MSME exemption under insolvency law requires proven registration status, not mere acknowledgement of an application.

MSME-based exemption under section 240A of the Insolvency and Bankruptcy Code applies only when the corporate debtor affirmatively proves valid MSME status under the governing registration and memorandum requirements. A mere acknowledgement of an application for registration does not confer legal status or entitlement under the Micro, Small and Medium Enterprises Development Act, 2006. On that basis, the resolution professional was not required to treat the promoter-director as a permissible resolution applicant or revise the expression of interest, and the challenge to the rejection of the bid failed because the rejection was for non-compliance with EOI requirements, not solely for section 29A disqualification.

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Issues: Whether the corporate debtor had established that it was a micro, small or medium enterprise so as to claim the benefit of section 240A of the Insolvency and Bankruptcy Code, 2016 and thereby assail the expression of interest and the rejection of the applicant's bid.

Analysis: The application turned on the claim that the corporate debtor was an MSME and therefore the rigour of section 29A, to the extent saved by section 240A, would not apply. The record, however, showed only an acknowledgement of an application for registration and not a completed statutory registration or memorandum conferring legal status under the Micro, Small and Medium Enterprises Development Act, 2006. For a service enterprise, the statutory scheme under section 7(1)(b) read with section 8 contemplated compliance with the prescribed memorandum regime, and the acknowledgement itself expressly did not confer any legal right. In the absence of proof that the corporate debtor had validly acquired MSME status, the applicant could not insist that the resolution professional treat the promoter-director as a permissible resolution applicant or revise the expression of interest on the footing that section 240A applied. The challenge to the process also failed because the rejection was on non-compliance with the EOI requirements and not on the sole ground of disqualification under section 29A.

Conclusion: The corporate debtor was not proved to be an MSME, section 240A was not attracted, and the challenge to the EOI and the rejection of the applicant's bid failed.

Ratio Decidendi: MSME-based exemption under section 240A of the Insolvency and Bankruptcy Code, 2016 is available only when MSME status is affirmatively established in accordance with the governing memorandum requirements; a mere acknowledgement of an application for registration does not confer that status or legal entitlement.

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