Supreme Court Clarifies ‘Same Line of Business’ Under Section 64(d) MSCS Act; Holds Bye-Laws Determine Eligibility to Submit Resolution Plan Under IBC

Case Name: M/s Nirmal Ujjwal Credit Co-operative Society Ltd. v. Ravi Sethia & Ors.
Citation: 2026 INSC 338
Date of Judgment/Order: 09 April 2026
Bench: Hon’ble Mr. Justice J.B. Pardiwala; Hon’ble Mr. Justice K.V. Viswanathan

Held: The Supreme Court held that the expression “any other institution in the same line of business” under Section 64(d) of the Multi-State Cooperative Societies Act, 2002 requires substantial and predominant similarity in business activities as determined from the society’s bye-laws, and that eligibility to submit a resolution plan under Section 30(2)(e) IBC must be tested against such statutory and bye-law restrictions.

Summary: The appeal arose from rejection of the appellant cooperative society’s resolution plan in CIRP proceedings on the ground that its bye-laws did not permit investment in the corporate debtor. While permitting withdrawal of the appeal, the Supreme Court examined the legal issue of interpretation of Section 64(d) of the MSCS Act in the context of IBC. The Court analysed the legislative intent behind the 2023 amendment introducing the phrase “same line of business,” relying on the Joint Parliamentary Committee report, and held that the amendment was intended to prevent misuse of funds by restricting investments to entities with closely related business activities. It emphasized that the determination of “same line of business” must be made primarily with reference to the objects and functions contained in the bye-laws of the cooperative society, which define its permissible business domain. Applying this standard, the Court noted that the appellant’s primary activity was financial services and member welfare, with only limited agro-based processing, whereas the corporate debtor was engaged in industrial manufacturing of man-made fibre textiles, thereby lacking substantial similarity. The Court also clarified that mere amendment of investment clauses in bye-laws does not expand the object clause or alter the nature of business, and revenue or profitability is irrelevant in determining business similarity.

Decision: The Supreme Court allowed withdrawal of the appeal while clarifying the legal position on interpretation of “same line of business” under Section 64(d) of the MSCS Act, upheld the reasoning of NCLAT on ineligibility, and directed that CIRP proceedings continue in accordance with law, with pending applications disposed of accordingly.