# In the matter of Feno Plast Limited

> NCLT judgment dated 2023-07-17. Citation: TCN-2023-NCLT-02487. The case involves an application (IA No. 805/2023) filed in a corporate insolvency resolution…

- **Court:** NCLT
- **Order date:** 17 Jul 2023
- **Citation:** TCN-2023-NCLT-02487
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/feno-plast-limited-646ca26c

## Summary

### Background

The case involves an application (IA No. 805/2023) filed in a corporate insolvency resolution process (CIRP) concerning Feno Plast Ltd. The applicants, erstwhile directors of Feno Plast Ltd, challenged the rejection of their Expression of Interest (EOI) by the Resolution Professional (RP) due to their failure to meet the minimum net worth criteria stipulated in the Request for Resolution Plan (RFRP). The applicants argued that as promoters of a Micro, Small, and Medium Enterprise (MSME), they should be exempt from these criteria under Section 240A of the Insolvency and Bankruptcy Code (IBC). The financial creditor, Canara Bank, initiated the CIRP under Section 7 of the IBC. The Tribunal had initially admitted the petition, but later set aside the admission order upon a

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## Facts

Canara Bank initiated CIRP against Feno Plast Ltd under Section 7 of IBC. The CIRP was initially admitted, then set aside, and later revived due to management disputes. The applicants, Mr. Haridas Krishna Kumar and Mr. Saparna Haridas, erstwhile directors and promoters of Feno Plast Ltd (an MSME), submitted an Expression of Interest (EOI) to propose a resolution plan. The Resolution Professional (RP) rejected their EOI because they did not meet the minimum 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, they should be exempt from this requirement under Section 240A of IBC. The RP sought a legal opinion and informed the Committee of Creditors (CoC) that the legal opinion and

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## Issues and analysis

### Issue 1: Whether the promoter of MSME unit, applicants herein, are also exempted from the other eligibility …

**Ratio:** The ratio is derived from the interpretation of Section 240A of the IBC in conjunction

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**Reasoning:** The Tribunal reasoned that the objective of the IBC is to maximize the value of assets of

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**Interpretation:** Section 240A of the IBC is interpreted to provide relaxations to MSMEs in the

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**Application:** The Tribunal applied the ratio to the specific facts of the case, recognizing

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## Parties

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

## Timeline

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

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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