# In the matter of Karvy Stock Broking Limited

> NCLT judgment dated 2024-09-10. Citation: TCN-2024-NCLT-00634. The case involves an application filed by M/s. Kapston Facilities Management Limited…

- **Court:** NCLT
- **Order date:** 10 Sept 2024
- **Citation:** TCN-2024-NCLT-00634
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/karvy-stock-broking-limited-63d7b9c0

## Summary

### Background

The case involves an application filed by M/s. Kapston Facilities Management Limited (Operational Creditor/Applicant) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Karvy Stock Broking Limited (Corporate Debtor/Respondent) for failing to pay a debt of Rs.1,07,63,333/-. The Operational Creditor provided facilities management services to the Respondent under an agreement. The Respondent defaulted on payments, leading to the filing of the petition.

## Facts

M/s. Kapston Facilities Management Limited (Operational Creditor) filed a petition under Section 9 of the IBC against M/s. Karvy Stock Broking Limited (Corporate Debtor) for a debt of Rs.1,07,63,333/-, including interest. The Operational Creditor provided facilities management services to the Corporate Debtor under an agreement dated 20.04.2011. Invoices were to be raised and paid within 30 days, but the Corporate Debtor allegedly did not adhere to this timeline. A demand notice was sent on 28.06.2021. The Corporate Debtor argued that it is a financial service provider and not a 'corporate person' under Section 3(7) of the IBC, and that the debt claimed did not meet the threshold limit under Section 4 of the IBC. The Corporate Debtor is registered as a stockbroker with

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## Issues and analysis

### Issue 1: Whether Karvy Stock Broking Limited qualifies as a 'corporate person' under Section 3(7) of the …

**Ratio:** A 'corporate person' under Section 3(7) of the IBC excludes financial service providers.

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**Reasoning:** The court reasoned that Karvy Stock Broking Limited is registered as a stockbroker with

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**Interpretation:** The interpretation of Section 3(7) read with Section 3(17) and 3(16) of the IBC

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**Application:** Since Karvy Stock Broking Limited is a registered stockbroker and thus a

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** Kapston Facilities…
- **Respondents:** Karvy Stock…

## Timeline

- **2011-04-20 — Agreement between…**: Karvy Stock Broking Limited entered into an agreement with Kapston Facilities Management…
- **2019-04-26 — Letter of…**: Letter of Intent Annexure-A4 was issued in favour of the Operational Creditor for…

## 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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