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

Sharma Traders, a sole proprietor based in Jaipur, owes Rs 4 lakh to a supplier. The supplier wants to start an insolvency resolution process against the proprietor under Part III of the Code. Before the matter reaches the tribunal, which body is the Adjudicating Authority for such a matter?

The Debt Recovery Tribunal is the Adjudicating Authority, specifically the one with territorial jurisdiction over the place where the debtor actually and voluntarily resides, carries on business or personally works for gain. The NCLT deals with corporate debtors, not individuals and firms.

  1. AThe National Company Law Tribunal at the registered office of the supplier
  2. BThe Debt Recovery Tribunal with territorial jurisdiction over where the debtor resides or carries on business or personally works for gainCorrect
  3. CThe High Court of the state where the supplier is located
  4. DThe Insolvency and Bankruptcy Board of India

Explanation

For insolvency matters of individuals and firms, the Adjudicating Authority is the Debt Recovery Tribunal having territorial jurisdiction over the place where the individual debtor actually and voluntarily resides, carries on business or personally works for gain. The NCLT handles corporate debtors, so option A is wrong.

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