Proprietary concern is entitled to file CIRP application as an operational creditor as contemplated u/s 2(f): NCLAT

Case Details: Fipola Retail (India) (P.) Ltd. v. M2N Interiors - [2021] 131 taxmann.com 234 (NCLAT - Chennai)

Judiciary and Counsel Details

• • M. Venugopal, Judicial Member and Kanthi Narahari, Technical Member
  • Rohan Rajasekaran and N.V. Prakash, Advs. for the Appellant. 
  • Manivannan J. and M. Govindaraju, Advs. for the Respondent.

Facts of the Case

The NCLT admitted the application filed by the operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 against the corporate debtor.
However, the Corporate debtor alleged that said an application would not be maintainable as the application had been filed in name of a proprietary concern and proprietary concern is not a ‘person’ for purpose of filing an application under section 9 of the Insolvency and Bankruptcy Code, 2016.

NCLAT Held

The Authority referred to section 2(f) of the Insolvency and Bankruptcy Code, 2016 which provides that provisions of Code shall apply to partnership firms and proprietorship firms

Since the same application was filed by proprietorship through its proprietor and in the instant case said section 9 application contained name of proprietorship firm as well as the name of its sole proprietor, which was maintainable and accordingly, appeal against the order passed by NCLT was to be dismissed.

Case Review

• • M2N Interiors v. Fipola Retail India (P.) Ltd. [2021] 131 taxmann.com 233 (NCLT – Chennai) (para 12) affirmed [See annex].
  • Neeta Saha v. Ram Niwas [2020] 117 taxmann.com 706/160 SCL 454 (NCL – AT) (para 11) followed.

List of Cases Referred to

• • Neeta Saha v. Ram Niwas Gupta [2020] 117 taxmann.com 706/160 SCL 454 (NCL-AT).