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2024 Supreme(Online)(GUJ) 7186
HIGH COURT OF GUJARAT
J. C. DOSHI, J
PRADIP VASANTLAL THAKKAR – Appellant
Versus
PIYUSHKUMAR RASIKLAL UDECHA – Respondent
R/SECOND APPEAL NO. 321 of 2024
The court ruled that the insolvency petition under Section 9 of the Provincial Insolvency Act remains maintainable despite the Act's repeal, as the relevant notification did not indicate its complete repeal.
Headnote:(A) Provincial Insolvency Act, 1920 - Section 9 - Insolvency petition - The petition was dismissed on grounds of maintainability due to the repeal of the Act, which was contested by the petitioner citing a notification regarding the applicability of the Insolvency and Bankruptcy Code, 2016 - The trial court's dismissal was found erroneous as the notification did not cover the petition under Section 9 of the Act. (Paras 4, 6, 7)
(B) Appeal - Second appeal under Section 100 of CPC - The appellate court confirmed the trial court's order without addressing the error in law regarding the maintainability of the insolvency petition. (Paras 2, 4)
Facts of the case:
The petitioner filed an insolvency petition claiming the respondent owed a debt of Rs. 4,54,828/- due to a loan agreement, which was not repaid within the stipulated time. The trial court dismissed the petition, stating it was not maintainable under the repealed Act. (Paras 4, 5)
Findings of Court:
The court found that the trial court erred in dismissing the petition as the notification did not indicate that the entire Provincial Insolvency Act was repealed, thus the petition should have been registered. (Paras 6, 7)
Issues: The main issue was whether the insolvency petition under Section 9 of the Provincial Insolvency Act was maintainable post-repeal of the Act. (Paras 2, 6)
Ratio Decidendi: The court held that the notification did not repeal the provisions relevant to the insolvency petition, and thus the trial court's dismissal was incorrect. (Paras 6, 7)
Result: Second appeal allowed; the impugned judgment and order quashed and set aside.
1.With the consent of learned advocates for the respective parties, present appeal is taken up for final disposal today.
2.This second appeal filed u/s 100 of the CPC challenges judgment and order dated 22.2.2023, whereby the learned Additional District Judge, Bhachau confirmed the order dated 9.3.2022 passed by the learned Principal Senior Civil Judge, Bhachau dismissing Insolvency Petition filed by the petitioner herein under the provisions of the Provincial Insolvency Act, 1920 (in short “the Act”) on the ground that on unveil of the Act, the insolvency petition is not maintainable under the provisions of the Act. An appeal u/s 75 of the Act being RCA No.3 of 2022 was filed before the learned appellate Court, which also came to be rejected.
3.Heard learned advocates appearing for the respective parties.
4.The facts, which could be noticed fro the pleadings, are that the petition filed insolvency petition u/s 9 of the Act claiming following relief:-“a. The Respondent be adjudged and declared insolvent under the provisions of The Provincial Insolvency Act, 1920 .
- b. The ad interim receiver be appointed with all necessary powers under The Provincial Insolvency Act, 1920 to take possession of the books of account, documents and assets of the Respondents.
- c. Any other better relief or reliefs as this Hon'ble court deemed fit may please be granted in favour of the Petitioner.”
4.1It is submitted that the petitioner has provided a hand- loan of Rs. 5,00,000/- (in word Rupees Five Lakhs Only) on 07.05.2021 to the Respondent vide Cheque No. 000024 of The Kutch Mercantile Co- operative Bank for a short period of 60 days. It is further submitted that previously, in the year 2017-18, the Respondent had provided an interest free financial assistance for trade purpose to the Petitioner, which, according to the mutual agreement, was payable by the end of the year 2021. That out of the above said financial assistance, an amount of Rs.45,172/- was balance payable by the Petitioner to the respondent. The verbal agreement between the parties scheduled the repayment to be made on 7.5.2021 and to be done after adjusting the previous dues and as such, the petitioner owes Rs.4,54,828/- on 7.7.2021 from the respondent. Since 60 days’ time has expired and the respondent failed to pay the loan within the notice period of 30 days, the petitioner preferred insolvency petition for declaring the respondent as insolvent under the provisions of the Act. This insolvency petition was kept for preliminary hearing. The learned trial Court, Bhachau considering section 243 of the Insolvency and Bankruptcy Code, 2016 , held that since the Provincial Insolvency Act, 1920 is repealed, the insolvency petition u/s 9 thereof cannot be filed.
This order is appealed u/s 75 of the Act by filing RCA No.3 of 2022, but it has been rejected. Hence, present second appeal.
5.Learned advocate Mr. Gogia for the petitioner refers to the notification of Ministry of Corporate Affairs dated 15.11.2019, which reads as under:-“MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 15th November, 2019 S.O. 4126(E). In exercise of the powers conferred by sub-section (3) of section 1 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby appoints the Ist day of December, 2019 as the date on which the following provisions of the said Code only in so far as they relate to personal guarantors to corporate debtors, shall come into force:-
- (1) clause (e) of section 2; 03-2023 (2) section 78 (except with regard to fresh start process) and section 79;
- (3) sections 94 to 187 [both inclusive);
- (4) clause (g) to clause (i) of sub-section (2) of section 239;
- (5) clause (m) to clause (zc) of sub-section (2) of section 239;
- (6) clause (zn) to clause (zs) of sub-section (2) of section 240; and (7) section 249.
- [F. No. 30/21/2018-Insolvency Section]
- GYANESHWAR KUMAR SINGH, Jt. Secy.”
5.1Learned advocate Mr. Gogia would further submit that the learned trial Court has fail
