Neither Promoters/Ex-Directors nor the Resolution Professional/CoC are empowered under the IBC 2016 to obtain an MSME Certificate post-commencement of CIRP with the sole purpose of opening or enabling a back door entry to the defaulting promoters, who are otherwise barred under Section 29A of IBC, 2016 to submit Resolution Plan – Deutsche Bank A.G Vs. Mr. Devendra Umrao RP of Overnite Express Ltd. – NCLT New Delhi Bench Court-II
NCLT New Delhi Bench Court-II held that:
(i) An MSME Certificate obtained by Promoter(s)/Ex-Director(s) post-commencement of the CIRP is invalid and it will not make them eligible to submit an EOI or the Resolution Plan by taking benefit of Section 240A of IBC 2016.
(ii) The RP/CoC by obtaining an MSME Certificate on their initiative, opened the doors, that were otherwise shut, to the Defaulter Promoter(s)/ Suspended Board of Director(s)/ ExManagement just to enable them to submit EOI/Resolution Plan to regain entry and control/management over the Corporate Debtor through the backdoor.
(iii) Neither there is any explicit provision under Section 25 of IBC 2016 enabling an RP to obtain an MSME Certificate nor such is the intention behind the insertion of Section 29A in the Code as observed by the Hon’ble Supreme Court in the Judgement (ibid). Further, under the garb of fixing the criteria for the intending Prospective Resolution Applicants, the RP cannot assume the role of a “Facilitator” to enable the Defaulter Promoter(s)/ Suspended Board of Director(s)/ Ex-Management to submit the EOI/Resolution Plan by abusing the provisions contained under Section 240A of IBC 2016.
(iv) Neither Section 25 nor Section 28 of IBC 2016 empowers the RP or the CoC to obtain an MSME Certificate to enable the back door entry of the defaulting promoter(s) into the Corporate Debtor.
(v) The benefit of Section 240A of IBC 2016 can only be availed by a genuine MSME Enterprise, whose registration or MSME Certification is done prior to the commencement of CIRP of a Corporate Debtor.
NCLT conclude that neither the Promoters/Ex-Directors nor the RP/COC are empowered under the IBC 2016 to obtain an MSME Certificate post-commencement of CIRP with the sole purpose of opening or enabling a back door entry to the defaulting promoters, who are otherwise barred under Section 29A of IBC, 2016 to submit the EOI/Resolution Plan.