Insolvency against a partner barred where the underlying debt belongs to the partnership firm, not the individual partner.

An insolvency application under the Code was held not maintainable against a corporate partner where the alleged debt was owed by the partnership firm itself. The Tribunal reasoned that, even if a demand notice was issued to the firm and its partners and joint liability was asserted under the Partnership Act, the liability remained that of the firm and could not be pursued through CIRP against one partner alone. The petition was therefore rejected because the debt was treated as a firm's obligation, not a basis for insolvency action against the respondent partner.

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Issues: Whether an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against a partner of a partnership firm, when the alleged debt is owed by the partnership firm, is maintainable.

Analysis: The claim arose from money advanced to a partnership firm, and the demand notice was addressed to the firm and its partners. The petitioning creditor sought to fasten liability on one corporate partner by relying on joint and several liability under the Partnership Act, 1932. The Tribunal followed the principle that where the debt is due from the partnership firm, an insolvency application against one partner of the firm is not maintainable merely because that partner is a corporate debtor. The reasoning applied the earlier view that the liability, in such a setting, remains that of the partnership firm and does not permit CIRP against one partner under the Code.

Conclusion: The application under Section 7 was held not maintainable against the corporate partner and was rejected.

Final Conclusion: The proceeding failed because the alleged liability was treated as a firm's debt, not a debt enforceable through CIRP against the respondent corporate partner.

Ratio Decidendi: An insolvency application under the Code is not maintainable against one partner of a partnership firm when the debt is owed by the partnership firm itself.

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