The court established that the minimum net worth requirement for MSME promoters to submit Resolution Plans can be relaxed, reflecting the intent to support their revival under the IBC.

ORDER

Per: Ms. Rekha Kantilal Shah, Member (Technical)

1. The Court congregated through hybrid mode.

2. Heard Ld. Counsels for the parties.

3. This is an Application being IA(I.B.C)/130(KB)2025 has been filed by Harsh Aggarwal (herein the referred Applicant) against Rachna JhunJhunwala, Resolution Professional of Alishan Veneer & Plywood Private Limited (hereinafter referred to as Corporate Debtor) and the Punjab National RCP (IB) No.1/KB/2023 Bank, the sole member of Committee of Creditors. This application seeks the following reliefs, inter alia:-

a) Direct the Respondent to relax the eligibility criteria requirement of minimum net worth of Rs 5 Crores for the applicant/promoter of the Corporate Debtor in view of the settle proposition of law.

b) The Respondent No.1 be directed to withdraw her mail dated 4.1.2025 and be directed to include the Applicant in the final list of the Prospective Resolution Applicant under section 240A of IBC, 2016

c) An Order for exclusion of time period for the applicant be passed for submission of Resolution plan by the applicant till the disposal of this application:

d) Such further and/or other order or order as this Hon'ble Tribunal may deem fit and proper.

Facts of the case

1. The Operational Creditor had filed Petition under section 9 of the IBC, 2016 read with rule 6 of the Insolvency And Bankruptcy ( Application to Adjudicating Authority ) Rules 2016, against the Corporate Debtor before this Adjudicating Authority. The Petition was admitted on 5^th June 2024. Moratorium was declared under section 14 of the IBC, 2016.

2. The Adjudicating Authority vide order dated 5^th June 2024, Appointed Mr. Gautam Mukherjee, as Interim Resolution Professional. Later, on the application filed by the Punjab National Bank, Ms. Rachna Jhunjhunwala vide order dated 4.11.2024 was appointed as Resolution Professional by this Adjudicating Authority.

3. The Resolution Professional, after taking charge of the Corporate Debtor published Form G on 5.12.2024 inviting expression of interest for submission of Resolution plan for the Corporate Debtor.

4. The Applicant being director of CD, which is MSME is eligible for submission of Resolution plan for the Corporate Debtor and accordingly, the Applicant submitted the Expression of Interest for the submission of the Resolution plan on 25.12.2024 along with EMD of Rs 10,00,000/-. The last date for submission of EOI was 25.12.2024.

5. However, the Resolution Professional vide mail dated 4.1.2025 informed that the minimum net-worth is Rs. 5 Crore and in the 10th Committee of Creditors (COC) it was decided that the Applicant is not eligible to participate in the Resolution plan of the Corporate Debtor. The email of Resolution Professional is attached as Annexure A6

6. None-appeared for the R2.

Applicant’s submissions:

7. Ld. Counsel Jatinder Singh Dhatt, appearing on behalf of the applicant submits that the I&B Code itself recognizes the exemption to the MSME promoters under section 240A. He also mentioned the rationale about introduction of section 240A as this exemption is that MSMEs are considered the backbone of the Indian economy, and the intent is to resolve their insolvency rather than pushing them into liquidation.

Applicant also mentioned that CoC considered him ineligible on the basis of his net-worth is less than Rs. 5 crore. He submitted that he is seriously interested in participating in the process for revival of the corporate debtor, hence RCP (IB) No.1/KB/2023 he shall be given a chance by allowing the relaxation in the eligibility criteria requirement of minimum networth of Rs. 5 crores.

Reliance is placed on