Section 70 of THE PRESIDENCY-TOWNS INSOLVENCY ACT, 1909 in hindi
–Where one partner in a firm is adjudged insolvent, a creditor to
whom the insolvent is indebted jointly with the other partners in the firm or any of them shall not receive any dividend out of the separate property of the insolvent until all the separate creditors have received the full amount of their respective debts.
Summary
–Where one partner in a firm is adjudged insolvent, a creditor to whom the insolvent is indebted jointly with the other partners in the firm or any of them shall not receive any dividend out of the separate property of the insolvent until all the separate creditors have received the full amount of.
Practical examples
FAQ
1. Can a joint creditor of a partnership get a dividend from an insolvent partner's personal property under Section 70 of the Presidency-Towns Insolvency Act, 1909?
No, not immediately. Under Section 70 of the Act, a joint creditor cannot receive any dividend from the insolvent partner's separate property until all of that partner's separate, personal creditors have been paid in full.
2. Who has priority over an insolvent partner's separate property under Section 70 of the Presidency-Towns Insolvency Act, 1909?
Under Section 70 of the Act, the separate (personal) creditors of the insolvent partner have absolute priority. They must receive the full amount of their respective debts before any partnership (joint) creditor can receive any dividend from that separate property.
3. Under what condition can a firm's creditor claim a share from an insolvent partner's individual estate under Section 70 of the Presidency-Towns Insolvency Act, 1909?
A firm's creditor can only claim a share once a surplus is available. Under Section 70 of the Act, this occurs only after all individual separate creditors of that partner have been paid in full.
Test yourself
Q1.Under Section 70 of the Presidency-Towns Insolvency Act, 1909, if one partner of a firm is declared insolvent, who is paid first out of that partner's separate individual property?
Q2.Under Section 70 of the 1909 Presidency Insolvency Law, what must happen before a joint creditor of a partnership firm can receive a dividend from an insolvent partner's personal estate?
Q3.Under Section 70 of the Presidency-Towns Insolvency Act, 1909, how are partnership debts treated in relation to an insolvent partner's separate property?
Q4.Under Section 70 of the Presidency-Towns Insolvency Act, 1909, and Section 71 of the same Act (which deals with retaining assets for distant or disputed claims), if a joint partnership creditor files a claim against an insolvent partner's separate estate, what must the official assignee do while separate personal claims are still being disputed or calculated?