NCLT rejects CIRP application filed u/s 7 of IBC against Religare Enterprises since the Corporate Debtor is registered under Reserve Bank of India, Act, 1934 as NBFC – Ligare Aviation Ltd. Vs. Religare Enterprises Ltd. – NCLT Principal Bench
July 13, 2023
The Adjudicating Authority held that the Reserve Bank of India by exercising its power under Section 45 IA of the Reserve Bank of India Act, 1934 has granted a certificate to the Corporate Debtor Company to carry on business of non-banking financial institution subject to the condition given on the reverse. Sec 3(8) defines a “Corporate Debtor” as meaning a corporate person who owes a debt to any person. Section 7 speaks of initiation of CIRP against a corporate debtor by a financial creditor. Reading the provisions together, it is clear that a section 7 petition may be initiated against any corporate debtor who is a corporate person within the meaning of Section 3(7) of the Code and the financial service provider is excluded from the definition of the Corporate Person, thus the corporate debtor herein is not covered within the definition of Section 3(7) of the Code, since it is admittedly NBFC.