Kerala Insolvency Rules, 1959
(a) These Rules may be called "The Kerala Insolvency Rules, 1959."
(b) They shall apply to all proceedings under the Insolvency Act, 1955 in any Court subordinate to the High Court of Kerala.
(c) They shall come into force on the date of publication in the Gazette and shall apply to all proceedings thereafter instituted and, as far as may be, to all proceedings then pending.
The forms mentioned in these rules are the forms in the Appendix hereto and shall be used with such variation as circumstances may require.
(1) In these Rules unless the context otherwise requires:--
(a) 'the Act' means the Insolvency Act, 1955 (Act II of 1956);
(b) 'the Court' includes a Receiver when exercising the powers of the Court in accordance with Section 84 of the Act;
(c) 'Receiver' means a Receiver appointed by the Court under Section 58 of the Act;
(d) 'Interim Receiver' means a Receiver appointed by the Court under Section 20 of the Act;
(e) 'Proved debt' means the claim of a creditor so far as it has been admitted by the Court.
(2) Save as otherwise provided all words and expressions used in these rules shall have the same meaning as those assigned to them in the Act.
(1) Every petition, application, affidavit or order in any proceeding under the Act or under these Rules shall be headed by a Cause-Title as in Form No. 1.
(2) Except in cases which are to be administrated summarily the petitioner shall at the time of making the petition deposit a sum of Rs. 25 to meet the expenses incidental to the adjudication.
1[(3) x x x x]
(4) A debtor's petition shall be in Form No. 2 and a creditor's petition shall be in Form No. 3.
(1) When an insolvency petition presented by a creditor is admitted, the creditor shall within seven days thereafter furnish copies of the petition for service on the debtors and on such other person to whom the Court may order notice. The Chief Ministerial Officer of the Court shall sign the copy or copies, if on examination he finds them to be correct.
(2) The copy shall be served together with the notice of the order fixing the date for hearing the petition on the debtor and on such other person to whom the Court orders notice.
Within a week after the date on which the debtor is adjudged an insolvent on the application of a creditor, or within ten days of the admission of a petition by a debtor, or within such further time as the Court may order in either case, the debtor shall file an affidavit in Form No. 4 giving full correct and true particulars of all his assets with a specification of the value of all property not consisting of money. In the case of immovable property, he will give the survey or re-survey numbers of properties, the boundaries thereof, the names of the persons in possession of the properties, the terms of the lease if the properties have been leased out, and the rent due and the encumbrances, if any, with detailed description of the date and amount of each encumbrance. If the property is only a portion of the survey field, its boundaries, shall be described. With regard to book-debts particulars as to the amounts due, the rate of interest and the time at which the debt is likely to ge
If a debtor against whom an insolvency petition has been admitted dies before the hearing of the petition, the Court may order that notice of the order fixing the date for hearing the petition shall be served on his legal representative or on such other persons as the Court may think fit in the manner provided for the service of summons.
(1) Unless otherwise ordered all claims shall be proved by affidavit in Form No. 5 in the manner provided in Section 50 of the Act; provided that before admitting any claim the Court may call for further evidence.
(2) The affidavit may be made by the creditor or by someone authorised by him; provided that if the deponent is not the creditor, the affidavit shall state the deponent's authority and means of knowledge.
(3) If in any case there are numerous claims for wages for workmen and other employed by the debtor it shall be sufficient if one proof of all such claims is made either by the debtor or by some other person on behalf of all such creditors. Such proof shall be in Form No. 6.
(4) As soon as may be after proof of any debt is tendered, the Court shall by order in writing, admit the creditor's claim in whole or in part, or reject it; provided that where a claim is rejected in whole or in part the order shall state briefly the reasons for th
(1) As soon as the schedule of creditors has been framed a copy thereof shall, if a Receiver or Interim Receiver has been appointed, be supplied to him and all subsequent entries and alterations made therein shall be communicated to the Receiver or Interim Receiver.
(2) A copy of the schedule so prepared shall be posted in the Court-house.
(3) Public examination of debtor.-- At the time of passing the order of adjudication, the Court shall fix a date directing the debtor to appear before the Official Receiver. On such date and adjourned dates the Official Receiver shall hold a public examination of the debtor as to his conduct, dealings and property after notice to all creditors who have tendered proof of their debts. Notice to creditors shall be sent by post registered for acknowledgement or shall be served personally or in such manner as the Official Receiver may think fit. The debtor shall be examined on oath and it shall be his duty to answer all question
(1) If a debtor submits a proposal under Section 39(1) of the Act the Court shall fix a date for the consideration of the proposal, and notice thereof in Form No. 7 together with a copy of the terms of the proposal, shall be sent to every creditor who has proved.
(2) At the meeting for the consideration of the proposal, the debtor shall be entitled to address the Court in person or by pleader in support of the proposal and every creditor who has proved, shall be entitled in person or by pleader to question the debtor and to address the Court.
(1) Every appointment of a Receiver or Interim Receiver shall be by order in writing in Form No. 8 and shall be signed by the Court. A Copy of this order sealed with the seal of the Court shall be forwarded to the person appointed.
(2) Every Receiver or Interim Receiver other than the Official Receiver shall be required to give such security as the Court thinks fit.
(3) An Official Receiver who has furnished security in accordance with the terms of his appointment shall not be required to furnish any other security.
(4) Any party to the proceedings may apply to the Court upon notice to the Official Receiver and the insolvent that the appointment of the Official Receiver may be set aside or that a Special Receiver may be appointed in his place.
(1) The Court may remove or discharge any Receiver or Interim Receiver other than an Official Receiver and any Receiver or Interim Receiver so removed or discharged shall, unless the Court otherwise orders, deliver up any assets of the debtor in his hands and any books, accounts or other documents relating to the debtor's property which are in his possession or under his control to such person as the Court may direct.
(2) If an order of adjudication is annulled the Receiver (if any) shall, unless the Court otherwise orders, deliver up any assets of the debtor in his hands and any books, accounts or other documents relating to the debtor's property which are in his possession or under his control to the debtor or to such other person as the Court may direct.
Every Receiver or Interim Receiver shall be deemed for the purpose of the Act and of these Rules to be an officer of the Court.
(1) Every application to the Court made by a Receiver or Interim Receiver shall be in writing.
(2) The Court may order that notice of any application by the Receiver or Interim Receiver and of the date fixed for the hearing of the application shall be sent by Registered Post to all creditors who have proved.
(1) The remuneration of Receivers or Interim Receivers other than Official Receivers shall be in such proportion to the amount of the dividends distributed, as the Court may direct; provided that it does not exceed five per centum of the amount of the dividends.
(2) If a Receiver has been appointed in an insolvency proceeding in which the Court makes an order approving a proposal under Section 40 of the Act, the remuneration to be paid to the Receiver shall be fixed by the Court and the order approving the proposal shall make provision for the payment of the remuneration, and shall be subject to the payment thereof.
(3) The apportionment of remuneration as between more than one Receiver shall be decided by the Court according to the quantity of work done by each.
(1) Unless that Court otherwise directs the Receiver or Interim Receiver shall as soon as may be after his appointment, and in any case before the hearing of the debtor's application for discharge, draw up a report upon the case of the debtor's insolvency, the conduct of the debtor so far as it may have contributed to his insolvency, and also his conduct during the insolvency proceedings in all matters connected with such proceedings, and in particular such report shall state (a) whether the value of the debtor's assets is less than half his unsecured liabilities and if so, whether that fact is due to circumstances for which the debtor cannot justify be held responsible, (b) whether the debtor has omitted to keep such books of accounts as are usual and proper in the business carried on by him and as are sufficient to disclose his business transactions and financial position within three years immediately preceding his insolvency, (c) whether the debtor has continued to trade after k
Unless the Court otherwise directs the debtor shall furnish the Receiver or Interim Receiver or, if a Receiver or Interim Receiver has not been appointed, the Court, with a trading account, and an account showing all moneys and securities paid, disposed of or encumbered or recovered by or from the debtor or on his account, and his income and the source thereof for such period as the Receiver or Interim Receiver, or, if a Receiver or Interim Receiver has not been appointed, the Court may direct; provided that the Receiver or Interim Receiver shall not without the previous sanction of the Court, direct the debtor to furnish accounts for more than two years before the day of the presentation of the insolvency petition.
(1) The Receiver or Interim Receiver shall keep a cash book and such books and other papers as are necessary to give a correct view of his administration of the estate, and shall submit his accounts at such times and in such forms as the Court may direct. Such accounts shall be audited by such person or persons as the Court may direct. The costs of the audit shall be fixed by the Court and shall be paid out of the estate.
(2) The accounts of Official Receivers shall be audited annually by the Examiner of Local Fund Accounts. The cost of such audit calculated at the rate of 75 naye paise for one hundred rupees on the amount realised since the last audit of the estate concerned, shall be paid by the Official Receiver from such amount and, in case a distribution thereof to creditors is ordered in any year before the audit has taken place, shall be reserved for such payment from the amount otherwise available for distribution.
(1) No dividend shall be distributed by a Receiver without the previous sanction of the Court.
(2) Notice in Form No. 9 or Form No. 10 as may be appropriate, that a distribution of a dividend has been sanctioned shall be sent by the Receiver or, if there is no Receiver, by the Court, to every creditor who has proved a debt, by registered post within one month from the date of the order sanctioning the distribution.
(3) The amount of any dividend due to a creditor may at his request be transmitted to him by postal money order at his risk and expense and, if the amount does not exceed Rs. 25, shall be so transmitted, unless he appears to claim it in person or by duly authorised agent before the Receiver or, if there is no Receiver, before the Court within three months from the date of the order sanctioning the distribution of the dividend.
(4) An order shall not be made under Section 68 of the Act without giving the Receiver opportunity to show caus
(1) An application for discharge shall not be heard until after the schedule of creditors has been framed.
(2) Every creditor who has proved shall be entitled in person or by pleader to appear at the hearing and oppose the discharge; provided that he has served upon the insolvent and upon the Receiver (if any) not less than seven days before the date fixed for the hearing, a notice stating the grounds of his opposition to the discharge.
(3) A creditor who has not served the prescribed notices shall not, unless the Court otherwise directs, be permitted to oppose the discharge of the debtor; and a creditor who has served the prescribed notice shall not be permitted, unless the Court otherwise directs, to oppose the discharge on any ground not specified in the notice.
(4) At the hearing of the application the Court may hear any evidence which may be tendered by a creditor or by the Receiver, and also any evidence which may be tendered on behalf of th
(1) The notices to be given under Sections 19(2), 31, 38(2), 39(1) and 42(1) of the Act shall be published in the Gazette in English and in the language of the Court and in such other manner, if any, as the Court may direct and the copies of the notices in English and in the language of the Court shall be affixed to the notice board of the Court. Such notices shall be in Form Nos. 11, 12, 13, 7 and 14 respectively.
(2) The notices to be given under Sections 19(2), 39(1) and 42(1) of the Act shall be published and affixed in the manner provided in sub-rule (1) not less than fourteen days before the date fixed for the hearing of the application, the consideration of the proposal, or the hearing of the application for discharge as the case may be.
(3) Notice of the date fixed for the hearing of an insolvency petition under Section 19(1) of the Act shall be sent by the Court by registered post, if the petition is by the debtor to all creditors mentioned in the pe
(1) All proceedings under this Act down to and including the making of an order of adjudication shall be at the cost of the party prosecuting them, but when an order of adjudication has been made the costs of the petitioning creditor including the cost of the publication of all gazette notices required by the Act or Rules, which by the Act or Rules, the petitioning creditors is required to pay shall be taxed and be payable out of the estate.
(2) Before making an order in an insolvency petition presented by a debtor, the Court may, require the debtor to deposit in Court a sum sufficient to cover the costs of sending the prescribed notices of the hearing of petition and the costs of the publication of all gazette notices required by the Act or Rules which, by the Act or Rules, the debtor is required to pay.
(3) The cost of the publication in the gazette of :--
(a) an order fixing the date for the hearing of an insolvency petition under Section
If the Court makes an order under Section 78 of the Act that the debtor's estate be administered in a summary manner:--
(a) the petition and all subsequent proceedings shall be endorsed "Summary Case".
(b) the Receiver or Interim Receiver shall not carry on the business of the debtor under clause (c) of Section 61 of the Act, nor institute any suit under clause (d) of the said section, nor accept as the consideration for the sale of any property of the debtor a sum of money payable at a future time under clause (f), nor mortgage nor pledge any part of the property of the debtor under clause (g).
All insolvency proceedings may be inspected at such times and subject to such restrictions as the Court may prescribe by the Receiver or Interim Receiver any debtor any creditor who has proved, or any legal representative on their behalf.
*[x x x x]
All Official Receivers shall maintain registers of (1) insolvency petitions received, (2) a dividend register, (3) a register of assets, (4) a document register (inventory), (5) a diary, (6) a hearing book, (7) a register of leases, (8) a register of initial charges met from contingencies, (9) a register of instruments impounded, (10) a ledger, (11) a register of sale deeds and (12) a register of advances made to pleaders in Form Nos. 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, and 30 respectively appended to these rules.
Expenditure incurred by an Official Receiver and his staff on journeys undertaken for the purpose of administration will be recoverable by the Official Receiver from the assets of the estate or estates concerned in accordance with the rules made by the High Court from time to time in that behalf.
(1) When any petition, notice or other document is signed by a firm of creditors or debtors in the firm's name, the partner signing for the firm shall add also his own signature in the manner, "B and Co., By A.B., a partner in the said firm".
(2) Any petition or notice of which personal service is necessary shall be deemed to be duly served on all members of the firm, if it is served at the place of business of the firm in India upon any one of the partners or upon any person having at the time of service the control or management of the partnership business there.
(3) When a firm of debtors files an insolvency petition, the same shall contain the names in full of the individual partners, and, unless it is signed by all of them, it shall be accompanied by the affidavit of the partner signing it that all the partners concur in the filing of the same.
(4) When a creditor files an insolvency petition against a firm, the same shall state the names of
(1) In any case in which the Court authorises the creditors to appoint a committee of inspection pursuant to Section 71 of the Act, the creditors (who have proved their debts) may at meeting duly convened for the purpose by resolution, appoint from among the creditors, or the holders of general proxies or general powers of attorney from such creditors, a committee of inspection for the purposes of superintending the administration of the insolvent's properties by the Official Receiver. The Committee of Inspection shall consist of not more than five, nor less than three persons.
(2) Meetings of the Committee of Inspection shall be held monthly at such time and place as they shall appoint and shall ordinarily be held in the chambers of the Official Receiver. The Official Receiver or any member of the Committee may also call a meeting of the Committee as and when he thinks necessary. The Official Receiver shall be present at all such meetings.
(3) The Committee
Unless otherwise directed or resolved by the Committee of Inspection (if any) or ordered by the Court, the Official Receiver shall not engage an auctioneer to sell the insolvent's property.
In all suits or proceedings by or against the Official Receiver there shall be inserted in the plaint or petition after his official title description "as receiver of the property of an insolvent" naming the particular insolvent.
(1) All amounts remaining unclaimed by creditors after the expiry of three years from the date of declaration of dividend or of each dividend if there be more than one will lapse to the Government.
(2) All amounts remaining to the credit of the estates of insolvents on the closing of the administration of the estate, will lapse to the Government.
(3)(i) All balances remaining to the credit of estates of insolvents which have not been increased or diminished by any transaction for 3 complete account years will lapse to the Government.
(ii) Disbursements cannot be recognised as transactions under clause (i) unless they are made in the bona fide administration of the estate. One of the tests of their being so will be the regularity and promptitude with which the administration of the estate in question is being carried on.
(4) At the close of each financial year, every Official Receiver shall send to the Court concerned a statement in duplicat
APPENDIX
FORM No. 1
(Rule IV—Cause Title)
In the Court of
Insolvency Petition No. ........................................................... of 19.........
In the matter of A. B.
FORM No. 2
(Rule IV)
Debtor’s Petition (Title)
| 1(a) (b) (c) | Insert name and address and description of debtor State name of court and particulars of decree in respect of which the order of detention has been made or by which an order of attachment has been made against debtor's property. State whether and how any of the debts are secured.< |
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