Hari Babu Thota vs *

Court

Supreme Court of India

Date

29 November 2023

Case No.

Civil Appeal No. 4422 of 2023

Result

Allowed

Bench

Sanjay Kishan Kaul, Sudhanshu Dhulia

Citation

[2023] 16 S.C.R. 917 : 2023 INSC 1056

Issue for consideration

Whether the resolution applicant was disqualified under the primary conditions as specified u/s.29A of the Insolvency and Bankruptcy Code, 2016 and; whether the corporate debtor not having an MSME status at the time of commencement of CIRP proceedings would disqualify the Resolution applicant u/s.29A of the Code as benefit of s.240A would not be available.

Headnote

Insolvency and Bankruptcy Code, 2016 – ss.29A, 240A – Persons not eligible to be resolution applicant – Application of the Code to micro, small and medium enterprises – Appellant-Resolution Professional presented plan as propounded by the promoters and approved by the Committee of Creditors – Application dismissed by NCLT holding that the promoters could not have presented the plan – Order upheld by NCLAT relying on its earlier order in Digamber Anand Rao Pingle v. Shrikant Madanlal Zawar & Ors. – Sustainability:

Held: s.29A was added as an amendment by Act 8 of 2018 with effect from 23.11.2017 – The objective was to cure the mischiefs of the persons who may be responsible for the financial situation of the company against trying to submit a plan and take over the company – On facts, there is no per say disqualification u/s.29A – s.240A also was introduced as an Amendment in 2018 effective from 06.06.2018 – It begins with a “notwithstanding clause” – Clauses (c) and (h) of s.29-A which apply to the promoters and exempts them to apply for a plan is not applicable qua any micro, small and medium enterprises – The objective obviously was to due to the nature of business carried out by such entities – Excluding such industries from disqualification u/s.29A (c) and (h) is because qua such industries other resolution applicants * Ed. Note: There was no respondent. Amicus Curiae was appointed in the matter. may not be forthcoming which thus, would inevitably lead not to resolution but to liquidation – The submission that while interpreting s.240A, the reason for carving out an exception in micro, small and medium industries is set out on the date of application for making the bid as the crucial date and that while for some other aspects the initiation of the CIRP proceedings would be the cut off date, the same would not apply in the case of s.240A, in view of the statement by the Minister himself, accepted – Law laid down in Digambar Anand Rao Pigle case by the Tribunal is not the correct position in law and the cut off date will be the date of submission of resolution plan – Even on this count, the plan submitted in question will not incur the disqualification – Impugned orders of the NCLT and NCLAT set aside. [Paras 6, 10, 14, 17, 20-23 and 25]

LIST OF CITATIONS AND OTHER REFERENCES

JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT SANJAY KISHAN KAUL, J. 1. Shree Aashraya Infra-Con Limited went into CIRP under the Insolvency and Bankruptcy Code, 2016 [for short “the Code”] and the appellant before us was appointed as the Resolution Professional. The Resolution Professional presented a plan before the National Company Law Tribunal, Bengaluru as propounded by the promoters and approved by the Committee of Creditors [COC] but in terms of the order dated 28.02.2023, the application was dismissed on the ground that the promoters could not have presented the plan. It is the say

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