Section 29A bar blocks indirect control through a purported scheme, and liquidation steps must route through the liquidator.
A purported facilitation arrangement under Section 230 of the Companies Act, 2013 was treated as a backdoor attempt to secure control of the corporate debtor because the scheme was appellant-centric and the appellant was materially connected with implementation; the arrangement was therefore hit by the ineligibility bar under Section 29A of the Insolvency and Bankruptcy Code, 2016. After liquidation commenced, statutory control vested in the liquidator, so the appellant could not bypass that process to obtain MSME registration or pursue Section 230 steps directly; no further opportunity was granted.
Issues: (i) Whether the appellant was only a facilitator for the proposed scheme under Section 230 of the Companies Act, 2013, or was in substance seeking to control the corporate debtor despite ineligibility under Section 29A of the Insolvency and Bankruptcy Code, 2016. (ii) Whether the appellant could validly obtain an MSME certificate and pursue further action under Section 230 of the Companies Act, 2013 during liquidation without routing the matter through the liquidator.
Issue (i): Whether the appellant was only a facilitator for the proposed scheme under Section 230 of the Companies Act, 2013, or was in substance seeking to control the corporate debtor despite ineligibility under Section 29A of the Insolvency and Bankruptcy Code, 2016.
Analysis: The schemes were found to be centered around the appellant, who was shown as the applicant and who would take the steps necessary to implement and execute the project. The arrangement was not treated as a neutral facilitation arrangement because the appellant was to remain in command of the scheme. On the contents of the schemes, the appellant was held to be materially connected with the proposed implementation and not a mere intermediary. In that setting, the proposed route was treated as an attempt to secure a backdoor entry despite the bar under Section 29A.
Conclusion: The appellant was not merely a facilitator and the proposed scheme was hit by ineligibility under Section 29A of the Insolvency and Bankruptcy Code, 2016.
Issue (ii): Whether the appellant could validly obtain an MSME certificate and pursue further action under Section 230 of the Companies Act, 2013 during liquidation without routing the matter through the liquidator.
Analysis: Once liquidation had commenced, the management and conduct of the process vested in the liquidator and the appellant could not bypass that statutory control. The application for MSME registration was made after liquidation had started and without the liquidator taking the step, which was treated as impermissible. In view of the subsequent auction and letter of intent, the Tribunal also declined to reverse the liquidation process or grant another opportunity under Section 230.
Conclusion: The appellant could not lawfully bypass the liquidator to obtain the MSME certificate, and no further opportunity under Section 230 of the Companies Act, 2013 was granted.
Final Conclusion: The challenge to the impugned orders failed because the proposed scheme was found to be appellant-centric and impermissible in liquidation, and the statutory process was not reopened.
Ratio Decidendi: A person ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 cannot indirectly control a liquidation scheme through a purported facilitation arrangement, and statutory steps during liquidation must be taken in accordance with the liquidator's authority.
TaxTMI 
AI Drafter ✕
TaxTMI 
