Section 31 of THE PRESIDENCY-TOWNS INSOLVENCY ACT, 1909
–(1) If default is made in the payment of any installment 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, readjudge 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.
Summary
–(1) If default is made in the payment of any installment 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.
Practical examples
FAQ
1. On what grounds can a debtor be re-adjudged insolvent after their composition scheme is approved under Section 31 of the Presidency-towns Insolvency Act, 1909?
Under Section 31 of the Presidency-towns Insolvency Act, 1909, a debtor can be re-adjudged insolvent if they default on any installment, if the scheme cannot proceed without injustice or undue delay, or if court approval was obtained by fraud.
2. What happens to the debtor's property if they are re-adjudged insolvent under Section 31 of the Presidency-towns Insolvency Act, 1909?
Under Section 31 of the Presidency-towns Insolvency Act, 1909, if the court annuls the scheme and re-adjudges the debtor insolvent, the debtor's property vests in, meaning its legal ownership transfers to, the official assignee.
3. Are payments already made under an approved scheme canceled if the debtor is re-adjudged insolvent under Section 31 of the Presidency-towns Insolvency Act, 1909?
No, under Section 31 of the Presidency-towns Insolvency Act, 1909, the re-adjudication and annulment of the scheme do not affect the validity of any transfer, payment, or thing duly done in pursuance of the scheme.
4. What debts are provable if a debtor is re-adjudged insolvent under Section 31 of the Presidency-towns Insolvency Act, 1909?
Under Section 31 of the Presidency-towns Insolvency Act, 1909, all debts provable in other respects which were contracted before the date of the re-adjudication are provable in the restored insolvency.
Test yourself
Q1.Under Section 31 of the Presidency-towns Insolvency Act, 1909, who can apply to the court to re-adjudge the debtor insolvent and annul the scheme?
Q2.Under Section 31 of the Presidency-towns Insolvency Act, 1909, if a debtor's composition scheme is annulled due to fraud, what happens to the property of the debtor?
Q3.Under Section 31 of the Presidency-towns Insolvency Act, 1909, what is the status of a payment duly made under the scheme before the scheme was annulled?
Q4.Under Section 31 of the Presidency-towns Insolvency Act, 1909, what is the cut-off date for contracting debts that can be proved in the restored insolvency after a re-adjudication?
Q5.If a debtor's insolvency is annulled under Section 30 of the Presidency-towns Insolvency Act, 1909, but they later default on their payments, what section of the Act allows the court to restore their insolvent status?