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

Ramesh Iyer, a sole proprietor, lives and runs his trading business in Coimbatore. Creditors wish to begin insolvency proceedings against him as an individual under Part III of the IBC (the firm is not a personal guarantor to any corporate debtor). Which authority is the Adjudicating Authority?

The Debt Recovery Tribunal with territorial jurisdiction over the place where the individual actually and voluntarily resides, carries on business or personally works for gain is the Adjudicating Authority for individuals and firms, as section 179(1) provides. The NCLT handles corporate persons.

  1. ANational Company Law Tribunal having jurisdiction over his place of residence
  2. BDebt Recovery Tribunal having territorial jurisdiction over where he resides or carries on businessCorrect
  3. CDebt Recovery Appellate Tribunal at Chennai
  4. DThe High Court of the State where he resides

Explanation

Section 179(1) makes the Debt Recovery Tribunal with territorial jurisdiction over the place where the individual debtor resides, carries on business or works for gain the Adjudicating Authority for individuals and firms. The NCLT acts only for corporate persons and their guarantors under section 60, and the DRAT is the appellate body.

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