2021 (8) TMI 165 - AT - Insolvency and Bankruptcy

Respondent Societies Not Corporate Persons under Insolvency Code

Asset Reconstruction Company (India) Limited Versus Mohammadiya Educational Society And Asset Reconstruction Company (India) Limited Versus Mohammed Vaziruddin Educational Society

Asset Reconstruction Company (India) Limited Versus Mohammadiya Educational Society And Asset Reconstruction Company (India) Limited Versus Mohammed ... Issues Involved:1. Whether the Respondent Societies are considered as 'body corporate' under the Andhra Pradesh Societies Registration Act, 2001.2. Whether the Respondent Societies fall under the definition of 'Corporate Person' as per Section 3(7) of the Insolvency and Bankruptcy Code, 2016.3. Whether the provisions of the Insolvency and Bankruptcy Code, 2016 apply to the Respondent Societies.Issue-wise Detailed Analysis:1. Whether the Respondent Societies are considered as 'body corporate' under the Andhra Pradesh Societies Registration Act, 2001:The Appellant argued that the Respondent Societies, originally registered under the Societies Registration Act, 1860, should be deemed as 'body corporate' under Section 18 of the Andhra Pradesh Societies Registration Act, 2001 (A.P. Act). Section 18 of the A.P. Act states that the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal. The Respondent countered that the societies registered under the 1860 Act do not acquire the status of a body corporate. The Adjudicating Authority relied on the judgment of the Andhra Pradesh High Court in 'Satyadeva Sannakaru Rythu Sangham vs. The State of Andhra Pradesh,' which held that only societies registered under the A.P. Act are conferred the status of a body corporate, not those under the 1860 Act.2. Whether the Respondent Societies fall under the definition of 'Corporate Person' as per Section 3(7) of the Insolvency and Bankruptcy Code, 2016:The Appellant contended that the Respondent Societies should be considered 'Corporate Persons' under Section 3(7) of the Insolvency and Bankruptcy Code, 2016 (I&B Code), which includes any other person incorporated with limited liability under any law for the time being in force. The Respondent argued that they are not companies incorporated under the Companies Act, 2013, nor limited liability partnerships, and thus do not fall under the definition of 'Corporate Person.' The Tribunal noted that the Respondents, even if deemed as body corporate under the A.P. Act, are not incorporated with limited liability, and thus do not meet the criteria under Section 3(7) of the I&B Code.3. Whether the provisions of the Insolvency and Bankruptcy Code, 2016 apply to the Respondent Societies:The Appellant argued that the I&B Code should apply to the Respondent Societies as they are in default of a financial debt. The Respondent maintained that the I&B Code does not apply to societies registered under the 1860 Act, as they are not included in the entities listed under Section 2 of the I&B Code. The Tribunal held that Section 2 of the I&B Code specifies the entities to which the Code applies, and the Respondent Societies do not fall under any of these categories. The Tribunal also referred to the judgment in 'Illachi Devi v. Jain Society, Protection of Orphans India,' where the Supreme Court held that a society registered under the 1860 Act is not a juristic person and cannot sue or be sued in its own name.Conclusion:The Tribunal concluded that the Respondent Societies are not 'Corporate Persons' under the I&B Code and thus, the provisions of the I&B Code do not apply to them. Consequently, the appeals were dismissed, and the petitions were deemed not maintainable under the I&B Code.Judgment:- Company Appeal (AT) (Insolvency) No. 495 of 2019 is dismissed. No order as to costs.- Company Appeal (AT) (Insolvency) No. 496 of 2019 is dismissed. No order as to costs.