PROCEEDINGS FROM ACT OF INSOLVENCY TO DISCHARGE ACTS OF INSOLVENCYCentral

Section 13 of THE PRESIDENCY-TOWNS INSOLVENCY ACT, 1909 in hindi

–(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—
1. (a)the debt of the petitioning creditor, and
2. (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—
1. (a)if it is not satisfied with the proof of the facts referred to in sub-section (2); or
2. (b)if the debtor appears and satisfies the Court that he is able to pay his debts, or that he has not committed an act of insolvency or that for other sufficient cause no order ought to be made.
(5)The Court may make an order of adjudication if it is satisfied with the proof above referred to, or if on a hearing adjourned under sub-section (3) the debtor does not appear and service of the petition on him is proved, unless in its opinion the petition ought to have been presented before some other Court having insolvency jurisdiction.
(6)Where the debtor appears on the petition and denies that he is indebted to the petitioner, or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the Court, on such security (if any) being given as the Court may require for payment to the petitioner of any debt which may be established against the debtor in due course of law, and of the costs of establishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be require a for trial of the question relating to the debt.
(7)Where proceedings are stayed, the Court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make an order of adjudication on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition on which proceedings have been stayed as aforesaid.
(8)A creditor's petition shall not, after presentation, be withdrawn without the leave of the Court. 1. Added by Act 3 of 1950, s.2.

Summary

The section provides instructions on how to proceed with the service of the petition on the petition.
It includes provisions for the issuance of a petition, the requirement for proof of debt, and the order of adjudication.

Practical examples

1Gopi files an insolvency petition against Hari. At the court hearing, Gopi presents his account books to prove Hari's debt of 600 rupees and a newspaper notice showing Hari closed his business to avoid creditors. The judge, satisfied with the proof, declares Hari insolvent.

2Kiran files a petition against Lalit, but Lalit shows up in court with a bank draft proving he has plenty of money to pay his debts. Under this law, the judge must dismiss Kiran's petition because Lalit proved his ability to pay.

FAQ

1. How must a creditor verify their insolvency petition under Section 13 of the Presidency-Towns Insolvency Act, 1909?

Under Section 13 of the Presidency-Towns Insolvency Act, 1909, a creditor's petition must be verified by an affidavit, which is a written statement confirmed by oath or affirmation, of the creditor, or of some person on their behalf who has knowledge of the facts.

2. Can a creditor withdraw their petition at any time under Section 13 of the 1909 Insolvency Act?

No. Under Section 13 of the 1909 Insolvency Act, a creditor's petition cannot be withdrawn after presentation without the leave, meaning formal permission, of the Court.

3. What must the Court do if the debtor denies the debt at the hearing under Section 13 of the Presidency-towns Insolvency Act, 1909?

Under Section 13 of the Presidency-towns Insolvency Act, 1909, the Court may require security and stay all proceedings, meaning temporarily pause the case, on the petition to allow time for a trial to establish the debt, instead of dismissing the petition.

4. On what grounds must the Court dismiss a creditor's petition under Section 13 of the Presidency towns insolvency law?

Under Section 13 of the Presidency towns insolvency law, the Court must dismiss the petition if it is not satisfied with the proof of the debt or act of insolvency, or if the debtor appears and satisfies the Court that they are able to pay their debts, or shows other sufficient cause.

Test yourself

Q1.Under Section 13 of the Presidency-Towns Insolvency Act, 1909, what must a petitioning creditor prove at the court hearing?

Q2.Under Section 13 of the 1909 Insolvency Act, what can the Court do if the debtor appears and denies the debt, and provides security as required?

Q3.Under Section 13 of the Presidency towns insolvency law, if proceedings on a creditor's petition are stayed due to a debt dispute, what can the Court do if there is delay?

Q4.Under Section 13 of the Presidency-Towns Insolvency Act, 1909, once a creditor's petition is presented, when can it be withdrawn?

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