If MSME Certificate Obtained Post Initiation Of CIRP, Promoter/Suspended Management Of Corporate Debtor Ineligible To Submit Resolution Plan: NCLT Delhi

The National Company Law Tribunal, New Delhi Bench, comprising of Shri Ashok Kumar Bhardwaj and Shri L.N. Gupta, while adjudicating a petition filed in M/s Hi-Tech Resource Management Limited v M/s Overnite Express Limited, has held that if the Suspended Management/Promoter obtains a MSME certificate for the Corporate Debtor post initiation of CIRP then such certificate, apart from being invalid, would not entitle them to submit a resolution plan by taking benefit of Section 240A of IBC. “Hence, in the light of the provision under Section 17 and of IBC 2016, and Judgement of the Hon’ble NCLAT, we find that an MSME Certificate obtained by Promoter/Ex-Director 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.” Background Facts On 02.03.2020, Overnite Express Limited was admitted into Corporate Insolvency Resolution Process by the NCLT. NCLT Verdict The Bench noted that the following parties could be interested in obtaining the MSME Certificate of the Corporate Debtor after commencement of CIRP: Promoter or Suspended Board of Directors, who intends to be a Prospective Resolution Applicant and who is otherwise barred under Section 29A &/or of IBC to submit the Resolution Plan; or Resolution Professional/CoC to avail the business advantages under MSME Act such as preference in the marketing of product, price preference, or benefit in the payment terms. “Hence, in the light of the provision under Section 17 and of IBC 2016, and Judgement of the Hon’ble NCLAT, we find that an MSME Certificate obtained by Promoter/Ex-Director 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.” Further, the benefit of Section 240A of IBC 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.