Case Law Details
R. Raghavendran Vs C. Raja John & Ors. (Supreme Court of India)
‘Exceptional Circumstances’ must exist to prevent promoters to compete with other resolution applicants to retain control of corporate debtor in case of MSME
Conclusion: In present facts of the case, the Hon’ble Supreme Court observed that in “exceptional circumstances” if a corporate debtor is an MSME, it is not necessary for promoters to compete with other resolution applicants to retain control of the corporate debtor. But in the impugned judgment, it can hardly be disputed that there is no discussion on the special circumstances. The impugned judgment was predicated on a broad reasoning as if ipso facto there is no need to call other proposals if it is an MSME which is not a correct position of law.
Facts: In present facts of the case, the appeal has been preferred against the impugned judgment of NCLAT dated 01.12.2021 on a limited aspect. The proceedings against the said entity are pending under the Insolvency and Bankruptcy Code, 2016 (for short “the Code”) initiated on 12.2.2020 and the appellant is the Resolution Professional.
The NCLAT had put a question mark on the status of the entity as MSME on account of the certificate being procured after the process had began but in appeal as per the impugned order, the factual finding is that it was an MSME before the process began and thus the benefit of the MSME Act would be available to the said entity.
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