Whether a society registered under Societies Registration Act, 1860 be dragged to CIRP?
As per section 6 of Insolvency and Bankruptcy Code, 2016, (IBC) the "corporate debtor" should have committed default in order to initiate CIRP.
Under IBC, 2016, a “corporate debtor”, against whom CIRP can be initiated, means a corporate person who owes a debt to any person; (sec.3(8))
Who can be corporate person? (sec.3(7))
- Company defined under Companies Act, 2013 (It can be Limited by shares, Limited by Guarantee or unlimited company)
- Limited liability partnership defined under Limited Liability Partnership Act, 2008
- Any other person incorporated with limited liability under any other law in force
- But shall not include any "financial service provider"
A Society, registered under Societies Registration Act, 1860, falls under pt.no.3 above.
The Societies Registration Act, 1860, is Act for the Registration of Literary, Scientific and Charitable Societies. Any seven or more persons associated for any scientific, literary or charitable purposes can apply for Registration of a society. No limit of maximum number of members is prescribed in the act. For registering a society, following documents needs to be prepared and submitted to the Registrar: a. Memorandum of Association (MOA) and b. Rules & Regulation.
As per section 10 of the Societies Registration Act, 1860, a Member in arrear of a subscription which according to the rules of the society he is bound to pay, may be sued for such arrear. It indicates that the Members' liability is limited to the extent of arrears in membership fee, unless otherwise stated in the bye laws of the society.
In view of the above, a Society registered under Societies Registration Act, 1860 can be dragged to CIRP.