• Bare Act: Provincial Insolvency Act, 1920

  • An Act to consolidate and amend the law relating to insolvency as administered by Courts having jurisdiction outside the Presidency towns.

    Whereas it is expedient to consolidate and amend the law relating to insolvency as administered by Courts having jurisdiction outside the Presidency-towns it is hereby enacted as follows:

    1. Short title and extent. -(1) This Act may be called the Provincial Insolvency Act, 1920.
    (2) It extends to the whole of India except, the territories which, immediately before the 1st November, 1956, were comprised in Part B States] and the Scheduled Districts.

    2. Definitions. – (1) In this Act, unless there is anything repugnant in the subject or context, -
    (a) “Creditor” includes a decree-holder, “debt” includes a judgment-debt, and “debtor” includes a judgment-debtor;
    (b) “District court” means the Principal Civil Court of original jurisdiction in any area outside the local limits for the time being of the Presidency-towns.
    (c) “Prescribed” means prescribed by rules made under this Act;
    (d) “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;
    (e) “Secured creditor” means a person holding a mortgage, charge or lien on the property of the debtor or any part thereof as a security for a debt due to him from the debtor; and
    (f) “Transfer of property” includes a transfer of any interest in property and the creation of any charge upon property.
    (2) Words and expressions used in this Act and defined in the Code of Civil Procedure, 1908 (5 of 1908), and not hereinbefore defined shall have the same meanings as those respectively attributed to them by the said Code.

    PART I: Constitution and Powers of Courts

    3. Insolvency jurisdictions. - (1) The District Courts shall be the Courts having jurisdiction under this Act:
    Provided that the State Government may, by notification in the official Gazette, invest any Court subordinate to a District Court with jurisdiction in any class of cases, and any Court so invested shall within the local limits of its jurisdiction have concurrent jurisdiction with the District Court under this Act.
    (2) For the purposes of this Act, a Court of Small Causes shall be deemed to be subordinate to the District Court.

    4. Power of Court to decide all questions arising in insolvency. -(1) Subject to the provisions of this Act, the Court shall have full power to decide all questions whether of title or priority, or of any nature whatsoever, and whether involving matters of law or of 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.
    (2) Subject to the provisions of this Act and notwithstanding anything contained in any other law forthe time being in force, every Such decision shall be final and binding for all purposes as between, on the one hand, the debtor and the debtor's estate and, on the other hand, all claimants against him or it and all persons claiming through or under them or any of them.
    (3) Where the Court does not deem it expedient or necessary to decide any question of the nature referred to in sub-section (1), but has reason to believe that the debtor has a saleable interest in any property, the Court may without further inquiry sell such interest in such manner and subject to such conditions as it may think fit.

    5. General powers of Courts. -(1) Subject to the provisions of this Act the Court, in regard to proceedings under this Act, shall have the same powers and shall follow the same procedure as it has and follows in the exercise of original civil jurisdiction.
    (2) Subject as aforesaid, High Courts and District Courts, in regard to proceedings under this Act in Courts subordinate to them, shall have the same powers and shall follow the same procedure as they respectively have and follow in regard to civil suit.

    PART II: Proceedings from Act of Insolvency To Discharge

    6. Acts of insolvency. -(1) A debtor commits an act of insolvency in each of the following cases, namely:
    (a) It in India 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) It’, in India 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 India 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 the territories to which this Act extends;
    (ii) He departs from his dwelling-house or usual place of business or otherwise absents himself;
    (iii) He secludes himself so as to deprive his creditors of the means of communicating with him;
    (e) If any of his property has been sold in execution of the decree of any Court for the payment of money,
    (f) If he petitions to be adjudged an insolvent under the provisions of this Act;
    (g) If he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debt; or
    (h) If he is imprisoned in execution of the decree of any Court for the payment of money.
    Explanation. -For the purposes of this section the act of an agent may be the act of the principal.
    (2) Without prejudice to the provisions of Sub-section (1), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for the payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served on him a notice (hereafter in this section referred to as the insolvency notice) as provided in subsection (3) and the debtor does not comply with that notice within the period specified therein:
    Provided that where a debtor makes an application under sub-section (5) for setting aside an insolvency notice-
    (a) In a case where such application is allowed by the District Court, he shall not be deemed to have committed an act of insolvency under this sub-section and
    (b) In a case where such application is rejected by the District Court, he shall be deemed to have committed an act of insolvency under this sub-section on the date of rejection of the application or the expiry of the period specified in the insolvency notice for its compliance, whichever is later:
    Provided further that no insolvency notice shall be served on a debtor residing, whether permanently or temporarily, outside India, unless the creditor obtained the leave of the District Court therefor.
    (3) An insolvency notice under sub-section (2) shall-
    (a) Be in the prescribed form;
    (b) Be served in the prescribed mariner;
    (c) Specify the amount due under the decree or order and require the debtor to pay the same or to furnish security for the payment of such amount to the satisfaction of the creditor or his agent;
    (d) Specify for its compliance a period of not less than one month after its service on the debtor or, if it is to be served on a debtor residing, whether permanently or temporarily, outside India, such period (being not less than one month) as may be specified by the order of the District Court granting leave for the service of such notice;
    (e) State the consequences of noncompliance with the notice.
    (4) No insolvency notice shall be deemed to by invalid be reason only that the sum specified therein as the amount due under the decree or order exceeds the amount actually due, unless the debtor, within the period specified in the insolvency notice for its compliance, gives notice to the creditor that the sum specified in the insolvency notice does not correctly represent the amount due under the decree or order:
    Provided that if the debtor does not give any such notice as aforesaid, he shall be deemed to have complied with the insolvency notice if within the period specified therein for its compliance, he takes such steps as would have constituted a compliance with the insolvency notice had the actual amount due been correctly specified therein.
    (5) Any person served with an insolvency notice may, within the period specified therein for its compliance, apply to the District Court to set aside the insolvency notice on any of the following grounds, namely, -
    (a) That he has a counter-claim or set-off against the creditor which is equal to or is in excess of the amount due under the decree or order and which he could not, under any law for the time being in force, prefer in the suit or proceeding in which the decree or order was passed;
    (b) That he is entitled to have the decree or order set aside under any law providing, for the relief of indebtedness and that-
    (i) He has made an application before the competent authority under Such law for the setting aside of the decree or order; or
    (ii) The time allowed for the making of such application has not expired;
    (c) That the decree or order is not executable under the provisions of any law referred to in clause (b) on the date of application. 

    8. Exemption of corporation, etc. from insolvency proceedings. -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.

    9. Conditions on which creditor may petition. -(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:
    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 re-opens.
    (2) If the petitioning creditor is a secured creditor, he shall in his petition either state that he is willing to relinquish his security for the benefit of the creditors in the event of the debtor being adjudged insolvent, or given all estimate of the value of the security in the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor.

    10. Conditions on which debtor tiny petitioner. – (1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and-
    (a) His debts amount to five hundred rupees; or
    (b) He is under arrest or imprisonment 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.
    (2) A debtor in respect of whom all order of adjudication whether made under the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under this Act has been annulled, owing to his failure to apply, or to prosecute all application for his discharge, shall not be entitled to present an insolvency petition without the leave of the Court by which the order of adjudication was annulled. Such Court shall not grant leave unless it is satisfied either that the debtor was prevented by any reasonable cause from presenting prosecuting his application, as the case may be, or that the petition is founded on facts substantially different from those contained in the petition on which the order of adjudication was made.

    11. Court to which petition shall be presented. -Every insolvency petition shall be presented to a Court having jurisdiction under this Act in any local area, in which the debtor ordinarily resides or carries on business, or personally works for gain, or if he has been arrested or imprisoned, where he is in custody:
    Provided that no objection as to the place of presentment shall be allowed by any Court in the exercise of appellate or revision jurisdiction unless such objection was taken in the Court by which the petition was heard at the earliest possible opportunity, and unless there has been a consequent failure of justice.

    17. Continuance of proceedings on death of debtor. -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 so far as may be necessary for the realization and distribution of the property of the debtor.

    20. Appointment of interim receiver.-The Court when making an order admitting the petition may, and where the debtor is the Petitioner ordinarily shall, appoint an receiver of the property of the debtor or of any part thereof and-may direct him to take immediate possession thereof or of any part thereof, and the interim receiver shall thereupon have such of the powers conferable on a receiver appointed under the Code of Civil Procedure, 1908 (5 of 1908), as the Court may direct. If an interim receiver is not so appointed, the Court may take such appointment at any subsequent time before adjudication, and the provisions of this section shall apply accordingly.

    21. Interim proceedings against debtor.-At the time of making an order admitting the petition or any subsequent time before adjudication the Court may either of its own motion or on application of any creditor make on or more of the following orders, namely,-
    (1) Order the debtor to give reasonable security for his appearance until final orders are made upon the petition, and direct, that in default of giving such security, he shall be detained in the civil prison;
    (2) Order the attachment by actual seizure of the whole or any of the property in the possession or under the control of the debtor, other than such particulars (not being his books of account) as are exempted by the Code of Civil Procedure, 1908 (5 of 1908), or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree;
    (3) order a warrant to issue with or without bail for the arrest of the debtor, and direct either that he be detained in the civil prison until the disposal of the petition, or that he be released on such terms as to security as may be reasonable and necessary:
    Provided that an order under clause (2) or clause (3) shall not be made unless the Court is satisfied that the debtor, with intent to defeat or delay his creditors or to avoid any process of the Court, -
    (i) Has absconded or has departed from the local limits of the jurisdiction of the Court, or is about to abscond or to depart from such limits, or is remaining outside them, or
    (ii) Has failed to disclose or has concealed, destroyed transferred or removed from such limits, or is about to conceal, destroy transfer or remove from such limits, any documents likely to be of use to his creditors in the course of the hearing, or any part of his property other than such particulars as aforesaid.

    25. Dismissal of petition. -(1) In the case of a petition presented by a creditor, where the Court is not satisfied with the proof of his right to present the petition or of the service on the debtor of notice of the order admitting the petition, or of the alleged act of insolvency, or is satisfied by the debtor that he is able to pay his debts, or that for any other sufficient cause no order ought to be made, the Court shall dismiss the petition.
    (2) In the case of a petition presented by a debtor, the Court shall dismiss the petition if it is not satisfied of his right to present the petition.

    26. Award of compensation. –(1) Where a petition presented by a creditor is dismissed under sub-section (1) of Section 25, and the Court is satisfied that the petition was frivolous or vexatious, the Court may, on the application of the debtor, award against such creditor such amount, not exceeding one thousand rupees, as it deems a reasonable compensation to the debtor for the expense or injury occasioned to him by the petition and the proceedings thereon, and such amount may be realized as if it were a fine,
    (2) An award under this section shall bar any suit for compensation in respect of such petition and the proceedings thereon.

    29. Stay of pending proceedings.-Any Court in which a suit or other proceeding is pending against him under this Act, either stay the proceedings, or allow it to continue on such terms as such Court may impose.

    30. Publication of order of adjudication. -Notice of an order of adjudication stating the name, address and description of the insolvent, the date of the adjudication, the period within which the debtor shall apply for his discharge, and the Court by which the adjudication is made, shall be published in the Official Gazette and in such other manner as may be prescribed.

    31. Protection order. -(1) Any insolvent in respect of whom an order of adjudication has been made 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 of the debtor, or to any of them as the Court may think proper, and may commerce 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 applies, and any insolvent arrested or detained contrary to the terms of such an order shall be entitled to his release:

    Provided that no such order shall operate to prejudice the rights of any creditor in the event of such order being revoked or the adjudication annulled.

    (4) Any creditor shall be entitled to appear and oppose the grant of a protection order.

    32. Power to arrest after adjudication.-At any time after an order of adjudication has been made, the Court may, if it has reason to believe on the application of any creditor or the receiver, that the debtor has absconded or departed from the local limits of its jurisdiction with intent to avoid any obligation which has been, or might be, imposed on him by or under this Act, order a warrant to issue for his arrest, and on his appearing or being brought before it, may, if satisfied that he was absconding or had departed with such intent, order his release on such terms as to security as may be reasonable or necessary, or if such security is not furnished, direct that he shall be detained in the civil prison for a period which may extend to three months.

    35. Power to annul adjudication of insolvency. -Where, in the petition 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 have been paid in full, the Court shall, on the application of the debtor, or of any other person interested, by order in writing, annul the adjudication and the Court may, of its own motion or on all application made by the receiver 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 10, not entitled to present such petition.

    39. Order of approval. -If the Court approves the proposal, the terms shall be embodied in an order of the Court, and the order of adjudication shall be annulled, ,and the provisions of Section 37 shall 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 debtor and provable under this Act.

    41. Discharge.-(1) A debtor may, at any time after the order of adjudication and shall, within the period specified by the Court, apply to the Court for an order of discharge, and the Court shall fix a day, notice whereof shall be given in such manner as may be prescribed, for hearing such application, and any objections which may be made thereto.
    (2) Subject to the provisions of this section the Court may, after considering the objections of any creditor and, where a receiver has been appointed, the report of the receiver-
    (a) Grant or refuse all absolute order of discharge; or
    (b) Suspend the operation of the order for a specified time; or
    (c) Grant and order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the insolvent, or with respect to his after-acquired property.

    44. Effect of order of discharge.- (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;
    (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 (5 of 1898).
    (2) Save as otherwise provided by sub-section (1), an order of discharge shall release the insolvent from all debts provable under this Act.
    (3) An order of discharge shall not release any person who, at the date of the presentation of the petition, was a partner or co-trustee with the insolvent, or was jointly bound or had made any joint contract with him or any person who was surety for him.

    46. Mutual dealings and set-off. -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.

    47. Secured creditors. -(1) Where a secured creditor realizes his security, he may prove for the balance due to him, after deducting the net amount realized.
    (2) Where a secured creditor relinquishes his security for the general benefit of the creditors, be may prove for his whole debt.
    (3) Where a secured creditor does not either realize or relinquish his security, he shall, before being entitled to have his debt entered in the schedule, state in his proof the particulars of his security, and the value at which he assesses it, and shall be entitled to receive a dividend only in respect of the balance due to him after deducting the value so assessed.
    (4) Where a security is so valued, the Court may at any time before realization redeem it on payment to the creditor of the assessed value.
    (5) Where a creditor, after having valued his security, subsequently realizes it, the net amount realized shall be substituted for the amount of any valuation previously made by the creditor, and shall be treated in all respect as an amended valuation made by the creditor.
    (6) Where a secured creditor does not comply with the provisions of this section. he shall be excluded from all shares, in any dividend

    55. Protection of bona fide transactions.-,Subject to the foregoing provisions of this Act 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 such person with whom such transaction takes place has not at the time notice of the presentation of any insolvency petition by or against the debtor.

    56. Appointment of receiver.- (1) The Court may, at the time of the order of adjudication,. or at any time afterwards, appoint a receiver for the property of the insolvent, and such property shall thereupon vest in such receiver.
    (2) Subject to such condition as may be prescribed, the Court may-
    (a) Require the receiver to give such security as it thinks fit duly to account for what he shall receive in respect of' the property; and
    (b) By general or special order, fix the amount to be paid as remuneration for the
    (3) Where the Court appoints a receiver, it may remove the person in whose possession or custody any such property as aforesaid, is from the possession or custody thereof :
    Provided that nothing in that section shall be deemed to authorize the Court to remove from the possession or custody of property any person whom the insolvent has not a present right to remove.
    (4) Where a receiver appointed under this section-
    (a) Fails to submit his accounts at such periods and in such forms as the Court directs, or
    (b) Fails to pay the balance due from him thereon as the Court directs, or
    (c) Occasions loss to the property by his wilful default or gross negligence, the Court may direct his property to be attached and sold, and may apply the proceeds to make good any balance found to be due form him or any loss so occasioned by him. 
    (5) The provisions of this section shall apply, so far as may be, to interim receivers appointed under Section 20.

    58. Powers of Court if no receiver appointed. -Where no receiver is appointed, the Court shall have all the rights of, and may exercise all the powers conferred on, a receiver under this Act.

    PART III: ADMINISTRATION OF PROPERTY

    60. Special provisions in regard to immovable property.- (1) In any local area in which a declaration has been made under Section 68 of the Code of Civil Procedure, 1908 (5 of 1908), and is in force, no sale of immovable property paying revenue to the Government or held or let for agricultural purposes shall be made by the receiver; but, after the other property of the insolvent has been realized, the Court shall ascertain-
    (a) The amount required to satisfy the debts proved under this Act after deducting the monies already received;
    (b) The immovable property of the insolvent remaining unsold; and
    (c) The encumbrances (if any) existing thereon; and shall forward a statement to the Collector containing the particulars aforesaid; and thereupon the Collector shall proceed to raise the amount so required by the exercise of such of the powers conferred on him by paragraphs 2 to 10 of the Third Schedule to the said Code as he thinks fit, and subject to the provisions of those paragraphs so far as they are applicable, and shall hold at the disposal of the Court all sums that may come to his hands by the exercise of such powers.
    (2) Nothing in this Act shall be deemed to affect any provisions of any enactment for the time being in force prohibiting or restricting the execution of decrees or orders against immovable property; and any such provision shall be deemed to apply to the enforcement of an order of adjudication made under this Act as if it were such a decree or order.

    61. Priority of debts.- (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; and
    (b) All salary or wages, not exceeding twenty rupees in all, 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.
    (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 insufficient to meet them, in which case they shall abate in equal proportions between themselves.
    (3) Subject to the retention of such sums as may be necessary for the expenses of administration or otherwise, the debts specified in subsection (1) shall be discharged forthwith in so far as the property of the insolvent is sufficient to meet them.
    (4) In the case of partners, the partnership property shall be applicable in the first instance in payment of the partnership debts, and the separate property of each partner shall be applicable in the first instance in payment of his separate debts. Where there is a surplus of the separate property of the partners, it shall be dealt with as part of the partnership property; and where there is a surplus of the partnership property, it shall be dealt with as part of the respective separate property in proportion to the rights and interests of each partner in the partnership property.
    (5) Subject to the provisions of this Act, all debts entered in the schedule shall be paid ratably according to the amounts of such debts respectively and without any preference.
    (6) Where there is any surplus after payment of the foregoing debts, it shall be applied in payment of interest from the date on which the debtor is adjudged an insolvent at the rate of six per centum on all debts entered in the schedule. 

    62. Calculation of dividends.- (1) In the calculation of dividends, the receiver shall retain in his hands sufficient assets to meet-
    (a) Debts provable under this Act 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 proof.
    (b) Debts provable under this Act, the subject of claims not yet determined;
    (c) Disputed proof or claims; and
    (d) The expenses necessary for the administration of the estate or otherwise.
    (2) Subject to the provisions of sub-section (1), all money in hand shall be distributed as dividends.

    65. No suit for dividend.-No suit for a dividend shall lie against the receiver; but where the receiver refuses to pay any dividend, the Court may, on the application of any creditor who is entered in the schedule, order him to pay it, and also to pay out of his own money interest thereon for the time that it is withheld, and the costs of the application.

    67. Right of insolvent to surplus.-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.

    67A. Committee of Inspection.- (1) The Court may, if it, thinks fit, authorise the creditors who have proved their debts to appoint a committee of inspection for the purpose of superintending the administration of the insolvent's property by the receiver.

    (2) The persons appointed to a committee of inspection shall be creditors who have proved their debts or persons holding general powers of attorney from such creditors.
    (3) The committee of inspection shall have such powers of control over the proceeding of the receiver as may be prescribed.

    68. Appeals to Court against Receiver. -If the insolvent or any of the creditors or any other person is aggrieved by any act or decision of the receiver, he may apply 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:
    Provided that no application under this section shall be entertained after the expiration of twenty-one days from the date of the act or decision complained of.

    PART IV: Penalties

    69. Offences by debtors.-If a debtor, whether before or after the making of an order of adjudication,--
    (a) Wilfully fails to perform the duties imposed on him by Section 22 or to deliver up possession of any part of his property which is divisible among his creditors under this Act, and which is for the time being in his possession or under his control to the Court or to any person authorized by the Court to take possession of it, or
    (b) Fraudulently with 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 document 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 document relating to such of his affairs as are subject to investigation under this Act, or
    (c) Fraudulently within tention to diminish the sum to be divided among his creditors or to give an undue preference to any of his creditors,.-
    (i) Has discharged or concealed any debt due to or from him, or
    (ii) (ii) Has made away, with, charged, mortgaged or concealed any part of his property of any kind whatsoever, he shall be punishable on conviction with imprisonment which may extend to one year. 

    71. Criminal liability after discharge or composition. -Where an insolvent has been guilty of any of the offences specified in Section 69, 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.

    73. Disqualifications of insolvent.- (1) Where a debtor is adjudged or re-adjudged 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 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 Section 35, or
    (b) he obtains from the Court an order of discharge, whether absolute or conditional, with a certificate that his insolvency was caused by misfortune without any misconduct on his part.
    (3) The Court may grant or refuse such certificate as it thinks fit, but any order of refusal shall be subject to appeal.

    75. Appeals. - (1) The debtor, any creditor, the receiver or any other person aggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court, may appeal to the District Court, and the order of the District Court upon such appeal shall be final:
    Provided that the High Court, for the purposes of satisfying itself that an order made in any appeal decided by the District Court was according to law, may call for the case and pass such order with respect thereto as it thinks fit:
    Provided further, that any such person aggrieved by a decision of the District Court on appeal from a decision of a subordinate Court under section (1) of Section 100 of the Code of Civil Procedure, 1908 (5 of 1908).
    (2) Any such person aggrieved by any decision or order of a District Court as is specified in Schedule 1, or made otherwise than in appeal from an order made by a Subordinate Court, may appeal to the High Court.

    (3) Any such person aggrieved by any other order made by a District Court otherwise than in appeal from an order made by a subordinate Court may appeal to the High Court by leave of the District Court or of the High Court.
    (4) The periods of limitation for appeals to the District Court and to the High Court under this section shall be thirty days and ninety days respectively.

    77. Courts to be auxiliary to each other. -All Courts having jurisdiction in insolvency and the Officers of such Courts, respectively, shall severally act in aid of and be auxiliary to each other in all matters of insolvency, and an order of a Court seeking aid, with a request to another of the said Courts shall be deemed sufficient to enable the latter Court to exercise, in regard to the matter directed by the order, such jurisdiction as either of such Courts could exercise in regard to similar matter within their respective jurisdictions.

    78. Limitation.- (1) The provisions of Section 5 and 12 of the Indian Limitation Act, 1908 (9 of 1908), shall apply to appeals and applications under this Act, and for the purpose of the said Section 12, a decision under Section 4 shall be deemed to be a decree.
    (2) Where an order of adjudication has been annulled under this Act, in computing the period of limitation prescribed for any suit or application for the execution of a decree or other than a suit or application--in respect of which the leave of the Court was obtained under sub-section (2) of section 28 which might have been brought or made but for the making o” an order of adjudication under this Act, the Period front e date of the order of adjudication to the date of order of annulment it shall be excluded:
    Provided that nothing in this section shall apply to a suit or application in respect of a debt provable but not proved under this Act.
    [Now Limitation Act, 1963.]

    80. Delegation of powers to Official Receivers. -(1) The High Court, with the like sanction, may from time to time direct that, in any matters in respect of which jurisdiction is given to the Court by this Act, the Official Receiver shall, subject to the direction of the Court, have all or any of the following powers, namely,-
    (a) [Omitted.]
    (b) To frame Schedules and to admit or reject proofs of creditors;
    (c) [Omitted.]
    (d) [Omitted.]
    (e) To make internal orders in any case of urgency; and
    (f) To hear and determine any unopposed or ex-parte action.
    (2) Subject to the appeal to the Court provided for by Section 68, any order made or act done by the Official Receiver in the exercise of the said powers shall be deemed the order or act of the Court.

    81. Power of State Government to bar application of certain provisions to certain Courts. -Any State Government may by notification in the Official Gazette, declare that any of the provisions of this Act specified in Schedule II shall not apply to insolvency proceedings, in any Court or Courts having, jurisdiction under this Act in any part of the territories administered by such State Government.

    SCHEDULE-I 
    [See Section 7-5(2)]

    Decisions and Order from which an appeal lies to the High Court under Section 75(2)
    Nature of decision or order
    24 Decision of questions of title, priority, etc. insolvency.
    25 Order of dismissing a petition.
    26 Order awarding compensation.
    27 Order of adjudication.
    33 Order regarding entries in the schedule.
    35 Order annulling adjudication.
    37 Order declaring the conditions on which the debtor's property shall revert to him on annulment of adjudication.
    41 Order on application for discharge.
    50 Order disallowing or reducing entries in the Schedule.
    53 Order annulling a voluntary transfer.
    54 Decision that a transfer of property is a preference in favour of a creditor.

    SCHEDULE-II

    (See Section 81)

    Provisions of the Act application of which may be barred by State Governments 
    Provisions of the Act Subject
    Section-26 Award of compensation
    28, sub-section (3) Reputed Property of an insolvent.
    34 Debts provable under the Act.
    38, 39, 40 Compositions and schemes or arrangements.
    42, sub-sections (1) and (2) obligation to refuse absolute discharge.
    45, 46, 47, 48 Method of proof of debt.

    Kindly CLICK HERE or e-mail us at office@hellocounsel.com if you are facing any Legal Issue and want to have Legal Consultations with the empanelled Lawyers at Hello Counsel.

Live2Support.com
All original content on these pages is fingerprinted and certified by Digiprove