Vinay Jain vs Avj Developers (India) Private Limited ...

IN THE MATTER OF: Vinay Jain ....Appellant

Vs.

AVJ Developers (India) Pvt. Ltd. & Ors. ....Respondents

Present: For Appellant: Mr. Ambuj Tiwari, Advocate with Mr. Vinay Jain, SRA. For Respondents: Ms. Mani Gupta, Mr. Aman Choudhary and Ms. Sonali Jain, Advocates for R-1. Mr. Anup Kumar D. Sayare, Advocate for R-3. Mr. Rajiv Mangla, Ms. Monika and Mr. Pradeep Kumar Kaushik, Advocates. Mr. U.N. Singh, Advocate for R-4/GNIDA. Mr. Shashank Agarwal, Advocate for R-5. Mr. Abhirup Das Gupta, Mr. Ishaan Duggal and Ms. Ruchi Goyal, Advocates for R-6.

ORDER

(Hybrid Mode)

14.02.2024: Heard Learned Counsel for the parties.

2. This appeal has been filed against the order passed by the Adjudicating

Authority dated 21.11.2023 by which the Adjudicating Authority has allowed

the application I.A. 5385/2021 filed by the Resolution Professional for approval

of Resolution Plan. Appellant the Ex-promoter of the Corporate Debtor has filed

the plan as a MSME promoter.

3. The Adjudicating Authority by the Impugned Order relying on the

Judgment of Hari Babu Thota in Comp. App. (AT) (CH) (Ins.) No. 110 of 2023

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held that Corporate Debtor having been registered as a MSME only after the

initiation of CIRP, the said certificate will not entitle the promoter to file a

resolution plan, hence, ineligibility shall attach under Section 29-A of the IBC,

2016.

4. Learned Counsel for the Appellant submits that the Judgment of this

Tribunal, Chennai Bench has been set aside by the Hon'ble Supreme Court in

Civil Appeal No. 4422 of 2023 in Hari Babu Thota which appeal has been

allowed by the Hon'ble Supreme Court vide its Judgment dated 29.11.2023.

It is submitted that the Judgment of the Hon'ble Supreme Court has reversed

the Judgment of this Tribunal, Chennai Bench in Comp. App. (AT) (CH) (Ins.)

No. 110 of 2023. Hence, even if the MSME Certificate registration is obtained

after initiation of CIRP the Promoter Directors are not ineligible to submit a

Resolution Plan.

5. There were several other applications which were filed before the

Adjudicating Authority objecting to the approval of the resolution plan.

Adjudicating Authority by the Impugned order after rejecting the resolution

plan has also allowed those applications where prayer was made to declare the

Resolution Applicant the ineligible and reject the plan.

6. Learned Counsel for the Respondent submitted that there were other

issues in the applications objecting to the approval of resolution plan apart

from ineligibility of the Resolution Applicant. Adjudicating Authority having

allowed the application on the ground that applicant was not ineligible other

issues have not been gone into.

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7. We have heard the Learned Counsel for the parties and perused the

record.

8. The basis of the Judgment of the Adjudicating Authority is that

Resolution Applicant i.e. Appellant herein Suspended Promoter Director was

not ineligible in view of the fact that MSME Certificate was obtained on

03.07.2021 whereas CIRP has commenced on 21.10.2019.

9. The Judgment of the Hon'ble Supreme Court in Hari Babu Thota has laid

down in Paragraphs 21 to 23:

"21. We are inclined to accept the aforesaid plea as it is quite obvious that while seeking to protect this category of industries, the disqualification is not to be incurred, especially in view of the "notwithstanding clause".

22. We certainly can look to the statement of the Minister for purposes of a cut-off date that "there is no other specific provision providing for cut-off date" which submits that it should be the date of application of making a bid. Thus, to opine that it is the initiation of the CIRP proceedings which is the relevant date, cannot be said to reflect the correct legal view and thus, we are constrained to observe that the law laid down in Digambar Anand Rao Pigle (supra) 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.

23. Thus, even on this count, the plan submitted in question will not incur the disqualification. We may also note that the aforesaid intent is reflected in the statutory provision itself that in Section 29A (c) which begins with "at the time of submission of the resolution plan"."

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10. The basis of the Judgment of Adjudicating Authority being only the

earlier Judgment of this Tribunal which held that MSME Certificate was

obtained after initiation of CIRP, Promoter Director is not eligible, that legal

position having been reversed by Judgment of Hon'ble Supreme Court, the

Judgment of the Adjudicating Authority cannot be sustained. In result, we set

aside the impugned order of the Adjudicating Authority and revive the

application filed by Resolution Professional for approval of the resolution plan

along with other I.As to be considered afresh and decided in accordance with

law.

11. It has been submitted by the counsel for the parties that the matter is

already listed on 05.03.2024, Adjudicating Authority shall endeavor to dispose

of the application as early as possible.

12. The appeal is disposed of accordingly.

[Justice Ashok Bhushan] Chairperson

[Mr. Barun Mitra] Member (Technical)

sa/nn

Company Appeal (AT) (Ins.) No. 1546 of 2023