Matter: C. Raja John v. R. Raghavendran, Resolution Professional of Springfield Shelters Pvt. Ltd
Order dated: 01 December 2021
Summary:
In the instant case, C. Raja John, the promoter of the corporate debtor Springfield Shelters Pvt. Ltd (Springfield) submitted a resolution plan for Springfield. It was C. Raja John’s stand that as Springfield is a micro, small and medium enterprises (MSME), a promoter is eligible to submit a resolution plan under the Insolvency and Bankruptcy Code, 2016 (Code). The NCLT as well as the resolution professional dismissed C. Raja John’s resolution plan on the ground that he suffers a disqualification (i.e., disqualified to act as a director) under the Code and he does not meet the eligibility norm. Moreover, his director identification number (DIN) was under default, and it was observed that he was trying to gain a backdoor entry in Springfield in the guise of presenting it as a MSME.
The NCLAT, keeping in view of the object of the Code i.e., maximization of the value of the assets of corporate debtor, held that if the corporate debtor is a MSME, it is not necessary for the promoters to compete with other resolution applicants to regain the control of the corporate debtor. In fact, the DIN of C. Raja John was reactivated pursuant to the directions of the Madras High Court. Hence, the resolution professional was directed to consider the resolution plan of C. Raja John and the order of the NCLT as well as the order passed by the resolution professional rejecting the resolution plan was quashed and set aside.
