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JC - Legal Updates - No CIRP can be triggered against ‘societies’ under IBC: NCLAT

Legal Updates

05 Aug 2021

No CIRP can be triggered against ‘societies’ under IBC: NCLAT

A bare reading of Section 2 read with Section 3(7) of the I&B Code, 2016 (“Code”) infers that the ‘societies’ cannot be said to be ‘corporate persons’ to whom the provisions of the Code applies. Even if a ‘society’ is accepted to be deemed body corporate, then also it cannot be said that it is company incorporated under the special Act/company law or that the incorporation is with limited liability.

This has been ruled by the NCLAT, New Delhi Bench vide its Judgment dated 3rd August 2021 in the matter of Asset Reconstruction Company (India) Limited vs. Mohammadiya Educational Society.

Though Section 18 of the AP Societies Registration Act, 2001 (“AP Act”) confers the status of a body corporate for such societies registered thereunder but the same is only for the purposes as mentioned in Section 18 of the AP Act, such as entitling it to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings. In other words, the Society is not incorporated rather it is registered and rendered a body corporate which can have perpetual succession and a common seal.


For any further information, please contact Mr. Shubhabrata Chakraborti (shubhabrata.chakraborti@jclex.com) or Mr. Dhruv Malik (dhruv.malik@jclex.com).