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THE PRESIDENCY-TOWNS INSOLVENCY ACT, 1909

Title : THE PRESIDENCY-TOWNS INSOLVENCY ACT, 1909

Year : 1909



(1) Every transfer, mortgage, assignment, power-of-attorney, proxy paper, certificate, affidavit, bond or other proceedings, 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 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 jurisidiction under this Act if it is sworn-

(a) In 1*[the States 2****], 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 Majestys 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;

(c) In Scotland or in Ireland, before a Judge Ordinary, Magistrate or Justice of the Peace; and

(d) In any other place, before a Magistrate or Justice of the Peace or other person qualified to administer oaths in that place (he being certified to be a Magistrate or Justice of the Peace, or qualified as aforesaid, by 3*[an Indian Consul or Political Agent] or by a notary public).

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1. Subs. by the A. O. 1948.

2. The words "of India" omitted by the A. O. 1950.

3. Subs. by the A. O. 1950 for "a British Minister or British Consul or British Political Agent".

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(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.1*

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1. For s. 121A, applicable to Bombay only, see the Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom. 20 of 1933), s. 7.

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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 2*[the State Government], unless the Court otherwise directs.

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1. This section has been amended in its application to Bombay by s.8, ibid.

2. Subs. by the A. O. 1937, for "the Govt. of India".

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Any person claiming to be entitled to any monies paid to the account and credit of 1*[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 1*[the State Government], the Court shall cause a notice to be served on such officer as 2*[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.3*

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1. Subs. by the A. O. 1937, for "the Govt. of India".

2. Subs., ibid., for "the G. G. in C.".

3. For ss. 123A and 123B, applicable to Bombay only, see the
Presidency-towns Insolvency (Bombay Amendment) Act, 1933 (Bom. 20 of 1933), s. 10.

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(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.1*

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1. 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.

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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 (46 and 47 Vict., c. 52), and to section 50 of the Provincial Insolvency Act, 1907 (3 of 1907).1*

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1. See now the Provincial Insolvency Act, 1920 (5 of 1920).

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1******

(2) 1**** The proceedings under an insolvency petition under the Indian Insolvency Act, 1848 (11 and 12 Vict., c. 21), pending at the comence -ment of this Act shall, except so far as any provision of this Act is expressly applied to pending proceedings, continue, and all the provisions of the said Indian Insolvency Act shall, except as aforesaid, apply thereto, as if this Act had not been passed.


SCHEDULE I

THE FIRST SCHEDULE

(See section 26)

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 insolvents 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 less than seven days before the day appointed for the meeting and may be delivered personally or sent by prepaid post letter, as may be convenient. The official assignee may, if he thinks fit, also publish the time and place of any meeting in any local newspaper or in the Official Gazette.

4. Duty of insolvent to attend if required.-

It shall be the duty of the insolvent to attend any meeting which the official assignee may, by notice, require him to attend, and any adjournment thereof. Such notice shall be either delivered to him personally or sent to him at his address by post at least three days before the date fixed for the meeting.

5. Proceedings not to be avoided for non-receipt of notice.-

The proceedings held and resolutions passed at any meeting shall, unless the Court otherwise orders, be valid notwithstanding that any creditor has not received the notice sent to him.

6. Proof of issue of notice.-

A certificate of the official assignee that the notice of any meeting has been duly given shall be sufficient evidence of such notice having been duly sent to the person to whom the same was addressed.

7. Costs of meeting.-

Where on the request of creditors the official assignee summons a meeting, there shall be deposited with the written request the sum of five rupees for every twenty creditors for the costs of summoning the meeting, including all disbursements:

Provided that the official assignee may require such further sum to be deposited as in his opinion shall be sufficient to cover the costs and expenses of the meeting.

8. Chairman.-

The official assignee shall be the chairman of any meeting.

9. Right to vote.-

A creditor shall not be entitled to vote at a meeting unless he has duly proved a debt provable in insolvency to be due to him from the insolvent, and the proof has been duly lodged one clear day before the time appointed for the meeting.

10. No vote in respect of certain debts.-

A creditor shall not vote at any such meeting in respect of any unliquidated or contingent debt, or any debt the value of which is not ascertained.

11. Secured creditor.-

For the purpose of voting, a secured creditor shall, unless he surrenders his security, state in his proof the particulars of his security, the date when it was given, and the value at which he assesses it, and shall be entitled to vote only in respect of the balance, if any, due to him after deducting the value of his security. If he votes in respect of his whole debt, he shall be deemed to have surrendered his security, unless the Court on application is satisfied that the omission to value the security has arisen from inadvertence.

12. Proof in respect of negotiable instruments.-

Where a creditor seeks to prove in respect of a bill of exchange, promissory note, or other negotiable instrument or security on which the insolvent is liable, such bill of exchange, note, instrument or security must, subject to any special order of the Court made to the contrary, be produced to the official assignee before the proof can be admitted for voting.

13. Power to require creditor to give up security.-

It shall be competent to the official assignee, within twenty-eight days after a proof estimating the value of a security has been made use of in voting at any meeting, to require the creditor to give up the security for the benefit of the creditors generally, on payment of the value so estimated.

14. Proof by partner.-

If one partner in a firm is adjudged insolvent, any creditor to whom that partner is indebted jointly with the other partners in the firm, or any of them, may prove his debt for the purpose of voting at any meeting of creditors and shall be entitled to vote thereat.

15. Power of official assignee to admit or reject proof.-

The official assignee shall have power to admit or reject a proof for the purpose of voting, but his decision shall be subject to appeal to the Court. If he is in doubt whether the proof of a creditor should be admitted or rejected, he shall mark the proof as objected to, and shall allow the creditor to vote, subject to the vote being declared invalid in the event of the objection being sustained.

16. Proxy.-

A creditor may vote either in person or by proxy.

17. Instrument of proxy.-

Every instrument of proxy shall be in the prescribed form and shall be issued by the official assignee.

18. General proxy.-

A creditor may give a general proxy to his attorney or to his manager or clerk, or any other person in his regular employment. In such case the instrument of proxy shall state the relation in which the person to act there under stands to the creditor.

19. Proxy to be deposited one day before date of meeting.

A proxy shall not be used unless it is deposited with the official assignee one clear day before the time appointed for the meeting at which it is to be used.

20. Official assignee as proxy.

A creditor may appoint the official assignee to act as his proxy.

21. Adjournment of meeting.-

The official assignee may adjourn the meeting from time to time and from place to place, and no notice of the adjournment shall be necessary.

22. Minute of proceedings.-

The official assignee shall draw up a minute of the proceedings at the meeting and shall sign the same.

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1. Sub-section (1) and the words "Notwithstanding the repeal effected by this Act," in sub-section (2) rep. by Act 10 of 1914, s. 3.and Sch. II.

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THE SECOND SCHEDULE

(See section 48)

PROOF OF DEBTS

Proofs in ordinary cases

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 statement of account showing the particulars of the debt, and shall specify the vouchers, if any, by which the same can be substantiated. The official assignee may at any time call for the production of the vouchers.

5. Affidavit to state if creditor holds security.-

The affidavit shall state whether the creditor is or is not a secured creditor.

6. Cost of proving debts.-

A creditor shall bear the cost of proving his debt unless the Court other wise specially orders.

7. Right to see and examine proof.-

Every creditor who has lodged a proof shall be entitled to see and examine the proofs of other creditors at all reasonable times.

8. Deduction to be made from proof.-

A creditor in lodging his proofs shall deduct from his debt all trade discounts, but he shall not be compelled to deduct any discount, not exceeding five per centum on the net amount of his claim, which he may have agreed to allow for payment in cash.

9. Proof where security realized.-

If a secured creditor realizes his security, he may prove for the balance due to him, after deducting the net amount realized.

10. Proof where security is surrendered.-

If a secured creditor surrenders his security to the official assignee for the general benefit of the creditors, he may prove for his whole debt.

11. Proof in other cases.-

If a secured creditor does not either realize or surrender his security, he shall, before ranking for dividend, state in his proof the particulars of his security, the date when it was given 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.

12. Valuation of security.-

(1) Where a security is so valued the official assignee may at any time redeem it on payment to the creditor of the assessed value.

(2) If the official assignee is dissatisfied with the value at which a security is assessed, he may require that the property comprised in any security so valued be offered for sale at such times and on such terms and conditions as may be agreed on between the creditor and the official assignee, or as, in default of agreement, the Court may direct. If the sale is by public auction, the creditor, or the official assignee on behalf of the estate, may bid or purchase:

Provided that the creditor may at any time, by notice in writing, require the official assignee to elect whether he will or will not exercise his power of redeeming the security or requiring it to be realized, and if the official assignee does not, within six months after receiving the notice, signify in writing to the creditor his election to exercise the power, he shall not be entitled to exercise it; and the equity of redemption, or any other interest in the property comprised in the security which is vested in the official assignee, shall vest in the creditor, and the amount of his debt shall be reduced by the amount at which the security has been valued.

13. Amendment of valuation.-

Where a creditor has so valued his security, he may at any time amend the valuation and proof on showing to the satisfaction of the official assignee, or the Court, that the valuation and proof were made bona fide on a mistaken estimate, or that the security has diminished or increased in value since its previous valuation; but every such amendment shall be made at the cost of the creditor, and upon such terms as the Court shall order, unless the official assignee shall allow the amendment without application to the Court.

14. Refund of excess received.-

Where a valuation has been amended in accordance with the foregoing rule, the creditor shall forthwith repay any surplus dividend which he has received in excess of that to which he would have been entitled on the amended valuation, or, as the case may be, shall be entitled to be paid out of any money for the time being available for dividend, any dividend or share of dividend which he has failed to receive by reason of the inaccuracy of the original valuation, before that money is made applicable to the payment of any future dividend, but he shall not be entitled to disturb the distribution of any dividend declared before the date of the amendment.

15. Amendment where security subsequently realized.-

If a creditor after having valued his security subsequently realizes it, or if it is realized under the provisions of rule 12, the net amount realized shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor.

16. Exclusion from sharing in dividend.-

If a secured creditor does not comply with the foregoing rules, he shall be excluded from all share in any dividend.

17. Limit of receipt.-

Subject to the provisions of rule 12, a creditor shall in no case receive more than sixteen annas in the rupee and interest as provided by this Act.Taking accounts of property mortgaged, and of the sale thereof

18. Inquiry into mortgage, etc.-

Upon application by any person claiming to be a mortgagee of any part of the insolvents real or leasehold estate and whether such mortgage is by deed or otherwise, and whether the same is of a legal or equitable nature, or upon application by the official assignee with the consent of such person claiming to be a mortgagee as aforesaid, the Court shall proceed to inquire whether such person is such mortgagee, and for what consideration and under what circumstances; and if it is found that such person is such mortgagee, and if no sufficient objection appears to the title of such person to the sum claimed by him under such mortgage, the Court shall direct such accounts and inquiries to be taken as may be necessary for ascertaining the principal, interest and costs due upon such mortgage, and of the rents and profits, or dividends, interest or other proceeds received by such person, or by any other person by his order or for his use in case he has been in possession of the property over which the mortgage extends, or any part thereof, and the Court, if satisfied that there ought to be a sale, shall direct notice to be given in such newspapers as the Court thinks fit, when and where, and by whom and in what way, the said premises or property, or the interest therein so mortgaged, are to be sold, and that such sale be made accordingly, and that the official assignee (unless it is otherwise ordered 1*) shall have the conduct of such sale; but it shall not be imperative on any such mortgagee to make such application. At any such sale the mortgagee may bid and purchase.

19. Conveyance.-

All proper parties shall join in the conveyance to the purchaser, as the Court directs.

20. Proceeds of sale.-

The monies to arise from such sale shall be applied, in the first place, in payment of the costs, charges and expenses of and occasioned by the application to the Court, and of such sale and the commission (if any) of the official assignee, and in the next place in payment and satisfaction, so far as the same extend, of what shall be found due to such mortgagee, for principal, interest and costs, and the surplus of the sale monies (if any) shall then be paid to the official assignee. But if the monies to arise from such sale are insufficient to pay and satisfy what is so found due to such mortgagee, then he shall be entitled to prove as a creditor for such deficiency, and receive dividends thereon rateably with the other creditors, but so as not to disturb any dividend then already declared.

21. Proceedings on inquiry.-

For the better taking of such inquiries and accounts, and making a title to the purchaser, all parties may be examined by the Court upon interrogatories or otherwise as the Court thinks fit, and shall produce before the Court upon oath all deeds, papers, books and writings in their respective custody or power relating to the estate or effects of the insolvent as the Court directs.

22. Periodical payments.-

When any rent or other payment falls due at stated periods, and the order of adjudication is made at any time other than one of those periods, the person entitled to the rent or payment may prove for a proportionate part thereof up to the date of the order as if the rent or payment due grew from day to day.

23. Interest.-

(1) On any debt or sum certain whereon interest is not reserved or agreed for, and which is overdue when the debtor is adjudged an insolvent, and which is provable under this Act, the creditor may prove for interest at a rate not exceeding six per centum per annum-

(a) If the debt or sum is payable by virtue of a written instrument at a certain time, from the time when such debt or sum was payable to the date of such adjudication; or

(b) If the debt or sum is payable otherwise, from the time when a demand in writing has been made giving the debtor notice that interest will be claimed from the date of the demand until the time of payment to the date of such adjudication.

(2) Where a debt which has been proved in insolvency includes interest or any pecuniary consideration in lieu of interest, the interest or consideration shall, for the purposes of dividend, be calculated at a rate not exceeding six per centum per annum, without prejudice to the right of a creditor to receive out of the debtors estate any higher rate of interest to which he may be entitled after all the debts proved have been paid in full.

24. Debt payable in future.-

A creditor may prove for a debt not payable when the debtor is adjudged an insolvent as if it were payable presently, and may receive dividends equally with the other creditors, deducting therefrom only a rebate of interest at the rate of six per centum per annum, computed from the declaration of a dividend to the time when the debt would have become payable, according to the terms on which it was contracted.

25. Admission or rejection of proof.-

The official assignee shall examine every proof and the grounds of the debt, and in writing admit or reject it in whole or in part, or require further evidence in support of it. If he rejects a proof, he shall state in writing to the creditor the grounds of the rejection.

26. Court may expunge proof improperly received.-

If the official assignee thinks that a proof has been improperly admitted, the Court may, on the application of the official assignee, after notice to the creditor who made the proof, expunge the proof or reduce its amount.

27. Power for Court to expunge or reduce proof.-

The Court may also expunge or reduce a proof upon the application of a creditor if the official assignee declines to interfere in the matter, or in the case of a composition or scheme upon the application of the insolvent.

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1. In the application of this rule to Calcutta, the words "for reasons to be recorded in writing" have been inserted here, see the Presidency-towns Insolvency (Bengal Amendment) Act, 1936 (Ben. 18 of 1936), s. 12.

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SCHEDULE III

Enactments repealed.


THE THIRD SCHEDULE.--[Enactments repealed.] Rep. by the Repealing and Amending Act, 1914 (10 of 1914), s. 3 and Sch. II.
 

Last updated on September, 2016

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