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. (Para 1)
That it was an MSME before the process began and thus the benefit of the MSME Act would be available to the said entity. (Para 2)
As the entity was not an MSME and thus incurred the disqualification under Section 29(A)(e) of the said Code and an exception for MSME would not be carved out in the facts of the present case. (Para 3)
Is that the respondent No.1 filed a contempt proceeding before the NCLAT alleging that the Resolution Professional was not acting in terms of the order dated 01.12.2021. (Para 4)
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. (Para 9)
It is, thereafter, in paragraph 22, penned down, that in “exceptional circumstances” if a corporate debtor is an MSME, it is not necessary for promoters to compete with other resolution applicants to retain control of the corporate debtor. (Para 10)
In the impugned judgment, it can hardly be disputed that there is no discussion on the special circumstances other than the reference to judgment in Bafna’s case. The impugned judgment is predicated on a broad reasoning as if ipso facto there is no need to call other proposals if it is an MSME. In view of the larger context it would have, we clearly observe and hold that this is not the correct position of law. (Para 11)
To give some hiatus time to the said respondent on account of the fact that he has submitted an OTS (One Time Settlement) proposal to the financial creditors and are hopeful of the acceptance of the same. It is also his say that the flat buyers are also on board but are only 15% of the CoCs. (Para 17)
SUPREME COURT OF INDIA
2023 STPL(Web) 289 SC
[2023 INSC 849]
Raghavendran Vs. C. Raja John & Ors.
Civil Appeal No. 2552 of 2022-Decided on 13-9-2023
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