Dharminder Singh, Member (Judicial)
1. The present Petition is filed under the Section 9 of the Insolvency and  Bankruptcy  Code, 2016 Â
(hereinafter,  The Code) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)Â
Rules, 2016 (hereinafter, Rules) by M / s. Krishna Industries Sole Proprietorship   Concern, (hereinafter  ""applicant""),  Â
with   a prayer   to   initiate   the   Corporate   Insolvency   Resolution Process against M/s. Nikhil
Footwears Pvt. Ltd. (hereinafter, Respondent/Corporate Debtor).
2. As per averments made in the petition, The Operational Creditor is a sole proprietorship concern. TheÂ
Operational Creditor is engaged in the business of services, trading and supplying of construction material.
3. The trade between the Operational Creditor and Corporate Debtor  commenced  from year 2017 with respect toÂ
the supply of the raw materials. All the goods supplied by the Operational Creditor were duly received  by the Corporate Debtor
without any dissatisfaction with respect to quantity and quality of the goods supplied.
4. The applicant issued Demand Notice dated 31.12.2019 in terms of section 8 of the Code to corporate debtor which was served
through speed post.
5. As   per   part   IV   of  the   application, Rs.  3,33,86,135/- alongwith  interest  is  still Â
pending to  paid  by  Corporate Debtor since 25.10.2017 to 27.09.2019.
6. Upon issuance of notice, Ld.  Counsel for the respondent appeared and filed reply to the present petition raising the
following objections against the admission of the present petition:
a) It is alleged that the said petition is filed by the power of attorney holder and the same need to be rejected on the said ground. Further, relied
upon the Judgement T.C.Mathai & Anr. V. District & Sessions Judge Thiruvanthapuram, Kerala (1999) 3 SCC  614, Â
wherein,  it was  held  by  the  Hon'ble Supreme Court held that Section 2 of the Power of Attorney Act, 1882 Â
cannot override  the  specific provision  of the  statute  which  required  that  a particular act should be done
by a party in person.
b) It is further submitted that instant petition is filed on behalf of a sole proprietorship firm and the same is not considered as a legal
entity. Further, relied upon the order passed by this tribunal in the matter R.G.  Steels v.  Berry Auto Ancillaries (P.) Ltd.,
wherein, it   was held   that   the   Person's definition as contained in Section 3(23) of IBC does not include withinÂ
its  ambut a sole proprietary concern  and  therefore,  sole  proprietary concern taking into consideration the definition
of   a ""person"" is not entitled to approach the Adjudicating Authority.
c) Corporate Debtor also stated that in the instant case the demand notice of the Operational Creditor has   been   issued  Â
in   the   name   of  the   Nikhil Footwears Pvt. Ltd.', however, the amount claimed as per the invoices is from the
different entity i.e. Nikhil Footwears'.
d) It  is  further  submitted  that the  Operational Creditor had not furnished any proof of serving a copy of demand notice.
7.  The  petitioner has  filed  rejoinder to the reply of respondent and submitted as follows:
a) It is submitted that the present petition is filed through  authorized  representative  of Mr.   Kapil Kumar BansalÂ
proprietor of M/s Krishna Industries.
b) The Operational Creditor had been in business transaction  with  M/s  Nikhil  Footwear Pvt.  Ltd. From past manyÂ
years and also with the other sister concerned companies like M/s Nikhil Footwears.
c) It is pertinent to mentioned here that Mr. Naresh Kumar Agarwal Director of Corporate Debtor is the authorized signatory in M/s Nikhil Footwears
as he is the one who has handed over cheques of sister company i.e. M/s Nikhil Footwears of M/s Nikhil Footwear Pvt. Ltd. To the
Operational Creditor.
8.  We have heard Ld. Counsel for the parties. We have perused the averments made in the application, reply, and rejoinder and additional
affidavits filed by the parties.
9. On the basis of the rival arguments, the following points of deteremination has arisen:
I.  Whether the present petitioner being sole propreiteor  is  entitled  to  maintain the present petition as Operational Creditor?
II. Whether  the   present   petitioner   is   entitled   to  initiate CIRP proceedings against the respondent on the basis
that the respondent owed debt for the goods supplied by the petitioner?
III.  Relief.
FINDINGS WITH REASONS
POINT NO. I
10.  Learned   Counsel  for   the   respondent  vehemently contended that the present petition has been filed by the sole
proprieto concern, accordingly, the same is not maintainable  as the same does not come under the purview of  ""definition Â
of  person""  and  could  not  be  treated  as Operational Creditor. In order to buttress his arguments, the Learned
Counsel relied upon citation RG Steels Vs. Berrys Auto Ancilliaries (P) Ltd. ,MANU/NC/6782/2019.
11.  On the other hand, Learned Counsel for   the petitioner argued that the present citation has been overruled, thus, the sole
proprietor can maintain the petitioner under Section 9 being Operational Creditor and also referred to definition 2(f) of the Code, whereby it is being
said that the IBC Code is applicable to the sole proprietorship as well also Section 3(23) of the Code has to be read in consonance with 2(f) of
the Code. Accordingly, prayed that the petition is well maintained.
12. Although, Section 5(21)  ""Operational Creditor"" refers to  a person  to whom  an  operational debt is owedÂ
and includes any person to whom such debt has been legally assigned or transferred for goods and services done by them.
No  doubt,  definition  of ""Operational  Creditor"" refer  to ""person"".
13.  Before  embarking further  discussion,  it would be appropriate to go through Section 3(23) of IBC Code where the term
person"" includes-
(a) an individual
(b) a company
(c) a trust
(d) a partnership
(e) a limited liability partnership ; and
(f) Â a limited liability partnership; and
(g) any other entity established under a statute; and includes a person resident outside India;
14. From the bare perusal of the above said section, it is apparent  that  the  term   ""person""  Â
includes   ""any  other  entity established under a statute"". Therefore, there are various statute under the Indian Law whichÂ
are very much applicable to sole proprietorship business, for example:
i. Issuance of PAN issued under Income Tax Act.
ii. Issuance of MSME registration certificate issued by Government of India
iii.  Issuance of GST Registration certificate.
iv.  Issuance of Shop and Establishment licence.
v.  Opening of bank account under the name of Proprietary concerned.
15. Though, the sole proprietorship firm I not legal entity as that of partnership firm, but it has been still recognized under the statute and have same
identity as of person, because this is entity which require registration under the various acts like that of the person or individual. Further, Section
2(f) clearly laid down that the provisions of this Code are applicable to sole proprietorship firm also. Hence,Â
Section 2(f) has to be read along with Section 3(23) of the Code. Section 2 (f) of IBC provides inter alia that the provision  ofÂ
the  code  are  applicable  to  partnership  firm  and proprietorship firm.
16.  Apart that it is settled law that the ""doctrine of harmonious construction"" has to be adopted because the Parliament makes a
separate set of   statute rules and regulations as well as Constitution of Provision under their well-defined power.  While
framing of these provisions, it has to be done very carefully, conflict still occurs sometimes due to overlapping in the proviosns of acts. This is because
of that there are chances of certain gaps being left while framing of these provisions,  which  could  not have  been
foreseen by the legislature. To deal such conflict, certain doctrine and  rules  are  propounded  by  the  Court  that Â
is  used  in  the interpretation of statute.  One such rule of interpretation is the ""doctrine of harmonious construction
which laid down when there is a conflict between two or more statute or two or more parts of statute  and  the  rule  ofÂ
harmonious  construction  need  to  be adopted. Every statute has a purpose and intent as per law and should be read as a whole.
While using the harmonious rule, the interpretation should be consistent with all the provisions of the statute.
17.  In this regard, the eference can be made to citation Union of India Vs. Dalip Kumar Singh, CIVIL APPEAL NOS.2466-2467 OF 2015,
decided on 26, February 2015., wherein it is laid down, The provision of statute must be read harmonious together, where this is not possible and there
is reconcilable conflict between two section, it must be determined which provision is leading and which provisions subordinate
provision and that which one must give way to the other. Hence, a construction giving effect to all the provisions of the statute should beÂ
adopted. In the matter in hand, very first definition of the Code i.e. 2(f) clearly laid down that the provisions of this Code shall apply to  Â
partnership firms and proprietorship firms.
18.  Further, under the definition of 3(23) though,the word ""sole proprietor"" exclusively had not been mentioned, but at the last
i.e. Section 3(23) (g)  lays  down  in  other  entity  established under statute. The sole proprietorship also entails various
acts which are established by the Government of India and sole proprietorship requires registration under the various acts and
regulations of the Government of India.
19.  ""Operational  Creditor"" refers  to a word ""person"" and the definition of ""person"" is laid down underÂ
Section 3(23)  of the Code,which does not include sole proprietorship concern specifically, but that Section 3(23) as to be read in
consonance of Section 2(f) to draw a harmonious construction among all these sections. . All these sections has to beÂ
taken into consideration together and not in a separate manner. Moreover, sole proprietorship has also to be taken as a entity constituted,
which invites all the acts for registration and all the acts i.e. Provisions of the Income Tax Act, Shop and Establishment LicenseÂ
Act, GST Registration Certificate, provisions are very much applicable. Thus, this leads to conclusion that both the sole proprietorship firm and
the natural person are the same legal entity. Therefore, the sole proprietorship is entitled to maintain the application under Section 9
being Operational Creditor against any Corporate Debtor. In this regard, the reference can be made to citation, Neeta Saha Vs. Ram NiwasÂ
Gupta, Company Appeal (AT) (Insolvency) No.  321  of 2020, NCLAT, New Delhi (2020).
20.  Further, in the case of Devendra Surana V Bank of Baroda, W.P. No. 5521 (w) of 2017, Calcutta High Court ddecided on 12
December, 2018, wherein it is held that the sole proprietorship firm and the natural person, both are the same legal entity.
21.  Apparently, the present petition has been filed by Mr. Rahul Bansal being Authorized Representative of sole Proprietor of Kapil Bansal
of  Krishna Industries (sole   proprietors   concerned). Moreover, the citation referred on the part of the respondent has also been
over-ruled by the Honble NCLAT in the matter of Neha Saha supra.. Hence, the present petitioner is entitled to file the present
petition on behalf of sole proprietorship concerned.   This proposition stands settled in the matter oNf eeta Saha (supra),
accordingly, the citation i.e. D G Steels pvt.Ltd. (Supra) referred on behalf of the respondent is not helpful to the Corporate  Debtor.
Hence,  the  contention  raised  by the Learned Counsel for the respondent   stands   discarded  Â
and   it  is   held   that   the   ""sole proprietorship firm"" is  entitled to maintain the petitionÂ
under Section 9 of the Code being ""Operational Creditor"" before NCLT. Consequently, this Point No. I stands decided
accordingly in the favour of the petitioner against the respondent.
POINT NO. II:
22.  Now, it has to be seen whether the present petitioner  actually owes dues against the present Corporate Debtor against the
goods were supplied. . In this context, it is to be mentioned that all the invoices placed on record pertains to M/s. Nikhil Footwear. Both the
entities are having different GSTIN/UIN 86 PAN Numbers. As the  GSTIN/UIN number of M/s. Nikhil Footwear Private Limited is
06AAACNO749A1Z1, whereas of M/s Nikhil Footwear is GSTIN/UIN  is  06AANFN8088L1ZF  and  PAN  Number ofÂ
Nikhil Footwears  is  AANFN8088L,  whereas  the  PAN  Number  of the Corporate Debtor is herein is
AAACNO749A. All these bills contains GST and PAN No. of partnership firm and not of the respondent company.
23.  Even, during the course of arguments, Learned Counsel for the petitioner herein also  fairly admitted that the invoices pertains to M/s,
Nikhil Footwear i.e. partnership firm and not Nikhil Footwear Private   Limited.   Therefore,   both   these   are  Â
different   entities constituted under the different laws and having different GSTIN/UIN_Numbers.   Hence, all the dues pertaining to
invoices placed on record pertains to M/s Nikhil Footwear i.e. Partnership Firm not to M/s Nikhil Footwear Private Limited. No transaction
pertains to the respondent company herein. Partnership firm  still does not come under the jurisdiction of NCLT as such no petition can be
maintained. Thus, this  Point No. II stands decided against the petitioner and in favour of the respondent.
POINT NO. III (RELIEF):
24.  In sequel of the above said discussion, the present petitioner miserably failed to prove on record that M/s Krishna Industries
supplied any goods as per the invoices to the respondent company i.e.  M/s  Nikhil  Footwear Pvt.  Ltd.  and duesÂ
were  against the Corporate Debtor herein qua those bills/ invoices.
25. Â Resultantly, the present petition stands dismissed with no order to costs.
File be consigned to records.
