# In the matter of Feno Plast Limited

> NCLT judgment dated 2023-07-17. Citation: TCN-2023-NCLT-02482. The case involves an application (IA No. 805/2023) filed in connection with a company petition…

- **Court:** NCLT
- **Order date:** 17 Jul 2023
- **Citation:** TCN-2023-NCLT-02482
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/feno-plast-limited-584d2035

## Summary

### Background

The case involves an application (IA No. 805/2023) filed in connection with a company petition (CP(IB) No. 10/7/HDB/2023) under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016. The applicants, erstwhile promoters of Feno Plast Ltd (the corporate debtor), challenged the decision of the Resolution Professional (RP) to reject their Expression of Interest (EOI) for submitting a resolution plan. The RP rejected the EOI because the applicants did not meet the minimum tangible net worth criteria of Rs. 75 Crores as stipulated in the Request for Resolution Plan (RFRP). The applicants argued that as promoters of an MSME (Micro, Small & Medium Enterprise), they should be exempt from this eligibility criterion under Section 240A of the IBC.

## Facts

The key facts are as follows:
1. Feno Plast Ltd is undergoing Corporate Insolvency Resolution Process (CIRP) under the IBC.
2. Canara Bank initiated the CIRP by filing a petition under Section 7 of the IBC.
3. Mr. Haridas Krishna Kumar and Mrs. Saparna Haridas, erstwhile promoters of Feno Plast Ltd, submitted an Expression of Interest (EOI) to propose a resolution plan.
4. The Resolution Professional (RP) rejected their EOI because they did not meet the minimum tangible net worth criteria of Rs. 75 Crores as stipulated in the Request for Resolution Plan (RFRP).
5. The applicants argued that as promoters of an MSME, they should be exempt from this eligibility criterion under Section 240A of the IBC.
6. The Committee of Creditors (CoC) decided that the net worth criteria

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## Issues and analysis

### Issue 1: Whether the promoters of an MSME corporate debtor can be exempted from the minimum net worth …

**Ratio:** Section 240A of the IBC provides certain relaxations for MSMEs in the insolvency

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**Reasoning:** The NCLT reasoned that the objective of the IBC is to promote entrepreneurship and allow

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**Interpretation:** Section 240A of the IBC is interpreted to provide a more lenient framework for

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**Application:** In this case, the NCLT applied the principle that MSME promoters should not be

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## Parties

- **Judges:** TELAPROLU…; SH. CHARAN…
- **Appellants:** Haridas Krishna…
- **Respondents:** Feno Plas…

## Timeline

- **2022-10-19 — Appointment of Interim…**: The Respondent was appointed as…
- **2022-11-15 — Tribunal sets aside…**: The Tribunal set aside the admission…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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