The Supreme Court has issued a significant clarification on the eligibility of co-operative societies wishing to act as resolution applicants under the Insolvency and Bankruptcy Code (IBC). The ruling, delivered on Thursday, confirms that these societies can bid, but only if they strictly follow the investment rules set out in the Multi-State Co-operative Societies Act (MSCS Act). This means co-ops must ensure their investments are limited to subsidiaries or companies within the same line of business as defined by their own bye-laws. This legal clarification, stemming from the Nirmal Ujjwal Credit Co-operative Society Ltd. versus Ravi Sethia case, means theoretical eligibility is now conditional.
The core of the ruling relies on Section…