The order stated that under ordinary circumstances, FSPs were not included in the definition of corporate person under Section 3(7) of the Code, except such categories of FSPs as demarcated under the FSP Threshold Notification dated November 18, 2019, which notified the categories of FSPs, as per Rule 2 of the Insolvency and Bankruptcy (lnsolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, to which the FSP Rules would be applicable.
The FSP Threshold Notification stated that insolvency resolution and liquidation proceedings could be undertaken only for NBFCs that have an asset size of ₹500 crore or more. In the present case, it was found that the total asset size of Jumbo Finvest (India) Limited is less than ₹500 crores. Therefore, the NCLT held that Jumbo Finvest would be excluded from the ambit of the FSP Threshold Notification.
As such, it was held that Jumbo Finvest, which was the principal borrower, would not strictly fall within the scope of a corporate person under the Code, and therefore, would not qualify as a corporate debtor.
Source: Barandbench
