02 (a)

Can insolvency be initiated against a Company registered under Section 8 of the Companies Act, 2013 with a charitable objective of imparting and promoting education? – M/s. Educomp Infrastructure & School Management Ltd. Vs. M/s. Millenium Education Foundation – NCLT New Delhi Bench Court-V

The Adjudicating Authority held that on a reading of Section 3(7) of the Insolvency and Bankruptcy Code, 2016 that defines a “corporate person”, it is amply clear that the definition under Section 3(7) inter alia, includes a “company” under Section 2(20) of Companies Act‟ 2013. Section 2(20) of the Companies Act, 2013 defines “Company” as a company incorporated under the Companies Act, 2013 or under any previous company law. Further, Section 2(a) of the Code, 2016 provides that the provisions of the Code, 2016 shall apply to, “any company incorporated under the Companies Act 2013 or under any previous company law for the applicability of the Code, 2016”. Accordingly, the Insolvency and Bankruptcy Code, 2016 does not create a difference based on the objectives or nature of the company. Thus, clearly, Section 8 Companies are also covered under the Code, 2016 as a “Corporate Person‟ and therefore, Corporate Insolvency Resolution Process can be initiated against the Corporate Debtor herein.

Can insolvency be initiated against a Company registered under Section 8 of the Companies Act, 2013 with a charitable objective of imparting and promoting education? – M/s. Educomp Infrastructure & School Management Ltd. Vs. M/s. Millenium Education Foundation – NCLT New Delhi Bench Court-V Read Post »

As per definition of Corporate Person under Section 3(7) of the Code, the Societies cannot be said to be Corporate Persons – Asset Reconstruction Company (India) Ltd. Vs. Mohammadiya Educational Society – NCLAT New Delhi

NCLAT upheld decision of the Adjudicating Authority and held that Section 3(7) defines “corporate person” and even if this definition is considered, the Respondents are not Companies defined in clause 2(20) of the Companies Act, 2013 or “limited liability partnership” as defined under the Limited Liability Partnership Act, 2008 or any other person incorporated with limited liability under any law for the time being in force. Even if the Appellant was to say that the Respondents should be treated as body corporate under Section 18 of the A.P. Act, nothing is shown that Respondents Societies are persons “incorporated” or that the incorporation is with “limited liability”. This has to be further read with Section 2(d) which requires that to apply the Code such other body incorporated under any law for the time being in force needs to be specified by Central Government only then Code would apply to it. Thus, reading Section 2 which prescribes the entities and individuals to which the Code applies when considered with definition of ‘corporate person’ under Section 3(7) of the Code, the Respondents i.e. Societies cannot be said to be ‘corporate persons’ to whom the provisions of the Code applies.(p20-21)

As per definition of Corporate Person under Section 3(7) of the Code, the Societies cannot be said to be Corporate Persons – Asset Reconstruction Company (India) Ltd. Vs. Mohammadiya Educational Society – NCLAT New Delhi Read Post »

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