Nirmal Ujjwal Credit Co-Operative Society Ltd. Vs Ravi Sethia & Ors. (Supreme Court of India)
Supreme Court held that section 64(d) of the Multi-State Co-operative Societies Act, 2002 restricts Multi-State Co-operative Society investment only to entities in the same line of business. Accordingly, Multi-State Co-operative Society is ineligible to submit resolution plan for corporate debtor which doesn’t operate in same line of business.
Facts- This statutory appeal arises from the judgment and order passed by the National Company Law Appellate Tribunal, New Delhi dated 21.08.2025. The NCLAT had affirmed the decision of the National Company Law Tribunal, Mumbai dated 09.04.2025, wherein it was declared that the appellant was ineligible to submit its resolution plan in the CIRP of Morarji Textiles Ltd. (Corporate Debtor) inter alia on the ground that the bye-laws of the appellant cooperative society did not permit it to invest in the corporate debtor.
Conclusion- Applying the standard of the same line of business, it cannot be said that the appellant and the corporate debtor are in the same line of business. As far as the reasoning of the NCLAT on the aforesaid aspect is concerned, we are in agreement with the same, inasmuch as the appellant cannot be said to fall within the second limb of Section 64(d) on the touchstone of “same line of business”. However, the NCLAT went one step further in observing that the income earned from the financial business was Rs. 194.27 Cr., whereas Nirmal Textile incurred a loss of Rs. 3.37 Cr., to arrive at the conclusion that the appellant is predominantly involved in the financial business and not in the textile business. We must clarify that the revenue earned or profit/loss incurred has no relevance in determining the standard of the same line of business, which necessarily has to be determined through the bye-laws of the MSCS only.
