Substitution of legal heir in insolvency proceedings upheld where deceased sole proprietor's proprietary concern had no separate legal identity.

A proprietary concern is not a separate legal entity from its sole proprietor, so on the proprietor's death the legal representatives may continue a pending Section 9 insolvency petition. Where the applicant was one of the legal heirs and the other heirs had executed relinquishment deeds in his favour, the Tribunal treated him as having stepped into the shoes of the deceased petitioner and allowed substitution. The amended memo of parties was also taken on record, and the objection based on a cited contrary decision was rejected as inapplicable on the facts.

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Issues: Whether the legal heir of a deceased sole proprietor could be substituted to continue the insolvency proceedings and whether the amended memo of parties could be taken on record.

Analysis: The application was made under the NCLT Rules for substitution after the death of the sole proprietor who had filed the Section 9 insolvency petition. The deceased had left behind legal heirs, and the other heirs had executed relinquishment deeds in favour of the applicant. The Tribunal accepted that a proprietary concern is not distinct from its proprietor and that, on the death of the proprietor, the legal representatives alone can represent the proprietary business. It held that the applicant had stepped into the shoes of the deceased petitioner and that the objection based on the cited contrary decision was not applicable on the facts.

Conclusion: The substitution was allowed, the applicant was permitted to continue the proceedings, and the amended memo of parties was taken on record.

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