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NBFCs Accepting Deposit Is Outside The Purview Of Insolvency And Bankruptcy Code

In Randhiraj Thakur, Director, Mayfair Capital Private Ltd vs Jindal Saxena Financial Services and Mayfair Capital Private Ltd., wherein appeal was preferred by the appellant seeking, inter-alia, setting aside order passed by the Adjudicating Authority whereby the application preferred by the 1st Respondent (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 has been admitted.

The NCLAT noted that an ‘Inter Corporate Deposit Agreement’ was arrived at between Jindal and Mayfair, which is a non-banking financial company. It further noted that Mayfair had undertaken financial services by accepting deposit from Jindal, in terms of Section 3(16) of the Code. It thereby asserted that it cannot be held that the amount was accepted towards public deposits. Therefore M/s. Mayfair Capital Pvt. Ltd. cannot be treated to be ‘Corporate Debtor’ and ‘M/s. Mayfair Capital Pvt. Ltd.’ (2nd Respondent) being a ‘financial service provider’ and having excluded from the definition of ‘corporate person’ under sub- section (7) of Section 3 of the I&B Code the application under Section 7 was not maintainable against ‘M/s. Mayfair Capital Pvt. Ltd’.

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