TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 151
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....nch, Bengaluru), dismissing the Application, whereby and whereunder the Resolution Professional ('RP')/the Appellant herein sought for approval of the Resolution Plan, the RP preferred this Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'). By the `Impugned Order', while rejecting the Resolution Plan, the `Adjudicating Authority' has observed as follows: "viii). Moreover, it was also pointed out in the above decision that though the Corporate Debtor was incorporated in the year 1995, it never sought registration as MSME and it was expressly denied in the Expression of Interest (EOI) issued by the RP pursuant to the order for initiation of CIRP. It was also noted that there were pe....
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....08.09.2021 for submission of a Resolution Plan for revival of the `Corporate Debtor'. Upon receipt of the Resolution Plan and the Affidavit under Section 29-A of the Code, the Resolution Professional placed the same before the CoC for approval. The Members of the CoC advised the Resolution Applicants to submit the revised terms of the Plan, which was placed before the 6th CoC Meeting held on 28.01.2022 and the same was approved by the CoC with 100% Voting Share. I.A. 192/2022 was preferred by the Appellant RP on 08.02.2022 seeking approval of the Resolution Plan which was rejected by the `Adjudicating Authority' vide the `Impugned Order'. 3. Learned Counsel for the Appellant submitted that the Resolution Applicant does not disqualify under....
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....or in which a preferential transaction, undervalued transaction, extortionate credit transaction or fraudulent transaction has taken place and in respect of which an order has been made by the Adjudicating Authority under this Code; viii. Have not executed a guarantee in favour of a creditor in respect of a corporate debtor against which an application for insolvency resolution made by such creditor has been admitted under this Code and such guarantee has been invoked by the creditor and remains unpaid in full or part; ix. Are not subject to any disability, corresponding to clauses (a) to (h), under any law in a jurisdiction outside India; x. Do not have a connected person not eligible under clauses (a) to (i); ..." 4. It is seen f....
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....e `related party' of the `Corporate Debtor'. It is significant to mention that this was not brought to the notice of the Members during the various CoC Meetings conducted. 5. The Hon'ble Supreme Court in `Arun Kumar Jagatramka' Vs. `Jindal Steel & Power Limited & Anr.' (2021) 7 SCC 674 , has held as follows: "46. The Report of the Insolvency Law Committee dated 3-3-2018 states that the intent behind introducing Section 29-A was to prevent unscrupulous persons from gaining control over the affairs of the company. These persons included those who by their misconduct have contributed to the defaults of the company or are otherwise undesirable. The Committee observed: "14.1. Section 29-A was added to the Code by the Amendment Act. Owing t....
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.... assets of a company at the time of liquidation. Concerns have been raised that persons who, with their misconduct contributed to defaults of companies or are otherwise undesirable, may misuse this situation due to lack of prohibition or restrictions to participate in the resolution or liquidation process, and gain or regain control of the corporate debtor. This may undermine the processes laid down in the Code as the unscrupulous person would be seen to be rewarded at the expense of creditors. In addition, in order to check that the undesirable persons who may have submitted their resolution plans in the absence of such a provision, responsibility is also being entrusted on the committee of creditors to give a reasonable period to repay ov....
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...., "management" and "control" which were contained in the opening lines of Section 29-A under the Ordinance have now been transferred to clause (c) in the 2017 Amendment Act. It is, therefore, important to note that the 2017 Amendment Act opens with language which is of wider import than that contained in the 2017 Ordinance, evincing an intention to rope in all persons who may be acting in concert with the person submitting a resolution plan." 7. At this juncture, it is relevant to reproduce Section 240-A, which is detailed as hereunder: "240-A. Application of this Code to micro, small and medium enterprises. - (1) Notwithstanding anything to the contrary contained in this Code, the provisions of clauses (c) and (h) of section 29A shall n....