CS Professional · Insolvency and Bankruptcy - Law and Practice · Bankruptcy for Individuals and Partnership Firms
M/s Gupta and Sons is a partnership firm with partners Hari, Mohan and Sohan. A supplier is owed a partnership debt and files an application under section 95 against partner Hari only. Later, another creditor files an application against partner Mohan for the same firm's debt in a different Debt Recovery Tribunal. What is the correct position?
The second application must be presented in or transferred to the Adjudicating Authority where the first application against Hari is pending, and that authority may direct consolidation of the proceedings as it thinks just. Parallel independent proceedings are not allowed.
- ABoth applications proceed independently in their own tribunals
- BThe second application must be dismissed as only one partner can be proceeded against
- CThe second application must be presented in or transferred to the Adjudicating Authority where the first is pending, which may direct consolidation of proceedingsCorrect
- DThe second application can proceed only after the first one ends
Explanation
Under section 95(3), where an application is made against one partner, any other application against another partner of the same firm must be presented in or transferred to the Adjudicating Authority where the first is pending, which may give directions for consolidation. Independent parallel proceedings are therefore wrong, and nothing bars proceeding against more than one partner.
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