NDLI: Bank of Baroda & Anr Vs. Mbl Infrastructures Limited & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	2016 Insolvency and Bankruptcy Code
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Insolvency and Bankruptcy Code, 2016 – s. 29A(h) (as amended by the Act 26 of 2018) – Interpretation and scope of – Held: s. 29A(h) creates one more category of persons not being eligible to be a resolution applicant – Other than the persons mentioned thereunder, there may not be any disqualification – The word “person” is of a wider import to include a promoter or a director, as the case may be – The definition of “person” as mentioned u/s. 3(23) of the Code includes certain categories of persons and thus, there is no such exclusion – It is merely illustrative/ inclusive in nature and therefore, the persons mentioned in s. 29A alone are ineligible to be resolution applicants – Once a person executes a guarantee in favour of a creditor with respect to the credit facilities availed by a corporate debtor, and in a case where an application for insolvency resolution has been admitted, with the further fact of the said guarantee having been invoked, the bar qua eligibility would certainly come into play – What the provision requires is a guarantee in favour of ‘a creditor’ – Once an application for insolvency resolution is admitted on behalf of ‘a creditor’ then the process would be one of rem, and therefore, all creditors of the same class would have their respective rights at par with each other – The word “such creditor” in s. 29A(h) has to be interpreted to mean similarly placed creditors after the application for insolvency application is admitted by the adjudicating authority – As a result, what is required to earn a disqualification under the said provision is a mere existence of a personal guarantee that stands invoked by a single creditor, notwithstanding the application being filed by any other creditor seeking initiation of insolvency resolution process, subject to further compliance of invocation of the said personal guarantee by any other creditor – Ineligibility has to be seen from the point of view of the resolution process – It can never be said that there can be ineligibility qua one creditor as against others – The ineligibility is to the participation in the resolution process of the corporate debtor – Exclusion is meant to facilitate a fair and transparent process – The provision after the amendment speaks of invocation by a creditor – The manner of invocation can never be a factor for the adjudicating authority to adjudge, as against its existence – Adequate importance will have to be given to the latter part of the provision which also disqualifies a person whose liability under the personal guarantee executed in favour of a creditor, remains unpaid in full or in part for the amount due from him, upon invocation – s. 29A has a laudable object of protecting and balancing the interest of the committee of creditors and the corporate debtor, while shutting the doors to canvas the interests of others – It consciously excludes certain categories of persons – s. 29A(h) foresees the creditors who are otherwise either already under the insolvency resolution process or are entitled to go under it – Interpretation of Statutes – Purposive Interpretation.Insolvency and Bankruptcy Code, 2016 – Object of – Discussed.Insolvency and Bankruptcy Code, 2016 – s. 29A – Objective of – Discussed.Insolvency and Bankruptcy Code, 2016 – s. 29A(h) (as amended by the Act 26 of 2018) – Date of reckoning – Whether the date of submission of resolution plan or the date of adjudication by the authority – Held: If there is a bar at the time of submission of resolution plan by a resolution applicant, it is obviously not maintainable – However, if the submission of the plan is maintainable at the time at which it is filed, and thereafter, by the operation of the law, a person becomes ineligible, which continues either till the time of approval by the CoC, or adjudication by the authority, then the subsequent amended provision would govern the question of eligibility of resolution applicant to submit a resolution plan – If there is ineligibility which in turn prohibits the other stakeholders to proceed further and the amendment being in the nature of providing a better process, and that too in the interest of the creditors and the debtor, the same is required to be followed as against the provision that stood at an earlier point of time – Thus, a mere filing of the submission of a resolution plan has got no rationale, as it does not create any right in favour of a facilitator nor it can be extinguished – It cannot be said that what is good today cannot be applied merely because an applicant was eligible to submit a resolution plan at an earlier point of time– It is only a part of procedural law. Insolvency and Bankruptcy Code, 2016 – s.12(3) – Held: There is a marked difference between extension and exclusion – Exclusion would come into play when the decision is challenged before a higher forum – Extension is one which is to be exercised by the authority constituted.
Judge	Hon'ble Mr. Justice M.M. Sundresh
Neutral Citation	2022 INSC 53
Petitioner	Bank Of Baroda & Anr
Respondent	Mbl Infrastructures Limited & Ors.
SCR	[2022] 12 S.C.R. 761
Judgement Date	2022-01-18
Case Number	8411

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