The certificate or memorandum stating that the company is a MSME must make use of the service in accordance with Section 240 A of the IBC: NCLAT

In the recent case of the National Company Law Appellate Tribunal, it was decided that the MSME certificate is required to support small and medium-sized micro-businesses under Section 240A of the IBC. According to the facts, the complainant initiated the liquidation proceedings against the company debtor, in which the complainant is the promoted and managing director of the company. The company, that is, the corporate debtor, deals with the sale and servicing of automobiles and owns certain immovable assets, equipment, machinery, and stocks of spare parts for the automobiles.

The complainant initiated the liquidation proceedings against this company, which were passed on September 12, 2017. The complainant later alleged that she had attempted to close the company’s business operations instead of reviving the company through a settlement pursuant to section 230 of the 2013 Companies Act. The complainant further alleged that, although the order had been issued by the Tribunal, the liquidator had not taken any steps to ensure that section 230 was properly followed.

However, the complainant was unable to prove to the government authorities that the company was a MSME. Therefore, the complainant’s legal counsel relied on Section 240A of the IBC to provide that the certificate or memorandum stating that the company is a MSME is not required to demonstrate that the company is a MSME .

However, taking all the arguments into account, the Tribunal dismissed the appeal, stating that if we determine that there is no need to pursue Section 230 of the Companies Act at the time of liquidation, it is not part of the IBC’s proceedings if the Corporate debtor is in liquidation. Both appeals are bound to fail because the objections raised have no substance. The corporate complaint must also be rejected, as the complainant is promoting a system of merger compromise and agreement for three companies that are already in liquidation under the IBC.

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