NBFC as financial service provider excluded from corporate person definition; Section 7 insolvency proceedings not maintainable.

A duly supported NBFC registered with the RBI was treated as a financial service provider and therefore fell outside the definition of corporate person under the Insolvency and Bankruptcy Code, 2016. On that footing, a Section 7 insolvency application was not maintainable against it, and alleged breaches of RBI conditions were not matters for determination in Section 7 proceedings. The admission order and consequential CIRP steps were set aside, and the company was released from insolvency with directions to close the proceedings.

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Issues: Whether a non-banking financial company shown on record as a financial service provider falls outside the definition of corporate person under the Insolvency and Bankruptcy Code, 2016, and whether a Section 7 insolvency application could therefore be maintained against it.

Analysis: The RBI registration certificate and accompanying material showed that the corporate debtor was functioning as an NBFC. The definition of corporate person expressly excludes any financial service provider, while financial service provider means a person engaged in providing financial services under authorisation or registration by a financial sector regulator. The Tribunal followed its earlier view that an NBFC carrying on financial business falls within the excluded category, and that alleged violation of RBI-imposed conditions is not for determination in Section 7 proceedings before the Adjudicating Authority.

Conclusion: The corporate debtor was a financial service provider and, as such, Section 7 proceedings under the Insolvency and Bankruptcy Code, 2016 were not maintainable against it. The admission order and the consequential CIRP steps were set aside.

Final Conclusion: The insolvency initiation against the corporate debtor was unsustainable, and the company was released from CIRP with consequential directions for closure of the proceedings.

Ratio Decidendi: A duly supported NBFC that qualifies as a financial service provider is excluded from the definition of corporate person, and insolvency proceedings under Section 7 cannot be initiated against it.

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