Case Law Details
SVS Marketing Sanitaryware Private Limited (NCLT Delhi)
NCLT Delhi held that an amalgamation of “a Sole Proprietorship Firm” with “a Company” is not permissible under the law. Thus, Merger and Amalgamation of sole proprietorship firm and company is not possible u/s 232 of Companies Act, 2013.
Facts- M/s SVS Marketing Sanitaryware Private Limited (‘Applicant’/ ‘Operational Creditor’) has filed the present petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (‘IBC, 2016’) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s. Kajaria Bathware Private Limited (‘Respondent’).
Conclusion- Since the Sole Proprietorship Firm has no separate legal entity of its own, and it is known only through its Proprietor Mr. Shibu M, who (as we have seen in the table given in Para 12 above) is a member/shareholder in the Applicant Company, the provision of Section 230 of the Companies Act 2013 can be resorted to by Mr. Shibu M and the Applicant Company namely, M/s SVS Marketing Sanitaryware Pvt. Ltd. for the purpose of “Compromise and Arrangement” by filing an appropriate Petition before NCLT by following the due procedure prescribed by law.
Held that neither the “Sole Proprietorship Firm” nor “its individual Proprietor” is a “Company” in terms of Section 2(20) of the Companies Act 2013. Hence, the Merger and Amalgamation of a “Sole Proprietorship Firm” and “a Company” is not possible under Section 232 of the Companies Act 2013. Hence, we find that an amalgamation of “a Sole Proprietorship Firm” with “a Company” is not permissible under the law.
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