NBFC status and Section 7 maintainability required factual determination before insolvency admission could stand.

The NCLAT set aside admission of the Section 7 insolvency application and remanded the matter because the appellant's asserted NBFC status and its effect on maintainability were not properly tested on evidence. Conflicting material existed on the registration status, and the appellate record was insufficient to finally determine whether the appellant fell within the statutory position governing financial service providers. The adjudicating authority was directed to examine the factual and legal effect of NBFC status before deciding maintainability of the Section 7 proceedings.

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Issues: Whether the order admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 deserved to be set aside and the matter remanded for determination of the appellant's status as a non-banking financial company and the maintainability of the Section 7 proceedings.

Analysis: The appellant relied on its registration as an NBFC and the dispute turned on whether that status brought it within the statutory position governing financial service providers. The record showed conflicting material on the appellant's registration status, and the appellate record had not been tested with evidence before the adjudicating authority on the effect of NBFC status on the Section 7 proceeding. In these circumstances, the issue was considered appropriate for determination by the adjudicating authority after evidence, rather than being finally decided in appeal.

Conclusion: The impugned order was set aside and the matter was remanded to the adjudicating authority, leaving open the question whether the Section 7 application is maintainable against the appellant if it is an NBFC.

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