The NCLAT has held that one partner may represent a firm in insolvency proceedings based on a majority decision by the partners, clarifying representation authority under the IBC.
NCLAT Clarifies Partnership Representation in Insolvency
The National Company Law Appellate Tribunal (NCLAT) has clarified that a single partner can represent a partnership firm in insolvency proceedings predicated on a majority decision taken by the partners. This ruling elucidates the legal authority existing within partnerships under the Insolvency and Bankruptcy Code (IBC).
The Tribunal's reasoning reflects the importance of majority decision-making in partnerships, asserting that such decisions are binding upon all members of the firm unless otherwise agreed. This simplification facilitates the insolvency process by allowing for streamlined representation.
Legal practitioners should advise partners about the ramifications of such decisions and the importance of documented resolutions to ensure collective representation in insolvency matters is clear. This will also enhance operational efficiency in insolvency processes.
“One partner can represent the firm in insolvency proceedings on a majority partners’ decision,” explained the NCLAT.
Citations
- NCLAT (2026) NCLAT 1237
