Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2019 (11) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 67 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to pay the due & payable financial debt - whether the debt falls within the meaning of 'Financial Debt' in terms of Section 5(8) of the Code of 2016? HELD THAT:- As per Section 3(8) of the Code of 2016, a CD means a corporate person who owes a debt to any person, and as per Section 3(7), a corporate person is a company, a LLP or any other person, but shall not include any financial service provider. That is to say that since a financial service provider is excluded from the definition of “corporate person”, it can also not be a CD. Further, since Part 2 of the IBC applies to “Insolvency Resolution and Liquidation for corporate persons”, and since a financial service provider, including an NBFC, is excluded from the definition of a corporate person and CD, provisions of Part 2 of the IBC do not become applicable in the case of a financial service provider. Hence, no creditor can seek initiation of corporate insolvency resolution process against any financial service provider. We are in agreement with the arguments presented by the respondent CD and consider it as a financial service provider and a Non-Banking Financial Institution, being registered as such by the RBI, and that for this reason it falls outside the purview of section 7 of the Code of 2016. Thus even though it owes a debt to the petitioner FC, the prayer of the FC for initiation of CIRP in respect of M/s. Purbanchal Trade and Industries Ltd. fails. Petition dismissed.
|