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

Ramesh Iyer, a sole trader, lives and runs his hardware shop in Coimbatore. A creditor wishes to file an insolvency application against him under Part III of the Code. Which authority has jurisdiction as the Adjudicating Authority for Ramesh?

The Debt Recovery Tribunal with territorial jurisdiction over Coimbatore, where Ramesh resides and carries on business, is the Adjudicating Authority. Section 179 gives this role to the DRT for individuals and firms, based on where the debtor lives, trades or works for gain, not the creditor's location.

  1. AThe National Company Law Tribunal bench nearest to the creditor's registered office
  2. BThe Debt Recovery Tribunal having territorial jurisdiction over the place where Ramesh resides or carries on businessCorrect
  3. CThe High Court of the State where the creditor is located
  4. DThe Insolvency and Bankruptcy Board of India

Explanation

Under section 179, the Adjudicating Authority for individuals and firms is 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 NCLT is the authority for corporate persons, not individuals, so the first option is wrong.

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