KYC And Aadhaar Related Service Provider ‘Karvy Data Management Services Ltd.’ Admitted Into Insolvency: NCLT Hyderabad
Pallavi Mishra
21 Sept 2023 3:15 PM IST
The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), while adjudicating a petition filed in M/s Allied Hi-Tech Industries Private Ltd. v Karvy Data Management Services Limited, has initiated Corporate Insolvency Resolution Process (“CIRP”) against...
The National Company Law Tribunal (“NCLT”), Hyderabad Bench, comprising of Dr. Venkata Ramakrishna Badarinath Nandula (Judicial Member) and Shri Charan Singh (Technical Member), while adjudicating a petition filed in M/s Allied Hi-Tech Industries Private Ltd. v Karvy Data Management Services Limited, has initiated Corporate Insolvency Resolution Process (“CIRP”) against Karvy Data Management Services Limited (“Corporate Debtor”).
Shri Kranthi Kumar Kedari has been appointed as the Interim Resolution Professional (“IRP”).
Background Facts
Karvy Data Management Services Limited (“Corporate Debtor”) is a KYC Registration Agency (KRA) under Regulation 7 of SEBI KYC Regulations, 2011 and engaged in the business of providing Know Your Customer (KYC) services, Aadhaar services, TIN services etc.
M/s Allied Hi-Tech Industries Private Ltd. (“Financial Creditor”) had extended credit facilities to the Corporate Debtor, which the latter could not completely repay.
The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor. The amount in default is Rs. 18,62,96,663/- inclusive of interest.
The Corporate Debtor contended that it is a Financial Service Provider and accordingly excluded from the definition of ‘Corporate Person’ under Section 3(7) of IBC. Hence, no CIRP can be initiated against it.
NCLT Verdict
The Bench noted that the Corporate Debtor failed to produce any authorization issued or registration granted by the Reserve Bank of India for payment services or any evidence that KYC Registration Agency (KRA) authorization issued by SEBI is valid as on date. Accordingly, the Bench concluded that the Corporate Debtor is not a Financial Service Provider.
Further, a debt of over Rs. 1 Crore due and payable and the Corporate Debtor has defaulted in such repayment.
The Bench observed that since debt and default have been established, the petition is liable to be admitted. Accordingly, CIRP has been initiated against the Corporate Debtor. Shri Kranthi Kumar Kedari has been appointed as the Interim Resolution Professional (“IRP”).
Case Title: M/s Allied Hi-Tech Industries Private Ltd. v Karvy Data Management Services Limited
Case No.: CP (IB) No.25/7/HDB/2022
Counsel For Applicant: Shri S. Ravi, Senior Counsel with Shri Laxmikanth Reddy, Advocate.
Counsel For Respondent: Shri Avinash Desai, Senior Counsel with Ms. Mrudhula Sarampally, Advocate.
