MSME certificate required to take benefit under Section 240A of IBC: NCLAT [Read Order]

MSME certificate - Section 240A of IBC - NCLAT - Taxscan

The National Company Law Appellate Tribunal ( NCLAT ) has ruled that the MSME certificate is required to take benefit of Micro Small and Medium Enterprises (MSME) under Section 240A of Insolvency and Bankruptcy Code.

The Appeal relates to Liquidation Proceedings against Corporate Debtor M/s. Hind Motors India Limited of which the Appellant Ashish Mohan Gupta is promoter and director. The Company was engaged in the sale and service of cars and has certain immovable assets as well as plant and machinery and stock of spare parts of cars. The Order of Liquidation with regard to this Company was passed on 12th September 2017 in which the Appellant claims that the Liquidator instead of reviving the Company through Settlement under Section 230 of the Companies Act, 2013 sought to close the business of the Company. The grievance of the Appellant is that in spite of such an order passed by this Tribunal the Liquidator has not taken steps to ensure scheme under Section 230 of the Companies Act, 2013. The Appellant did not have a memorandum or certificate from the Government authorities showing that the Companies of the Appellant are MSME. They relied on Section 240 A of IBC to submit that such certificate or memorandum is not necessary and going by the definitions in the Act and balance sheet, the Tribunal must find if it is Micro, Small or Medium Industry.

Judicial member A.I.S. Cheema and Technical Member Dr. Alok Srivastava while dismissing the appeals held, “When we find that it is not necessary for us to pursue Section 230 of the Companies Act at the stage of Liquidation, the same not being part of Procedure of IBC when the Corporate Debtor is in Liquidation, both the Appeals must fail, not having substance in the contentions raised. The Company Appeal (AT) No. 07/2020 also needs to be dismissed as the Appellant is pushing forward a scheme of amalgamation compromise and arrangement for three companies which are already in Liquidation under IBC.”

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