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Insolvency and Bankruptcy - Law and Practice · Bankruptcy for Individuals and Partnership Firms

Adjudicating Authority and Insolvency Professionals under Section 179 IBC

Updated 11 October 2026 · Fact-checked

Under section 179, the Debt Recovery Tribunal (DRT) with territorial jurisdiction is the adjudicating authority for insolvency of individuals and firms. Section 60 overrides this for personal guarantors to corporate debtors, where the NCLT acts. Insolvency professionals, as resolution professionals or bankruptcy trustees, run the process under section 208.

Understand Adjudicating Authority and Insolvency Professionals

Every insolvency process needs a forum that admits applications, passes orders and decides disputes. The IBC gives two forums. The NCLT handles corporate persons. The DRT handles individuals and firms. You must know which forum fits which debtor.

Section 179(1) says the adjudicating authority for insolvency matters of individuals and firms is the DRT having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides, carries on business or personally works for gain. It is made subject to section 60. That opening phrase is the key to the exception.

Section 60 makes the NCLT the adjudicating authority for corporate persons, including corporate debtors and personal guarantors thereof. Where a CIRP or liquidation of a corporate debtor is pending before an NCLT, an application about the insolvency resolution, liquidation or bankruptcy of its corporate guarantor or personal guarantor must be filed before that same NCLT. Any such pending process in another court or tribunal stands transferred to it. So a personal guarantor to a corporate debtor goes to the NCLT, not the DRT. The NCLT then uses the DRT's powers under Part III for that purpose.

Section 179(2) gives the DRT wide jurisdiction, despite any other law. It can entertain or dispose of any suit or proceeding by or against the individual debtor, any claim by or against the debtor, and any question of priorities or other question of law or facts arising out of or in relation to the insolvency and bankruptcy of the individual debtor or firm. Section 179(3) excludes the moratorium period when computing limitation for suits or applications in the debtor's name.

The process is run by an insolvency professional. Section 208(1) lists the processes: fresh start, individual insolvency resolution, corporate insolvency resolution, pre-packaged process, individual bankruptcy and liquidation. In individual insolvency the professional acts as resolution professional; in bankruptcy, as bankruptcy trustee. Section 208(2) sets the code of conduct: reasonable care and diligence, compliance with the bye-laws of the insolvency professional agency, allowing the agency to inspect records, submitting records of every proceeding before the Adjudicating Authority to the Board and the agency, and performing functions as specified.

Key rules to remember

Forum for individuals and firms
Individuals and firms (Part III) → DRT with territorial jurisdiction (s. 179(1))
Subject to section 60.
Territorial test for DRT
Place where the individual debtor actually and voluntarily resides, or carries on business, or personally works for gain
Any one of these places can found jurisdiction.
Forum for personal guarantors to corporate debtors
Personal guarantor → NCLT where the corporate person's registered office is located (s. 60(1))
If the corporate debtor's CIRP or liquidation is pending before an NCLT, file before that NCLT (s. 60(2)).
Transfer of pending guarantor processes
Pending process in any court or tribunal → stands transferred to the Adjudicating Authority handling the corporate debtor (s. 60(3))
Applies to corporate and personal guarantors.
DRT scope
Suits, claims, priorities, questions of law or fact arising out of the individual's or firm's insolvency (s. 179(2))
Operates notwithstanding any other law.
Limitation
Moratorium period is excluded from limitation for suits or applications in the debtor's name (s. 179(3))
Section 60(6) is the corporate counterpart, for suits by or against a corporate debtor.
Minimum default for Part III
Default ≥ ₹1,000 (s. 78)
The Central Government may notify a higher minimum, not above ₹1 lakh.
Code of conduct
Section 208(2)(a) to (e)
Care and diligence, agency bye-laws, inspection, submit records, perform functions as specified.

How to solve Adjudicating Authority and Insolvency Professionals questions

For any case question on forum or role, follow this order. Write provision, facts, conclusion.

  1. 1Identify the debtor: company, LLP, personal guarantor to a corporate debtor, partnership or proprietorship firm, or other individual (section 2).
  2. 2Check whether it is a personal guarantor to a corporate debtor. If yes, section 60 applies and the forum is the NCLT.
  3. 3If the debtor is another individual or a firm, apply section 179(1): the DRT.
  4. 4Fix the bench using the facts: where the debtor resides, carries on business or works for gain; for guarantors, the registered office of the corporate person or the NCLT already seeing the corporate debtor's process.
  5. 5Check whether other proceedings are pending elsewhere. Under section 60(3) they stand transferred to the NCLT.
  6. 6Name the professional involved (resolution professional or bankruptcy trustee) and cite section 208 duties and code of conduct if the question asks.
  7. 7State the conclusion in one clear line, with the section number.

Quickest way: Two-question forum test

When to use it: Use for short forum questions or the first line of a long case answer.

  1. Ask: is the debtor a personal guarantor to a corporate debtor? Yes → NCLT (section 60).
  2. If no: is it an individual or a firm? Yes → DRT (section 179).
  3. Add the territorial link in one phrase and the section number.

Common mistakes in Adjudicating Authority and Insolvency Professionals

  • Saying the DRT hears every individual case, including personal guarantors to corporate debtors.

    Students remember section 179 and forget its opening words, 'subject to section 60'.

    Fix: Always test for personal guarantor status first. Such guarantors go to the NCLT.

  • Choosing the DRT by the creditor's location.

    Confusion with ordinary civil suit rules.

    Fix: Use the debtor's residence, place of business or place of working for gain.

  • Treating the DRT's power as limited to the application itself.

    Students overlook section 179(2).

    Fix: Mention suits, claims and questions of priorities or law and fact arising from the insolvency.

  • Forgetting the limitation rule.

    Sections 179(3) and 60(6) look like minor sub-sections.

    Fix: State that the moratorium period is excluded in computing limitation.

  • Calling every insolvency professional a liquidator or bankruptcy trustee.

    Roles are learned as a list, not by process.

    Fix: Link the role to the process: resolution professional in resolution, bankruptcy trustee in bankruptcy, liquidator in liquidation.

  • Applying Part III to any default of any size.

    Students forget section 78.

    Fix: Mention the minimum default of ₹1,000, which the Central Government may raise by notification up to ₹1 lakh.

Worked examples

Example 1

Ramesh Iyer, a proprietor running a business in Coimbatore, defaults on a loan of ₹8,00,000. He is not a guarantor of any company. Which authority is the adjudicating authority for his insolvency, and what is its territorial basis?

Show the solution
  1. Provision: section 2(f) covers proprietorship firms and section 179(1) makes the DRT the adjudicating authority for individuals and firms.
  2. Facts: Ramesh is not a personal guarantor to a corporate debtor, so section 60 does not displace section 179.
  3. Territory: the DRT with jurisdiction over the place where he actually and voluntarily resides, carries on business or personally works for gain, which is Coimbatore.
  4. Default: ₹8,00,000 exceeds the minimum of ₹1,000 under section 78.

Answer: The DRT having territorial jurisdiction over Coimbatore is the adjudicating authority under section 179(1). It can also decide related suits, claims and priority questions under section 179(2).

Example 2

Sundaram Textiles Ltd, with its registered office in Chennai, is under CIRP before the NCLT, Chennai. Its director Mr. Karthik, who gave a personal guarantee for its loan, faces a bankruptcy application in a DRT elsewhere. Which forum is correct?

Show the solution
  1. Provision: section 179(1) is subject to section 60. Section 60(2) says that where a CIRP is pending before an NCLT, an application on bankruptcy of a personal guarantor of that corporate debtor must be filed before that NCLT.
  2. Facts: Karthik is a personal guarantor to a corporate debtor whose CIRP is pending before the NCLT, Chennai.
  3. Pending matter: section 60(3) says a bankruptcy proceeding of such a guarantor pending in any court or tribunal stands transferred to the Adjudicating Authority dealing with the corporate debtor's process.
  4. Powers: under section 60(4) the NCLT has the powers of the DRT under Part III for this purpose.

Answer: The NCLT, Chennai is the forum. The DRT proceeding stands transferred to it under section 60(3), and fresh applications go there under section 60(2).

Exam tips

  • Open every forum answer by classifying the debtor. The marks lie in noticing the personal guarantor exception.
  • Quote 'subject to section 60' when citing section 179(1).
  • In long case questions, tie the professional's role to the process and cite section 208(2) conduct duties.
  • Write section numbers only for provisions you are sure of, such as 2, 60, 78, 179 and 208.
  • Use the short structure: provision, facts, conclusion.

Practice questions from Bankruptcy for Individuals and Partnership Firms

Adjudicating Authority and Insolvency Professionals: frequently asked questions

Which is the adjudicating authority for individuals and partnership firms under the IBC?

It is the Debt Recovery Tribunal with territorial jurisdiction, under section 179(1). This is subject to section 60, which sends personal guarantors to corporate debtors to the NCLT.

What is the difference between NCLT and DRT under the IBC?

The NCLT handles corporate persons and personal guarantors to corporate debtors. The DRT handles other individuals and partnership and proprietorship firms. Both have wide power to decide related claims and priority questions.

How is the DRT's territorial jurisdiction decided?

It depends on where the individual debtor actually and voluntarily resides, carries on business or personally works for gain. The creditor's location does not decide it.

What does an insolvency professional do in individual insolvency?

The professional takes the actions needed in the process, such as fresh start, individual insolvency resolution or individual bankruptcy, as listed in section 208(1). The professional must follow the code of conduct in section 208(2).