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of <h1>Tribunal grants legal heir substitution in insolvency, clarifies operational creditor status.</h1> <h3>Vijender Kumar Jain Versus M/s. Atlas Cycles (Haryana) Limited</h3> The Tribunal allowed the application for substitution of the legal heir in insolvency proceedings, emphasizing the applicant's status as a legal heir and ... Seeking substitution of name of Vijender Kumar Jain and allow her to continue the proceedings in the present petition - Rule 53 read with Rule 11 of NCLT Rules, 2016 - HELD THAT:- It is observed that the applicant is a legal heir along with four other legal heirs(daughters) of Vijender Kumar Jain, who was running a proprietorship concern under the name of Arihant Cycles. The copy of death certificate of Vijender Kumar Jain and the relinquishment deed furnished by other four legal heirs in favour of the applicant are attached as Annexure- A-1 and A-2 respectively of the application. In the present case, the applicant has stepped into the shoes of the petitioner in CP (IB) No. 217/Chd/Hry/2020 being the legal heir/wife of Vijender Kumar Jain(Since Deceased) - the present application is allowed and the applicant is to continue the proceedings in the present petition and the amended memo of parties is also taken on record. Issues:1. Substitution of legal heir in insolvency proceedings under IBC.2. Interpretation of operational creditor under Section 5(20) of IBC, 2016.3. Application of legal principles regarding proprietary concerns and partnership firms in insolvency cases.Analysis:1. The case involved an application filed by a legal heir seeking substitution in insolvency proceedings under IBC due to the death of the original petitioner. The applicant, as the legal heir of the deceased proprietor, requested to continue the proceedings. The respondent objected, arguing legal heirs are not operational creditors under Section 5(20) of IBC, 2016. The applicant cited the transfer of debt by operation of law, asserting her status as an operational creditor.2. The respondent relied on the judgment of M/s. Double Seven Enterprises Vs. M/s. Vijay Fine Art Press, emphasizing the distinction between the deceased proprietor and the legal heirs in seeking recovery. However, the applicant referred to the judgment of Hon'ble NCLAT in FIPOLA RETAIL (INDIA) PRIVATE vs M2N INTERIORS, highlighting the applicability of IBC provisions to proprietorship firms and the inclusive definition of 'person' under Section 3(23) of IBC, 2016.3. The Tribunal considered the applicant's legal status as a legal heir and the relinquishment deeds by other legal heirs, emphasizing the distinction between a proprietary concern and a partnership firm. Citing the judgment in Ashok Transport Agency vs. Awadhesh Kumar, the Tribunal clarified the legal position regarding proprietary concerns and the rights of legal representatives in such cases. The Tribunal concluded that the applicant, as a legal heir, could step into the shoes of the deceased petitioner, allowing her to continue the proceedings.In conclusion, the Tribunal allowed the application for substitution of the legal heir in the insolvency proceedings, emphasizing the applicant's status as a legal heir and her right to continue the proceedings as the representative of the deceased proprietor. The judgment clarified the interpretation of operational creditors under IBC and the legal principles regarding proprietary concerns and legal representation in insolvency cases.
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