TMI Blog2022 (8) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... he proprietor of proprietary business insofar as the nature of such case permits . This means that only those provisions of Order XXX can be made applicable to proprietary concern which can be so made applicable keeping in view the nature of the case. Thus, the proprietor and the proprietorship firm herein cannot be deemed to be separate entities and the Corporate Debtor, being the proprietor will be liable to clear the dues of the proprietorship concern. Whether a petition under section 7 of the Code can be filed against the Corporate Debtor herein, for the debt due from a proprietorship concern? - HELD THAT:- Sections 2(f) of the code which makes it clear that the Code, including Part II of the Code shall apply to proprietorship firms. Further, under section 3(8) of the Code, the Corporate Debtor means a corporate person who owes a debt to any person - In the instant case, the Corporate Debtor, in its role as a proprietor, owes the debt incurred by The Mining Engineering Corporation, towards the Financial Creditor. Further, while the definition of corporate person under section 3(7) of the Code does not include proprietorship firms, in the instant case, the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heque on 31/03/2010. A copy of the of the Financial Creditor's bank statements evidencing the abovementioned disbursals is annexed to the petition as Annexure 'B'. 3.2 The said loan was disbursed to the Corporate Debtor on account of the proprietorship business carried on by the Corporate Debtor in the name and style of The Mining Engineering Corporation. The fact that the Corporate Debtor is the proprietor of the said concern will appear, inter alia, from the financial statement of the Corporate Debtor filed with ROC for FY2017-18, a copy whereof is collectively annexed to the petition and marked with letter C . 3.3 It was agreed and understood between the parties that the aforesaid loan amounts would be repayable by the Corporate Debtor on demand made by the Financial Creditor and there was no fixed time for repayment of the said amount. It was also agreed and understood between the parties that the loan amount would carry interest at the rate of 9% per annum and that the interest amount would be paid to the Financial Creditor from time to time. 3.4 The aforesaid agreement and understanding between the parties regarding the loan transaction is eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor: 9.1 The Corporate Debtor has submitted that there is no privity of contract between the Financial Creditor and M/s. Vindhya Industries Pvt. Ltd. The amount of Rs. 20,00,000/- was disbursed by the Financial Creditor to M/s. The. Mining and Engineering Corporation, which is a sole proprietorship firm and not to the Corporate Debtor. Such disbursement to the M/s. The Mining and Engineering Corporation will be evident from page 16 of the said application. As such the aforementioned debt is due from the said M/s. The. Mining and Engineering Corporation to the Financial Creditor, and not from the Corporate Debtor herein. 9.2 Further, no interest has ever been paid by the Corporate Debtor to the Financial Creditor till date and, as such, this instant application is liable to be dismissed at the very threshold as there is no financial debt vis- -vis the Financial Creditor and the Corporate Debtor. 9.3 As per Section 3(7) of the Code, Corporate Person means a company has defined in section 2(20) of the Companies Act, 2013, a limited liability partnership, as defined under Section 2 of the Limited Liability Partnership Act, 2008 or any other person incorporated with li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efault and this instant application is liable to be dismissed at the very threshold. 9.9 The Financial Creditor along with her family members, namely, Sri Maganlal Daga, who was the father of the Financial Creditor along with Sri Jagmohan Daga and Rajesh Kumar Daga, had made an investment in M/s. The Mining and Engineering Corporation in the year 2005 for the purpose of executing the project floated by Reliance Communications Ltd. and its subsidiaries. Thereafter a family arrangement was arrived at and pursuant to the family arrangement, all the family members including the Financial Creditor had made investments in M/s. The Mining and Engineering Corporation to successfully execute the project floated by Reliance Communications Ltd. and its subsidiaries. In this connection, documents evidencing the fact that M/s. The Mining and Engineering Corporation, which is a sole proprietorship firm executed projects floated by Reliance Communications Ltd. and its subsidiaries are annexed to the Reply Affidavit as Annexure B . 9.10 M/s. The Mining and Engineering Corporation has already filed its claim in the insolvency proceeding of Reliance Communications Ltd., which further prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law that the proceedings under section 7 and 9 of the Code are not recovery proceedings, but a tool to resolve insolvency of Corporate Debtor. In the instant matter, the Corporate Debtor is a solvent and profit making company having no creditors. The same will be reflected from the balance sheets of the Corporate Debtor, a copy whereof is annexed to the Reply-Affidavit as Annexure D . 10. Rejoinder on behalf of the Financial Creditor: 10.1. It has been submitted that the allegations made in the affidavit are baseless and contradictory. The corporate debtor has also resorted to fraudulent fabrication and forgery of documents in an attempt to avoid repayment to the applicant. 10.2. Bimal Kumar Daga is put to strict proof of the allegation that he is a Director of the corporate debtor or that he is competent or authorized to make or affirm this affidavit on behalf of the corporate debtor or that he is aware of the facts of the case. No valid authorisation whatsoever has been disclosed with the affidavit. 10.3. It is a matter of record that the corporate debtor carries on business, inter alia, as proprietor in the name and style of The Mining and Engineering Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein, while making it clear that that the consortium could not be allowed to rely upon their status as independent entities while dealing with MMRDA, the Apex Court held that: 15. By way of contrast, we have seen how the Respondents have themselves applied to become distributors of Amway products in India as a sole proprietorship concern under the relevant forms issued by the Appellant, read with the Code of Ethics referred to hereinabove. In Ashok Transport Agency v. Awadhesh Kumar, MANU/SC/0675/1998 : (1998) 5 SCC 567, this Court has clearly held that a sole proprietary concern is equated with the proprietor of the business as follows: 6. A partnership firm differs from a proprietary concern owned by an individual. A partnership is governed by the provisions of the Indian Partnership Act, 1932. Though a partnership is not a juristic person but Order XXX Rule 1 Code of Civil Procedure enables the partners of a partnership firm to sue or to be sued in the name of the firm. A proprietary concern is only the business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the MOU dated 1/04/2009 between the two directors of the Corporate Debtor and Shri Magan Lal Daga. On perusal of the said MOU, it can be seen that while the Financial Creditor herein is mentioned as the daughter of the first party of the said MOU, the Financial Creditor herself is not a party thereof. The MOU has not been signed by the Financial Creditor. Further, the amount mentioned to be transferred by the Financial Creditor therein is different from the amount which is the subject matter of this petition. Therefore, the said MOU cannot be deemed to extend to the Financial Creditor herein and as such, the contention of the Corporate Debtor regarding the same is not maintainable. 11.5. The date of default mentioned in the petition is 30.09.2016. The instant petition has been filed on 27/09/2019. The Corporate Debtor has acknowledged the debt by means of confirmation of accounts till 1.04.2019. period. Further, the Corporate Debtor herein has deducted Tax deducted at Source (TDS) on the amounts payable to the Financial Creditor. As such, the instant petition is within limitation. Further, such acknowledgments on part of the Corporate Debtor will also be deemed to be admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and furnish every information in their knowledge to the IRP within one week from the date of receipt of this Order, in default of which coercive steps will follow. g) The IRP/RP shall submit to this Adjudicating Authority periodical reports with regard to the progress of the CIRP in respect of the Corporate Debtor. h) The Financial Creditor shall deposit a sum of Rs. 2,00,000 (Rupees Two lakh only) with the IRP to meet the expenses arising out of issuing public notice and inviting claims. These expenses are subject to approval by the Committee of Creditors (CoC). i) In terms of section 7(5)(a) of the Code, Court Officer of this Court is hereby directed to communicate this Order to the Financial Creditor, the Corporate Debtor and the IRP by Speed Post, email and WhatsApp immediately, and in any case, not later than two days from the date of this Order. j) Additionally, the Financial Creditor shall serve a copy of this Order on the IRP and on the Registrar of Companies, West Bengal, Kolkata by all available means for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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