# In the matter of Nathella Depositors Welfare Association Vs UOI, Through its Secretary, Ministry of Finance CA (AT) (Insolvency) 732-2018

> NCLAT judgment dated 2018-11-30. Citation: TCN-2018-NCLAT-00038. The Nathella Depositors Welfare Association filed an appeal against an order dated April 23,…

- **Court:** NCLAT
- **Order date:** 30 Nov 2018
- **Citation:** TCN-2018-NCLAT-00038
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/nathella-depositors-welfare-association-vs-uoi-through-its-secretary-ministry-of-103e0548

## Summary

### Background

The Nathella Depositors Welfare Association filed an appeal against an order dated April 23, 2018, passed by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai. The Adjudicating Authority had allowed the 'Committee of Creditors' to recommend a name and appoint a new 'Resolution Professional' and opined that the recommendations made by the 'Corporate Debtor' for the appointment of an 'Interim Resolution Professional' as 'Resolution Professional' were valid.

## Facts

The Nathella Depositors Welfare Association appealed against an order by the NCLT Chennai, which concerned the appointment of a Resolution Professional. The appellant argued that the depositors of the 'Corporate Debtor' should be treated as 'Financial Creditors' rather than 'Operational Creditors', referencing a Supreme Court decision. The Appellate Tribunal acknowledged the depositors as creditors due to the amounts they deposited with the 'Corporate Debtor'. The key fact is the dispute over the classification of the depositors as either 'Financial Creditors' or 'Operational Creditors', which impacts their rights and priority in the insolvency resolution process.

## Issues and analysis

### Issue 1: Whether the depositors of the 'Corporate Debtor' should be treated as 'Financial Creditors' or …

**Ratio:** The ratio is based on the interpretation of Section 5(8) of the I&B Code, which

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**Reasoning:** The Appellate Tribunal reasoned that while the depositors do not fall within the strict

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**Interpretation:** The interpretation involves balancing the strict legal definition of 'financial

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**Application:** The Appellate Tribunal applied this reasoning by directing the 'Committee of

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## Parties

- **Judges:** S.J. Mukhop…; Bansi Lal…
- **Appellants:** Nathella Depositor…
- **Respondents:** Union of…

## Timeline

- **2018-11-30 — Appeal Pre…**: Nathella Depositors Welfare Association preferred an appeal against the order dated 23rd…
- **2018-04-23 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(8) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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