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2021 (8) TMI 165 - AT - Insolvency and BankruptcyInitiation of CIRP - petition was dismissed on the ground that the Respondent is not a body corporate - existence of debt and default or not - best case claimed by the Appellant is that the Respondents are Societies registered under the 1860 Act which after coming into force of A.P. Act under Section 18 read with Section 32 of the A.P. Act should be deemed to be a body corporate under the Special Act. HELD THAT - Section 3(7) defines corporate person and even if this definition is considered, the Respondents are not Companies defined in clause 2(20) of the Companies Act, 2013 or limited liability partnership as defined under the Limited Liability Partnership Act, 2008 or any other person incorporated with limited liability under any law for the time being in force. Even if the Appellant was to say that the Respondents should be treated as body corporate under Section 18 of the A.P. Act, nothing is shown that Respondents Societies are persons incorporated or that the incorporation is with limited liability - reading Section 2 which prescribes the entities and individuals to which the I B Code applies when considered with definition of corporate person under Section 3(7) of the I B Code , the Respondents i.e. Societies cannot be said to be corporate persons to whom the provisions of the Code applies. A committee or any officer of the society authorized in that behalf by the bye-laws may sue or be sued in its name. 'Authorization' means to give right or authority to a particular person to act on behalf of the society to sue or be sued. 'To sue' means initiating or defending any legal proceedings in accordance with the provisions of the CPC. What appears from reading of Section 18 of the A.P. Act is that the registration of a Society shall render it a body corporate by the name under which it was registered having perpetual succession and a common seal. Thus, although the Society is not incorporated and it is registered, it is rendered a body corporate which can have perpetual succession and have a common seal. Section 18 makes it clear that as the Society will be rendered body corporate, it shall be entitled to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all other things necessary for the furtherance of the aim for which it was constituted. The Learned Counsel for the Respondents has rightly submitted that even if best case of the Appellant is accepted, the Society which will be deemed to be a body corporate is for the purposes as mentioned in Section 18, and not Company incorporated as such - Section 2 read with Section 3 (7) does not spell out that the Respondents Companies in these Appeals are Corporate Persons under the I B Code to whom provisions for I B Code would apply. There are no substance in these Appeals - appeal dismissed.
Issues Involved:
1. Whether the Respondent Societies are considered as "body corporate" under the Andhra Pradesh Societies Registration Act, 2001. 2. Whether the Respondent Societies fall under the definition of "Corporate Person" as per Section 3(7) of the Insolvency and Bankruptcy Code, 2016. 3. Whether the provisions of the Insolvency and Bankruptcy Code, 2016 apply to the Respondent Societies. Issue-wise Detailed Analysis: 1. Whether the Respondent Societies are considered as "body corporate" under the Andhra Pradesh Societies Registration Act, 2001: The Appellant argued that the Respondent Societies, originally registered under the Societies Registration Act, 1860, should be deemed as "body corporate" under Section 18 of the Andhra Pradesh Societies Registration Act, 2001 (A.P. Act). Section 18 of the A.P. Act states that the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal. The Respondent countered that the societies registered under the 1860 Act do not acquire the status of a body corporate. The Adjudicating Authority relied on the judgment of the Andhra Pradesh High Court in "Satyadeva Sannakaru Rythu Sangham vs. The State of Andhra Pradesh," which held that only societies registered under the A.P. Act are conferred the status of a body corporate, not those under the 1860 Act. 2. Whether the Respondent Societies fall under the definition of "Corporate Person" as per Section 3(7) of the Insolvency and Bankruptcy Code, 2016: The Appellant contended that the Respondent Societies should be considered "Corporate Persons" under Section 3(7) of the Insolvency and Bankruptcy Code, 2016 (I&B Code), which includes any other person incorporated with limited liability under any law for the time being in force. The Respondent argued that they are not companies incorporated under the Companies Act, 2013, nor limited liability partnerships, and thus do not fall under the definition of "Corporate Person." The Tribunal noted that the Respondents, even if deemed as body corporate under the A.P. Act, are not incorporated with limited liability, and thus do not meet the criteria under Section 3(7) of the I&B Code. 3. Whether the provisions of the Insolvency and Bankruptcy Code, 2016 apply to the Respondent Societies: The Appellant argued that the I&B Code should apply to the Respondent Societies as they are in default of a financial debt. The Respondent maintained that the I&B Code does not apply to societies registered under the 1860 Act, as they are not included in the entities listed under Section 2 of the I&B Code. The Tribunal held that Section 2 of the I&B Code specifies the entities to which the Code applies, and the Respondent Societies do not fall under any of these categories. The Tribunal also referred to the judgment in "Illachi Devi v. Jain Society, Protection of Orphans India," where the Supreme Court held that a society registered under the 1860 Act is not a juristic person and cannot sue or be sued in its own name. Conclusion: The Tribunal concluded that the Respondent Societies are not "Corporate Persons" under the I&B Code and thus, the provisions of the I&B Code do not apply to them. Consequently, the appeals were dismissed, and the petitions were deemed not maintainable under the I&B Code. Judgment: - Company Appeal (AT) (Insolvency) No. 495 of 2019 is dismissed. No order as to costs. - Company Appeal (AT) (Insolvency) No. 496 of 2019 is dismissed. No order as to costs.
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