# In the matter of Ramesh Kothari vs. The State of Madhya Pradesh and Others

> HC judgment dated 2025-03-03. Citation: TCN-2025-HC-00036. The petitioner, Ramesh Kothari, filed a writ petition seeking direction to the respondents to…

- **Court:** HC
- **Order date:** 3 Mar 2025
- **Citation:** TCN-2025-HC-00036
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/high-courts-new-delhi/ramesh-kothari-vs-the-state-of-madhya-pradesh-and-others-cf06ed1f

## Summary

### Background

The petitioner, Ramesh Kothari, filed a writ petition seeking direction to the respondents to consider his representation regarding a pending petition under the Insolvency and Bankruptcy Code, 2016 (IBC) before the National Company Law Tribunal (NCLT), Indore. The petitioner owns a property mortgaged as collateral security for financial facilities availed by M/s Rainbow Sales and M/s Kothari Enterprises. Axis Bank classified the account as a Non-Performing Asset and initiated recovery proceedings under the SARFAESI Act. The bank approached the Sub Divisional Magistrate, who ordered the Tehsildar to take possession of the property. Before the possession date, the petitioner approached the NCLT under Section 94 of IBC, 2016, and then the High Court seeking a stay on the

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## Facts

Ramesh Kothari is the owner of a property at House No.437-B, Katju Nagar, Ratlam, M.P. This property was mortgaged as collateral security for financial facilities availed by M/s Rainbow Sales and M/s Kothari Enterprises from respondents No.4 & 5. M/s Rainbow Sales and M/s Kothari Enterprises are sole proprietorship firms owned by Chetan Kothari and Angoorbala Kothari, respectively. They availed financial facilities from Axis Bank in the form of SBB overdraft facilities of Rs.23,00,000/- and Rs. 49,10,680/-. Axis Bank classified the account as a Non-Performing Asset on 2023-08-30 and initiated recovery proceedings under Section 14 of the SARFAESI Act. The Sub Divisional Magistrate passed an order on 2024-06-28 for taking possession of the mortgaged property. The

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## Issues and analysis

### Issue 1: Whether Section 94 of the IBC, 2016 applies to sole proprietorship firms, allowing a personal …

**Ratio:** Section 3(8) of the IBC, 2016 defines 'corporate debtor' as a corporate person who owes a

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**Reasoning:** The court reasoned that the definition of 'corporate debtor' under Section 3(8) of the

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**Interpretation:** The court interpreted the definition of 'corporate debtor' strictly, adhering

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**Application:** Since M/s Rainbow Sales and M/s Kothari Enterprises are sole proprietorship

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## Parties

- **Judges:** Vivek R…; Prem Naraya…
- **Appellants:** Ramesh Ko…
- **Respondents:** THE STATE OF…
- **Other parties:** Kohi…
- **Advocates:** Amit Ag…; Utkarsh…; +1 more

## Timeline

- **2023-08-30 — Account Classified as…**: Axis Bank classified the…
- **2024-06-28 — Order for Pos…**: The Additional Collector passed an order for…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 94 — Application by debtor to initiate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-94)

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