Insolvency jurisdiction fails against a financial service provider; a Section 7 application cannot sustain CIRP for a non-corporate person.

A Section 7 insolvency application could not be maintained against a corporate guarantor that was, at the time of filing, registered as a financial service provider and therefore outside the definition of a corporate person. The RBI registration showed the entity fell outside the statutory class amenable to CIRP, and later cancellation of that registration did not cure the original defect. Because the proceeding was initiated against an entity beyond the Adjudicating Authority's jurisdiction, the insolvency commencement order was void and non est. The appeal succeeded, the insolvency order was set aside, and the respondent was left free to proceed in accordance with law.

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Issues: Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 could be maintained against a corporate guarantor that was registered as a non-banking financial institution and therefore fell outside the definition of a corporate person.

Analysis: The definition of a corporate person excludes a financial service provider, while a corporate guarantor must itself be a corporate person. The registration granted by the Reserve Bank of India showed that the entity was a financial service provider when the Section 7 application was filed, and the subsequent cancellation of registration did not cure the defect. Since proceedings under Section 7 were initiated against a financial service provider, the Adjudicating Authority lacked jurisdiction to commence the insolvency process. A jurisdictional defect goes to the root of the matter and can be raised even in appeal, as a proceeding without jurisdiction is void.

Conclusion: The Section 7 application was not maintainable against the corporate guarantor on the date of filing, and the initiation of CIRP was without jurisdiction.

Final Conclusion: The appeal succeeded and the insolvency order was set aside, leaving the respondent free to proceed in accordance with law if so advised.

Ratio Decidendi: A Section 7 insolvency application cannot be sustained against an entity that is, at the relevant time, a financial service provider excluded from the category of corporate person, and any insolvency proceeding initiated without jurisdiction is void and non est.

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