TaxTMI 
TaxTMI 
2026 (4) TMI 1279
X X X X Extracts X X X X
X X X X Extracts X X X X
....rity, aggrieved by which order, this Appeal has been filed. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The CD - GEI Industries Systems Ltd. has been put to Corporate Insolvency Resolution Process ("CIRP") by an order dated 22.01.2025 by the Adjudicating Authority. The Respondent was appointed as Interim Resolution Professional ("IRP"), who was subsequently confirmed as Resolution Professional ("RP"). On 21.03.2025, the RP published the Form-G inviting Expression of Interest ("EoI") for the CD. Last date for submitting the EoI was 20.04.2025 and 15.05.2025 was the date for issuance of final list of Prospective Resolution Applicants ("PRAs"). On 15.05.2025, final list of PRAs was published, containing names of three Resolution Applicants. (ii) In the 4th Committee of Creditors ("CoC") Meeting held on 16.05.2025, the Appellant expressed his desire to submit a Resolution Plan. The CoC approved the request, subject to approval of the NCLT, Indore Bench. (iii) Pursuance to the decision taken by the CoC on 16.05.2025, the RP filed an IA No.237 of 2025 seeking approval of the Adjudicating Authority to allow the Appellan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. Insofar as the ineligibility Report relying on SEBI Circular, freezing of Promoter shareholding at ISIN level is related to one listed entity and does not amount to a general bar from accessing the securities markets. As a matter of utmost good faith, the Appellant himself has disclosed to the RP that restriction on the Appellant arises not from the ISIN Freeze Circular, but from an order of the Stock Exchange directing compulsory delisting of the shares of GEISL, under a separate SEBI Circular dated 07.09.2016. The copy of the order dated 26.06.2018 was brough on record by the Appellant itself. It is submitted that order dated 26.06.2018 related to GEISL, of which the Appellant was Promoter. Insolvency proceedings against GEISL commenced in the year 2017 and at that time when order dated 26.06.2018 was issued GEISL was under insolvency and moratorium had been declared. No action could have been taken against GEISL on account of moratorium being in place. The Appellant has informed the Stock Exchange about the initiation of CIRP against GEISL. 5. Learned Senior Counsel appearing for Respondent No.1 refuting the submissions of the Appellant, submits that the Appellant being Pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be dismissed as withdrawn on 06.06.2025. However, as per liberty taken by RP while withdrawing the application, the RP proceeded to examine the eligibility of the Appellant and an eligibility Report was obtained by the RP. The RP after considering the eligibility Report obtained, sent a communication to the Appellant on 11.06.2025 informing the Appellant that the Appellant is ineligible under Section 29A(e) and 29A(f). The letter issued by the RP with respect to ineligibility under Section 29A(e) and 29A(f) states as follows: "Pursuant to the verification of documents submitted by you and based on information available in the public domain and official records, we wish to inform you of the following observations that render you ineligible to submit a resolution plan in the Corporate Insolvency Resolution Process (CIRP) of GEI Power Ltd.: 1. Ineligibility under Section 29A(e) read with Section 164(2) of the Companies Act, 2013: It has been observed that your Director Identification Number (DIN: 00054508) stands deactivated. As per the provisions of the Companies Act, 2013, an individual whose DIN is deactivated is disqualified from acting or being appoi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nge. 4.2 On account of compulsory delisting, the Company, its whole time directors, its promoters and the companies which are promoted by any of them shall not directly or indirectly access the securities market or seek listing for any equity shares for a period of ten years from the date of such delisting in terms of Regulation 24 of Delisting Regulations." 9. It an admitted fact that the Appellant apart from being Suspended Director of the CD was also Promoter of GEI Industrial Systems Ltd. Paragraph 4.2 of the order clearly prohibited the Appellant from directly or indirectly access the securities markets. Section 29A(e) and 29A(f) of the IBC are as follows: "29A(e) is disqualified to act as a director under the Companies Act, 2013 (18 of 2013): Provided that this clause shall not apply in relation to a connected person referred to in clause (iii) of Explanation I; (f) is prohibited by the Securities and Exchange Board of India from trading in securities or accessing the securities markets;" 10. With respect to 29A(e), learned Counsel for the Appellant has submitted that the DIN, which was initially inactive now been activated and releva....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Authority ought to have declared the prohibition as void and held that the prohibition is contrary to moratorium under Section 14, cannot be accepted. The legislative scheme and intendment for prohibition under Section 29A(f) is not to examine the decision taken by SEBI, prohibiting from trade in securities or accessing securities markets, that is not the jurisdiction vested with the Adjudicating Authority. When an order prohibiting the Promoter exists, ineligibility under Section 29A(f) comes into operation and the RP and the Adjudicating Authority have not committed any error in declaring the Appellant ineligible under Section 29A(f). 12. Learned Counsel for the Appellant in support of his submission has placed reliance on judgments of the Hon'ble Supreme Court in M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr. - (2024) 1 SCC 42. Learned Counsel for the Appellant has placed reliance on Paragraphs 144 and 145 of the judgment. The Hon'ble Supreme Court in the above case was examining the effect of Section 164 of the Companies Act, 2013. Section 164 (2)(b) of the Companies Act provides as follows: "164(2) No person who is or has been a director of a company whic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esolution applicant goes to the root of the matter but, we do agree with the other part of the submission in this regard that there is no concept of deemed disqualification under Section 164(2)(b) of the Companies Act." 14. The above judgment of the Hon'ble Supreme Court in no manner supports the Appellant, since in the present case there is already order by the competent Authority dated 26.06.2018 prohibiting the Promoter from dealing with the securities. Thus, the present is not a case where any assumption of any disqualifications are made. In the present case, order putting bar on the Appellant was passed by the competent Authority. Hence, the above judgment in no manner supports the submission of the Appellant. 15. Another judgment relied by the learned Counsel for the Appellant is Malharshanti Enerprises vs. Naresh Sevantilal Shah and Anr. - Company Appeal (AT) (Ins.) no.2032 of 2025 decided on 20.03.2026. This Tribunal in the above case was again dealing with disqualification under Section 164(2)(a) and 164(2)(b) of the Companies Act, 2013. This Tribunal followed the judgment of the Hon'ble Supreme Court in M.K. Rajagopalan vs. Dr. Periasamy Palani Gounder & Anr. - (202....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in Malharshanti Enterprises also does not come to any aid of the Appellant in the facts of the present case. 17. Learned Counsel for the Appellant has relied on judgment of this Tribunal in Ms. Anju Agarwal, Resolution Professional for Shree Bhawani Paper Mills Ltd. vs. Bombay Stock Exchange & Ors. - Company Appeal (AT) (Ins.) No.734 of 2018. In the above case, this Tribunal came to consider Section 28A of the SEBI Act, 1992, which relates to recovery of amounts. Section 28A has been noticed by this Tribunal in its judgment in Paragraph-15. In Paragraphs 19, 20 and 21, following have been observed: "19. Section 28A of the 'SEBI Act, 1992' being inconsistent with Section 14 of the 'I&B Code', we hold that Section 14 of the 'I&B Code' will prevail over Section 28A of the 'SEBI Act, 1992' and 'Securities Exchange Board of India' cannot recover any amount including the penalty from the 'Corporate Debtor'. The 'Bombay Stock Exchange' for the same very reason cannot take any coercive steps against the 'Corporate Debtor' nor can threaten the 'Corporate Debtor' for suspension of trading of shares. 20. The 'Bombay Stock Exchange' deals with the shares. The shares of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he order in the present case prohibiting the Promoter from accessing securities markets cannot be counted as any order for recovery of any amount from the CD. The judgment of this Tribunal in Ms. Anju Agarwali, thus, does not come to any aid of the Appellant. 20. Learned Counsel for the Respondent has placed reliance on judgment of this Tribunal in Bohar Singh Dhillon vs. Rohit Sehgal (IRP) and Ors. - Company Appeal (AT) (Ins.) No.665 of 2018, where this Tribunal in Paragraph-8 has held that till the period of Moratorium continues, the SEBI cannot recover any amount. However, the RP has to act in compliance with the requirements under SEBI Act and Regulations. In Paragraph-8 of the judgment, following was held: "8. In view of the aforesaid position of law, we hold that the application under Section 7 is maintainable and till the period of 'Moratorium' continues, the 'Securities and Exchange Board of India' cannot recover any amount nor can sell the assets of the 'Corporate Debtor' during the 'Moratorium' period. Though we have held that the application under Section 7 is maintainable while step has been taken by the 'Securities and Exchange Board of India' the ....