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TMI Blog2022 (2) TMI 1311X X X X Extracts X X X X X X X X Extracts X X X X ..... me the Corporate Person under section 3(7) has to complete the criteria given under section 2 of the Code, which deals with applicability of the Code. If the Corporate Debtor in the matter is not covered under the section 2 of the Code, the question of applicability of section 3(7) does not arise. Thus, it is clear that the Corporate Debtor being Co-operative Society is not the Corporate Person nor the provisions of Code are applicable to the Co-operative Society as the Corporate Debtor in the matter is registered/incorporated under Multi-State Co-operative Societies Act, 2002 which is a special statute and provides specific provisions for the winding up of the Societies registered under the same. And hence, the Corporate Debtor being Co-operative Society cannot be put under Insolvency Resolution Process. This Bench finds no merit in admitting Petition filed by the Financial Creditor under section 7 of the Code against the Corporate Debtor who is a Co-operative Society registered under the Multi-State Co-operative Societies Act, 2002 - this Bench is of considered view that the Corporate Debtor who is Co-operative Society registered/incorporated under the Multi-State Co-Op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19,80,00,000/- 26.10.2018 2 19,80,00,000/- 06.11.2018 c) A total amount of Rs.40,00,00,000/- (Rupees forty crore only) was sanctioned by the Financial Creditor which was utilised by the Corporate Debtor as and when it was in need of utilising the said funds. d) The Short-Term Loan facility was secured by mortgage of immovable and movable properties of the Corporate Debtor by way of a second charge by English Mortgage. The details of the documents executed with respect to the Short-Term Loan are as follows: i. Mortgage Deed dated 05.11.2018 registered at Serial No 4185/2018 at the office of Joint Sub Registrar Class 2, Solapur North-2. ii. Joint and Several Liability Bond dated 05.11.2018 registered at Serial No. 4186/2018 at the office of Joint Sub Registrar Class 2, Solapur North-2. iii. Joint Declaration dated 05.11.2018 notarised and registered at Serial No 8476/018 by Subhash N Bet, Advocate and Notary e) The Corporate Debtor had availed the Short-Term Loan facility primarily to facilitate all its expenditure incurred during the non-crushing sugar se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long with the applicable interest. However, the Corporate Debtor has defaulted on the repayment. The details are as follows: Principal Amount 29,80,00,000/- Interest 1,04,07,000/- Total Amount Outstanding as on 30.06.2019 30,84,07,000/- c) The facility pertaining to the Working Capital Loan, which was due and payable by Corporate Debtor on or before 31st October 2019, was eventually extended by the Financial Creditor and was due and payable on or before 31st December 2020. d) The Financial Creditors thereafter issued reminder letters informing the Corporate Debtor of the default and demanding payment of the outstanding amounts. The details of outstanding amount as on date 30th June 2020 is as follows: Principal Amount 29,80,00,000/- Interest 5,50,00,000/- Total Amount Outstanding as on 30.06.2020 35,30,95,000/- e) The Corporate Debtor has raised the defence as to the maintainability of the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith limited liability; and ii. Such incorporation must be under any other law for the time being in force. If the abovementioned two conditions are satisfied then such person shall be a corporate person and if he owes any debt then he becomes Corporate Debtor, thereby comes within the ambit of the code. (iii) The Financial Creditor submits that, Section 3(7) of the code was notified by way of a notification dated 2nd November 2016. Section 2(d) of the code requires that for application of the code to any person other than Company and LLP notification from the Central Government is required and thereby objection of the Corporate Debtor does not remain valid. The notification is annexed to these written submissions at pp 15-16. (iv) The Financial Creditor submits that, assuming without admitting that there is a conflict between section 3(7) and section 2 of the code. It is cardinal principal of interpretation that when the language of the statute is plain, clear, unambiguous and easily susceptible to one meaning the effect should be given to the provision as such. The provision which is special shall prevail over the provision which is general in nature. (v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entually when the CIRP fails. As observed by this Court in Swiss Ribbons Pvt Ltd, referred to hereinabove, the primary focus of the legislation while enacting the IBC is to ensure revival and continuation debtor from its own management and from a corporate debtor by liquidation and such CIRP is to be completed in a time-bound manner. Therefore, the entire CIRP as such cannot be equated with Winding Up proceedings. Therefore, considering Section 238 of the Code, which is a subsequent Act to the Tea Act, 1953. Any other view would frustrate the object and purpose of the IBC. If the submission on behalf of the Appellant that before initiation of proceedings under section 9 of the IBC, the consent of the Central Government as provided under section 16G (1) (c) of the Tea Act, 1953 is to be obtained, in that case, the main object and purpose of the IBC, namely, to complete the CIRP in a time-bound manner, shall be frustrated. In short, the provision of the IBC would have an overriding effect over the Tea Act, 1953 and that no prior consent of the Central Government before imitation of the proceedings under section 7 or section 9 of the Code would required and even without such consent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial service provider; 11. After bare reading of the above provisions of the Code, even if we consider the Corporate Debtor to be a Corporate Person as defined under section 3(7) of the Code, the Corporate Debtor is itself a Co-operative Society and hence cannot come under the provisions of section 2(d) of the Code as the Central Government has not issued the Notification of the applicability of the Code to the Co-operative Society. 12. Section 2 addresses the applicability of the code and listed down the various types of Corporate Debtors on whom/by whom Insolvency, Liquidation, Voluntary Liquidation or Bankruptcy Proceedings can be initiated. 13. From the bare reading of Section 2 of the Code, it can be understood that the Corporate Debtor in the given case is i. Not a company incorporated under the Companies Act, 2013 or under any previous company law (Section 2(a)); ii. Not a company governed by any special Act for the time being in force, except in so far as the said provisions are inconsistent with the provisions of such special Act (Section 2(b)); iii. Not a Limited Liability Partnership incorporated under the Limited Liability Partnership Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 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 substance in these Appeals. For reasons mentioned above: (a) Company Appeal (AT) (Insolvency) No. 495 of 2019 is dismissed. No order as to costs. (b) Company Appeal (AT) (Insolvency) No.496 of 2019 is dismissed. No order as to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be further 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. 20. From the entire observations of the rulings, it is well understood that, the Corporate Debtor which is Co-operative Society, to become the Corporate Person under section 3(7) has to complete the criteria given under section 2 of the Code, which deals with applicability of the Code. If the Corporate Debtor in the matter is not covered under the section 2 of the Code, the question of applicability of section 3(7) does not arise. 21. It is also important to note that the Central Government has issued the notifications with respect to CIRP of Corporate Debtor [Ministry of Corporate Affairs Commencement of Sections under Chapter II, Chapter VII of Part IV and sections under Part V Dated 01.11.2016 SO 3355(E)] and the Personal Guarantor to Corporate Debtor [Insolvency and Bankruptcy Board of India Notification (Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Regulations, 2019]. However, the Central Government has n ..... 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