Proprietorship Insolvency and Functus Officio bars prevented relief against possession recovery under the Insolvency Code.

A sole proprietorship concern does not fall within the definition of a corporate person or corporate debtor under the Insolvency and Bankruptcy Code, so a petition under Section 94 could not be maintained to trigger interim moratorium under Section 96. The text also notes that once the competent authority had passed an order on the representation, the stage was concluded and the authority became functus officio; a subordinate officer could not re-adjudicate the objection or representation. On that basis, no restraint was available against possession recovery, and the writ petition was dismissed as misconceived.

---

---

Issues: (i) Whether a petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 could be invoked in respect of a sole proprietorship concern so as to attract interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016; (ii) Whether the respondents could be restrained from proceeding with possession recovery when the representation stage had already concluded and the authority had become functus officio.

Issue (i): Whether a petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 could be invoked in respect of a sole proprietorship concern so as to attract interim moratorium under Section 96 of the Insolvency and Bankruptcy Code, 2016.

Analysis: Section 94 provides a remedy to a debtor to apply for initiation of the insolvency resolution process. The statutory scheme of Sections 3(7) and 3(8) confines the expression to a corporate person and a corporate debtor, and a proprietorship concern does not fall within that definition. On that basis, the application under Section 94 was held not maintainable for the sole proprietorship concerns involved.

Conclusion: The answer is in the negative. The petition under Section 94 of the Insolvency and Bankruptcy Code, 2016 was not maintainable for the sole proprietorship concerns, and the claimed interim moratorium could not be invoked.

Issue (ii): Whether the respondents could be restrained from proceeding with possession recovery when the representation stage had already concluded and the authority had become functus officio.

Analysis: The order notes that the stage of considering the representation had already ended because the Additional District Magistrate had passed an order. The authority was therefore functus officio, and the Tehsildar issuing the notice did not possess adjudicatory power to examine the petitioner's objection or representation.

Conclusion: The answer is in the negative. No restraint could be granted on that ground.

Final Conclusion: The writ petition failed on merits and was dismissed as misconceived, with no interference in the possession recovery process.

Ratio Decidendi: A proprietorship concern does not qualify as a corporate debtor for the purpose of Section 94 insolvency proceedings, and once the competent authority has passed an order, subordinate officers cannot re-adjudicate the matter after becoming functus officio.

---