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

Rakesh Menon runs a trading business from Coimbatore and owes Sundaram Traders a debt of Rs 4 lakh. Sundaram wants to start an insolvency resolution process against him under Part III of the Code. Which authority will act as the Adjudicating Authority for this application?

The Debt Recovery Tribunal with territorial jurisdiction over the place where the debtor resides, carries on business or personally works for gain is the Adjudicating Authority for individuals and firms. The NCLT handles corporate persons, so it does not apply to Rakesh Menon.

  1. AThe National Company Law Tribunal at its principal bench
  2. BThe Debt Recovery Tribunal having territorial jurisdiction over the place where Rakesh resides or carries on businessCorrect
  3. CThe High Court of the State where the creditor is registered
  4. DThe Insolvency and Bankruptcy Board of India

Explanation

Section 179 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 for individuals and firms. The NCLT is the forum for corporate persons, so it is wrong here. The creditor's place of registration is irrelevant.

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