MP High Court: SARFAESI Recovery Proceedings Against Sole Proprietorships Not Halted by IBC Moratorium

The Madhya Pradesh High Court held that recovery under the SARFAESI Act, 2002, can proceed against sole proprietorships despite insolvency proceedings initiated under the Insolvency and Bankruptcy Code (IBC), 2016. 

In the case concerning M/s Rainbow Sales and M/s Kothari Enterprises—both sole proprietorships whose loans were declared Non-Performing Assets (NPAs) by Axis Bank - the Court held that such entities do not qualify as "debtors" under Section 94 of the IBC.

Consequently, the moratorium provisions of the IBC do not apply, allowing SARFAESI recovery proceedings to continue uninterrupted.