PRESIDENCY-TOWNS INSOLVENCY ACT, 1909
(1) This Act may be called the Presidency-towns Insolvency Act, 1909.
(2) It shall come into force on the first day of January 1910.
In this Act, unless there is anything repugnant in the subject or context,--
(a) "creditor" includes a decree-holder;
(b) "debt" includes a judgment-debt, and "debtor" includes a judgment-debtor;
{Cls.(bb) and (bbb), ins.by Act 9 of 1926, s.3, rep.by the A.O.1948}
(c) "official assignee" includes an acting official assignee {Ins.by Act 10 of 1930, s.2} [and a deputy official assignee, whether permanent or acting];
(d) "prescribed" means prescribed by rules;
(e) "property" includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit;
(f) "rules" me
The Courts having jurisdiction in insolvency under this Act shall be {Subs.by the A.O.1948 for the original cls.(a) and (b) as amended by Act 9 of 1926, s.4, and the A.O.1937} [the High Courts at Calcutta, Madras and Bombay].
All matters in respect of which jurisdiction is given by this Act shall be ordinarily transacted and disposed of by or under the direction of one of the Judges of the Court, and the Chief Justice {The words "or Judicial Commissioner" rep.by the A.O.1948} shall, from time to time, assign a Judge for that purpose.
Subject to the provisions of this Act and of rules, the Judge of a Court exercising jurisdiction in insolvency may exercise in chambers the whole or any part of his jurisdiction.
(1) The Chief Justice {The words "or Judicial Commissioner"} may, from time to time, direct that, in any matters in respect of which jurisdiction is given to the Court by this Act, an officer of the Court appointed by him in this behalf shall have all or any of the powers in this section mentioned; and any order made or act done by such officer in the exercise of the said powers shall be deemed the order or act of the Court.
(2) The powers referred to in sub-section (1) are the following, namely:-
(a) to hear insolvency petitions presented by debtors, and to make orders of adjudication thereon;
(b) to hold the public examination of insolvents;
(c) to make any order or exercise any jurisdiction which is prescribed as proper to be made or exercise
Subject to the provisions of this Act, the Court shall have full power to decide all questions of priorities, and all other questions whatsoever, whether of law or fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case:
{Ins.by Act 19 of 1927, s.2} [Provided that, unless all the parties otherwise agree, the power hereby given shall, for the purpose of deciding any matter arising under section 36, be exercised only in the manner and to the extent provided in that section.]
(1) The Court may review, rescind or vary any order made by it under its insolvency jurisdiction.
(2) Orders in insolvency matters shall, at the instance of any person aggrieved, be subject to appeal as follows, namely:-
(a) an appeal from an order made by an officer of the Court empowered under section 6 shall lie to the Judge assigned under section 4 for the transaction and disposal of matters in insolvency and no further appeal shall lie except by leave of such Judge;
(b) save as otherwise provided in clause (a), an appeal from an order made by a Judge in the exercise of the jurisdiction conferred by this Act shall lie in the same way and be subject to the same provisions as an appeal from an order made by a Judge in the exercise of the ordinary original civil jurisdiction of the Court.
A debtor commits an act of insolvency in each of the following cases, namely:-
(a) if, in the states or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;
(b) if, in the States or elsewhere, he makes a transfer of his property or of any part thereof with intent to defeat or delay his creditors;
(c) if, in the States or elsewhere, he makes any transfer of his property or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent;
(d) if, with intent to defeat or delay his creditors,-
(i) he departs or remains out of
Subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent.
Explanation.-The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.
The Court shall not have jurisdiction to make an order of adjudication, unless-
(a) the debtor is, at the time of the presentation of the insolvency petition, imprisoned in execution of the decree of a Court for the payment of money in any prison to which debtors are ordinarily committed by the Court in the exercise of its ordinary original jurisdiction; or
(b) the debtor, within a year before the date of the presentation of the insolvency petition, has ordinarily resided or had a dwelling-house or has carried on business either in person or through an agent within the limits of the ordinary original civil jurisdiction of the Court; or
(c) the debtor personally works for gain within those limits; or
(d) in the case of a petition by or against a
(1) A creditor shall not be entitled to present an insolvency petition against a debtor unless-
(a) the debt owing by the debtor to the creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees, and
(b) the debt is a liquidated sum payable either immediately or at some certain future time, and
(c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition:
{Added by Act 3 of 1950, s.2} [Provided that where the said period of three months referred to in clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court reopens].
(1) A creditor's petition shall be verified by affidavit of the creditor, or of some person on his behalf having knowledge of the facts.
(2) At the hearing the Court shall require proof of-
(a) the debt of the petitioning creditor, and
(b) the act of insolvency, or, if more than one act of insolvency is alleged in the petition, some one of the alleged acts of insolvency.
(3) The Court may adjourn the hearing of the petition and order service thereof on the debtor.
(4) The Court shall dismiss the petition-
(a) if it is not satisfied with the proof of the facts referred to in sub-section (2); or
(b) if the debto
{The original s.14 was renumbered as sub-section (1) of that section by Act 11 of 1927, s.2} [(1)] A debtor shall not be entitled to present an insolvency petition unless-
(a) his debts amount to five hundred rupees, or
(b) he has been arrested and imprisoned in execution of the decree of any Court for the payment of money, or
(c) an order of attachment in execution of such a decree has been made and is subsisting against his property.
{Ins.by s.2, ibid} [(2) A debtor in respect of whom an order of adjudication, whether made under this Act or under the Provincial Insolvency Act, 1920, has been annulled owing to his failure to apply or to prosecute an application for his discharge shall not be entitled to present an insolvency petition without th
(l) A debtor's petition shall allege that the debtor is unable to pay his debts, and, if the debtor proves that he is entitled to present the petition, the Court may thereupon make an order of adjudication, unless in its opinion the petition ought to have been presented before some other Court having insolvency jurisdiction.
(2) A debtor's petition shall not, after presentation, be withdrawn without the leave of the Court.
{Ins.by Act 19 of 1927, s.3} [(3) On the making of the order admitting his petition.a debtor shall-
(a) unless the Court otherwise directs, produce all his books of account, and
(b) file such lists of creditors and debtors and afford such assistance to the Court as may be prescribed,
&nb
The Court may, if it is shown to be necessary for the protection of the estate, at any time after the presentation of an insolvency petition and before an order of adjudication is made, appoint the official assignee to be interim receiver of the property of the debtor, or of any part thereof, and direct him to take immediate possession thereof or any part thereof, and the official assignee shall thereupon have such of the powers conferable on a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908), as may be prescribed.
On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall become divisible among his creditors, and thereafter, except as directed by this Act, no creditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall commence any suit or other legal proceeding except with the leave of the Court and on such terms as the Court may impose:
Provided that this section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed.
(1) The Court may, at any time after the making of an order of adjudication, stay any suit or other proceeding pending against the insolvent before any Judge or Judges of the Court or in any other Court subject to the superintendence of the Court.
(2) An order made under sub-section (1) may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting such suit or proceeding, and notice of such order shall be sent to the Court before which the suit or proceeding is pending.
(3) Any Court in which proceedings are pending against a debtor may, on proof that an order of adjudication has been made against him under this Act, either stay the proceedings or allow them to continue on such terms as it may think just.
(1) The Court may, at any time after the presentation of an insolvency petition, stay any insolvency proceedings pending against the debtor in any Court subject to the superintendence of the Court, and may, at any time after the making of an order of adjudication, annul an adjudication against the debtor made by any such Court.
(2) Where an adjudication is annulled under sub-section (1), all sales and dispositions of property and payments duly made and all acts done by the Court whose order is annulled, or by the receiver appointed by it or other person acting under his authority, shall be valid, but the property vested in such Court or receiver shall vest in the official assignee, and the Court may make such direction in regard to the custody of such property as it thinks fit.
(3) Notice of the order annulling an adjudication under su
(1) If in any case the Court, having regard to the nature of the debtor's estate or business or to the interests of the creditors generally, is of opinion that a special manager of the estate or business ought to be appointed to assist the official assignee, the Court may appoint a manager thereof accordingly to act for such time as the Court may authorize, and to have such powers of the official assignee as may be entrusted to him by the official assignee or as the Court may direct.
(2) The special manager shall give security and furnish accounts in such manner as the Court may direct, and shall receive such remuneration as the Court may determine.
Notice of every order of adjudication, stating the name, address and description of the insolvent, the date of the adjudication, the Court by which the adjudication is made and the date of presentation of the petition, shall be published {The words "in the Gazette of India and" rep.by the A.O.1937} * * * in the Official Gazette and in such other manner as may be prescribed.
(1) Where, in the opinion of the Court, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the Court that the debts of the insolvent are paid in full, {Subs.by Act 3 of 1950, s.3, for "the Court may, on the application of an y person interested} [the Court shall, on the application of any person interested,] by order annul the adjudication {Ins.by Act 11 of 1927, s.3} [and the Court may, of its own motion or on application made by the official assignee or any creditor, annul any adjudication made on the petition of a debtor who was, by reason of the provisions of sub-section (2) of section 14, not entitled to present such petition].
(2) For the purposes of this section, any debt disputed by a debtor shall be considered as paid in full, if the debtor enters into a bond, in such sum and with such sureties as the Court approves, to pay th
Where it is proved to the satisfaction of the Court that insolvency proceedings are pending in any other {Subs.by the A.O.1950 for "British Court"} [Court in India] whether within or without the States against the same debtor and that the property of the debtor can be more conveniently distributed by such other Court, the Court may annul the adjudication or may stay all proceedings thereon.
(1) Where an adjudication is annulled, all sales and dispositions of property and payments duly made, and all acts theretofore done, by the official assignee or other person acting under his authority, or by the Court, shall be valid, but the property of the debtor who was adjudged insolvent shall vest in such person as the Court may appoint, or, in default of any such appointment, shall revert to the debtor to the extent of his right or interest therein on such terms and subject to such conditions (if any) as the Court may declare by order.
(2) Where a debtor has been released from custody under the provisions of this Act and the order of adjudication is annulled as aforesaid, the Court may, if it thinks fit, recommit the debtor to his former custody, and the jailor or keeper of the prison to whose custody such debtor is so recommitted shall receive such debtor into his custody a
Section 23 of the Presidency Towns Insolvency Act, 1909, deals with the legal consequences following the annulment of an insolvency adjudication. It delineates the status of the insolvent’s property and transactions once the adjudication is annulled, restoring the legal position to pre-adjudication conditions. This section is crucial in understanding the effect of annulment on the property and legal proceedings related to the insolvent.
Section 23 provides that:- When an adjudication of insolvency is annulled, all acts and proceedings taken under the insolvency are deemed null and void.- The property of the insolvent, which had vested in the Official Assignee during insolvency, shall revest in the insolvent as if the adjudication had never taken place.- The section also stipulates that any transfer or disposition of property made during the insolvency, which is impugned as fraudulent or in bad faith, can be challenged and set aside.
Section 23 itself does not prescribe specific punishments. However:- Fraudulent or bad faith transactions impugned under this section can lead to civil remedies, including setting aside transfers.- If such transactions involve criminal conduct, other provisions like Section 103 of the Act or criminal laws may apply, leading to penalties or imprisonment.
In summary, Section 23 plays a pivotal role in the legal framework of insolvency by providing that the annulment of an insolvency order restores the debtor’s property to its pre-insolvency status, while also enabling the invalidation of fraudulent transactions made during the insolvency period. It balances the interests of creditors and debtors, ensuring that fraudulent conveyances are challenged and property rights are protected in accordance with equitable principles.
(1) Where an order of adjudication is made against a debtor, he shall prepare and submit to the Court a schedule verified by affidavit, in such form and containing such particulars of and in relation to his affairs as may be prescribed.
(2) The schedule shall be so submitted within the following times, namely:-
(a) if the order is made on the petition of the debtor, within thirty days from the date of the order,
(b) if the order is made on the petition of a creditor, within thirty days from the date of service of the order.
(3) If the insolvent fails, without reasonable excuse, to comply with the requirements of this section, the Court may, on the application of the official assignee or of any creditor, make an order for his committal to the civ
(1) Any insolvent who shall have submitted his schedule as aforesaid may apply to the Court for protection, and the Court may, on such application, make an order for the protection of the insolvent from arrest or detention.
(2) A protection order may apply either to all the debts mentioned in the schedule or to any of them as the Court may think proper, and may commence and take effect at and for such time as the Court may direct and may be revoked or renewed as the Court may think fit.
(3) A protection order shall protect the insolvent from being arrested or detained in prison for any debt to which such order shall apply, and any insolvent arrested or detained contrary to the terms of such order shall be entitled to his release:
Provided that no such order shall operate to prejudice the ri
(1) At any time after the making of an order of adjudication against an insolvent, the Court, on the application of a creditor or of the official assignee, may direct that a meeting of creditors shall be held to consider the circumstances of the insolvency and the insolvent's schedule and his explanation thereof and generally as to the mode of dealing with the property of the insolvent.
(2) With respect to the summoning of and proceedings at a meeting of creditors the rules in the First Schedule shall be observed.
(1) Where the Court makes an order of adjudication it shall hold a public sitting on a day to be appointed by the Court, of which notice shall be given to creditors in the prescribed manner, for the examination of the insolvent, and the insolvent shall attend thereat, and shall be examined as to his conduct, dealings and property.
(2) The examination shall be held as soon as conveniently may be after the expiration of the time for the filing of the insolvent's schedule.
(3) Any creditor who has tendered a proof or a legal practitioner on his behalf may question the insolvent concerning his affairs and the causes of his failure.
(4) The official assignee shall take part in the examination of the insolvent; and for the purpose thereof, subject to such directions as the Court may give, may be
(1) An insolvent may at any time after the making of an order of adjudication submit a proposal for a composition in satisfaction of his debts or a proposal for a scheme of arrangement of his affairs in the prescribed form, and such proposal shall be submitted by the official assignee to a meeting of creditors.
(2) The official assignee shall send to each creditor who is mentioned in the schedule, or who has tendered a proof before the meeting, a copy of the insolvent's proposals with a report thereon, and if on the consideration of such proposal the majority in number and three-fourths in value of all the creditors whose debts are proved resolve to accept the proposal, the same shall be deemed to be duly accepted by the creditors.
(3) The insolvent may at the meeting amend the terms of his proposal if the amendment is in the opinion o
(1) The insolvent or the official assignee may after the proposal is accepted by the creditors apply to the Court to approve it, and notice of the time appointed for hearing the application shall be given to each creditor who has proved.
(2) Except where an estate is being summarily administered or special leave of the Court has been obtained, the application shall not be heard until after the conclusion of the public examination of the insolvent.Any creditor who has proved may be heard by the Court in opposition to the application notwithstanding that he may at a meeting of creditors have voted for the acceptance of the proposal.
(3) The Court shall before approving the proposal hear a report of the official assignee as to the terms thereof and as to the conduct of the insolvent and any objections which may be made by or on behalf of
If the Court approves the proposal, the terms shall be embodied in an order of the Court, and an order shall be made annulling the adjudication, and the provisions of section 23, sub-sections (1) and (3), shall thereupon apply, and the composition or scheme shall be binding on all the creditors so far as relates to any debt due to them from the insolvent and provable in insolvency.
(2) The provisions of the composition or scheme may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application shall be deemed a contempt of Court.
(1) If default is made in the payment of any instalment due in pursuance of any composition or scheme, approved as aforesaid, or if it appears to the Court that the composition or scheme cannot proceed without injustice or undue delay or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by any person interested, re-adjudge the debtor insolvent and annul the composition or scheme, and the property of the debtor shall thereupon vest in the official assignee but without prejudice to the validity of any transfer or payment duly made or of anything duly done under or in pursuance of the composition or scheme.
(2) Where a debtor is re-adjudged insolvent under sub-section (1), all debts provable in other respects which have been contracted before the date of such re-adjudication shall be provable in the insolvency.
Notwithstanding the acceptance and approval of a composition or scheme, the composition or scheme shall not be binding on any creditor so far as regards a debt or liability from which, under the provisions of this Act, the insolvent would not be discharged by an order of discharge in insolvency, unless the creditor assents to the composition or scheme.
(1) Every insolvent shall, unless prevented by sickness or other sufficient cause, attend any meeting of his creditors which the official assignee may require him to attend, and shall submit, to such examination and give such information as the meeting may require.
(2) The insolvent shall-
(a) give such inventory of his property, such list of his creditors and debtors, and of the debts due to and from them respectively,
(b) submit to such examination in respect of his property or his creditors,
(c) wait at such times and places on the official assignee or special manager,
(d) execute such powers-of-attorney, transfers and instruments, and
(e) generally do
(1) The Court may, either of its own motion or at the instance of the official assignee or of any creditor, by warrant addressed to any police-officer or prescribed officer of the Court, cause an insolvent to be arrested, and committed to the civil prison or if in prison to be detained until such time as the Court may order, under the following circumstances, namely:-
(a) if it appears to the Court that there is probable reason for believing that he has absconded or is about to abscond with a view of avoiding examination in respect of his affairs, or of otherwise avoiding, delaying or embarrassing proceedings in insolvency against him; or
(b) if it appears to the Court that there is probable reason for believing that he is about to remove his property with a view of preventing or delaying possession being taken of it by the official as
Where the official assignee has been appointed interim receiver or an order of adjudication is made, the Court, on the application of the official assignee, may, from time to time, order that for such time, not exceeding three months, as the Court thinks fit, all post letters, whether registered or unregistered, parcels and money orders addressed to the debtor at any place or places mentioned in the order for redirection, shall be re-directed or delivered by the Postal authorities in the States, to the official assignee, or otherwise as the Court directs; and the same shall be done accordingly.
(1) The Court may, on the application of the official assignee or of any creditor who has proved his debt, at any time after an order of adjudication has been made, summon before it in such manner as may be prescribed the insolvent or any person known or suspected to have in his possession any property belonging to the insolvent, or supposed to be indebted to the insolvent, or any person whom the Court may deem capable of giving information respecting the insolvent, his dealings or property; and the Court may require any such person to produce any documents in his custody or power refining to the insolvent, his dealings or property.
(2) If any person so summoned, after having been tendered a reasonable sum, refuses to come before the Court at the time appointed, or refuses to produce any such document, having no lawful impediment made known to the Court at the time of its sitting
The Court shall have the same powers to issue commissions and letters of request for the examination on commission or otherwise of any person liable to examination under section 36 as it has for the examination of witnesses under the Code of Civil Procedure, 1908.
(1) An insolvent may, at any time after the order of adjudication, apply to the Court for an order of discharge, and the Court shall appoint a day for hearing the application, but, save where the public examination of the insolvent has been dispensed with under the provisions of this Act, the application shall not be heard until after such examination has been concluded.The application shall be heard in open Court.
(2) On the hearing of the application, the Court shall cake into consideration any report of the official assignee as to the insolvent's conduct and affairs, and, subject to the provisions of section 39, may-
(a) grant or refuse an absolute order of discharge, or
(b) suspend the operation of the order for a specified time, or
(c) gran
(1) The Court shall refuse the discharge in all cases where the insolvent has committed any offence under this Act, or under sections 421 to 424 of the Indian Penal Code, and shall, on proof of any of the facts hereinafter mentioned, either--
(a) refuse the discharge; or
(b) suspend the discharge for a specified time; or
(c) suspend the discharge until a dividend of not less than four annas in the rupee has been paid to the creditors; or
(d) require the insolvent as a condition of his discharge to consent to a decree being passed against him in favour of the official assignee for any balance or part of any balance of the debts provable under the insolvency which is not satisfied at the date of his discharge; such balance or part of any balance o
Notice of the appointment by the Court of the day for hearing the application for discharge shall be published in the prescribed manner and sent one month at least before the day so appointed to each creditor who has proved, and the Court may hear the official assignee and may also hear any creditor.At the hearing, the Court may put such questions to the insolvent and receive such evidence as it may think fit.
If an insolvent does not appear on the day so appointed for hearing his application for discharge or if an insolvent shall not apply to the Court for an order of discharge within such time as may for be prescribed, the Court, on the application of the official assignee or of a creditor or of its own motion, may annul the adjudication or make such other order as it may think fit, and the provisions of section 23 shall apply on such annulment.
(1) Where the Court refuses the discharge of the insolvent it may, after such time and in such circumstances as may be prescribed, permit him to renew his application.
(2) Where an order of discharge is made subject to conditions and at any time after the expiration of two years from the date of the order the insolvent shall satisfy the Court that there is no reasonable probability of his being in a position to comply with the terms of such order, the Court may modify the terms of the order, or of any substituted order, in such manner and upon such conditions as it may think fit.
A discharged insolvent shall, notwithstanding his discharge, give such assistance as the official assignee may require in the realization and distribution of such of his property as is vested in the official assignee, and, if he fails to do so, shall be guilty of a contempt of Court; and the Court may also, if it thinks fit, revoke his discharge, but without prejudice to the validity of any sale, disposition or payment duly made or thing duly done subsequent to the discharge, but before its revocation.
In either of the following cases, that is to say -
(1) in the case of a settlement made before and in consideration of marriage where the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement; or
(2) in the case of any covenant or contract made in consideration of marriage for the future settlement on or for the settlor's wife or children of any money or property wherein he had not at the date of his marriage any estate or interest (not being money or property of or in right of his wife);
if the settlor is adjudged insolvent or compounds or arranges with his creditors, and it appears to the Court that the settlement, covenant or contract was made in order to defeat or delay creditors, or was unjustifiable ha
(1) An order of discharge shall not release the insolvent from-
(a) any debt due to the Government,
(b) any debt or liability incurred by means of any fraud or fraudulent breach of trust to which he was a party; or
(c) any debt or liability in respect of which he has obtained forbearance by any fraud to which he was a party; or
(d) any liability under an order for maintenance made under section 488 of the Code of Criminal Procedure, 1898.
(2) Save as otherwise provided by sub-section (1), an order of discharge shall release the insolvent from all debts provable in insolvency.
(3) An order of discharge shall be conclusive evidence of the insolvency, and of
(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract or breach of trust shall not be provable in insolvency.
(2) A person having notice of the presentation of any insolvency petition by or against the debtor shall not prove for any debt or liability contracted by the debtor subsequently to the date of his so having notice.
(3) Save as provided by sub-sections (1) and (2), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject when he is adjudged an insolvent or to which he may become subject before his discharge by reason of any obligation incurred before the date of such adjudication, shall be deemed to be debts provable in insolvency.
(4) An estimate shall be made by the official assignee of the value
Where there have been mutual dealings between an insolvent and a creditor proving or claiming to prove a debt under this Act, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party, and the balance of the account, and no more, shall be claimed or paid on either side respectively:
Provided that a person shall not be entitled under this section to claim the benefits of any set-off against the property of an insolvent in any case where he had at the time of giving credit to the insolvent notice of the presentation of any insolvency petition by or against him.
With respect to the mode of proving debts, the right of proof by secured and other creditors, the admission and rejection of proofs, and the other matters referred to in the Second Schedule, the rules in that Schedule shall be observed.
(1) In the distribution of the property of the insolvent there shall be paid in priority to all other debts —
(a) all debts due to the Government or to any local authority;
(b) all salary or wages of any clerk, servant or labourer in respect of services rendered to the insolvent during four months before the date of the presentation of the petition, not exceeding three hundred rupees for each such clerk, and one hundred rupees for each such servant or labourer; and
(c) rent due to a landlord from the insolvent: provided the amount payable under this clause shall not exceed one month's rent.
(2) The debts specified in sub-section (1) shall rank equally between themselves, and shall be paid in full, unless the property of the insolvent is insuffic
After an order of adjudication has been made no distress for in rent due before such order shall be made upon the goods or effects of the insolvent, unless the order be annulled, but the landlord or part to whom the rent may be due shall be entitled to prove in respect of such rent.
The insolvency of a debtor, whether the same takes place on the debtor's own petition or upon that of a creditor or creditors, shall deemed to have relation back to and to commence at--
(a) the time of the commission of the act of insolvency on which an order of adjudication is made against him, or
(b) if the insolvent is proved to have committed more acts of insolvency than one, the time of the first of the acts of insolvency proved to have been committed by the insolvent within three months next preceding the date of the presentation of the insolvency petition:
Provided that no insolvency petition or order of adjudication shall be rendered invalid by reason of any act of insolvency committed anterior to the debt of the petitioning creditor.
(1) The property of the insolvent divisible amongst his creditors, and in this Act referred to as the property of the insolvent, shall not comprise the following particulars, namely:—
(a) property held by the insolvent on trust for any other a person;
(b) the tools (if any) of his trade and the necessary wearing apparel, bedding, cooking vessel, and furniture of himself, his wife and children, to a value, inclusive of tools and apparel and other necessaries as aforesaid, not exceeding three hundred rupees in the whole.
(2) Subject as aforesaid, the property of the insolvent shall comprise the following particulars, namely:—
(a) all such property as may belong to or be vested in the insolvent at the commencement of the insolvency or may be acquir
(1) Where execution of a decree has issued against the property of a debtor, no person shall be entitled to the benefit of the execution against the official assignee, except in respect of assets realised in the course of the execution by sale or otherwise {Subs.by Act 3 of 1950, s.4, for "before the date of the order of adjudication and before he had notice of the presentation of any insolvency petition by or against the debtor} [before the date of the admission of the insolvency petition].
(2) Nothing in this section shall affect the right of a secured creditor in respect of property against which a decree is executed.
(3) A person who in good faith purchases the property of a debtor under a sale in execution shall in all cases acquire a good tit]e to it against the official assignee.
Where execution of a decree has issued against any property of a debtor which is saleable in execution, and before the sale thereof to notice is given to the Court executing the decree that an order of adjudication has been made against the debtor, the Court shall, on application, direct the property, if in the possession of the Court, to be delivered to the official assignee, but the costs of the execution shall be a first charge on the property so delivered, and the official assignee may sell the property or an adequate part thereof for the purpose of satisfying the charge.
Any transfer of property, not being a transfer made before any and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, shall, if the transferor is adjudged insolvent within two years after the date of the transfer, be void against the official assignee.
(1) Every transfer of property, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor, with a view of giving that creditor a preference over the other creditors, shall, if such person is adjudged insolvent on a petition presented within three months after the date thereof, be deemed fraudulent and void as against the official assignee.
(2) This section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the insolvent.
Subject to the foregoing provisions with respect to the effect of insolvency on an execution and with respect to the avoidance of certain transfers and preferences, nothing in this Act shall invalidate in the case of an insolvency—
(a) any payment by the insolvent to any of his creditors;
(b) any payment or delivery to the insolvent;
(c) any transfer by the insolvent for valuable consideration; or
(d) any contract or dealing by or with the insolvent for valuable consideration:
Provided that any such transaction takes place before the date of the order of adjudication and that the person with whom such transaction takes place has not at the time notice of the presentation of any insolvency petition by
(1) The official assignee shall, as soon as may be, take possession of the deeds, books and documents of the insolvent and all other of parts of his property capable of manual delivery.
(2) The official assignee shall, in relation to and for the purpose of acquiring or retaining possession of the property of the insolvent, be in the same position as if he were a receiver of the property appointed under the Code of Civil Procedure, 1908, and the Court may on his application enforce such acquisition or retention accordingly.
(3) Where any part of the property of the insolvent consists of stock, shares in ships, shares, or any other property transferable in the books of any company, office or person, the official assignee may exercise the right to transfer the property to the same extent as the insolvent might have exercised it, if he had
(1) The Court may grant a warrant to any prescribed officer of the Court or any police-officer above the rank of a constable to seize any part of the property of an insolvent in the custody or possession of the insolvent or of any other person, and with a view to such seizure to break open any house, building or room of the insolvent where the insolvent is supposed to be, or any building or receptacle of the insolvent where any of his property is supposed to be.
(2) Where the Court is satisfied that there is reason to believe that property of the insolvent is concealed in a house or place not belonging to him, the Court may, if it thinks fit, grant a search-warrant to any such officer as aforesaid who may execute it according to its tenor.
(1) Where an insolvent is an officer of {Subs.by the A.O.1950 for "the Army or Navy or of the Royal Indian Navy"} [the Indian Army or Navy], or an officer or clerk or otherwise employed or engaged in the civil service of the Government, the official assignee shall receive for distribution amongst the creditors so much of the insolvent's pay or salary liable to attachment in execution of a decree as the Court may direct.
(2) Where an insolvent is in the receipt of a salary or income other; than as aforesaid, the Court may, at any time after adjudication an from time to time, make such order as it thinks just for the payment to the official assignee, for distribution among the creditors of so much of such salary or income as may be liable to attachment in execution of a decree, or of any portion thereof.
{In the application of the Act to
The property of the insolvent shall pass from official assignee to official assignee, and shall vest in the official assignee for the time being during his continuance in office, without any transfer whatever.
(1) Where any part of the property of an insolvent consists of land of any tenure burdened with onerous covenants, of shares or stocks in companies, of unprofitable contracts, or of any other property that is unsaleable, or not readily saleable, by reason of its binding the possessor thereof to the performance of any onerous act or to the payment of any sum of money, the official assignee may, notwithstanding that he may have endeavoured to sell or have taken possession of the property, or exercised any act of ownership in relation thereto, but subject always to the provisions hereinafter contained in that behalf, by writing signed by him, at any time within twelve months after the insolvent has been adjudged insolvent, disclaim the property:
Provided that, where any such property has not come to the knowledge of the official assignee within one month after such adjudication as af
Subject always to such rules as may be made in this behalf, the official assignee shall not be entitled to disclaim any leasehold interest without the leave of the Court; and the Court may, before or on granting such leave, require such notices to be given to persons interested, and impose such terms as a condition of granting leave, and make such orders with respect to fixtures, tenant's improvements and other matters arising out of the tenancy, as the Court thinks just.
The Official assignee shall not be entitled to disclaim any property in pursuance of section 62 in any case where an application of in writing has been made to the official assignee by any person interested in the property requiring him to decide whether he will disclaim, and the official assignee has for a period of twenty-eight days after the receipt of the application, or such extended period as may be allowed by the Court, declined or neglected to give notice that he disclaims the property; and in the case of a contract, if the official assignee, after such application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it.
The Court may, on the application of any person who is, as against the official assignee, entitled to the benefit or subject to the burden of a contract made with the insolvent, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise, as to the Court may seem equitable, and any damages payable under the order to any such person may be proved by him as a debt under the insolvency.
Any person injured by the operation of a disclaimer under by the foregoing provisions shall be deemed to be a creditor of the insolvent to the amount of the injury, and may accordingly prove the same as a debt under the insolvency.
(1) Subject to the provisions of this Act, the official assignee shall, with all convenient speed, realize the property of the insolvent, and for that purpose may—
(a) sell all or any part of the property of the insolvent;
(b) give receipts for any money received by him;
and may, by leave of the Court, do all or any of the following things namely:—
(c) carry on the business of the insolvent so far as may be necessary for the beneficial winding up of the same;
(d) institute, defend or continue any suit or other legal proceeding relating to the property of the insolvent;
(e) employ a legal practitioner or other agent to take any proceedings or do any busine
(1) The official assignee shall, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.
(2) The first dividend (if any) shall be declared and be distributed within {Subs.by Act 3 of 1929, s.2, for "six months"} [one year] after the adjudication, unless the official assignee satisfies the Court that there is sufficient reason for postponing the declaration to a later date.
(3) Subsequent dividends shall, in the absence of sufficient reason to the contrary, be declared and be payable at intervals of not more than six months.
(4) Before declaring a dividend, the official assignee shall cause notice of his intention to do so to be published in the prescribed manner, and shall also send reasonable notice thereof to each creditor mentioned i
Where one partner in a firm is adjudged insolvent, a creditor to whom the insolvent is indebted jointly with the other partners in the firm or any of them shall not receive any dividend out of the separate property of the insolvent until all the separate creditors have received the full amount of their respective debts.
(1) In the calculation and distribution of dividends, the official assignee shall retain {For Madras, read: "under his control"—see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), s.4} [in his hands] sufficient assets to meet—
(a) debts provable in insolvency and appearing from the insolvent's statements or otherwise to be due to persons resident in places so distant that in the ordinary course of communication they have not had sufficient time to tender their proofs;
(b) debts provable in insolvency the subject of claims not yet determined;
(c) disputed proofs or claims; and
(d) the expenses necessary for the administration of the estate or otherwise.
(2) Subject to the
Any creditor who has not proved his debt before the declaration of any dividend or dividends shall be entitled to be paid out of any money for the time being {For Madras, read: "under the control"—see s.5, ibid} [in the hands] of the official assignee any dividend or dividends which he may have failed to receive, before that money is applied to the payment of any future dividend or dividends, but he shall not be entitled to disturb the distribution of any dividend declared before his debt was proved by reason that he has not participated therein.
(1) When the official assignee has realized all the properly of the insolvent, or so much thereof as can, in his opinion, be realized without needlessly protracting the proceedings in insolvency, he shall, with the leave of the Court, declare a final dividend; but, before so doing, he shall give notice in manner prescribed to the persons whose claims to be creditors have been notified to him but not proved that, if they do not prove their claims, to the satisfaction of the Court, within the time limited by the notice, he will proceed to make a final dividend without regard to their claims.
(2) After the expiration of the time so limited, or, if the Court on application by any such claimant grants him further time for establishing his claim, then on the expiration of that further time, the property of the insolvent shall be divided among the creditors who have proved their debts, w
No suit for a dividend shall lie against the official assignee, but, where the official assignee refuses to pay any dividend, the Court may, on the application of the creditor who is aggrieved by such refusal, order him to pay it, and also to pay out of his own money interest thereon at such rate as may be prescribed for the time that it is withheld, and the costs of the application.
(1) Subject to such conditions and limitations as may be prescribed, the official assignee may appoint the insolvent himself to superintend the management of the property of the insolvent or of any part thereof, or to carry on the trade (if any) of the insolvent, for the benefit of his creditors, and in any other respect to aid in administering the property in such manner and on such terms as the official assignee may direct.
(2) Subject as aforesaid, the Court may, from time to time, make such allowance as it thinks just to the insolvent out of his property, for the support of the insolvent and his family, or in consideration of his services, if he is engaged in winding up his estate, but any such allowance may at any time be varied or determined by the Court.
The insolvent shall be entitled to any surplus remaining after payment in full of his creditors, with interest, as provided by this Act and of the expenses of the proceedings taken thereunder.
{Subs.by the A.O.1937 for the original sub-section (1) as amended by Act 9 of 1926, s.7, and Act 10 of 1930, s.4.In its application to Calcutta, s.77 had been previously amended by the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), s.3.In its application to Madras, this section has been amended by the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), s.7}
[(1) (a) The Chief Justice of the High Court at Madras may from time to time appoint substantively or temporarily such persons as he thinks fit to the office of official assignee of insolvents' estates and such person or persons as he thinks fit to the office of the deputy official assignee for the said Court and may, with the concurrence of a majority of the other Judges of the Court, remove the person for the time being holding any of the said offices for any cause appearing
An official assignee may, for the purpose of affidavits verifying proofs, petitions or other proceedings under this Act, administer oaths.
(1) The duties of an official assignee shall have relation to the conduct of the insolvent as well as to the administration of his estate.
(2) In particulars it shall be the duty of the official assignee--
(a) to investigate the conduct of the insolvent and to report to the Court upon any application for discharge, stating whether there is reason to believe that the insolvent has whether there is reason to believe that the insolvent has committed any act which constitutes an offence under this Act or under sections 421 to 424 of the Indian Penal Code in connection with his insolvency or which would justify the Court in refusing, suspending or qualifying an order for his discharge ;
(b) to make such other reports concerning the conduct of the insolvent as the Court may direct or as may be pr
The official assignee shall, whenever required by any creditor so to do and on payment by the creditor of the prescribed fee, furnish and send to the creditor by post a list of the creditors showing in the list the amount of the debt due to each of the creditors.
{In the application of the Act to Madras, ss.81 and 83 have been repealed, see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), ss.9 and 12.In the application of the Act to Bombay, s.84 has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11.For ss.81, 81B, 82, 82A, 82B, 82C and 84A, as applicable to Calcutta, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), ss.4 to 7.For ss.82 and 83, as applicable to Bombay, see Bombay Act 20 of 1933, ss.4 and 5.For ss.82, 82A, 82B, 84 and 84A, as applicable to Madras, see M
(1) Such remuneration shall be paid to the official assignee as may be prescribed.
(2) No remuneration whatever beyond that referred to in sub section (1) shall be received by an official assignee as such.{In the application of the Act to Madras, ss.81 and 83 have been repealed, see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), ss.9 and 12.In the application of the Act to Bombay, s.84 has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11.For ss.81, 81B, 82, 82A, 82B, 82C and 84A, as applicable to Calcutta, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), ss.4 to 7.For ss.82 and 83, as applicable to Bombay, see Bombay Act 20 of 1933, ss.4 and 5.For ss.82, 82A, 82B, 84 and 84A, as applicable to Madras, see Madras Act 5 of 1943, ss.11 and 14.}
&
The Court shall call the official assignee to account for any misfeasance, neglect or omission which may appear in his accounts or otherwise, and may require the official assignee to make good any loss which the estate of the insolvent may have sustained by reason of the misfeasance, neglect or omission.{In the application of the Act to Madras, ss.81 and 83 have been repealed, see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), ss.9 and 12.In the application of the Act to Bombay, s.84 has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11.For ss.81, 81B, 82, 82A, 82B, 82C and 84A, as applicable to Calcutta, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), ss.4 to 7.For ss.82 and 83, as applicable to Bombay, see Bombay Act 20 of 1933, ss.4 and 5.For ss.82, 82A, 82B, 84 and 84A, as applicable to Madras, see Madras
The official assignee may sue and be sued by the name of "the official assignee of the property of, an insolvent," inserting the name of the insolvent, and by that name may hold property of every description, make contracts, enter into any engagements binding on himself and his successors in office, and do all other acts necessary or expedient to be done in the execution of his office.
{In the application of the Act to Madras, ss.81 and83 have been repealed, see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), ss.9 and 12.In the application of the Act to Bombay, s.84 has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11.For ss.81, 81B, 82, 82A, 82B, 82C and 84A, as applicable to Calcutta, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), ss.4 to 7.For ss.82 and 83, as
If an order of adjudication is made against an official assignee, he shall thereby vacate the office of official assignee.{In the application of the Act to Madras, ss.81 and 83 have been repealed, see the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), ss.9 and 12.In the application of the Act to Bombay, s.84 has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11.For ss.81, 81B, 82, 82A, 82B, 82C and 84A, as applicable to Calcutta, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), ss.4 to 7.For ss.82 and 83, as applicable to Bombay, see Bombay Act 20 of 1933, ss.4 and 5.For ss.82, 82A, 82B, 84 and 84A, as applicable to Madras, see Madras Act 5 of 1943, ss.11 and 14}.
(1) Subject to the provisions of this Act and to the directions of the Court, the official assignee shall, in the administration of the property of the insolvent and in the distribution thereof amongst his creditors, have regard to any resolution that may be passed by the creditors at a meeting.
(2) The official assignee may, from time to time, summon meetings of the creditors for the purpose of ascertaining their wishes, and it shall be his duty to summon meetings at such times as the creditors, by resolution at any meeting, or the Court may direct, or whenever requested in writing to do so by one-fourth in value of the creditors who have proved.
(3) The official assignee may apply to the Court for directions in relation to any particular matter arising under the insolvency.
(4) Subject to
If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the official assignee, he may at appeal to the Court, and the Court may confirm, reverse or modify the act or decision complained of, and make such order as it thinks just.
(1) If any official assignee does not faithfully perform his duties and duly observe all the requirements imposed on him by any enactment, rules or otherwise, with respect to the performance of his duties, or if any complaint is made to the Court by any creditor in regard thereto, the Court shall enquire into the matter and take such action thereon as may be deemed expedient.
(2) The Court may at any time require any official assignee to answer any enquiry made by it in relation to any insolvency in which he is engaged, and may examine him or any other person on oath concerning the insolvency.
{In the application of the Act to Bombay, this sub-section has been repealed, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.11 and Sch.I} (3) The Court may also direct an investigation to be made of the book
The Court may, if it so thinks fit, authorize the creditors who have proved to appoint from among the creditors or holders of general proxies or general powers-of-attorney from such creditors, a committee of inspection for the purpose of superintending the administration of the insolvent's property by the official assignee:
Provided that a creditor, who is appointed a member of a committee of inspection, shall not be qualified to act until he has proved.
The committee shall have such powers of control over the ton proceedings of the official assignee as may be prescribed.
(1) In proceedings under this Act the Court shall have the like powers and follow the like procedure as it has and follows in the exercise of its ordinary original civil jurisdiction:
Provided that nothing in this sub-section shall in any way limit the jurisdiction conferred on the Court under this Act.
(2) Subject to the provisions of this Act and rules, the costs of and incidental to any proceeding in the Court shall be in the discretion of the Court.
(3) The Court may at any time adjourn any proceedings before it upon such terms, if any, as it thinks fit to impose.
(4) The Court may at any time amend any written process or proceeding under this Act upon such terms, if any, as it thinks fit to impose.
&n
Where two or more insolvency petitions are presented against the same debtor or against joint debtors, or where joint debtors file separate petitions, the Court may consolidate the proceedings or any of them on such terms as the Court thinks fit.
Where the petitioner does not proceed with due diligence on his petition, the Court may substitute as petitioner any other creditor , to whom the debtor is indebted in the amount required by this Act in the case of a petitioning creditor.
If a debtor by or against whom an insolvency petition has been presented dies, the proceedings in the matter shall, unless the Court otherwise orders, be continued as if he were alive.
The Court may, at any time, for sufficient reason, make an order staying the proceedings under an insolvency petition, either altogether or for a limited time, on such terms and subject to such conditions as the Court thinks just.
Any creditor whose debt is sufficient to entitle him to present an insolvency petition against all the partners in a firm may present a petition against any one or more partners in the firm without including the others.
Where there are more respondents than one to a petition, the Court may dismiss the petition as to one or more of them without prejudice to the effect of the petition as against the other or others of them.
Where an order of adjudication has been made on an insolvency petition against or by one partner in a firm, any other insolvency petition against or by a partner in the same firm shall be presented in or transferred to the Court in which the first-mentioned petition is in course of prosecution; and such Court may give such directions for consolidating the proceedings under the petitions as it thinks just.
(1) Where a partner in a firm is adjudged insolvent, the Court may authorize the official assignee to continue or commence and carry on any suit or other proceeding in his name and that of the insolvent's partner; and any release by the partner of the debt or demand to which the proceeding relates shall be void.
(2) Where application for authority to continue or commence any suit or any other proceeding has been made under sub-section (1), notice of the application shall be given to the insolvent's partner, and he may show cause against it, and on his application the Court may, if it thinks fit, direct that he shall receive his proper share of the proceeds of the proceeding, and if he does not claim any benefit therefrom he shall be indemnified against costs in respect thereof as the Court directs.
(1) Any two or more persons, being partners, or any person carrying on business under a partnership name, may take proceedings or be proceeded against under this Act in the name of the firm:
Provided that in that case the Court may, on application by any person interested, order the names of the persons who are partners in the firm, or the name of the person carrying on business under a partnership name, to be disclosed in such manner and verified on oath or otherwise, as the Court may direct.
(2) In the case of a firm in which one partner is an infant, an adjudication order may be made against the firm other than the infant partner.
(1) A warrant of arrest issued by the Court may be executed in the same manner and subject to the same conditions as a warrant of arrest issued under the Code of Criminal Procedure, 1898, may be executed.
(2) A warrant to seize any part of the property of an insolvent, issued by the Court under section 59, sub-section (1), shall be in the form prescribed, and sections 77(2), 79, 82, 83, 84 and 102 of the said Code shall, so far as may be, apply to the execution of such warrant.
(3) A search-warrant issued by the Court under section 59, subsection (2), may be executed in the same manner and subject to the same conditions as a search-warrant for property supposed to be stolen may be executed under the said Code.
The period of limitation for an appeal from any act or decision of the official assignee, or from an order made by an officer of the Court empowered under section 6, shall be twenty days from the date of such act, decision or order, as the case may be.{For s.101A, applicable to Bombay only, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1939 (Bom.15 of 1939), s.2}
{Ins.by Act 3 of 1950, s.5}
Where an order of adjudication has been annulled under this Act, in computing the period of limitation prescribed for any suit or other legal proceeding (other than a suit or legal proceeding in respect of which the leave of the Court was obtained under section 17) which might have been brought but for the making of an order of adjudication under this Act, the period from the date of the order of adjudication to the date of the order of annulment shall be excluded:
Provided that nothing in this section shall apply to any suit or other legal proceeding in respect of a debt provable but not proved under this Act.]
An undischarged insolvent obtaining credit to the extent of fifty rupees or upwards from any person without informing such person that he is an undischarged insolvent shall, on conviction by a Magistrate, be punishable with imprisonment for a term which may extend to six months, or with fine, or with both.
Any person adjudged insolvent who--
(a) fraudulently with the intent to conceal the state of his affairs or to defeat the objects of this Act,--
(i) has destroyed or otherwise wilfully prevented or purposely withheld the production of any book, paper or writing relating to such of his affairs as are subject to investigation under this Act, or
(ii) has kept or caused to be kept false books, or
(iii) has made false entries in , or withheld entries from, or wilfully altered or falsified, any book, paper or writing relating to such of his affairs as are subject to investigation under this Act, or
(b) fraudulently with intent to diminish the sum to be divided amongst his creditors or of giving an undue pr
(1) Where a debtor is adjudged or readjudged insolvent under this Act, he shall, subject to the provisions of this section, be disqualified from—
(a) being appointed or acting as a Magistrate;
(b) being elected to any office of any local authority where the appointment to such office is by election, or holding or exercising any such office to which no salary is attached; and
(c) being elected or sitting or voting as a member of any local authority.
(2) The disqualifications which an insolvent is subject to under this section shall be removed, and shall cease if—
(a) the order of adjudication is annulled under sub-section (1) of section 21, or
(b) he obtai
(1) Where the Court is satisfied, after such preliminary inquiry, if any, as it thinks necessary, that there is ground for inquiring into any offence referred to in section 103 and appearing to have been committed by the insolvent, the Court may record a finding to that effect and make a complaint of the offence in writing to a Presidency Magistrate or a Magistrate of the first class having jurisdiction, and such Magistrate shall deal with such complaint in the manner laid down in the Code of Criminal Procedure, 1898 (5 of 1898).
(2) Any complaint made by the Court under sub-section (1) may be signed by such officer of the Court as the Court may appoint in this behalf.]
Where an insolvent has been guilty of any of the offences specified in section 102 or section 103, he shall not be exempt from being proceeded against therefor by reason that he has obtained his discharge or that a composition or scheme of arrangement has been accepted or approved.
(1) Where the Court is satisfied by affidavit or otherwise, or the official assignee reports to the Court, that the property of an insolvent is not likely to exceed in value three thousand rupees or such other less amount as may be prescribed, the Court may make an order that the insolvent's estate be administered in a summary manner, and thereupon the provisions of this Act shall be subject to the following modifications, namely:—
(a) no appeal shall lie from any order of the Court, except by leave of the Court;
(b) no examination of the insolvent shall be held except on the application of a creditor or the official assignee;
(c) the estate shall, where practicable, be distributed in a single dividend;
(d) such other modifications as may be pre
No insolvency petition shall be presented against any corporation or against any association or company registered under any enactment for the time being in force.
(1) Any creditor of a deceased debtor whose debt would have been sufficient to support an insolvency petition against the debtor, had he been alive, may present to the Court within the limits of whose ordinary original civil jurisdiction the debtor resided or carried on business for the greater part of the six months immediately prior to his decease, a petition in the prescribed form praying for an order for the administration of the estate of the deceased debtor under this Act.
(2) Upon the prescribed notice being given to the legal representative of the deceased debtor, the Court may, upon proof of the petitioner's debt, unless the Court is satisfied that there is a reasonable probability that the estate will be sufficient for the payment of the debts owing by the deceased, make an order for the administration in insolvency of the deceased debtor's estate, or may upon cause show
(1) Upon an order being made for the administration of a deceased debtor's estate under section 108, the property of the debtor shall vest in the official assignee of the Court, and he shall forthwith proceed to realize and distribute the same in accordance with the provisions of this Act.
(2) With the modification hereinafter mentioned, all the provisions of Part III, relating to the administration of the property of an insolvent, shall, so far as the same are applicable, apply to the case of such administration order in like manner as to an order of adjudication under this Act.
(3) In the administration of the property of the deceased debtor under an order of administration, the official assignee shall have regard to any claims by the legal representative of the deceased debtor to payment of the proper funeral and testamentary expens
(1) After notice of the presentation of a petition under section 108 no payment or transfer of property made by the legal representative shall operate as a discharge to him as between himself and the official assignee.
(2) Save as aforesaid nothing in section 108 or section 109 or this section shall invalidate any payment made or act or thing done in good faith by the legal representative or by a District Judge acting under the powers conferred on him by section 64 of the Administrator-General's Act, 1874 (2 of 1874), before the date of the order for administration.
The provisions of sections 108, 109 and 110 shall not apply to any case in which probate or letters of administration to the estate of a deceased debtor have been granted to an Administrator-General.
{This section has been amended in its application to Bombay, Madras and Calcutta: see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.6; the Presidency-towns Insolvency (Bombay Amendment) Act, 1939 (Bom.15 of 1939), s.2; the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), s.15, and the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), s.8}
(1) The Courts having jurisdiction under this Act may from time to time make rules for carrying into effect the objects of this Act.
(2) In particular and without prejudice to the generality of the foregoing power, such rules may provide for and regulate—
(a) the fees and percentages to be charged under this Act and the manner in which the same are to be collected and acco
Rules made under the provisions of this Part shall be subject to the previous sanction of the State Government.]
Rules so made and sanctioned shall be published {The words "in the Gazette of India or" rep.by the A.O.1937} in the Official Gazette, {The words "as the case may be" rep., ibid and shall thereupon have the same force and effect with regard to proceedings under this Act in the Court which made them as if they had been enacted in this Act.
(1) Every transfer, mortgage, assignment, power-of attorney, proxy paper, certificate, affidavit, bond or other proceedings, of instrument or writing whatsoever before or under any order of the Court, and any copy thereof, shall be exempt from payment of any stamp or other duty whatsoever.
(2) No stamp-duty or fee shall be chargeable for any application made by the official assignee to the Court under this Act, or for the drawing and issuing of any order made by the Court on such application.
(1) A copy of the Official Gazette containing any notice inserted in pursuance of this Act shall be evidence of the facts to stated in the notice.
(2) A copy of the Official Gazette containing any notice of an order of adjudication shall be conclusive evidence of the order having been duly made, and of its date.
Any affidavit may be used in a Court having jurisdiction under this Act if it is sworn—
(a) in {Subs.by the A.O.1948} [the States {The words "of India" omitted by the A.O.1950}], before—
(i) any Court or Magistrate, or
(ii) any officer or other person appointed to administer oaths under the Code of Civil Procedure, 1908; (5 of 1908)
(b) in England, before any person authorized to administer oaths in His Majesty's High Court of Justice, or in the Court of Chancery of the County Palatine of Lancaster, or before any Registrar of a Bankruptcy Court, or before any officer of a Bankruptcy Court authorized in writing in that behalf by the Judge of the Court or before a Justice of the peace for the county or place where it is sworn;
&nbs
(1) No proceeding in insolvency shall be invalidated by any formal defect or by any irregularity, unless the Court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by any order of that Court.
(2) No defect or irregularity in the appointment of an official assignee or member of a committee of inspection shall vitiate any act done by him in good faith.
Where an insolvent is a trustee within the Indian Trustee Act, 1866, (27 of 1866) section 35 of that Act shall have effect so as to authorize the appointment of a new trustee in substitution for the insolvent (whether voluntarily resigning or not), if it appears expedient to do so, and all provisions of that Act, and of any other Act relative thereto, shall have effect accordingly.
Save as herein provided, the provisions of this Act relating to the remedies against the property of a debtor, the priorities of debts, the effect of a composition or scheme of arrangement, and the effect of a discharge shall bind the Government.
Nothing in this Act, or in any transfer of jurisdiction effected thereby, shall take away or affect any right of audience that any person may have had immediately before the commencement of this Act, or shall be deemed to confer such right in insolvency matters on any person who had not a right of audience before the Courts for the Relief of Insolvent Debtors.{For s.121A, applicable to Bombay only, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom.20 of 1933), s.7}.
{This section has been amended in its application to Bombay by s.8, ibid}
Where the official assignee has under his control any dividend which has remained unclaimed for fifteen years from the date of declaration or such less period as may be prescribed, he shall pay the same to the account and credit of {Subs.by the A.O.1937 for "the Govt.of India"} [the State Government], unless the Court otherwise directs.
Any person claiming to be entitled to any monies paid to the account and credit of {Subs.by the A.O.1937 for "the Govt.of India} [the State Government] under section 122, may apply to the Court for an order for payment to him of the same; and the Court, if satisfied that the person claiming is entitled, shall make an order for payment to him of the sum due:
Provided that, before making an order for the payment of a sum which has been carried to the account and credit of {Subs.by the A.O.1937 for "the Govt.of India"} [the State Government], the Court shall cause a notice to be served on such officer as {Subs., ibid., for "the G.G.in C"} [the State Government] may appoint in this behalf, calling on the officer to show cause, within one month from the date of the service of the notice, why the order should not be made.{For ss.123A and 123B, applicable to Bombay only, see the Presiden
(1) No person shall, as against the official assignee, be entitled to withhold possession of the books of accounts belonging to the insolvent or to set up any lien thereon.
(2) Any creditor of the insolvent may, subject to the control of the Court, and on payment of such fee, if any, as may be prescribed, inspect at all reasonable times, personally or by agent, any such books in the possession of the official assignee.
Such fees and percentages shall be charged for and in respect of proceedings under this Act as may be prescribed.{In its application to Calcutta and Madras, this section has been amended: see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben.18 of 1936), s.11, and the Presidency-towns Insolvency (Madras Amendment) Act, 1943 (Mad.5 of 1943), s.16}
All Courts having jurisdiction under this Act shall make such orders and do such things as may be necessary to give effect to section 118 of the Bankruptcy Act, 1883, and to section 50 of the Provincial Insolvency Act, 1907.{See now the Provincial Insolvency Act, 1920 (5 of 1920)}.
{Sub-section (1) and the words "Notwithstanding the repeal effectedby this Act," in sub-section (2) rep.by Act 10 of 1914, s.3 and Sch.II}
(2) {Sub-section (1) and the words "Notwithstanding the repealeffected by this Act," in sub-section (2) rep.by Act 10 of 1914, s.3 andSch.II} The proceedings under an insolvency petition under the IndianInsolvency Act, 1848, pending at the commencement of this Act shall, except sofar as any provision of this Act is expressly applied to pending proceedings,continue, and all the provisions of the said Indian Insolvency Act shall, exceptas aforesaid, apply thereto, as if this Act had not been passed.
THE FIRST SCHEDULE
(See section 26)
MEETINGS OF CREDITORS
1.Meetings of creditors.- The official assignee may at any time summon a meeting of creditors, and shall do so whenever so directed by the Court or by the creditors by resolution at any meeting or whenever requested in writing by one-fourth in value of the creditors who have proved.
2.Summoning of meetings.- Meetings shall be summoned by sending notice of the time and place thereof to each creditor at the address given in his proof, or, if he has not proved, at the address given in the insolvent's schedule, or such other address as may be known to the official assignee.
3.Notice of meetings.- The notice of any meeting shall be sent off not les
The Presidency-Towns Insolvency Act, 1909, was enacted to address insolvency issues specifically in the three presidency towns of India: Bombay, Calcutta, and Madras. This Act provides a framework for the adjudication of insolvency and the rights and responsibilities of insolvents and creditors.
Section Sch.I of the Act outlines the penalties and disqualifications applicable to insolvents who commit certain offences under the Act. It establishes the legal consequences for individuals who fail to comply with the provisions of the insolvency law.
The scope of this section is limited to the jurisdiction of the presidency towns and applies specifically to individuals who have been declared insolvent. It aims to ensure compliance with the insolvency process and protect the interests of creditors.
The punishment for offences under this section may include imprisonment for a term that may extend to six months, a fine, or both. This serves as a deterrent against fraudulent activities by insolvents.
THE SECOND SCHEDULE
(See section 48)
PROOF OF DEBTS
1. Time for lodging proof.- Every creditor shall lodge the proof of his debt as soon as may be after the making of an order of adjudication.
2. Mode of lodging proof.- A proof may be lodged by delivering or sending by post in a registered letter to the official assignee an affidavit verifying the debt.
3. Authority to make affidavit.- The affidavit may be made by the creditor himself or by some person authorized by or on behalf of the creditor.If made by a person so authorized, it shall state his authority and means of knowledge.
4. Contents of affidavit.- The affidavit shall contain or refer to a statem
Legal Comments
"Scope" - Act governs insolvency in Presidency Towns with Official Assignee vesting assets; Section 17 vests insolvent's property in Official Assignee irrespective of location [In Re: Jewandas Jhawar VS . ].
"Section 7" - Official Assignee's jurisdiction to collect or assert rights in property; in joint ownership scenarios, Section 52 and related sections interplay with Section 7 to determine vesting and disposition powers [Tehmina Dinshaw Tehrani VS Dinshaw K. Tehrani], [Official Assignee, High Court, Madras VS Mangalambal].
"Reputed ownership" - Goods in possession of insolvent, under Section 52(2)(c), may vest in Official Assignee if true owner fails to protect ownership; hypothecations must be scrutinized as to whether goods truly belong to debtor or are reputed owners’ property [In the Matter of P. K. Pattabhiraman VS . ], [Official Assignee, High Court, Madras VS Mangalambal].
"Fraudulent transfers" - Section 39 interpretations indicate transfers made to defeat creditors can be void; good faith and valuable consideration required for transfers under Sections 39/55 (trust deeds) to bind Official Assignee [Kokku Rama Row And Anr. VS The Official Assignee Of Madras], [The Official Assignee of Madras VS A. R. Narayana Mudaliar].
"Notice and acts of insolvency" - Non-compliance with insolvency notices under Section 9(2) constitutes an act of insolvency, enabling adjudication; notice validity (service) and decree-like nature of orders are crucial [Rajathi Rajasingh VS Aluminium Products Corporation], [Official Assignee, High Court, Madras VS Mangalambal], [SICOM Ltd. VS Bajranglal Jain].
"Discretion vs. regular suit" - Section 36(5) allows summary orders only where straightforward; where complex title questions arise, regular suit preferred; discretion should not resolve title disputes (conflict of rights) via summary order [Rash Behari Ghose VS Official Assignee].
"Criminal proceedings vs insolvency" - Insolvency status does not automatically bar criminal proceedings (e.g., Section 138 NI Act matters may proceed); insolvency provisions do not suspend criminal prosecutions (see contrasting cases on Section 138 and Section 9(2)) [Bharath N. Mehtha And Etc. VS Mansi Finance (Chennai) Ltd. ], [Bharath N. Mehtha And Etc. VS Mansi Finance (Chennai) Ltd. ] (duplicate).
"Stay of proceedings" - Insolvency adjudication effects do not automatically stay suits; stay provisions require careful application of Section 17, 24, and related rules; improper interim sale without notice not permitted where insolvent is a party [In Re: Jewandas Jhawar VS . ], [Ranjani VS The Indian Bank, R. A. Puram Branch (East) Madras].
"Locus standi of creditors" - A creditor can seek annulment or other relief under Section 21; petitions must satisfy that adjudication was improper at the date of disposal; relief can include refund of surplus and handling of admitted claims [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai], [02100107551].
"Vestings and revestings" - Sec 17 vests property in Official Assignee; revesting does not occur automatically without proper transfer mechanisms; abandonment by Official Assignee does not automatically revest in the insolvent; requires legal transfer [Rash Behari Ghose VS Official Assignee].
"Joint ownership and transfers between spouses" - Section 7 with Section 45(2) of Transfer of Property Act implies presumptions of joint ownership in husband-wife purchases; Official Assignee can pursue division according to these presumptions, with possible allocations to wife or insolvent depending on evidence [Tehmina Dinshaw Tehrani VS Dinshaw K. Tehrani].
"Orders and decrees under CPC" - Insolvency decree/order must be recognized as a decree/order of a Civil Court to support Section 9(2) proceedings; arbitral awards or non-Civil Court orders typically do not satisfy "decree" or "order" criteria for insolvency notices (as per Supreme Court guidance cited in 2013-2014-era decisions) [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai], [02100107551].
"Contempt and compliance" - Verbal orders by Official Assignee can support contempt proceedings; non-compliance with Insolvency Rules does not invalidate proceedings; committal is not a criminal proceeding; Section 33 acknowledges non-written orders permissible [Bhuramull Banka VS Official Assignee of Bengal].
"Interim sale limits" - Interim sales under O.39 and S.151 CPC require proper notice and do not permit sale of immovable property before decree; Section 17 prohibits creditor remedies against insolvent property during pendency without leave of Court [00900089825].
"Discharge and penalties" - Discharge orders can be set aside or suspended; Courts may suspend discharge for specified periods for fraudulent or dishonest conduct by insolvent; termination or modification of discharge is possible in light of Section 38 and related case law [In re : Surendrakumar Harkishor Jain and Elbros Textlles limited VS Not Available ], [Official Assignee VS The President, The Ideal Homes Co-Op. Building Society Ltd. ].
"Notices to adjudicate" - Insolvency proceedings can be triggered by insolvency notices; proper service and content (including correct addresses) are essential for validity; invalid service can lead to annulment of adjudication [SICOM Ltd. VS Bajranglal Jain], [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai].
"Priority of creditors in partnerships" - In insolvent partnerships, Madras creditors may prove against assets of other partners if lacking knowledge of partnership status; English law alignment influences Section 49 interpretations; lack of knowledge of partnership allows proof against other assets [M. Subbramiah VS Bausilal Abeerchand].
"Trust deeds and good faith" - Trust deeds under Section 55 require good faith; deeds lacking good faith are voidable by Official Assignee; transfers to secure creditors must avoid fraudulent preference [Kokku Rama Row And Anr. VS The Official Assignee Of Madras], [Official Assignee, High Court, Madras VS Mangalambal].
"Protection of debtor's estate" - Official Assignee’s power to realize estate and distribute among creditors is conditioned by Sections 9, 10-13 and 21; surplus funds can be refunded following adjudication annulment or payment of admitted claims, subject to Court directions [Parmanand Sitlaprasad Pandey VS Gopaldas Lilaram Valecha], [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai].
"Vakils and audience rights" - Right of audience of vakils in Madras Insolvency Court recognized as limited; Section 121 preserves pre-existing rights; modern practitioner rights are constrained by statutory framework [In Re: G. Krishnaswami Ayyar VS Unknown].
"Arrest and detention" - Section 34-based arrest provisions apply for willful disobedience, dispossession, or other violations; six-month civil imprisonment can be awarded to deter non-compliance; criminal process not triggered by insolvency contest, but contempt can lead to imprisonment [Rajesh D. Vora VS Aarti Mehra], [Bhuramull Banka VS Official Assignee of Bengal].
"Efficiency and accountability of officials" - Official Assignee’s actions in collecting, delivering, and distributing assets are central to insolvency administration; proper notices, schedules, and examinations are required to satisfy the statutory framework and protect creditors’ interests [K. Anbarasi VS . ], [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai].
"Section 52(2)(i) – machinery and assets" - Official Assignee filing petitions to deliver pledged machinery where ownership and possession issues arise; continuous possession by insolvent complicates vesting; careful application of vesting provisions to avoid loss to creditors [The Official Assignee of Madras VS Suresh Electric Company], [K. Anbarasi VS . ].
"Section 52(2)(C) – reputed ownership vs actual ownership" - Hypothecated goods may vest in Official Assignee if the insolvent is the reputed owner due to possession in business; bank hypothecation claims require evidence of the true owner and safeguards for creditor rights [Official Assignee, High Court, Madras VS Mangalambal], [In the Matter of P. K. Pattabhiraman VS . ].
"Annulment petitions under Section 21" - Debtor or any person interested may seek annulment if adjudication ought not to have occurred; court considers the state of affairs at disposal date and may direct refunds or adjustments accordingly [D. M. Sripathy Managing Partner, Chennai VS B. S. Ramachandran, Chennai], [CHITRA DESAI VS S. ARJUNLAL SUNDERDAS].
Note: The above points synthesize key legal concepts and rulings extracted from the provided sources related to the Presidency Towns Insolvency Act, 1909, particularly focusing on Section 17, 7, 9, 36, 52, 55, 21, and related procedural and substantive implications. Citations use square brackets as requested.
THE THIRD SCHEDULE.—
[Enactments repealed.] Rep.by the Repealing and Amending Act.1914 (10 of 1914), s.3 and Sch.II.
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