The Applicant after publication of the Expression of Interest on 05.03.2022 could not approach the Resolution professional with the request, since, the Director of the Suspended Board namely, Kamal Kumar Harlalka, who is also the promoter of the company was ill and under medical treatment. 2.11 Resolution Professional is oblivious of the fact that the provisions of sections 25(h) of the Insolvency and Bankruptcy code, 2016 cannot empower either him or the CoC to overreach the provisions of Section 240A of The Insolvency and Bankruptcy Code, 2016, in as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a fit case where this Hon'ble Tribunal in exercise of its powers shall grant a stay in favour of the applicant staying the further proceedings of the IRP until a resolution plan is placed before him or before this Hon'ble Tribunal, by the Applicant within a stipulated time, as may be granted by your Lordship. The Applicant therefore states that there is a prima facie case in favour of the Applicant as his intent is in consonance with the aim and object of the Insolvency and Bankruptcy Code, of 2016. The balance of convenience also lies in favour of the Applicant as the final resolution plan is yet to be adopted. Irreparable loss both in terms of money as well as to the reputation of the Applicant is bound to be caused to the Applicant, if the interim stay, as prayed for is not granted. That there is a standard dictum in law that "a thing that can not be done directly, can not be allowed to be done indirectly." 3. On the other hand, the RP submits that: 3.1 The instant I.A. is not at all maintainable in law and in facts and therefore liable to be dismissed in limine. 3.2 The instant I.A. have been filed without application of mind and is also without any substance and only for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor in which he was Promoter/Director. Interestingly in contravention to all norms and provisions of the Code, the Applicant also requested the Respondent No. 1 (RP) to treat the Letter dated 02.05.2022 as EOI that too without any whisper of the compliance of the terms and conditions of the EOI. There was palpable silence on that aspect even though there was no bar for the Applicant to submit EOI for an on behalf of the Corporate Debtor. The invitation for EOI clearly mentions that the EOI submitted by the Prospective Resolution Applicants shall be verified by the RP and the provisional list of Resolution Applicants shall be published after necessary verification of the eligibility norms as set out in IBC and the invitation of EOI. It is therefore crystal dear that the action on the part of the Applicant and the subsequent filling of the IA, clearly demonstrate the intent of the Applicant to cause delay and defeat the CIRP process of the Corporate Debtor. In fact, the list of Provisional Resolution Applicants had already been issued/declared and the Resolution Plan had already been received and presently the Resolution Plan are being scrutinized/analysed. Had the Applicant was pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " Either way therefore the Applicant cannot be said to be eligible in any manner whatsoever. The eligibility criteria in Para 2a, 2b, 2c and 2d as prescribed in the invitation of Expression of Interest (EOI) are being laid down by RP having regard to the complexity and scale of operations of the business of the corporate debtor and is duly approved in the meeting of the Committee of Creditors held on 02 March, 2022. As envisaged in Section 25(2)(h) of the code, the additional criteria laid down in the invitation of EOI shall be fulfilled by every Resolution Applicant submitting Resolution Plan and no relaxation from such compliances are given to the promoters of MSME under Section 240A of the code. Inexplicably the Applicant in the said Letter dated 02.05.2022 tries to' pressurize and coax the Respondent No. 1 (RP) stating that the applicant having already invested and brought in securities in the account to a great extent and hence, it may not be able to fulfil the above eligibility conditions which are the pre-requisite to submit the resolution plan and therefore desist or refrain from putting such onerous conditions for existing promoter group. 3.10 With regard to the stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account has been declared as NPA. 4.3 This Hon'ble Tribunal will appreciate that the circumstances leading to filling of section 10 application by the Corporate Debtor. It was during pandemic which started from the month of March, 2020 and continued till 2021, the accounts of the Corporate Debtor became NPA. Moreover, the bank in question i.e. Punjab National Bank had after sanction of the further loan put certain conditions which can not be legally complied with by the Corporate Debtor as per the Assam Land & Revenue Regulation Act. 4.4 The Hon'ble NCLAT in the case of Saravana Global Holdings has held in para 20 as follows: "The Committee of Creditors is to consider the feasibility, viability and such other requirements as has been specified by the Board. If it purposes maximization of the assets and is found to be feasible, viable and fulfil all other requirements as specified by the Board, the company being MSME, it is not necessary for the Committee of Creditors to follow all the procedures under the Corporate Insolvency Resolution Process. For examples, if case is settled before the constitution of the Committee of Creditors or in terms of section 12A on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10 of IBC filed by the CD itself for its default to the FCs was admitted by this Bench on 23/11/2021. 5.2 The RP has submitted that the Resolution Plans had already been received and presently the Resolution Plan are being scrutinized/analysed. Ninety days' extension has been allowed as prayed for to complete the CIRP. 5.3 When the CIRP Period of 180 days was going to complete on 21/05/2022 and at that stage almost after 41 days from the last date of submission of the EOI, the Applicant on behalf of the Corporate Debtor in which he was Promoter/Director has submitted a simple letter dated 02.05.2022 to the Respondent No. 1 (RP) requesting the RP to allow them to submit a Resolution Plan and treat the said Letter as EOI without any reference of the compliance of the terms and conditions of the EOI. 5.4 The Applicant has submitted in the said representation that they have been assured by a group of investors to support them in submitting a viable and suitable resolution plan. 5.5 Hence it is apparent that the letter submitted is all hypothetical when the Applicant CD itself couldn't pay the dues to the FCs and had filed application under Section 10 of IBC for CIRP. The qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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