MSME insolvency eligibility turns on the resolution plan submission date, while Section 29A disqualifications require strict factual proof.

Section 29A disqualifications must be tested against the actual statutory facts, and the record here did not establish disqualification under clauses (c), (g) or (h). For MSME resolution, Section 240A is treated as a beneficial exception that excludes the specified Section 29A bars, and the operative cut-off for assessing eligibility is the date of submission of the resolution plan, not the commencement of CIRP. The analysis also states that this reading accords with the statutory scheme and legislative intent to preserve viable resolution for MSMEs linked to their promoters.

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Issues: (i) Whether the resolution applicant or promoter was disqualified under Section 29A of the Insolvency and Bankruptcy Code, 2016 on the facts of the case; (ii) whether, in the case of a micro, small and medium enterprise, the relevant cut-off date for applying Section 240A is the date of commencement of CIRP or the date of submission of the resolution plan.

Issue (i): Whether the resolution applicant or promoter was disqualified under Section 29A of the Insolvency and Bankruptcy Code, 2016 on the facts of the case.

Analysis: The disqualifying clauses relied upon were examined against the factual record. Clause (c) was found inapplicable because there was no established non-performing asset position meeting the statutory requirements. Clause (g) was not attracted because no adjudicatory finding on the alleged preferential transaction had been made as on the relevant date. Clause (h) also had no factual application. The analysis proceeded on the basis that the statutory disqualifications were specific and were not made out on the existing record.

Conclusion: The disqualification under Section 29A was not established.

Issue (ii): Whether, in the case of a micro, small and medium enterprise, the relevant cut-off date for applying Section 240A is the date of commencement of CIRP or the date of submission of the resolution plan.

Analysis: Section 240A, introduced as a beneficial exception for micro, small and medium enterprises, carves out clauses (c) and (h) of Section 29A through a notwithstanding clause. The statutory purpose was to preserve the possibility of resolution where the business is closely linked to its promoter and to avoid liquidation in deserving cases. Reading Section 29A(c) with the later amendment and the legislative background, the relevant point of time was held to be the submission of the resolution plan. The view that the commencement of CIRP is the cut-off date was rejected as inconsistent with the statutory scheme and the legislative intent.

Conclusion: The cut-off date is the date of submission of the resolution plan, not the commencement of CIRP.

Final Conclusion: The impugned orders were set aside, the appeal succeeded, and the matter was restored for reconsideration before the National Company Law Tribunal, with consequential action pursuant to the impugned order rendered unsustainable.

Ratio Decidendi: For MSME insolvency resolution, the eligibility of a resolution applicant is to be tested with reference to the date of submission of the resolution plan, and the Section 29A disqualifications excluded by Section 240A cannot be applied by treating the commencement of CIRP as the operative cut-off date.

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