# 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-00313. The appeal arises from an order dated 2020-02-14 passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 18 Mar 2021
- **Citation:** TCN-2021-NCLAT-00313
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/gyanchand-mutha-vs-aditya-birla-money-limited-ca-ba7a1a0d

## Summary

### Background

The appeal arises from an order dated 2020-02-14 passed by the National Company Law Tribunal (NCLT), Jaipur Bench, regarding an application filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) by Aditya Birla Money Limited against Arkay International Finsec Limited (Corporate Debtor). The appellant, a shareholder of Arkay International Finsec Ltd., challenged the NCLT's decision to admit the application for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The core issue revolves around whether the Corporate Debtor, being an NBFC, falls under the purview of the IBC, considering Section 3(7) which excludes financial service providers from the definition of 'Corporate Person'.

## Facts

Arkay International Finsec Limited (Corporate Debtor) is an NBFC. Aditya Birla Money Limited (Operational Creditor) filed an application under Section 9 of the IBC to initiate CIRP against Arkay International Finsec Limited, claiming a debt of Rs.28,90,835.10 with interest. The debt arose from trading activities conducted by the Corporate Debtor through a trading account opened with the Operational Creditor. The Corporate Debtor purchased 1 Lakh shares of Steel Exchange of India Ltd. The Operational Creditor sold shares of the Corporate Debtor to recover the debt. The Corporate Debtor submitted a KYC form indicating it was a 'Public Limited Company' and not a 'Financial Institution'. The Corporate Debtor holds a certificate of registration from the Reserve Bank of

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority was justified in initiating CIRP against the Corporate Debtor, …

**Ratio:** Section 3(7) of the IBC defines 'corporate person' but explicitly excludes any financial

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**Reasoning:** The NCLAT reasoned that the Corporate Debtor held a valid certificate of registration

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**Interpretation:** The interpretation of Section 3(7) is strict and excludes financial service

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**Application:** The NCLAT applied the ratio by holding that since the Corporate Debtor was an

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## Parties

- **Judges:** A.I.S. C…; Alok Sriv…
- **Appellants:** Gyanchand…
- **Respondents:** Arkay Internationa…; M/s. Aditya Birla…
- **Advocates:** Susshil…; Mamt…; +9 more

## Timeline

- **2020-02-14 — Order by NCLT Jaipur…**: Order passed by National Company Law Tribunal, Jaipur Bench in IA No.203/JPR/2019 IB -…
- **2017-09-01 — Trading Accoun…**: Corporate Debtor opened a trading account with the Operational Creditor in Jaipur and…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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