2021 (9) TMI 143 - AT - Insolvency and Bankruptcy

Jurisdiction - power of Adjudicating Authority to review its own Order - case of appellant is that Adjudicating Authority has traversed beyond its powers and jurisdiction by reviewing its own Order - HELD THAT - The Ld. Adjudicating Authority was of the view that as per Section 3(23) of the IBC 2016 only a person as defined therein can approach the NCLT and an opportunity was given to the Sole Proprietor as a Petitioner/Applicant as the case may be to approach the Adjudicating Authority. The Adjudicating Authority also directed the Applicant therein to amend the cause title to cure the defect. Further, the Ld. Adjudicating Authority granted ten days time for compliance of the Order dated 25.02.2020 in view of the Pandemic due to Covid- 19. From the perusal of the Application it is seen that the Proprietorship name i.e., M/s. M2N Interiors is represented by its Sole Proprietor Mr. M. Murali 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 is being represented by the Proprietorship Firm as well as the Proprietor, duly represented by its Sole Proprietor Mr. M. Murali. 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. This Tribunal is of the view that the Application filed by the Respondent i.e., M/s. M2N Interiors, a Proprietorship Firm is maintainable - appeal dismissed.

Summary

Issues:
1. Jurisdictional overreach by Adjudicating Authority in reviewing own order.
2. Compliance with cause title requirements under the Insolvency and Bankruptcy Code.
3. Applicability of IBC provisions to Proprietorship Firms.
4. Maintainability of the Application filed by the Respondent.

Jurisdictional Overreach by Adjudicating Authority:
The Appellant challenged the Adjudicating Authority's Order directing the Corporate Debtor to file a reply to a petition within three weeks, alleging that the Authority exceeded its powers by reviewing its own previous Order. The Appellant contended that the Respondent should have appealed the initial Order instead of seeking a review.

Compliance with Cause Title Requirements:
The Adjudicating Authority initially noted a defect in the cause title of the petition filed by the Respondent, a Sole Proprietorship Concern. The Authority allowed the Respondent to amend the cause title within a specified time frame. The Respondent later sought to dispense with the compliance of this amendment based on a Tribunal judgment.

Applicability of IBC Provisions to Proprietorship Firms:
The Respondent argued that the provisions of the Insolvency and Bankruptcy Code apply to Proprietorship Firms, citing a Tribunal judgment that clarified the inclusive definition of "person" under Section 3(23) of the IBC. Relying on this interpretation, the Respondent contended that the Application filed against the Corporate Debtor was maintainable.

Maintainability of the Application:
The Tribunal analyzed the cause title, which reflected both the name of the Sole Proprietor and the Sole Proprietorship Concern. Considering the inclusive definition of "person" under the IBC and the applicability of the Code to Proprietorship Firms, the Tribunal upheld the Adjudicating Authority's Order, deeming the Application filed by the Respondent, a Proprietorship Firm, as maintainable.

In conclusion, the Tribunal found no illegality in the Adjudicating Authority's Common Order dated 01.02.2021. The Appeal was deemed devoid of merits and dismissed, with no costs awarded.