# In the matter of Karvy Stock Broking Limited

> NCLT judgment dated 2025-08-05. Citation: TCN-2025-NCLT-01264. Vardhaman Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016…

- **Court:** NCLT
- **Order date:** 5 Aug 2025
- **Citation:** TCN-2025-NCLT-01264
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-hyderabad/karvy-stock-broking-limited-312f20ac

## Summary

### Background

Vardhaman Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) to initiate Corporate Insolvency Resolution Process (CIRP) against Karvy Stock Broking Limited, citing default on commercial paper subscribed by the Applicant.

## Facts

Vardhaman Bank filed a petition under Section 7 of the IBC against Karvy Stock Broking Limited for default on commercial papers.

Karvy Stock Broking Limited argued that it is a Financial Service Provider and thus not subject to IBC.

The commercial papers purchased by Vardhaman Bank were worth ₹5 Crores and were to be redeemed on 10.12.2019.

Karvy Stock Broking Limited defaulted on the redemption amount on 10.12.2019.

Vardhaman Bank extended an OD facility of ₹47.50 Crores against Karvy Stock Broking Limited's deposits of ₹50 Crores.

Karvy Stock Broking Limited admitted its liability vide email dated 14.04.2020, citing the Covid-19 pandemic.

SEBI cancelled Karvy Stock Broking Limited's Certificate of Registration on 31.05.2023.

…

## Issues and analysis

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

**Ratio:** A financial service provider is excluded from the definition of 'corporate person' under

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**Reasoning:** Section 3(16) of the IBC defines 'financial service,' and Section 3(17) defines

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**Interpretation:** The NCLT interpreted the provisions of Section 3(7), 3(16), and 3(17) of the

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**Application:** The NCLT applied the definition of 'financial service provider' to the

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## Parties

- **Judges:** Rajeev Bh…; Sanjay…
- **Appellants:** Vardhaman…
- **Respondents:** Karvy Stock…; Karvy Stock…
- **Advocates:** Ms Mummaneni…; Mr.V.V.S.…; +2 more

## Timeline

- **2019-12-10 — Default…**: Commercial Paper matured and the…
- **2020-04-14 — Liability Ad…**: The Respondent admitted its liability vide email dated 14.04.2020, stating that it was…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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