Home / Business and Economy / NCLAT Upholds Ruling: Jumbo Finvest Not Subject to Insolvency
NCLAT Upholds Ruling: Jumbo Finvest Not Subject to Insolvency
27 Dec
Summary
- NCLAT rejected Equitas Small Finance Bank's insolvency plea against Jumbo Finvest.
- Jumbo Finvest is classified as a Financial Service Provider, not a corporate person.
- RBI had previously restricted Jumbo Finvest's lending and balance sheet growth.
The National Company Law Appellate Tribunal (NCLAT) has definitively rejected an insolvency plea filed by Equitas Small Finance Bank against Jumbo Finvest. This decision upholds a prior ruling by the National Company Law Tribunal (NCLT) in Jaipur, which had identified Jumbo Finvest as a Financial Service Provider (FSP) under the Insolvency & Bankruptcy Code (IBC). Consequently, Jumbo Finvest is not considered a corporate person eligible for a Section 7 application.
Equitas Small Finance Bank had challenged the NCLT's order, arguing that due to a January 16, 2020, directive from the Reserve Bank of India (RBI) that barred Jumbo Finvest from expanding its balance sheet and accessing public funds, it was no longer operating as a true financial service provider. However, NCLAT found no merit in this argument, stating that the RBI's prohibition did not alter Jumbo Finvest's FSP status.
NCLAT emphasized that Jumbo Finvest's registration as an FSP was valid until its cancellation on October 14, reinforcing its status during the period in question. The tribunal concluded that the IBC's provisions for initiating Corporate Insolvency Resolution Process (CIRP) against FSPs must be followed. While dismissing the Section 7 application, NCLAT clarified that Equitas Bank retains the right to pursue other legal remedies for its outstanding dues.
