TaxTMI 
TaxTMI 
2024 (1) TMI 530
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.... the ground that Mr. Mahesh Mathai- Successful Resolution Applicant is not eligible to submit a Resolution Plan under Section 29 A of the Code. 2. Brief facts of the case necessary to be noticed for deciding this Appeal are:- 2.1. Corporate Debtor- 'M/s. Blue Frog Media Private Limited' through its Managing Director filed an Application under Section 10 of the Code which was admitted on 19.05.2021 by the Adjudicating Authority. Form G was published in response to which Resolution Plan was submitted by Mr. Mahesh Mathai, Ex-Director of the Corporate Debtor. Committee of Creditors (CoC) on 08.11.2021 by 91.86% vote share has approved the Resolution Plan submitted by the Respondent No.2- Successful Resolution Applicant. On 13.11.2021, Appellant filed an application IA No. 2828 of 2021 under Section 30(6) of the Code seeking approval of the Resolution Plan. The Adjudicating Authority heard the matter and reserved it for orders on 07.06.2023. On 21.07.2023, the Adjudicating Authority sought certain clarifications and Additional Affidavit was filed by the Appellant in compliance with the direction dated 21.07.2023. The Adjudicating Authority by impugned order rejected IA No. 2828 of 20....
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....esolution Applicant was never held to be ineligible. 6. We have considered the submissions of the Counsel for the parties and perused the record. 7. The only question to be answered in this Appeal is as to whether Respondent No.2 is ineligible under Section 29A to submit a Resolution Plan. The Resolution Plan submitted by the Respondent No.2 has been approved by the CoC with 91.86% vote share. Application was also filed by the Resolution Professional for approval of the Resolution Plan which has been rejected by impugned order holding that the Respondent No.2 is not eligible in submitting a Resolution Plan. In pursuance of the order passed by the Adjudicating Authority asking for clarification, Additional Affidavit was filed by the Resolution Professional where it was stated that the Successful Resolution Applicant was director of the Corporate Debtor from 20.07.2006 to 01.03.2018. Copy of Form DIR-12 and Resignation Letter was annexed along with Additional Affidavit. Financials of the Corporate Debtor for F.Y. 2018- 2019 and 2019-2020 were also annexed along with the Additional Affidavit. Resolution Plan was submitted by the Respondent No.2 on 28.10.2021 which is clear from Form....
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.... prescribed], 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 under this Code;] [(d) has been convicted for any offence punishable with imprisonment - (i) for two years or more under any Act specified under the Twelfth Schedule; or (ii) for seven years or more under any law for the time being in force: Provided that this clause shall not apply to a person after the expiry of a period of two years from the date of his release from imprisonment: Provided further that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I]; (e) is disqualified to act as a director under the Companies Act, 2013 (1....
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....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 [or completion of such transactions as may be prescribed], 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; (b) any entity regulated by a foreign central bank or a securities market regulator or other financial sector regulator of a jurisdiction outside India which jurisdiction is compliant with the Financial Action Task Force Standards and is a signatory to the International Organisation of Securities Commissions Multilateral Memorandum of Understanding; (c) any investment vehicle, registered foreign institutional investor, registered foreign portfolio investor or a foreign venture capital investor, where the terms shall ....
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.... from his shareholding pattern that he was always involved in the company, in fact after his resignation and whilst the company was under financial distress, his shareholding went up from 4,36,757 equity shares to 5,13,458 shares equity shares in the year 2019-2020. The said Resolution Plan cannot be allowed as it is in violation of rationale behind insertion of Section 29A, which was to protect the interest of creditors, from persons who have contributed to the mismanagement and defaults committed by the Corporate Debtor." 11. Thus, the question to be answered is as to whether a mere fact that the person submitting a Resolution Plan has been promoter or director makes ineligible to submit a Resolution Plan. 12. The Hon'ble Supreme Court had occasion to consider Section 29A in reference to promoters of the Corporate Debtor in 'Hari Babu Thota' (supra). In the above case, a plan proposed by the promoter was approved by the Committee of Creditors and the application was filed by the Resolution Professional for approval of the plan which was dismissed on the ground that the promoters could not have presented the plan. The Appeal was filed by the Resolution Professional challenging ....