NCLT, Mumbai: Retired Partner, unable to pledge reports under IBC

NCLT, Mumbai: Retired Partner, unable to pledge reports under IBC

As per the NCLT, Mumbai Bench, elected by Kishore Vemulapalli as the Judicial Member, and Rajesh Sharma as the Technical Member in the case of Anil Vora HUF v. Kavya Build-Con Private Limited, the Operational Creditor's Section 9 application was denied on the basis that a retired partner cannot initiate proceedings under Section 9 of the Insolvency and Bankruptcy Code, 2016 to seek retirement benefits from co-partners or the company.

The Applicant/Operational Creditor of the Corporate Debtor submitted an application in compliance with the IBC, 2016 seeking the initiation of CIRP against the Corporate Debtor- Kavya Build-Con Private Limited on the ground that the Corporate Debtor had failed to make a payment of Rs. 75,00,000 of which the Applicant was a partner of the company, Kavya KCD Developers.

The applicant was granted Rs. 75,00,000 in lumpsum consideration when the Act of Retirement took place, including the amounts that stood towards the Operational Creditor's credit.

Taking into account the aforementioned decision of the Supreme Court in Gammon India Ltd v. Neelkanth Mansions and Infrastructure Pvt Ltd., the NCLT determined that the Operational Creditor's application is not maintainable since both creditors are partners in the Firm and dismissed the application.

The NCLT held-

"The Operational Creditors can, however, make claims against the Corporate Debtor not under IBC, but under any other law which gives them the right to do so. The Retired Partners, however, do not have any legal right to make a claim against the Partner or the Firm under the IBC."