TaxTMI 
TaxTMI 
2021 (2) TMI 1027
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....6 challenging the decision of the first respondent/RP in rejecting the Expression of Interest (EOI) submitted by the applicant for submission of resolution plan in respect of the corporate debtor. 2. The Corporate Insolvency Resolution Process proceedings were initiated against the corporate debtor M/s Bhandari Deepak Industries Private Limited on 19.11.2019 when this Adjudicating Authority admitted CP (IB) No. 269/Chd/HP/2019 filed by an operational creditor Mr. Gulshan Kumar, the Proprietor of Gulshan Trading Company. 3. It is submitted that in terms of Regulation 36A(i) of the IBBI (IRP for CP) Regulations, 2016, the RP published Form G dated 02.02.2020 inviting EOI from the prospective resolution applicants. The applicant being promoter of an Enterprise categorized under Micro, Small and Medium Enterprises (MSME) pursuant to publication of Form G submitted its EOI vide e-mail dated 22.02.2020 (Annexure A-5). The first respondent-RP vide e-mail dated 24.02.2020 rejected the EOI submitted by the applicant by giving certain reasons (Annexure A-6). The applicant vide e-mail dated 26.02.2020 clarified the queries or concerns of the first respondent/RP and provided the certificate ....
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....g asset accounts before submission of resolution plan: Provided further that nothing in this clause shall apply to a resolution applicant where such applicant is a financial entity and is not a related party to the corporate debtor. Explanation I- For the purposes of this proviso, the expression "related party" shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date. Explanation II - For the purposes of this clause, where a resolution applicant has an account, or an account of a corporate debtor under the management or control of such person or of whom such person is a promoter, classified as non-performing asset and such account was acquired pursuant to a prior resolution plan approved under this Code, then, the provisions of this clause shall not apply to such resolution applicant for a period of three years from the date of approval of such resolution plan by the Adjudicating Authority....
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....solution applicant; or (ii) any person who shall be the promoter or in management or control of the business of the corporate debtor during the implementation of the resolution plan; or (iii) the holding company, subsidiary company, associate company or related party of a person referred to in clauses (i) and (ii): Provided that nothing in clause (iii) of Explanation I shall apply to a resolution applicant where such applicant is a financial entity and is not a related party of the corporate debtor: Provided further that the expression "related party" shall not include a financial entity, regulated by a financial sector regulator, if it is a financial creditor of the corporate debtor and is a related party of the corporate debtor solely on account of conversion or substitution of debt into equity shares or instruments convertible into equity shares, prior to the insolvency commencement date; Explanation II-For the purposes of this section, "financial entity" shall mean the following entities which meet such criteria or conditions as the Central Government may, in consultation with the financial sector regulator, notify in this behalf, namely:- (a) a scheduled bank....
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....5) The period of thirty days referred to in sub-section (3) shall not include any period during which the House referred to in sub-section (4) is prorogued or adjourned for more than four consecutive days. (6) Every notification issued under this section shall be laid, as soon as may be after it is issued, before each House of Parliament. Explanation.- For the purposes of this section, the expression "micro, small and medium enterprises" means any class or classes of enterprises classified as such under sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).]" 7. The impugned Annexure A-6 e-mail dated 24.02.2020 whereunder the first respondent/RP rejected the EOI of the applicant reads as under:- "YOUR EXPRESSION OF INTEREST TO SUBMIT THE RESOLUTION PLAN FOR BHANDARI DEEPAK INDUSTRIES PRIVATE LIMITED, HAS BEEN REJECTED FOR THE FOLLOWING REASONS: A. On preliminary scrutiny of your expression of interest, it is observed that the expression of interest has been submitted on behalf of Bhandari Deepak Industries Private Limited that is the corporate debtor and you have signed it as Suspended Director of the same. Please b....
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....e provisions. C. Also, BHANDARI DEEPAK INDUSTRIES PRIVATE LIMITED i.e. corporate debtor is an undischarged insolvency, therefore, is barred to be a resolution applicant pursuant to provisions of section 29A of insolvency and bankruptcy code. Therefore, the corporate debtor is not eligible to submit resolution plan. This is for your information please. Please note that your objections, if any must reach the undersigned on or before the date specified for the same in the Form G." 8. It is clear that the first reason given by the RP for rejection of the EOI submitted by the applicant is that the EOI was not submitted by the applicant in his individual capacity as a promoter of the corporate debtor, but the same was submitted on behalf of the corporate debtor M/s Bhandari Deepak Industries Private limited. Clauses (c) and (h) of Section 29A disentitles a promoter of a corporate debtor to be a resolution applicant of the same corporate debtor. Section 240A exempts the applicability of the disqualifications under Clauses (c) and (h) of Section 29A. That means Section 240A exempted the promoters of the MSME to be the resolution applicants of the same corporate debtor for which....