Eligibility vs Conduct in CIRP

The Tribunal examined whether promoters of an MSME Corporate Debtor could be exempted from the minimum net worth eligibility criteria prescribed by the Committee of Creditors for participation as resolution applicants.

While acknowledging jurisprudence that MSME promoters may, in exceptional cases, regain control without strict competition, the Tribunal held that such relaxation is not automatic. 

The CoC’s commercial wisdom in prescribing eligibility criteria remains paramount, and judicial interference is limited to cases of illegality or material irregularity.

The Applicants’ persistent non-cooperation, contradictory litigation positions, and inability to demonstrate genuine intent to resolve the Corporate Debtor led the Tribunal to conclude that no exceptional circumstances existed. 

Accordingly, the rejection of their Expression of Interest was upheld and the application was dismissed.