HARI BABU THOTA versus *

HARI BABU THOTA versus *

The Supreme Court held that on the facts there was no per se disqualification under Section 29A; Section 240A exempts clauses (c) and (h) of Section 29A for MSMEs and the correct cut-off date for determining the benefit of Section 240A is the date of submission of the resolution plan (the date of application making a bid), not the date of commencement of CIRP; the NCLT and NCLAT orders relying on the contrary position (including Digamber Anand Rao Pingle) were set aside and the appeal allowed.

Parties
Appellant: Hari Babu Thota
Jurisdiction
India
Judgment Date
29 November 2023
Procedural Posture
Civil Appeal / Appeal to Supreme Court From Nclat; Final Judgment by Supreme Court Allowing Appeal
Outcome
Appeal allowed; impugned orders of NCLT and NCLAT set aside; IA restored to NCLT for reconsideration; parties to bear their own costs.
Legal Topics
Section 29 a, Section 240 a, MSME Exemption, Eligibility of Resolution Applicant, Corporate Insolvency Resolution Process (cirp)
Insolvency and Bankruptcy Law Company Law Section 29 a Section 240 a MSME Exemption Eligibility of Resolution Applicant Corporate Insolvency Resolution Process (cirp)

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Parties

Hari Babu Thota

Appellant

Procedural Posture

Civil Appeal / Appeal to Supreme Court From Nclat; Final Judgment by Supreme Court Allowing Appeal

Legal Issues

  1. 1 Whether the resolution applicant was disqualified under Section 29A of the Insolvency and Bankruptcy Code, 2016
  2. 2 Whether lack of MSME status at the time of commencement of CIRP disqualifies a resolution applicant under Section 29A in light of Section 240A
  3. 3 What is the cut-off date for determining applicability of Section 240A (whether at initiation of CIRP or at submission of resolution plan)

Ratio Decidendi

The Supreme Court held that on the facts there was no per se disqualification under Section 29A; Section 240A exempts clauses (c) and (h) of Section 29A for MSMEs and the correct cut-off date for determining the benefit of Section 240A is the date of submission of the resolution plan (the date of application making a bid), not the date of commencement of CIRP; the NCLT and NCLAT orders relying on the contrary position (including Digamber Anand Rao Pingle) were set aside and the appeal allowed.

Court Disposition

Appeal allowed; impugned orders of NCLT and NCLAT set aside; IA restored to NCLT for reconsideration; parties to bear their own costs.

Orders

  • Impugned NCLT order dated 28.02.2023 and NCLAT order dated 02.06.2023 set aside
  • Appeal allowed