Insolvency petition

Appellant-lady filed an insolvency petition under S.7 of the Provincial Insolvency Act, 1920 ("the 1920 Act") to be declared insolvent; she arrayed all her institutional creditors as respondents in the petition

Petition was dismissed by the Trial Court on the basis of S.8 of the 1920 Act holding that no insolvency petition could be filed against any corporation or association or company registered under any enactment for the time being in force

Question as to whether S.8 of the 1920 Act barred an insolvency petition to be filed by the debtor seeking his own insolvency by arraying corporate banks as creditors to the petition

Held, that S.8 of the 1920 Act exempted corporations and companies from any insolvency proceedings against them, however, in the present case the insolvency petition filed by the appellant was not an insolvency petition filed against any corporate person but instead, was filed by the debtor (the appellant) to get herself adjudged as an insolvent

Arraying the creditor banks (corporations or companies) as respondents in the insolvency petition did not mean that an insolvency petition had been filed against corporate persons to seek their insolvency

Exemption contained in S.8 of the 1920 Act had no application to the present case

Orders of courts below were set-aside and Supreme Court directed that insolvency petition would be deemed to be pending before the Trial Court, which shall decide the same in accordance with law

Appeal was allowed.

Said Act dealt with the insolvency of an individual, while corporate insolvency was dealt with separately under the company law

Therefore, insolvent companies were not amenable to the law of insolvency but underwent a separate process known as liquidation, or winding up, administered under separate law.

Contention of petitioner was that due to theft in his office and payment of ransom amount he had no movable and immovable assets to pay loan to the bank

Validity

Petitioner had failed to fulfill mandatory requirements of S.15(3)(a) of Insolvency (Karachi Division) Act, 1909 and Rr.586(1) & (2) of Sindh Chief Court (O.S.) Rules

No book of account was maintained by the petitioner

No documentary evidence and audit report that petitioner sustained losses had been produced before the Official Assignee

Petitioner had tried to take advantage in civil and criminal proceedings initiated against him by the creditors

Petitioner had failed to make out his case for grant of Insolvency Certificate

Petition was dismissed in circumstances.

Petitioners had not submitted documents which were required to be produced under S.15(3) of the Insolvency (Karachi Division) Act, 1909

Contention of the petitioners was that the required information/documents could be produced by the petitioners in a meeting of the petitioners' creditors to be called under S.26 of the Insolvency (Karachi Division) Act, 1909

Validity

Said contention was without any force as meeting of creditors under S.26 of the Insolvency (Karachi Division) Act, 1909 could only be called after an order of adjudication against an insolvent was passed and on application of a creditor before the Official Assignee under the Sindh High Court Rules (Original Side)

If no such order of adjudication as insolvent had been passed against the petitioners, no meeting under S.26 of the Act could be called.