# In the matter of Gyanchand Mutha Vs. Aditya Birla Money Limited CA (AT) (Ins) No. 346 of 2020

> NCLAT judgment dated 2021-03-18. Citation: TCN-2021-NCLAT-00312. The appeal arises from an order dated 14.02.2020 passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 18 Mar 2021
- **Citation:** TCN-2021-NCLAT-00312
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/gyanchand-mutha-vs-aditya-birla-money-limited-ca-108bbe86

## Summary

### Background

The appeal arises from an order dated 14.02.2020 passed by the National Company Law Tribunal (NCLT), Jaipur Bench, regarding an application under Section 9 of the Insolvency and Bankruptcy Code (IBC). The Operational Creditor, Aditya Birla Money Ltd., filed the application against Arkay International Finsec Ltd., the Corporate Debtor, claiming default on a debt. The Appellant, a shareholder of the Corporate Debtor, challenged the initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, arguing that the Corporate Debtor is an NBFC and thus exempted from the purview of 'Corporate Person' under Section 3(7) of the IBC.

## Facts

Arkay International Finsec Ltd. (Corporate Debtor) is a company registered with the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC). Aditya Birla Money Ltd. (Operational Creditor) provided services to the Corporate Debtor, including a trading account. The Corporate Debtor purchased 1 Lakh shares of Steel Exchange of India Ltd. through the Operational Creditor. The value of the shares decreased, and the Operational Creditor sold the shares, crediting the Corporate Debtor's account. A debit balance remained, and the Operational Creditor claimed that Rs.28,90,835.10 was outstanding with interest. The Operational Creditor issued a notice under Section 8 of the IBC and subsequently filed an application under Section 9 of the IBC. In the KYC form

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority could have initiated CIRP against the Corporate Debtor, …

**Ratio:** Section 3(7) of the IBC defines 'Corporate Person' but excludes 'any financial service

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**Reasoning:** The NCLAT reasoned that the Corporate Debtor, being registered as an NBFC with the RBI,

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**Interpretation:** The interpretation of Section 3(7) of the IBC is crucial in determining whether

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**Application:** The NCLAT applied the ratio to the facts of the case, noting that the Corporate

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## Parties

- **Judges:** A.I.S. C…; Alok Sriv…
- **Appellants:** Gyanchand…
- **Respondents:** Arkay Internationa…; M/s. Aditya Birla…

## Timeline

- **2017-09-01 — Trading Accoun…**: The Corporate Debtor opened a trading account with the Operational Creditor in Jaipur and…
- **2017-11-01 — Trading Con…**: Trading continued until…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(7) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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