National Company Law Appellate Tribunal Allows A Proprietorship Firm Application

National Company Law Appellate Tribunal Allows A Proprietorship Firm Application

The Appellate Tribunal held that an application duly represented by sole proprietor which shows that it was being represented by proprietorship firm and proprietor is maintainable

The National Company Law Appellate Tribunal (NCLAT) has held an application u/S 9 of the Insolvency and Bankruptcy Act, 2016 (IBC) as maintainable which reflected the name of the sole proprietor itself which would show that the application was being represented by the proprietorship firm as well as the proprietor, duly represented by its sole proprietor.

The Division Bench of the National Company Law Appellate Tribunal at Chennai, comprising Justice M. Venugopal and Mr Kanthi Narahari heard the matter titled Fipola Retail (India) Private Limited v M2N Interiors.

The present appeal was preferred by the Appellant – Corporate Debtor on the ground that the National Company Law Tribunal (NCLT) at Chennai went beyond its powers and jurisdiction by reviewing its own order. The original order of the Tribunal granted the Respondent – Operational Creditor, an opportunity to amend the cause title of the application filed u/S 9 of the Insolvency and Bankruptcy Act, 2016 (IBC) in view of Section 3(23) of the IBC, 2016 where only a person as defined therein could approach the Tribunal rather than a proprietorship firm. However, later the Tribunal reviewed its own order by allowing the cause title to remain the same as it contained both the name of the sole proprietor as well as the name of the sole proprietary concern when the Respondent filed a memo before it. It further directed the Appellant – Corporate Debtor to file its reply to the application.

The Appellant – Corporate Debtor contended that if the Respondent was aggrieved by the original order then his only remedy would have been by way of an appeal u/S 61(1) of the IBC, 2016 and not by seeking review of the order. On the other hand, the Respondent – Operational submitted a judgment of Neeta Saha v Ram Niwas Gupta in Company Appeal (AT) (Insolvency) No. 321 of 2020 wherein the Appellate Tribunal held that Section 2 of the IBC provided that the provisions of IBC apply to proprietorship firms and further contended that the definition of person in Section 3(23) of IBC was an inclusive definition.

The bench went through the submissions of the parties and found that the Respondent was represented by its sole proprietor as depicted in cause title, therefore, taking into consideration that the proprietorship firm represented by its sole proprietor by reflecting the name of sole proprietor itself would show that the application was being represented by the proprietorship firm as well as the proprietor, duly represented by its sole proprietor.

The Appellate Tribunal took the judgment referred by Respondent into consideration and made the following observation:

"In this regard, as decided by this Tribunal Section 2 of I & B Code 2016 applies to Partnership Firms and Proprietorship Firms. As per Sub Clause (f) of Section 2, the person defines in Sub Section 23 of Section 3 includes a Partnership Firm. Therefore, relying upon the decision of this Tribunal there is no error apparent in the Impugned Order, this Tribunal in Neeta Saha supra held at Para 14 which reads as under."

Thus, the appeal was dismissed for being devoid of any merit and found the application filed by the Respondent – Operational Creditor who was a proprietorship firm to be maintainable.