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

Mr. Raghav Iyer carries on business as a sole proprietor in Coimbatore and has defaulted on a loan. A creditor wishes to file an insolvency application against him under Part III of the IBC (the individual debtor is not a personal guarantor to a corporate debtor). Which authority is the Adjudicating Authority?

The Debt Recovery Tribunal is the Adjudicating Authority. It has territorial jurisdiction over the place where the individual debtor actually and voluntarily resides, carries on business or personally works for gain. The NCLT deals with corporate persons, and the DRAT only hears appeals.

  1. AThe National Company Law Tribunal at the place of his registered office
  2. BThe Debt Recovery Tribunal having territorial jurisdiction over the place where he resides or carries on businessCorrect
  3. CThe High Court of the State where the loan was sanctioned
  4. DThe Debt Recovery Appellate Tribunal at Chennai

Explanation

Section 179(1) makes the Debt Recovery Tribunal with territorial jurisdiction over the place where the individual debtor actually and voluntarily resides, carries on business or personally works for gain the Adjudicating Authority. The NCLT applies to corporate persons under section 60, and a sole proprietor has no registered office. The DRAT is only the appellate forum.

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