NCLT admitted a ₹1.68 crore MUDRA CIRP petition, ruling that cancellation of RBI registration ended the Financial Service Provider exclusion under Section 247(1) of the Companies Act.
Cancelled RBI Licence Removes FSP Exclusion: NCLT Admits MUDRA CIRP
The National Company Law Tribunal (NCLT) admitted an insolvency petition filed by MUDRA for ₹1.68 crore, holding that the target entity ceased to be a Financial Service Provider (FSP) after the Reserve Bank of India cancelled its licence. This removal disqualified its exemption under Section 247(1) of the Companies Act, 2013, and Regulation 2(g) of the CIRP Regulations.
The Tribunal found a financial default exceeding ₹1 crore (post-amendment threshold), allowing CIRP admission under Section 7 of the IBC. It noted that FSP status is dynamic—once licence is revoked, the entity becomes amenable to insolvency proceedings like any other corporate debtor.
This decision clarifies the temporal nature of FSP exemptions. Legal advisors must verify current regulatory status before relying on exclusions. Creditors may now pursue defaulted entities whose licences have been withdrawn, expanding the scope of recoverable claims.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 7
- Companies Act, 2013, Section 247(1)
- CIRP Regulations, Regulation 2(g)
