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

Under Part III, Anil's spouse, his dependent parents and his employee are being examined to decide who counts as his associate. Which statement is correct under the definitions of Part III?

Both the spouse and the employee are associates. The definition of associate covers immediate family, which means spouse, dependent children and dependent parents, and also any employer or employee of the debtor. Dependent parents are part of immediate family, not excluded.

  1. AOnly the spouse is an associate; employees are not covered
  2. BThe spouse, as immediate family, and his employee are both associates of the debtorCorrect
  3. COnly persons related by blood are associates
  4. DDependent parents are excluded from immediate family

Explanation

Section 79(2) includes a person belonging to the immediate family and a person who is an employer or employee of the debtor as associates. Immediate family under 79(17) means spouse, dependent children and dependent parents, so the spouse qualifies and so does the employee. Hence the option excluding employees is wrong.

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