Co-operative Society Not Subject to IBC: Tribunal Dismisses Financial Creditor's Petition

The tribunal dismissed the petition filed by the Financial Creditor under Section 7 of the IBC against the Co-operative Society, ruling that it does not qualify as a "Corporate Person" under the IBC. Consequently, the provisions of the IBC are not applicable to Co-operative Societies registered under the Multi-State Co-operative Societies Act, 2002. The tribunal held that the Corporate Insolvency Resolution Process cannot be initiated against the Co-operative Society, and the application was dismissed without costs, with a clarification that the ruling should not prejudice the rights of the Financial Creditor in other judicial forums.

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Issues Involved:
1. Whether Co-operative Societies registered under the Multi-State Co-operative Societies Act, 2002 fall within the meaning of "Corporate Person" as defined under Section 2(d) and Section 3(7) of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Whether the provisions of the IBC are applicable to Co-operative Societies registered under the Multi-State Co-operative Societies Act, 2002.
3. Whether the Multi-State Co-operative Societies Act, 2002 prevails over the IBC.

Issue-wise Detailed Analysis:

Issue 1: Definition of "Corporate Person"
The tribunal examined whether Co-operative Societies fall within the definition of a "Corporate Person" under Section 2(d) and Section 3(7) of the IBC. Section 3(7) defines a "corporate person" as a company, LLP, or any other person incorporated with limited liability under any law for the time being in force. However, Section 2(d) requires a notification from the Central Government to specify such bodies. The tribunal concluded that since the Corporate Debtor is a Co-operative Society and no such notification has been issued by the Central Government, it does not fall under the definition of "Corporate Person."

Issue 2: Applicability of IBC to Co-operative Societies
The tribunal referred to the judgment of the Hon'ble NCLAT in the matter of Asset Reconstruction Company (India) Ltd. v. Mohammadiya Educational Society, which held that societies registered under the Societies Registration Act do not fall within the definition of "corporate persons" under the IBC. The tribunal emphasized that even if a Co-operative Society is considered a body corporate, it does not meet the criteria set out in Section 2(d) of the IBC, as it has not been notified by the Central Government. Therefore, the provisions of the IBC are not applicable to Co-operative Societies registered under the Multi-State Co-operative Societies Act, 2002.

Issue 3: Prevalence of Multi-State Co-operative Societies Act over IBC
The tribunal noted that Section 238 of the IBC states that the provisions of the IBC shall have an overriding effect over any other law. However, since the tribunal had already concluded that Co-operative Societies do not fall within the ambit of the IBC, the question of the Multi-State Co-operative Societies Act prevailing over the IBC does not arise for further discussion.

Conclusion:
The tribunal found no merit in admitting the petition filed by the Financial Creditor under Section 7 of the IBC against the Corporate Debtor, a Co-operative Society registered under the Multi-State Co-operative Societies Act, 2002. The tribunal concluded that the Corporate Debtor does not come under the purview of the IBC, and therefore, the Corporate Insolvency Resolution Process (CIRP) cannot be initiated against it. The application was dismissed with no cost, and it was clarified that the observations made in the order should not prejudice the rights of the Financial Creditor before any other judicial forum.

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