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TMI Blog2021 (8) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 7 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short) was filed against the Respondent- 'M/s. Mohammadiya Educational Society' claiming that the Respondent is Corporate Debtor. The Adjudicating Authority in the impugned order held that the Respondent is not a body corporate and dismissed the Petition. Hence, the Appeal. Company Appeal (AT) (Insolvency) No. 496 of 2019 2. The same Appellant filed yet another Application under Section 7 of the 'I&B Code' against Respondent- 'Mohammed Vaziruddin Educational Society' and in this Application also, the Adjudicating Authority (National Company Law Tribunal, Hyderabad Bench, Hyderabad) in CP(IB) No. 646/7/HDB/2018 vide impugned order dated 26th March, 2019 held that the Respondent is not a body corporate. Hence, this Appeal. 3. Both the Appeals have been heard together. For sake up convenience, we will refer to particulars and documents of parties from the record of Company Appeal (AT) (Insolvency) No. 495 of 2019 (unless mentioned otherwise). 4. The Application under Section 7 of the 'I&B Code' was filed claiming that the Respondent was in default of amount as mentioned in the Application. It was claimed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintainable. No order as to costs." 6. We have heard Counsel for both sides. The Learned Counsel for the Appellant submitted that under Section 18 of the 'A.P Act', Societies registered in the State of Andhra Pradesh are to be treated as 'body corporate'. According to the Learned Counsel, the Adjudicating Authority wrongly relied on Judgment in the matter of "Satyadeva Sannakaru Rythu Sangham" (Supra). According to the Learned Counsel for the Appellant, the Respondents- 'Mohammed Vaziruddin Educational Society' was originally established in the year 1990 and 'Mohammadiya Educational Society' in the year 1999 and was registered under the 1860 Act. The said Act was subsequently repealed to the extent of applicability to the Act of A.P. when the 'A.P. Act' was enforced. With the repeal of the 1860 Act in Andhra Pradesh, the Respondents- Societies for all material purposes are governed by the A.P. Act. The Learned Counsel referred to Section 32 of the A.P. Act which provides for the repeal and savings clause. According to the said provision, anything done or any action taken under the 1860 Act shall be deemed to have been done or taken in the exercise of the powers conferred by or und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act, 2013 definition of Company has been provided. Referring to the said definition, it is argued that the Respondent- Society is not a company incorporated under the Companies Act, 2013 and thus, it is not covered in 'I&B Code'. The argument is that clause (b) of Section 2 of the 'I&B Code' the word 'company' cannot be said to include "any body corporate" as such interpretation would make clause (d) redundant. Provisions cannot be so read to make the same redundant or meaningless. To apply clause (d) of Section 2, it would be necessary that the Central Government issue a notification in that behalf to make a particular body incorporated under any law eligible for application of provisions of the Code. There is no such notification by the Central Government. 10. It is further argued by the Learned Senior Counsel for Respondents that if structure of the 'I&B Code' is perused, the Society cannot be comprehended to be covered under the provisions of the 'I&B Code' given the nature of proceedings under the 'I&B Code'. All the provisions of the 'I&B Code' are typically tailored to deal with insolvency of the company formed under the Companies Act or the limited liability partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistration Act, 2001' reads as under:- "13. the Register of members shall be kept open during the business hours subject to such reasonable restrictions a the bye-laws of the society may specify" Section 18 of the 'A.P. Society Registration Act, 2001' reads as under:- "18. 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 society 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." Section 32 of the 'A.P. Society Registration Act, 2001' reads as under:- "32. Repeals and savings Central Act 21 of 1860. Act 1 of 1350 F. (1) The Societies Registration Act, 1860, in its application to the Andhra area of the State of Andhra Pradesh and the Andhra Pradesh (Telengana Area) Public societies Registration Act, 150 F are hereby repealed. (2) Not-withstanding such repeal, anything done or any action taken under the said Acts (including any order, rule, form, regulation, certificate or bye-law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(20) read as follows;- "2. Definitions.- In this Act, unless the context otherwise requires,- xxx xxx xxx (11) "body corporate" or "corporation" includes a company incorporated outside India, but does not include- (i) a co-operative society registered under any law relating to co-operative societies; and (ii) any other body corporate (not being a company as defined in this Act), which the Central Government may, by notification, specify in this behalf; xxx xxx xxx (20) ―company means a company incorporated under this Act or under any previous company law;" 17. In the Limited Liability Partnership Act, 2008, Section 2(1) (n) reads as follows:- "(n) "limited liability partnership" means a partnership formed and registered under this Act" 18. It would be appropriate to carefully consider Section 2 along with relevant definition of 'corporate person' in Section 3 of the 'I&B Code'. The 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. 19. The quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 2(d) which requires that to apply the Code such other body incorporated under any law for the time being in force needs to be specified by Central Government only then 'I&B Code' would apply to it. 21. Thus, 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. 22. Respondents have relied on judgment in the matter of "Satyadeva Sannakaru Rythu Sangham vs. The State of Andhra Pradesh and Ors." [MANU/AP/0497/2011] [Writ Petition No. 488 of 2006] which was also relied on by the Adjudicating Authority which mentioned in Para 32, as under:- "32. It is pertinent to note that the Petitioner Sangham was registered under the provisions of the Act of 1860. The legal character of a society registered under the Act of 1860 has been determined by case law to mean that it would not be conferred the status of a body corporate or a corporation having a distinct legal entity from the members constituting it, in the sense of a com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1860. The Andhra Pradesh Societies Registration Act, 2001 (for short, 'the Act, 2001') was enacted and came into force on 10.10.2011. Sub-section (1) of Section 32 of the Act, 2001 provides that the Societies Registration Act, 1860, in its application to the Andhra area of the State of Andhra Pradesh, and the Andhra Pradesh (Telangana Area) Public Societies Registration Act, 1350F are hereby repealed. Sub-section (2) provides for savings of the act done or action taken in pursuance of the Societies Registration Act, 1860. Section 3 of the Act, 2001 provides as to how a society can be registered. Section 4 deals with Memorandum of Association of the society and Bye-laws to be filed with Registrar. Section 8 deals with amendment of Memorandum and Bye-laws. Section 14 deals with Committee of the society; Section 18 provides that society is to be a body corporate, which reads as follows: "The registration of society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal. The society shall be entitled to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Government of A.P., AIR 1958 AP 773, a Society registered with the Registrar under that Act, by filing memorandum and certified copy of rules and regulations, and after the Registrar issuing a certificate that it is a Society registered under the 1860 Act, it enjoys the status of a legal entity, apart from the members constituting the same, and is capable of suing and being sued, and the members of the Society, or its Governing Body, do not have any proprietary or beneficial interest in the property of the Society. Thus it is very clear that a Society registered either under 1860 Act, or 2001 Act, becomes an artificial person, and is and would be entirely different from its members. Therefore, if the elections held for that Society are not in accordance with its Bye-laws, or constitution (Memorandum of Association), person aggrieved by those irregularities has to file a petition, but the society itself cannot file a petition questioning the elections held to its Governing Body." 26. Referring to the above judgments, the Learned Counsel for the Appellant stated that in the matter of "Satyadeva Sannakaru Rythu Sangham" in para 32 reproduced supra, the effect of Section 32 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shable, in some aspects, from its own members, that would qualify as a material distinction, which prevents societies from obtaining letters of administration. xxx xxx xxx 26. Vesting of property, therefore, does not take place in the Society. Similarly, the society cannot sue or be sued. It must sue or be sued through a person nominated in that behalf. xxx xxx xxx 31. A bare perusal thereof would show that a society registered under the Societies Registration Act as contra-distinguished from a company registered under the Company Act cannot sue in its own name. It is to be sued in the name of the president, chairman, or principal secretary or trustees as shall be determined by the rules and regulations of the society or in the name of such person as shall be appointed by the Government Body for the occasion in default of such determination. It is, therefore, not correct to contend that it is capable of suing or being sued in its own name." 28. Relying on the said judgment, it has been argued that the Society cannot be treated as a juristic person and thus, cannot sue or be sued. The Hon'ble Supreme Court had in the judgment of "Illachi Devi" (supra) referred in para 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 32. We need not deliberate in more details on the effect of Section 18 of the A.P. Act for the reasons we have already discussed above. Looked at in any manner, 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. 33. For such reason, we do not find any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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