under the Insolvency and Bankruptcy Code, 2016 (IBC), a proprietorship firm is not considered a “person” in its own right

 under the Insolvency and Bankruptcy Code, 2016 (IBC), a proprietorship firm is not considered a “person” in its own right. However, this does not mean that a proprietorship business cannot invoke the IBC. Here's a clearer legal explanation:

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📘 Legal Definition of “Person” under IBC:

Section 3(23) of the IBC defines “person” to include:

• An individual,

• A Hindu Undivided Family (HUF),

• A company,

• A trust,

• A partnership firm,

• A limited liability partnership (LLP),

• Any other entity established under a statute.

❌ Notably, it does not mention "proprietorship firm" — because a proprietorship is not a separate legal entity.

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✅ Then How Can a Proprietorship File under IBC?

A proprietorship firm operates in the name of its proprietor. Therefore:

• The proprietor, as an individual, is a "person" under IBC.

• He/she can initiate proceedings (such as under Section 9 for operational creditors) in their personal capacity, trading as the firm.

✔ Correct Style of Filing:

“Mr. X, sole proprietor of M/s ABC Enterprises”

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🧑‍⚖️ Judicial Precedent:

• M/s. Shailesh Sangani v. Joel Cardoso (NCLAT, 2019):

  The NCLAT held that proprietorship firms cannot file independently, but the individual proprietor can file in his/her own name on behalf of the proprietorship.

• Pawan Dubey v. J.B.K. Developers (NCLT):

  Clarified that if a proprietorship files in its own name without disclosing the proprietor, it is not maintainable.

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⚠ Implication:

Proprietorship Firm	✅ Cannot sue or be sued as a person under IBC
Proprietor (Individual)	✅ Can initiate proceedings under IBC, representing the firm