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Principles enshrined in relation to IBC Code Section 29A disqualification applies in the present time.
- National Company Law Appellate Tribunal give the judgments that Non-Executive Director who wasn’t involved in Mgt of company affairs couldn’t be disqualified u/s 29A,
- Managing Director of a Successful Resolution Applicant being an Ex-independent director of Non-Performing Asset –Company was not ineligible U/s 29A under IBC Code.
- Supreme Court judgment in Arun Kumar Jagatramka Vs. Jindal Steel & Power Ltd. & Anr clearly stated that Promoter who is ineligible u/s 29A can’t apply for arrangement scheme for taking immovable property of Corporate Debtors.
- National Company Law Appellate Tribunal Chennai bench stated that Applicant being an Micro, Small & Medium Enterprises would be eligible to file resolution plan for his own company. In case CD is an Micro, Small & Medium Enterprises, it is not necessary for Promoters to compete with other Resolution Applicants to regain the control of them.
- National Company Law Tribunal Chennai in the matter of Ravindranath Narayana Rao Vs. Maruthanayagam Kathiresh given the judgement that so Director’s Disqualification U/s 164(2)(a) of Companies Act 2013 read with Section 29A of the Code. In case CD is an Micro, small & Medium Enterprises, even if the promoters or directors have been declared as wilful defaulters, they can apply under the provisions of Section 230 of the Companies Act, 2013 as they are exempted from Section 29A of Insolvency & Bankruptcy Code, 2016,
- Neither Ex-Directors or Promoters nor Committee of Creditors / Resolution Professional are empowered under the Insolvency & Bankruptcy Code to obtain an Micro, Small & Medium Enterprises Certificate post-commencement of Corporate Insolvency Resolution Process with sole purpose of enabling or opening a back door entry to defaulting Ex-Directors or Promoters, who are otherwise barred U/s 29A of Insolvency & Bankruptcy Code to file Resolution Plan.
Mumbai Bench - National Company Law Tribunal in the matter of Shri Kishore Vemulapalli & Ms. Anu Jagmohan Singh given the Decision that
- In this case, Former Director who are resigned & immediately within few months later a section 10 of IBC act file petition & become the Successful Resolution Applicant,
- Shareholder/Director/ Former Promotor of a CD Resigned before filing of Corporate Insolvency Resolution Process application u/s 10 of Insolvency & Bankruptcy Code & became Successful Resolution Applicant, even than it is Duties / Responsibility of Resolution Professional to conduct Section 29A due diligence, Only taking an affidavit for eligibility u/s 29A will not suffice under the CIRP / Liquidation Proceedings
- No Micro, Small & Medium Enterprises benefit U/s 240A of IBC Code, if date of registration after admission of Corporate Insolvency Resolution Process, Similarly No Micro, Small & Medium Enterprises benefit u/s 240A of the Insolvency & Bankruptcy Code is available to promoters after the approval of Resolution Plan by the Adjudicating Authority
Applicability of Section 29A on Pre-Packaged Insolvency & its Implication.
- Promoter of a Micro, Small & Medium Enterprises CD will be eligible to file an Resolution Plan or Expression of Interest in his individual capacity as Promoter. National Company Law Tribunal Kochi Bench Order clears the status regarding Section 240A of Insolvency & Bankruptcy Code, which states that eligibility conditions stated in Sec 29A(h) & 29A(c) of Insolvency & Bankruptcy Code will not be applicable to insolvency of Micro, Small & Medium Enterprises. So, law was clear with reference to the eligibility of Resolution Applicants to file Resolution Plans during insolvency of Micro, Small & Medium Enterprises. But, IBC Code (Amendment) Ordinance, 2021 & also applicable on Pre-Packaged Insolvency as per the the provision of Insolvency and Bankruptcy (Pre-packaged Insolvency Resolution Process) Rules, 2021 which makes clear that Section 29A applicable to Pre-Packaged Insolvency for Micro, Small & Medium Enterprises. So, except for sections 29A(c) and 29A(h), the MSME has to be compliant with the provisions of section 29A in order to be eligible for Pre-packaged insolvency resolution process.
- National Company Law Tribunal given verdict that Resolution plan approved of by Committee of Creditors with 100% voting & complying with requirements of IBC Code was to be approved
- National Company Law Appellate Tribunal Chennai bench given the decision that : Committee of Creditors has power to consider the ineligibility/eligibility of the Resolution Applicant whether they are ineligible/ eligible U/s 29A(e) of the Code –
- National Company Law Tribunal Kolkata Bench stated that Date of eligibility U/s 29A of Insolvency & Bankruptcy Code, 2016 should be the date on which all Resolution Plans are finally considered by Committee of Creditors before it is put to vote in terms of CIRP Regulation 39.
- National Company Law Appellate Tribunal New Delhi bench given the judgment that IBC Section 29A literal interpretation also permeates the provisions of section 35(1)(f) of the Insolvency & Bankruptcy Code &, So, a same kind of prohibition is applicable to a successful auction purchaser so that backdoor entry of erstwhile mgt is not permissible.
Post auction in Liquidation proceedings
- Post auction in Liquidation proceedings is not open to RP/Liquidator to Act on 3rd party communication & cancel an auction unless RP/Liquidator is found that collusion or fraud had vitiated the Liquidation auction proceedings. administrative authority can take a decision without disclosing specified appropriate reasons for taking such a kind of ineligibility decision. Under Section 29A ineligibility specified in the Insolvency & Bankruptcy Code shall be attached when Resolution plan is filed by RA; So, RA disqualification on submission of Resolution plan applies in the present time.
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