Insolvency and Bankruptcy Code, 2016 – Corporate debtor, an MSME – Impugned judgment in view of the observations made in Bafna’s case observed that if a corporate debtor is an MSME it is not necessary for promoters to compete with other resolution applicants to retain control of the corporate debtor – Legality: Held: In the factual scenario of Bafna’s case, the observations that in “exceptional circumstances” if a corporate debtor is an MSME it is not necessary for promoters to compete with other resolution applicants to retain control of the corporate debtor, were made in the context of (a) before the constitution of CoCs or (b) in terms of s.12A of the Code on the basis of an offer given by the promoter in such a case – In the impugned judgment, there is no discussion on the special circumstances other than the reference to judgment in Bafna’s case – It is predicated on a broad reasoning as if ipso facto there is no need to call other proposals if corporate debtor is an MSME – This is not the correct position of law – Further, all that was done by this Court in Saravana Global Holdings Ltd. & Anr. Vs. Bafna Pharmaceuticals Ltd. & Ors. was to simply uphold the order of the Tribunal by observing that no case for interference is made out, nothing more and nothing less – In the present case, the appellant-Resolution Professional cannot be faulted for calling for other proposals in which the proposal given by respondent No.1Promoter of the MSME was also to be examined, put them to voting before the CoCs and declare the results – To that extent, the impugned order is set aside – Contempt proceedings or any other proceedings emanating from the premise of the observations in paragraph Nos. 32 and 34 in the impugned judgment set aside – Further, on request, a one time window given to the respondent No.1 on account of the fact that he has submitted an OTS (One Time Settlement) proposal to the financial creditors and are hopeful of the acceptance of the same – Beyond the window of two months, if the OTS is not accepted, the appellant will be free to declare the results of the e-voting qua all the proposals. [Paras 7, 11, 14-17, 21]
LIST OF CITATIONS AND OTHER REFERENCES
Kunhayammed & Ors vs State Of Kerala & Anr. (2000) 6 SCC 359: [2000] 1 Suppl. SCR 538 – referred to.
Saravana Global Holdings Ltd. & Anr. Vs. Bafna Pharmaceuticals Ltd. & Ors Company Appeal (AT) (Insol.) No. 203 of 2019 – referred to. OTHER CASE DETAILS INCLUDING IMPUGNED
ORDER AND APPEARANCES
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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