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CS Professional · Insolvency and Bankruptcy - Law and Practice · Insolvency Resolution of Individuals and Partnership Firms

A creditor, Kiran Finance, is owed a partnership debt by Sharma & Sons, a firm with partners Asha, Bimal and Chetan. Kiran files an application against Asha alone. Later another creditor files a separate application against Bimal in a different Adjudicating Authority. Under section 95, what is the position?

The second application against Bimal must be presented in or transferred to the Adjudicating Authority where the application against Asha is pending, and that authority may direct consolidation of the proceedings as it thinks just.

  1. AThe second application must be dismissed since only one partner can be proceeded against
  2. BThe second application is presented in or transferred to the Adjudicating Authority where the first is pending, which may direct consolidationCorrect
  3. CThe first application is transferred to the second authority
  4. DBoth proceed independently without any consolidation

Explanation

Section 95(3) says that where an application is made against one partner, any other application against another partner in the same firm shall be presented in or transferred to the Adjudicating Authority where the first is pending, which may give directions to consolidate the proceedings. Section 95(2) permits proceedings against one or more partners or the firm. Dismissal or independent proceedings are not provided.

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