Case Note & Summary
The appeal was filed by M/s. Meir Commodities India Pvt. Ltd., a prospective resolution applicant, challenging the order of the National Company Law Tribunal (NCLT), Hyderabad, dated 08.05.2024. The NCLT had allowed applications filed by Respondent No. 1, the erstwhile promoter director of NCS Sugars Ltd., under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, holding him eligible to submit a resolution plan and permitting him to participate as a resolution applicant. The CIRP against the corporate debtor was initiated on 24.06.2022 based on a Section 7 application by Punjab National Bank. The Resolution Professional had invited expressions of interest on multiple dates. The appellant expressed interest but challenged the eligibility of the erstwhile promoter. The NCLAT found that the erstwhile promoter is a related party under Section 29A of the IBC and thus ineligible to submit a resolution plan. The appeal was allowed, and the impugned order was set aside.
Headnote
A) Insolvency and Bankruptcy Code - Eligibility of Resolution Applicant - Section 29A - Related Party - The issue was whether an erstwhile promoter director, being a related party, is eligible to submit a resolution plan. The NCLAT held that the erstwhile promoter is ineligible under Section 29A of the IBC, 2016, as he is a related party. The impugned order of the NCLT allowing him to participate was set aside. (Paras 1-15)
Issue of Consideration
Whether an erstwhile promoter director of the corporate debtor, who is a related party under Section 29A of the Insolvency and Bankruptcy Code, 2016, is eligible to submit a resolution plan.
Final Decision
The appeal is allowed. The impugned order dated 08.05.2024 passed by NCLT, Hyderabad in IA (IBC) / 897 / 2024 & IA (IBC) / 898 / 2024 is set aside.
Law Points
- Eligibility of resolution applicant
- Section 29A IBC
- Related party
- Erstwhile promoter
- CIRP
Case Details
2024 LawText (NCLAT) (01) 36
Comp. App (AT) (CH) (INS) No. 206 / 2024
Justice Sharad Kumar Sharma
Mr. PH. Arvindh Pandian, Senior Advocate for Mr. Ananth Merathia, Advocate for Appellant; Mr. Y. Suryanarayana, Advocate for R2
M/s. Meir Commodities India Pvt. Ltd.
Mr. Narayanam Nageswara Rao, Mr. K. Sivalingam, Committee of Creditors of M/s. NCS Sugars Limited
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Nature of Litigation
Company appeal against order of NCLT allowing erstwhile promoter to submit resolution plan.
Remedy Sought
Appellant sought setting aside of NCLT order permitting Respondent No. 1 to participate as resolution applicant.
Filing Reason
Appellant challenged eligibility of erstwhile promoter as resolution applicant under Section 29A IBC.
Previous Decisions
NCLT, Hyderabad allowed IA (IBC) / 897 / 2024 & IA (IBC) / 898 / 2024 filed under Section 60(5) IBC, holding Respondent No. 1 eligible to submit resolution plan.
Issues
Whether an erstwhile promoter director is a related party under Section 29A IBC and thus ineligible to submit a resolution plan.
Submissions/Arguments
Appellant argued that Respondent No. 1 is a related party and ineligible under Section 29A IBC.
Ratio Decidendi
An erstwhile promoter director of the corporate debtor is a related party under Section 29A of the Insolvency and Bankruptcy Code, 2016 and is therefore ineligible to submit a resolution plan.
Judgment Excerpts
The instant Company Appeal... has been preferred by the Appellant... who has put in a challenge to the Impugned Order dated 08.05.2024...
By the said Impugned Order under challenge, NCLT, Hyderabad, allowed the Application... filed under Section 60(5) of the I & B Code, 2016, by Respondent No. 1 herein, holding him to be eligible to submit a Resolution Plan...
Procedural History
CIRP initiated on 24.06.2022. Resolution Professional invited EOI on 19.09.2022, 05.10.2022, 05.02.2024, 24.02.2024. NCLT allowed applications of Respondent No. 1 on 08.05.2024. Appeal filed on 27.06.2024.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 60(5), Section 29A
