Mitali Palnitkar
Published On: February 13, 2022 at 19:28 IST
In the Case of The Solapur Dist Central Co-operative Bank Ltd v Sangola Taluka Sahakari Sakhar Karkhana Ltd; National Company Law Tribunal (NCLT), Mumbai dismissed an Application filed under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC) against Sangola Taluka Sahakari Sakhar Karkhana Ltd/Corporate Debtor.
The Application was filed on the ground that the Corporate Debtor was a Co-operative society and not a ‘Corporate person’ to whom IBC applies.
The Bench comprised of Mr Rajesh Sharma (Technical Member) and Mr HV Subba Rao (Judicial Member).
The Solapur District Central Co-operative Bank/Financial Creditor had facilitated a loan to the Corporate Debtor for setting up a plant for producing sugar, cutting sugarcane, transport, machinery repair, and other expenses.
The Corporate Debtor defaulted on the repayment of credit facilities and thus the Financial Creditor initiated legal action under provisions of Maharashtra State Co-operative Societies Act, 1960 and obtained a Recovery Certificate under the Act.
The Corporate Debtor appealed against the Order before Maharashtra State Co-operative Appellate Court, which set aside the lower Court’s Order subject to condition that the amount would be deposited within 2 months from date of Order. But the Corporate Debtor failed to deposit the amount.
The Financial Creditor filed an Application under Section 7 of IBC for initiating Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor. But the Tribunal noted that Corporate Debtor was a Co-operative society incorporated under Maharashtra State Co-operative Societies Act, 1960.
The Application was dismissed while relying on National Company Law Appellate Tribunal (NCLAT) decision in Asset Reconstruction Company (India) Ltd v Mohammadiya Educational Society, wherein it was held that society under AP Society Registration Act, 2001 was not a ‘Corporate person’ under IBC, and thus IBC would not apply to it.
NCLT noted that the Central Government had issued notification with respect to CIRP against Corporate Debtor but not with regards to Co-operative society.