A Trading Member of National Stock Exchange is a Financial Service Provider in terms of Section 3(17) of IBC 2016, CIRP u/s 7, 9 & 10 cannot be initiated – Globe Capital Market Ltd. Vs. Narayan Securities Ltd. – NCLT New Delhi Bench Court-II
July 11, 2023
In this important judgment, the Adjudicating Authority held that mere holding of a Decree/Award per se by an individual will not make its debt fall within the ambit of “Financial Debt”. Following points to be considering in the decree/award:
a) a Decree/Award of the Court/Tribunal is a measure of debt,
b) mere holding of a Decree per se by an individual will not make its debt fall within the ambit of “Financial Debt”,
c) it is the underlying claim under a decree that will decide the nature of the debt, whether it is Financial or Operational debt.
In our considered view, the amount claimed by the Applicant out of the Arbitral Award dated 24.09.2021 is neither based on any transaction having the time value of money nor the commercial effect of borrowing. At the most, the claims of the Applicant (other than brokerage, fee, etc.) could be in the nature of “damages” which do not fall within the ambit of Financial Debt.
The Respondent was providing “Financial Services” in terms of Section 3(16)(d) of IBC 2016. the Respondent was registered with SEBI, which is evident from the “Clearing Member – Trading Member Agreement dated 09.03.2017”. Since, the Respondent was registered with SEBI, the Services of the Respondent could be regulated by SEBI, which is covered under the definition of “Financial Sector Regulator” under Section 3(18) of IBC 2016.
