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2021 (2) TMI 1094 - AT - Insolvency and BankruptcyMaintainability of the Application in the name of proprietorship firm - Jurisdiction - power of proprietorship firm to file a claim - legal entity or not - HELD THAT - Although the Adjudicating Authority in para 15 referred to part of dispute raised by the Respondent, the Adjudicating Authority has not dealt with or decided the same. As such, in the Appeal, we are not going into the merits of the Application under Section 9 of IBC. Maintainability of the Application in the name of proprietorship firm - HELD THAT - Section 2(f) of IBC in Judgement in the matter of NEETA SAHA VERSUS RAM NIWAS GUPTA AND ORS. 2020 (2) TMI 1442 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI where the Section provides that the provisions of this Code shall apply to partnership firms and proprietorship firm. - However, without entering into legal issue if such Trade Name is person , we find that it was a curable defect. The learned Counsel for Appellant has rightly relied on the Judgement in the matter of Neeta Saha . The Adjudicating Authority should have given opportunity to the Appellant to appropriately amend the Application in part 1 of the Format where name of the Operational Creditor is shown. Mr. Piyush Bangar can show his name and suffix that he is sole proprietor of M/s. Mateshwari Minerals. The matter is remitted back to the Adjudicating Authority. The Adjudicating Authority will give opportunity to the Appellant to correct the description of the name of the Operational Creditor in the Format - Appeal allowed by way of remand.
Issues:
1. Maintainability of the Application filed by a proprietorship firm under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC). 2. Interpretation of the definition of a "person" under Section 3(23) of IBC. 3. Whether a defect in the filing can be cured under Section 9(5) (Proviso) of IBC. Issue 1: Maintainability of the Application: The Appellant, a proprietorship firm, filed an Appeal against the Impugned Order dismissing their Application under Section 9 of IBC. The Adjudicating Authority held that a proprietorship firm is not a legal entity and thus the Application was not maintainable. The Authority emphasized that a sole proprietorship firm cannot sue in its own name as it lacks legal recognition. The Adjudicating Authority deemed the Application as not maintainable and bad in law solely based on this ground. Issue 2: Interpretation of the Definition of a "Person" under IBC: The Adjudicating Authority referred to Section 3(23) of IBC, which defines a "person" to include various entities but does not specifically mention a proprietorship firm. The Authority concluded that a proprietorship firm like M/s. Mateshwari Minerals, being a proprietary concern, does not fall under the definition of a "person" eligible to file an application under Section 9 of IBC. Therefore, the Application was considered not maintainable on this basis. Issue 3: Curability of the Filing Defect: The Appellant argued that the defect in filing the Application was curable under Section 9(5) (Proviso) of IBC. They relied on precedents where similar defects were allowed to be corrected. The Appellant contended that the Adjudicating Authority should have permitted them to amend the Application to rectify the description of the Operational Creditor. The Appellate Tribunal agreed that the defect was curable and allowed the Appeal, quashing the Impugned Order and remitting the matter back to the Adjudicating Authority for correction and further consideration. In conclusion, the Appellate Tribunal allowed the Appeal, emphasizing that the defect in the filing was curable and directed the Adjudicating Authority to provide an opportunity to the Appellant to correct the description of the Operational Creditor in the Application. The Tribunal did not delve into the merits of the Application under Section 9 of IBC but focused on the procedural aspect of maintainability.
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