Active DIN Status Not Sufficient To Establish Eligibility To Submit Resolution Plan Under IBC: NCLT Indore

The National Company Law Tribunal (NCLT) at Indore has held that mere reflection of a Director Identification Number (DIN) as “Approved/Active” on the MCA portal is not sufficient to establish eligibility to submit a resolution plan under Section 29A of the Insolvency and Bankruptcy Code (IBC).

The tribunal dismissed an application filed by Carnet Elias Fernandes, Suspended Management/Promoter of GEI Power Limited, challenging the Resolution Professional's decision declaring him ineligible to submit a resolution plan under Sections 29A(e) and 29A(f) of the Code.

Section 29A bars persons who are disqualified from being directors or prohibited by SEBI from accessing the securities market from submitting resolution plans

A bench of Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta held that an online DIN status, in the absence of a clear and categorical order passed by the competent authority removing the disqualification, cannot establish eligibility to participate in the resolution process.

"Mere reflection of DIN status on an online portal, in the absence of a clear and categorical order passed by the competent authority removing the disqualification or negating the basis recorded in the due diligence exercise, cannot, by itself, be treated as sufficient to establish eligibility under Section 29A of the Code.”

GEI Power Limited was admitted into the Corporate Insolvency Resolution Process (CIRP) on January 22, 2025. The Resolution Professional obtained a due diligence report, which recorded that Fernandes was disqualified under Section 29A. He was accordingly informed that he was not entitled to submit a resolution plan.

Fernandes contended that his DIN, which was earlier shown as “deactivated,” had been reactivated and reflected as “Approved/Active” on the MCA portal. He argued that the ineligibility under Section 29A(e) did not subsist. He also claimed benefit of the MSME exemption under Section 240A and questioned the regulatory findings relied upon in the due diligence report.

Rejecting the contention, the Tribunal observed that such a DIN status, in the absence of any other orders, is insufficient to remove the ineligibility.

The bench held that where a person claims removal of disqualification, the burden lies on such person to place on record an order passed by the competent authority evidencing such removal. Fernandes had “not placed on record any order of the competent authority setting aside or overruling the findings forming the basis of the due diligence report,” it noted.

On the MSME argument, the tribunal clarified that Section 240A exempts MSMEs only from disqualifications under Sections 29A(c) and 29A(h). The exemption does not apply to Sections 29A(e) and 29A(f), under which Fernandes was found ineligible to submit a resolution plan.

The tribunal also held that it cannot examine or decide upon the propriety or legality of the SEBI order forming part of the disqualification. If aggrieved, the appropriate remedy was to approach the court or authority of competent jurisdiction.