NBFC registration cancellation does not end financial service provider status where regulatory control and asset reduction directions continue.

Cancellation of NBFC registration did not, by itself, change the entity's character where it remained subject to Reserve Bank of India regulatory control and had not substantively complied with the direction to reduce its financial assets below the prescribed threshold. The applicant was therefore treated as continuing to fall within the category of a financial service provider, excluding it from the definition of corporate person for section 10 proceedings. On that basis, the application for initiation of corporate insolvency resolution process was not maintainable and could not be entertained under the insolvency framework.

---

---

Issues: Whether the corporate applicant remained a financial service provider after cancellation of its NBFC registration and, if so, whether an application under section 10 of the Insolvency and Bankruptcy Code, 2016 was maintainable.

Analysis: The corporate applicant had been registered with the Reserve Bank of India as an NBFC and was therefore a financial service provider when the lending transactions were created and when default occurred. The cancellation of registration did not alter that legal character. The cancellation letter and connected order showed that the applicant was still governed by the Reserve Bank of India Act and regulatory directions, and was only required to dispose of financial assets and bring them below the prescribed threshold within the stipulated period. The record did not show such disposal in substance; instead, the assets were written off in the books. The direction of the regulator was thus not complied with in the manner contemplated.

Conclusion: The applicant continued to fall within the category of financial service provider and was excluded from the definition of corporate person for the purpose of section 10 proceedings. The application for initiation of corporate insolvency resolution process was not maintainable.

Final Conclusion: The petition could not be entertained under the corporate insolvency framework and was dismissed.

Ratio Decidendi: Cancellation of NBFC registration does not, by itself, remove the character of financial service provider where the entity remains subject to regulatory control and the statutory direction to alter its asset profile has not been substantively complied with.

---