Ex-Promoter who Resigned before Commencement of CIRP is eligible to Submit Resolution Plan: NCLAT [Read Order]

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT) observed that the ex-promoter who resigned before commencement of the Corporate Insolvency Resolution Process (CIRP) is eligible to submit resolution plan.

The appeal has been filed challenging the order dated 18.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal) Mumbai Bench. The Adjudicating Authority by the impugned order has rejected an application filed by the Resolution Professional for approval of the Resolution Plan submitted by Mr. Mahesh Mathai- Successful Resolution Applicant on the ground that Mr. Mahesh Mathai- Successful Resolution Applicant is not eligible to submit a Resolution Plan under Section 29 A of the Insolvency and Bankruptcy Code, 2016.

The counsel for the Resolution Professional challenging the order impugned submitted that the Adjudicating Authority committed error in holding Successful Resolution Applicant as ineligible whereas promoters/ex management are not ineligible to submit a Resolution Plan unless they are ineligible under any of the clauses as provided in Section 29A.

It was also submitted that the Successful Resolution Applicant is not covered by any of the clauses under which ineligibility is attached to promoter/ex-management. Section 29A does not make ineligible ipso facto all promoters and directors. Ineligibility is attached if they are ineligible under any of the clauses under Section 29A.

The Counsel for the Committee of Creditors (CoC) submitted that the CoC having already approved the Resolution Plan, the Successful Resolution Applicant was never held to be ineligible.

 A Three-Member Bench comprising Justice Ashok Bhushan, Chairperson, Barun Mitra, Member (Technical) and Arun Baroka, Member (Technical) observed that “The present is not a case where any of the clauses of Section 29A are being pressed for ineligibility of Respondent No.2. Ineligibility is being held only on the ground that Respondent No.2 was promoter of the Corporate Debtor till 2018 when he resigned. The view taken by the Adjudicating Authority is not as per the true and correct interpretation of Section 29A. Section 29A does not make per se promoters and directors ineligible to submit a plan unless they are ineligible under clauses (a) to (g). Since in the present case, it is not the case that any of the clauses (a) to (g) are attracted on Respondent No.2, the mere fact that Respondent No.2 was promoter and director shall not make him ineligible to submit a Resolution Plan.”

To Read the full text of the Order CLICK HERE

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