A Stock Broker registered with SEBI and Trading Member of NSE is a Financial Service Provider as per Section 3(17) of IBC and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 CIRP application is not maintainable – Nitin Pannalal Shah Vs. Vipul H Raja – NCLAT New Delhi

Hon’ble NCLAT held that:

(i) Section 3(16)(e) of IBC is an inclusive definition.

(ii) The Stock Brokers, who are covered by the Regulation 1992 are subject to various obligation and duties towards Investors and from the nature of activities as contained in the Memorandum of Association of both the Corporate Debtors, they clearly fall within the definition of ‘Financial Service Provider’.

(iii) Section 5(8)(g) has to be read harmoniously with Section 7 and Section 5(7) and 5(8). Section 5(8)(g) cannot be read in any manner that financial service providers are also covered under Section 5(8)(g).

(iv) Both the Corporate Debtors, i.e. Simandhar Broking Ltd. and M/s. Astitva Capital Market Private Limited being registered Broker with SEBI and Trading Member of the NSE are providing services, which are ‘financial services’ within the meaning of definition of Section 3(16) of the Code and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 Application filed by Corporate Debtors were not maintainable.

A Stock Broker registered with SEBI and Trading Member of NSE is a Financial Service Provider as per Section 3(17) of IBC and by virtue of Section 3(7) read with Section 3(8) and Section 227 of the Code, Section 7 CIRP application is not maintainable – Nitin Pannalal Shah Vs. Vipul H Raja – NCLAT New Delhi Read Post »