Supreme Court Puts NCLAT's Approval on Hold to Decide on Co-op Society's Role Under IBC [Read Order]
The matter has been listed for further hearing on October 28, 2025, to await the response from the Central Registrar and proceed with the adjudication.
Supreme - court - taxscan
Supreme - court - taxscan
The Supreme Court has sought clarification from the Central Registrar of Multi State Cooperative Societies in a matter involving M/S. Nirmal Ujjwal Credit Co-operative Society Ltd.'s appeal against Ravi Sethia & Ors. The Court is examining whether co-operative societies are eligible to submit a resolution plan under the Insolvency and Bankruptcy Code (IBC) for a corporate entity.
The two judge bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, prima facie viewed the presence of the Central Registrar as necessary for the effective adjudication of the issues involved. Consequently, the Court has directed that the approval process by the National Company Law Appellate Tribunal (NCLAT) may proceed, but no final order shall be passed until the core legal question is resolved.
The Court ordered the appellant to amend the cause title and implead the Central Registrar as a party respondent to the appeal. It has specifically sought the Central Registrar's view on whether societies like the appellant are, in any manner, barred from submitting a resolution plan under the provisions of the IBC.
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The role of cooperative societies under the Insolvency and Bankruptcy Code, 2016 (IBC) is a nuanced and evolving area of Indian law. While the IBC was primarily designed for companies and Limited Liability Partnerships (LLPs), its provisions have significant implications for cooperative societies, which are also distinct legal entities.
Section 3(7) of the IBC defines a "corporate person" to include "a company, a limited liability partnership, or any other person incorporated with a limited liability under any law for the time being in force." A cooperative society, registered under the Central or State Cooperative Societies Act, is a separate legal entity with limited liability for its members.
Notice was issued in the matter, which was waived by the counsel for the Successful Resolution Applicant, the Resolution Professional, and one of the respondents. The matter has been listed for further hearing on October 28, 2025, to await the response from the Central Registrar and proceed with the adjudication.
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