Promoters of MSMEs can be exempt from certain eligibility criteria to submit resolution plans, fostering recovery and preventing liquidation.

ORDER

PER Bidisha Banerjee, Member (Judicial)

1. This Court is congregated through hybrid mode.

2. Heard the Learned Counsels for both parties.

Brief in nutshell:

3. This instant application has been preferred by Mr. Mukesh Goel, Suspended Promoter of Aanchal Ispat Ltd (under CIR Process) against CA Santanu Brahma, the Respondent Professional of the Corporate Debtor, Aanchal Ispat Ltd. and the Committee of Creditor of the Corporate Debtor, Aanchal Ispat Ltd. under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 , for brevity “I&B Code” seeking the following direction from this Adjudicating Authority as under:

a. An order be passed directing the Respondents to relax and/or dispense with the eligibility criteria in respect of the Applicant herein in submitting the EoI pursuant to the In C.P. (IB) No. 1518/KB/2020 issuance of Form-G by the Respondent No. 1 on December 30, 2023, considering that the Applicant is a promoter of the Corporate Debtor which is an MSME Entity.

b. The Applicant may be permitted to submit its EoI pursuant to publication of the FORM-G/ EoI dated 30.12.2023 considering that the Applicant is promoter of the Corporate Debtor which is an MSME Entity.

c. Pending disposal of the present application, the Form G/ EoI published on 30.12.2023 by the Respondent No. 1 d. Any order may deem fit and proper.

Brief Background

4. The Corporate Insolvency Resolution Process (hereinafter referred to as "CIRP") was initiated against the Corporate Debtor vide Order dated 12.09.2023 passed by this Adjudicating Authority. Mr. Sriram Mittal has appointed as the Interim Resolution Professional (hereinafter referred to as the "IRP") of the Corporate Debtor. Subsequently an application was preferred to replace the IRP and apropos the same, the Respondent No. 1 namely Mr. Santanu Braham herein was thereby appointed as the Resolution Professional ("hereinafter referred to as "RP") vide order dated 17.11.2023.

Submissions by the Learned Senior Counsel, Shri Joy Saha for the Applicant:

5. In course of arguments the Learned Senior Counsel would submit that the Corporate Debtor herein is MSME registered under the MSMED Act, 2006 , and the Applicant herein is the suspended In C.P. (IB) No. 1518/KB/2020 promoter of the MSME Corporate Debtor. That pursuant to the provisions of the IBC, 2016, the Respondent No.1 has taken necessary steps for the CIRP of the Corporate Debtor herein and as such had published a Form "G" whereby Expression of Interest has been invited on 30.12.2023 along with corrigendum published on 01.01.2024.

6. That the relaxation and/or exemptions apropos the submission of EOI has been rejected by the RP and CoC.

7. That Section 29A of the Code attaches the ineligibility to the promoters to become a resolution applicant(s) and thus, the promoters are ineligible to submit a resolution plan.

8. The Second Amendment introduced section 240A provides certain relaxations to the MSME promoters giving them immunity from the restriction enshrined in section 29A of the Code.

9. That the intention behind the enactment of the provision was to grant exemptions to corporate debtors which are MSME(s), by permitting a promoter who is not a wilful defaulter or covered under any other specific disqualification as provided under section 29A, to bid for the resolution plan of an MSME.

10. This Application has been filed by the Applicant under Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of National Company Law Tribunal Rules, 2016 seeking direction upon the Respondent to inter alia relax and/or exempt In C.P. (IB) No. 1518/KB/2020 with the net wor