# In the matter of Asmitha Microfin Limited

> NCLT judgment dated 2024-02-12. Citation: TCN-2024-NCLT-02642. Asmitha Microfin Ltd filed a petition under Section 10 of the Insolvency and Bankruptcy Code…

- **Court:** NCLT
- **Order date:** 12 Feb 2024
- **Citation:** TCN-2024-NCLT-02642
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/asmitha-microfin-limited-2da90b96

## Summary

### Background

Asmitha Microfin Ltd filed a petition under Section 10 of the Insolvency and Bankruptcy Code (IBC), seeking initiation of Corporate Insolvency Resolution Process (CIRP). The company, a Non-Banking Financial Institution (NBFC), claimed default in payment of an alleged debt of Rs. 143,69,07,866/-. The Reserve Bank of India (RBI) was impleaded as a respondent. Several financial creditors, including SIDBI, PNB, SBI, and Kotak Mahindra Bank, filed counters objecting to the petition, primarily arguing that Asmitha Microfin is a Financial Service Provider (FSP) and thus ineligible for CIRP under Section 3(17) of the IBC. The RBI had previously cancelled Asmitha Microfin's NBFC registration and directed it to dispose of its financial assets.

## Facts

Asmitha Microfin Ltd., a registered NBFC, filed a petition under Section 10 of the IBC seeking CIRP due to an alleged debt of Rs. 143,69,07,866/-. The company was incorporated in 2001 and operated in 14 states until 2010, when the Andhra Pradesh Microfinance Institutions (Regulation of Money Lending Act) impacted its recovery. The company's loans were restructured in 2011 under Corporate Debt Restructuring (CDR). The RBI cancelled Asmitha Microfin's NBFC registration on 22.02.2019 due to non-compliance. The company received default notices from several banks. The affairs of the company were deliberated in a Joint Lenders Meeting on 19.04.2021, leading to the decision to file the IBC application. The RBI was impleaded as a respondent. Several financial creditors,

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## Issues and analysis

### Issue 1: Whether the respondent is a Financial Service Provider as claimed by some of the financial …

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

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**Reasoning:** The NCLT reasoned that Asmitha Microfin was registered as an NBFC with authorization from

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**Interpretation:** The NCLT interpreted Section 3(7) and Section 3(17) of the IBC to mean that a

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**Application:** The NCLT applied the ratio to the facts of the case, finding that Asmitha

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## Parties

- **Judges:** Venkata Ramakrishn…; SH. CHARAN…
- **Respondents:** Asmitha Microfin…; Reserve Bank of…

## Timeline

- **2001-01-01 — Company Incor…**: Asmitha Microfin Ltd. was incorporated with the main object of carrying micro finance…
- **2010-01-01 — Impact of Andhra…**: The enactment of the Andhra Pradesh Microfinance Institutions (Regulation of Money…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 10 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-10)

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