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

Sunita Traders, a partnership firm, defaulted on a loan. The default amount is Rs 80,000, and the Central Government has not notified any higher minimum default amount. Under section 78, is Part III of the IBC applicable to this matter?

Yes. Section 78 applies Part III to partnership firms and individuals where the default is not less than Rs 1,000, and no higher threshold was notified here. A Rs 80,000 default therefore qualifies; one lakh rupees is only the maximum the Government may notify.

  1. AYes, as the default is not less than one thousand rupeesCorrect
  2. BNo, as the minimum default is one lakh rupees
  3. CNo, as Part III covers only individuals, not firms
  4. DNo, as the default must exceed Rs 5 lakh

Explanation

Section 78 applies Part III to individuals and partnership firms where the default is not less than Rs 1,000; the Central Government may notify a higher amount of up to Rs 1 lakh. With no notification, Rs 80,000 qualifies. Firms are covered, and Rs 1 lakh is only the ceiling for a notified threshold.

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