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

Rohit Malhotra, an individual, has been adjudged bankrupt by a bankruptcy order. His brother-in-law Sameer (his spouse's brother) lent him money earlier. Under Part III of the Code, how is Sameer classified in relation to Rohit?

Sameer is an associate of Rohit. The Code's definition of associate includes a relative of the debtor or a relative of the debtor's spouse, and it is not limited to immediate family, partners or companies controlled by the debtor.

  1. AAn associate, as a relative of the debtor's spouseCorrect
  2. BNot an associate, because only immediate family members count
  3. CAn associate only if he is in partnership with Rohit
  4. DAn associate only if he holds more than fifty per cent of Rohit's company

Explanation

The definition of associate covers a person who is a relative of the debtor or a relative of the debtor's spouse. Sameer is the spouse's brother, so he qualifies. Limiting associates to immediate family (spouse, dependent children, dependent parents) is wrong because the definition is wider.

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