TaxTMI 
TaxTMI 
2023 (10) TMI 72
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....nt of NCLAT dated 01.12.2021 on a limited aspect. It is not necessary for us to delve into all the factual scenario which gave rise to these proceedings. Suffice to say that there is no controversy before us that the respondent No.1 is the promoter of the Micro, Small & Medium Enterprises (for short 'MSME') -Springfield Shelters Pvt. Ltd. The proceedings against the said entity are pending under the Insolvency and Bankruptcy Code, 2016 (for short "the Code") initiated on 12.2.2020 and the appellant before us is the Resolution Professional. 2. It is sufficient to note that the NCLAT had put a question mark on the status of the entity as MSME on account of the certificate being procured after the process had began but in appeal as per the ....
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.... 34) Further, this Tribunal, keeping in view of the object of the Code that the Maximization of the Value of the Assets of Corporate Debtor is to be kept in mind in achieving its object. To give an opportunity to regain the control of the Corporate Debtor, the Management/Promoters/Erstwhile Directors of the Corporate Debtor being an MSME, not necessary to compete with other Resolution Applicants." 5. The aforesaid observations have been made in the context of the judgment of the Tribunal in titled as "Saravana Global Holdings Ltd. & Anr. Vs. Bafna Pharmaceuticals Ltd. & Ors.". 6. The appellant sought to invite other plans and thereafter e-voting took place. On the anvil of the results of e-voting to be declared, contempt proceedi....
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.... envisages maximization of value of the assets of the 'Corporate Debtor' so that they are efficiently run as going concerns and in turn, will promote entrepreneurship. The preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no 'Resolution Plan' or the 'Resolution Plan's submitted are not up to the mark. 19. Admittedly, the 'Corporate Debtor' is a 'MSME' and the promoters are not ineligible in terms of Section 29A of the 'I&B Code'. Therefore, it is not necessary for the 'Committee of Creditors' to find out whether the 'Resolution Applicant' is ineligible in terms of Section 29A or not. 20. The 'Committee of Creditors....
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.... by the 'Insolvency and Bankruptcy Board of India'. 22. Therefore, we hold that in exceptional circumstances, if the 'Corporate Debtor' is MSME, it is not necessary for the Promoters to compete with other 'Resolution Applicants' to regain the control of the 'Corporate Debtor'." 9. A reading of the aforesaid shows that it begins with the fundamental principle that the Court envisages maximization of value of assets of the corporate debtor. Thereafter, it proceeds to discuss the scenario of a corporate debtor, which is an MSME, qua the ineligibility in terms of the inapplicability of Section 29A (c) & (h) of the Code to a promoter. 10. The discussion proceeds to the aspect of Committee of Creditors (for shor....
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.... of law. 12. This is more so as in the factual scenario of Bafna's case, the observations were made in the context of (a) before the constitution of CoCs or (b) in terms of Section 12A of the Code on the basis of an offer given by the promoter in such a case. 13. This is to clarify the legal principles so that there is no confusion in future in appreciating the context of the observations made in Bafna's Case. 14. We are, thus, clearly of the view that the appellant cannot be faulted for calling for other proposals in which the proposal given by respondent No.1 was also to be examined, put them to voting before the CoCs and declare the results. 15. To that extent, the impugned order is set aside. 16. Needless to say all proce....