Shri Ganpati Jurists Legal Learning
Sole Proprietorships NOT Covered Under Section 94 of IBC: High Court
The High Court has clarified that sole proprietorship firms are not considered “debtors” under Section 94 of the Insolvency and Bankruptcy Code, 2016.
Key Takeaway:
Applications for individual insolvency resolution under Section 94 of IBC are not maintainable for sole proprietorship firms. Hence, no interim moratorium applies in such cases, and SARFAESI recovery proceedings can continue.
Case Background:
Recovery was initiated under SARFAESI against mortgaged property for loans taken by X and Y (sole proprietorships).
Petitioner sought relief under Section 94 of IBC.
High Court dismissed the writ, ruling IBC remedies not available to sole proprietorships, and recovery via SARFAESI was valid.
Legal Insight:
Only individuals (in their personal capacity) or corporate persons (as per Section 3(7) & 3(8) of IBC) can seek insolvency relief. Sole proprietorships, lacking separate legal identity, do not qualify.
#ShriGanpatiJurists #LegalLearning #InsolvencyLaw #IBC #SARFAESI #KnowYourRights #LegalAwareness #BathindaAdvocate #AdvocateBathinda #LawyersBathinda #LegalExperts #LawyersPunjab #AdvocatesPunjab #PunjabLawFirm #DebtRecovery #InsolvencyRelief #LegalTips #JusticeForAll #ShriGanpatiJuristsLearning
