2020 (2) TMI 1118 - Tri - Insolvency and Bankruptcy

Recall of Order - initiation of CIRP - primary ground for the recall it is evident from the averments contained in the application as well as the grounds is that the applicant company, namely, the CD is Non-Banking Financial Company (NBFC) registered on 1.1.2003 bearing registration No. B. 14.00908 evident from the registration certificate issued by the Reserve Bank of India (RBI) - HELD THAT - It is evident that the CD is required to establish that it is rendering financial service as defined under Section 3(16) of IBC,2016 and that it is a 'Financial Service Provider' as defined under section 3(17) of IBC,2016 all of which requires appreciation of evidence, which this Tribunal is afraid cannot be ventured into after a final order has been passed after contest with the available materials on hand, including the pleadings of the respective parties. Inherent powers as provided under Rule 11 of NCLT Rules, 2016 cannot also be indiscriminately exercised by this Tribunal with a view to subvert the appellate provisions as provided under IBC,2016 in case if the parties are aggrieved by final order passed by this Tribunal more so when specific time limits are provided in IBC,2016 in filing appeals before the Appellate Tribunal. Application do not deserves to be admitted - application dismissed.

Summary

Issues Involved:

1. Jurisdiction of the Tribunal to recall or review its order.
2. Classification of the Corporate Debtor (CD) as a Non-Banking Financial Company (NBFC) and its exclusion from the purview of the Insolvency and Bankruptcy Code (IBC), 2016.
3. Definition and applicability of 'Financial Service Provider' (FSP) under IBC, 2016.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal to Recall or Review its Order:
The Tribunal examined whether it had the authority to recall or review its previous order dated 15.01.2019, wherein the Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor (CD). The Tribunal noted that it does not possess the power to review or recall its final orders under the IBC, 2016 or the Companies Act, 2013. The Tribunal emphasized that inherent powers under Rule 11 of the NCLT Rules, 2016 cannot be exercised indiscriminately to subvert appellate provisions. It was highlighted that any aggrieved party should seek recourse through the appellate process within the specified time limits under the IBC, 2016.

2. Classification of the Corporate Debtor (CD) as a Non-Banking Financial Company (NBFC) and its Exclusion from the Purview of the IBC, 2016:
The CD argued that it is an NBFC registered with the Reserve Bank of India (RBI) and thus falls outside the jurisdiction of the IBC, 2016. The Tribunal examined the registration certificate issued by the RBI and the terms and conditions associated with it. However, the Tribunal pointed out that the CD had not raised this plea during the initial proceedings, nor did it provide sufficient evidence to demonstrate compliance with all RBI terms and conditions. The Tribunal also noted that the Central Government had not issued any notification under Section 227 of the IBC, 2016 to categorize the CD as a 'Corporate Person' excluded from the IBC's purview.

3. Definition and Applicability of 'Financial Service Provider' (FSP) under IBC, 2016:
The Tribunal delved into the definitions of 'financial service' and 'Financial Service Provider' (FSP) as per Sections 3(16) and 3(17) of the IBC, 2016. The CD contended that its activities fell within these definitions, thereby excluding it from the IBC's applicability. The Tribunal, however, observed that the CD failed to establish that it was rendering financial services as defined under Section 3(16) of the IBC, 2016. The Tribunal highlighted that the CD's activities did not strictly fall under the specific financial services listed in clauses (a) to (i) of Section 3(16). Consequently, the Tribunal concluded that the CD could not be considered a Financial Service Provider (FSP) and thus remained amenable to the IBC, 2016.

Conclusion:
The Tribunal dismissed the application filed by the CD seeking to recall the order dated 15.01.2019, initiating CIRP. The Tribunal held that it lacked the jurisdiction to review or recall its final orders and that the CD had not sufficiently demonstrated its exclusion from the IBC's purview as an NBFC or FSP. The application was dismissed with costs of ?50,000/- payable to the Interim Resolution Professional (IRP).