TaxTMI 
TaxTMI 
2020 (2) TMI 1077
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....led Application under section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC - in short) on behalf of the Corporate Debtor as Applicant on the basis of Board Resolution and the Application under section 10 was admitted by the Adjudicating Authority on 26th April, 2018. After initiation of the CIRP process, Respondent - Resolution Professional issued (Annexure A-3) "Invitation for Expression of Interest and Submission of Resolution Plan" with regard to the Corporate Debtor. The invitation specified last date to submit EOI by 12 Noon of 18.08.2018. It is stated for the Appellant that the Appellant sent e-mail dated 18.08.2018 (Annexure A-9 - Page 135) to the Resolution Professional. The contents of which read as under:- "Amit Gupta <[email protected]> Sat, Aug 18, 2018 at 12:07 PM To: yogesh gupta <[email protected]> Cc: Yogesh Gupta <[email protected]> Dear Mr. Yogesh, I, Amit Gupta s/o Late Mr. Jag Mohan Gupta is interested to bid for resolution of M/s Varanasi Auto Sales Limited. Kindly enlist my name for the same. Thanking you, With Regards, Amit Gupta Enclosed : ITR and pan" Th....
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....e Debtor is MSME and that the claim had no supporting material or registration details. The Affidavit also claimed that the e-mail was sent on the last date of submitting EOI. The Resolution Professional stated in the Affidavit that the e-mail was received at 11:50:58 on 18th August, 2018. (Although Respondent stated this in the Affidavit, the copy of e-mail filed at Annexure A-9 Page - 135 filed by the Appellant himself shows the date and time of the e-mail to be "Sat, Aug 18,2018 at 12:07 PM"). The Resolution Professional claimed before the Adjudicating Authority that the e-mail had only attached copy of PAN Card and Income Tax Returns for the 3 years and the same was not in accordance with the requirements of document for submission of expression of interest and such deficiencies were informed to the Appellant. The other averments made against the Resolution Professional were also resisted including the claim that there were employees in the Company. Respondent claimed that the Corporate Debtor had only the Agency of Tata Motors which also was terminated in August, 2017, for which documents were filed. 6. Before Adjudicating Authority, the Appellant filed Rejoinder Affidavit ....
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....erred, the Adjudicating Authority could not have relied on section 8. In this regard, after referring to the rival cases (which we have also referred above), the Adjudicating Authority in the Impugned Order analysed section 7 and 8 of MSME Act. It may be recalled that the Appellant himself in the CA 259 of 2018 relied on sections 7 and also section 8 of MSME Act to claim that section 8 had given option to the existing enterprise if it was micro or small enterprise to submit memorandum under section 8, when the Act came into force. The Adjudicating Authority observed in Para - 18 of Impugned Order:- "If the person who established the enterprises, is not exercised the option of filing the memorandum with the specified authority under sub-section (3) or (4) of section 8, then the person who is running the enterprises, is not entitled for the benefits under the MSME Act."' 9. Adjudicating Authority then referred to the acknowledgement which had been filed and reproduced note from the acknowledgement issued by the Authority under MSME that,- "Issue of this acknowledgement does not confer any legal right. It is mandatory for the entrepreneur to obtain No Objectio....
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.... matter which was before the Hon'ble High Court of Delhi, the Petition was filed against reference being made by the Respondent whereby disputes between RIL and Respondent No.2 in that matter were referred to arbitration. The reference was made in terms of provisions of section 18 of MSME Act. RIL assailed the decision of the Council to make a reference claiming that at the material time, GCIL was not registered under the MSME Act and was not a supplier as defined under section 2(n) of the said Act and so the Council had no jurisdiction to refer the subject to the arbitration. In Para - 26, Hon'ble High Court observed as under:- "26. As noticed above, there is no dispute that GCIL would fall within the definition of micro/small enterprise even at the material time when it had executed the contract with RIL. GCIL is a company and the services provided by GCIL are clearly services rendered by a micro/small enterprise and, therefore, GCIL - being engaged in supply of services rendered by a micro/small enterprise - would fall within the fourth category of entities that are included as a 'supplier': that is, a company, co-operative society, trust or a body engag....
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.... (iii) a medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees. Explanation 1.-For the removal of doubts, it is hereby clarified that in calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded. Explanation 2.-It is clarified that the provisions of section 29B of the Industries (Development and Regulation) Act, 1951 (65 of 1951), shall be applicable to the enterprises specified in sub-clauses (i) and (ii) of clause (a) of sub-section (1) of this section. (2) The Central Government shall, by notification, constitute an Advisory Committee consisting of the following members, namely:- (a) the Secretary to the Government of India in the Ministry or Department of the Central Government having administrative control of the small and medium enterprises who shall be the Chairperson, ex officio; (b) not more than five officers of the Central Government possessing necessary expertise in matters relating to micro, small and me....
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....ny enterprises or the village enterprises, as part of small enterprises." [Emphasis Supplied] 13. When at the time of arguments, the learned Counsel for the Appellant tried to show the investments made by the Corporate Debtor to claim that it was a small enterprise, it was noticed that the above explanations require not merely seeing the investment but other factors also. Under section 29B of the Industries (Development & Regulation) Act, 1951, Central Government has powers to exempt any industrial undertaking in public interest from applying all or any of the provision of that Act, subject to conditions as it may think fit. The learned Counsel for the Appellant has not been able to show us as to how Resolution Professional when he receives expression of interest could be expected to go into accounts and other factors or facts and go into Notifications to apply law and hold under which classification an applicant would or not fall. It is not shown how Resolution Professional with time bound milestones fixed in IBC can decide if or not the Corporate Debtor fits into classifications under section 7 or is not covered by MSME Act at all. The Appellant pointed out an old ack....
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....16" ('Regulations' - in short) deals with invitation for expression of interest. Clause - 6 of Regulation 36-A provides that "The expression of interest received after the time specified in the invitation under Clause (b) of the sub-regulation (3) shall be rejected." Although the Resolution Professional in his Affidavit before Adjudicating Authority mentioned the time of receipt of e-mail dated 18th August, 2018 (Annexure A-9) from the Appellant at 11:50:58 hours, the document filed by the Appellant himself shows that it was received/sent after 12 o' clock. In terms of Clause - 6 of Regulation 36-A, even if such e-mail was to be categorized as an expression of interest, it would require to be rejected. Apart from this, if Sub-Clause - 7 of Regulation 36-A is seen, it requires that the expression of interest shall be unconditional and should be accompanied by undertakings, records, information as specified in Sub-Clauses 'a' to 'g'. One of the requirements for the prospective Resolution Applicant is giving undertaking that it meets the criteria specified by the Committee under Clause 'h' Sub-section (2) of section 25. We have already reproduced th....
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....Resolution Professional cannot be going into investigations and enquiries and findings whether or not a Corporate Debtor falls under the classifications of MSME and Adjudicating Authority is also not expected to make such investigations, enquiries on such evidence or give findings on such issues, which may not be accurate without assistance of an opposite side or Government Counsel bringing forth which or the other Notification etc. applies. Under sections of MSME Act, even if getting Memorandum Certificated for a given enterprise may be optional, if advantage is to be taken of MSME Act, the Applicant must take pains to get the Memorandum Certificate to seek benefits under IBC. 19. The learned Counsel for the Appellant relied on the Judgement in the case of Saravana Global Holdings Ltd. v. Bafna Pharmaceuticals Ltd. [2019] 108 taxmann.com 358/155 SCL 240 (NCL - AT) to submit that in that matter benefit was given to the Corporate Debtor when it was claimed that it was MSME. If para 8 and para 19 of that Judgement are seen, the Resolution Professional in that matter had confirmed that the Resolution Applicant therein was an MSME and was eligible under section 29-A of IBC. That bei....
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.... 38 of that Judgement). The learned Counsel for the Appellant relied on Judgement in the matter of Armada Singapore (P.) Ltd. v. Ashapura Minechem Ltd.in Company Appeal (AT) (Insolvency) No. 350 of 2019 and others dated 30th September, 2019 to submit that even in that matter, it was found that there was no dispute that to file Application under section 10, approval of AGM/EGM was not taken. This Tribunal had observed that it was against the provisions of law. This also, we find was subsequent to 6th June, 2018 when Sub-section (3) of section 10 of IBC was substituted and Clause 'c' came to be added. By this amendment to move Application under section 10, the Corporate Debtor was now required to file special Resolution passed by shareholders of the Corporate Debtor or Resolution passed by at least 3/4th of the total partners of the Corporate Debtor, as the case may be, approving filing of the Application. This Tribunal has already observed in the matter of Umesh Aggarwal v. Ricoh India Ltd. in Company Appeal (AT) (Insolvency) No. 621 of 2018 in para - 11 where it was observed:- "11. We have already noticed that the prior approval of the shareholders in the AGM....