WHETHER A NBFC OR MFIs IS A CORPORATE PERSON OR FINANCIAL SERVICE PROVIDER UNDER IBC CODE 2016? WHETHER THEY CAN SEEK RELIEF UNDER IBC CODE 2016?

WHETHER A NBFC OR MFIs IS A CORPORATE PERSON OR FINANCIAL SERVICE PROVIDER UNDER IBC CODE 2016?

WHETHER THEY CAN SEEK RELIEF UNDER IBC CODE 2016?

Jindal Saxena Financial Service (P.) Ltd. V. Mayfair Capital (P.) Ltd.-MANU/NC/0074/2018

WHETHER A NBFC IS A CORPORATE PERSON OR  FINANCIAL PROVIDER?

NCLT held that where the petitioner NBFC files petition u/s 7 of IBC for recovering deposit made by it, the respondent cannot contend that having accepted deposits, petitioner NBFC has become 'financial service provider' and has been excluded from defination of 'Corporate person' u/s 3(7).

NCLT , NEW DELHI HELD THAT A NBFC IS A CORPORATE PERSON.

Since NBFC has various facet of other activities, it will not be covered by the term 'financial service provider'.

However  , NCLAT held in  -Randhiraj Thakur, Director, Mayfair Capital (P) Ltd. Vs. M/s. Jindal Saxena Financial Services (P) Ltd is not a Corporate  Person under IBC 2016?                                   

If the entire scheme of the I&B Code is seen, it will be evident that the Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution of ‘corporate persons’, ‘partnership firms’ and ‘individual’ in a time bound manner. It is a self-contained Code which is exhaustive in nature when it comes to re-organisation and insolvency resolution.

FINANCIAL SERVICE PROVIDERS

However, an exception had been carved out while enacting the Code that the ‘financial service providers’ have been kept outside the purview of the Code. Being a consolidating legislation only those acts are permitted which are mentioned in the Code and it cannot be made applicable to ‘financial service providers’ including ‘non-banking financial institutions’ and MFI’s banks, which have been kept outside the purview of the Code. It is a self-contained Code which is exhaustive in nature when it comes to reorganisation and insolvency resolution. However, an exception had been carved out while enacting the Code that the ‘financial service providers’ have been kept outside the purview of the Code.

FINANCIAL SERVICE PROVIDERS WILL NOT COME UNDER IBC CODE 2016 FOR RELIEF

If the entire scheme of the I&B Code is seen, it will be evident that the Code is to consolidate and amend the laws relating to reorganisation and insolvency resolution of ‘corporate persons’, ‘partnership firms’ and ‘individual’ in a time bound manner. It is a self-contained Code which is exhaustive in nature when it comes to reorganisation and insolvency resolution.

 However, an exception had been carved out while enacting the Code that the ‘financial service providers’ have been kept outside the purview of the Code. Being a consolidating legislation only those acts are permitted which are mentioned in the Code and it cannot be made applicable to ‘financial service providers’ including ‘non-banking financial institutions’ and MFI’s banks, which have been kept outside the purview of the Code.