Even if the "Promoter" is otherwise ineligible under Section 29A, IBC provides no prohibition against them filing a "resolution application"

In the case of Sreeram E. Techno School Private Limited v. Beans and More Hospitality Private Limited Through R.P. Prabhjit Singh Soni, which was decided on September 11 of this year, the National Company Law Appellate Tribunal ("NCLAT") upheld the judgement made on July 19, 2019 by the NCLT, III bench in Delhi ("Adjudicating Authority") under Section 30(6) of the Insolvency and Bankruptcy Code, 2016 ("IBC").

Beans and More Hospitality Private Limited ("Corporate Debtor") was the subject of an application under Section 7 of the IBC by Shree Siyaram Automations Private Limited (now Shreeram E Techno School Private Limited), the "Appellant," for the initiation of a Corporate Insolvency Resolution Process ("CIRP") for a default of INR 90,00,000 (Rupees Ninety Lacs Only) plus interest. The aforementioned application for the start of CIRP was accepted by the adjudicating authority by its order dated 13.03.2018 imposing a moratorium under Section 14 of the IBC and appointing Mr. Prabhjit Singh Soni as the Interim Resolution Professional, who was later named as the Resolution Professional ("RP") in accordance with the terms of Section 22(3)(a) of the IBC at the first meeting of the Committee of Creditors ("CoC") held on 25.04.2018. 

The resolution applicant had submitted an affidavit denying that they were ineligible under Section 29A of the IBC, which was noted by the adjudicating authority. By a vote of 74.19 percent, the aforementioned resolution plan was duly approved by the CoC. The RP then submitted an application to the adjudicating authority under Section 30(6) of the IBC read with Regulation 39(4) of the CIRP Regulations, asking that the resolution plan that the CoC had duly approved be approved. The adjudicating authority, considering the facts that the resolution plan was approved by the CoC is in accordance with Section 30(2) read with Section 31 of IBC, the resolution applicant is not ineligible under Section 29A of IBC, and no defect seems to have been revealed during screening of the resolution. 

In the instant case titled Sreeram E. Techno School Private Limited v. Beans and More Hospitality Private Limited Through R.P. Prabhjit Singh Soni the issue raised for clarification before the NCLAT was:

1. Is the resolution applicant, who was also the former promoter, prohibited from filing the resolution plan under Section 29A of the IBC?

With regard to this issue, The NCLAT declined to accept such a submission because, even if the promoter is unqualified under Section 29A of the IBC, there is no prohibition in the IBC prohibiting them from submitting a resolution application. Furthermore, there is no evidence in the public domain that would indicate that the Corporate Debtor is an undischarged bankrupt or a willful defaulter under the Reserve Bank of India's regulations published under the Banking Regulations Act, 1949. 

Has a "Non-Performing Asset" account at the time the resolution plan is submitted; The promoter or its directors have been convicted of a crime punishable by imprisonment; They are ineligible to serve as directors under the 2013 Companies Act; They have engaged in a transaction that was prohibited by the Securities and Exchange Board of India; They have engaged in a transaction that was a preferential transaction, an undervalued transaction. The NCLAT stated that the CoC had taken note of every component and that, despite the appellant being a financial creditor who disagrees, there was no need for interference because there was no criminal activity.

The NCLAT categorically stated that, 

"However a ‘resolution plan’ cannot be rejected on such ground if the resolution 

applicants can show the feasibility to run the company in future. The question of viability, feasibility and other conditions as prescribed by the ‘Insolvency and Bankruptcy Board of India (for short, ‘the Board) of a ‘Corporate Debtor’ can be looked into by the ‘Committee of Creditors’ which has experte in the financial 

field. Such issue of viability, feasibility and other conditions of the ‘Corporate Debtor’ cannot be looked into by the Adjudicating Authority or by this Appellate Tribunal. The ‘Committee of Creditors’ having gone through the financial aspects, including the viability, feasibility and other conditions of the ‘Resolution Plan’ and having approved the plan with 74.19% of voting share, this Appellate Tribunal is not inclined to decide such an issue."