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Ministry of Law and Justice

Act nº 3 of 1909

  • Part I
  • Part II
  • Part III
  • Part IV
  • Part V
  • Part VI
  • Part VII
  • Part VIII
  • Part IX
  • Part X
  • Part XI
  • Part XII
  • Schedules
  • Act nº 3 of 1909



[ACT, No. 3 OF 1909]

[AS ON 1957]

{The Act has been amended in Bombay by Bom. Acts 20 of 1933 and 15 of 1939; in Bengal by Ben. Act 18 of 1936; and in Madras by Mad. Act 5 of 1943}

[12th March, 1909.]


An Act to amend the Law of Insolvency in the Presidency towns {The words and the town of Rangoon rep. by the A.O.1937}

WHEREAS it is expedient to amend the law relating to insolvency in the Presidency-towns {The words "and the town of Karachi" rep.by the A.O.1948.The words "towns of Rangoon and Karachi" had been subs. for "town of Rangoon" by Act 9 of 1926, s.2, and the words "town of" had been subs. for "towns of Rangoon and" by the A.O.1937};

It is hereby enacted as follows :--

Section 1. Short title and commencement

(1) This Act may be called the Presidency-towns Insolvency Act, 1909.

(2) It shall come into force on the first day of January 1910.

Section 2. Definitions

In this Act, unless there is anything repugnant in the subject or context,--

(a) "creditor" includes a decree-holder;

(b) "debt" includes a judgment-debt, and "debtor" includes a judgment-debtor;

{Cls.(bb) and (bbb), ins.by Act 9 of 1926, s.3, rep.by the A.O.1948}

(c) "official assignee" includes an acting official assignee {Ins.by Act 10 of 1930, s.2} [and a deputy official assignee, whether permanent or acting];

(d) "prescribed" means prescribed by rules;

(e) "property" includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit;

(f) "rules" means rules made under this Act;

(g) "secured creditor" includes a landlord who under any enactment for the time being in force has a charge on land for the rent of that land;

(h) "the Court" means the Court exercising jurisdiction under this Act; and

(i) "transfer of property" includes a transfer of any interest therein and any charge created thereon;

{Cl.(j) ins.by the A.O.1950} [(j) "States" means all the territories {Subs.by the Adaptation of Laws (No.2) Order, 1956, for "for the time being comprised"} [which immediately before the 1stNovember, 1956, were comprised] within Part A States and Part C States.]

Part I

Section 3. Courts having jurisdiction in insolvency

The Courts having jurisdiction in insolvency under this Act shall be {Subs.by the A.O.1948 for the original cls.(a) and (b) as amended by Act 9 of 1926, s.4, and the A.O.1937} [the High Courts at Calcutta, Madras and Bombay].

Section 4. Jurisdiction to be exercised by a single Judge

All matters in respect of which jurisdiction is given by this Act shall be ordinarily transacted and disposed of by or under the direction of one of the Judges of the Court, and the Chief Justice {The words "or Judicial Commissioner" rep.by the A.O.1948} shall, from time to time, assign a Judge for that purpose.

Section 5. Exercise of jurisdiction in chambers

Subject to the provisions of this Act and of rules, the Judge of a Court exercising jurisdiction in insolvency may exercise in chambers the whole or any part of his jurisdiction.

Section 6. Delegation of powers to officers to officers of Court

(1) The Chief Justice {The words "or Judicial Commissioner"} may, from time to time, direct that, in any matters in respect of which jurisdiction is given to the Court by this Act, an officer of the Court appointed by him in this behalf shall have all or any of the powers in this section mentioned; and any order made or act done by such officer in the exercise of the said powers shall be deemed the order or act of the Court.

(2) The powers referred to in sub-section (1) are the following, namely:

(a) to hear insolvency petitions presented by debtors, and to make orders of adjudication thereon;

(b) to hold the public examination of insolvents;

(c) to make any order or exercise any jurisdiction which is prescribed as proper to be made or exercised in chambers;

(d) to hear and determine any unopposed or ex-parte application;

(e) to examine any person summoned by the Court under section 36.

(3) An officer appointed under this section shall not have power to commit for contempt of Court.

Section 7. Power of Court to decide all questions arising in insolvency

Subject to the provisions of this Act, the Court shall have full power to decide all questions of priorities, and all other questions whatsoever, whether of law or fact, which may arise in any case of insolvency coming within the cognizance of the Court, or which the Court may deem it expedient or necessary to decide for the purpose of doing complete justice or making a complete distribution of property in any such case:

{Ins.by Act 19 of 1927, s.2} [Provided that, unless all the parties otherwise agree, the power hereby given shall, for the purpose of deciding any matter arising under section 36, be exercised only in the manner and to the extent provided in that section.]

Section 8. Appeals Appeals in insolvency

(1) The Court may review, rescind or vary any order made by it under its insolvency jurisdiction.

(2) Orders in insolvency matters shall, at the instance of any person aggrieved, be subject to appeal as follows, namely:

(a) an appeal from an order made by an officer of the Court empowered under section 6 shall lie to the Judge assigned under section 4 for the transaction and disposal of matters in insolvency and no further appeal shall lie except by leave of such Judge;

(b) save as otherwise provided in clause (a), an appeal from an order made by a Judge in the exercise of the jurisdiction conferred by this Act shall lie in the same way and be subject to the same provisions as an appeal from an order made by a Judge in the exercise of the ordinary original civil jurisdiction of the Court.

Part II

Section 9. Acts of insolvency Acts of insolvency

A debtor commits an act of insolvency in each of the following cases, namely:

(a) if, in the states or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;

(b) if, in the States or elsewhere, he makes a transfer of his property or of any part thereof with intent to defeat or delay his creditors;

(c) if, in the States or elsewhere, he makes any transfer of his property or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent;

(d) if, with intent to defeat or delay his creditors,

(i) he departs or remains out of the States,

(ii) he departs from his dwelling-house or usual place of business or otherwise absents himself,

(iii) he secludes himself so as to deprive his creditors of the means of communicating with him;

(e) if any of his property has been sold or attached for a period of not less than twenty-one days in execution of the decree of any Court for the payment of money;

(f) if he petitions to be adjudged an insolvent;

(g) if he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts;

(h) if he is imprisoned in execution of the decree of any Court for the payment of money.{For cl.(i) and the proviso, applicable to Bombay only, see the Presidency-towns Insolvency and the Provincial Insolvency (Bombay Amendment) Act, 1939 (Bom.15 of 1939), s.2}

Explanation.For the purposes of this section, the act of an agent may be the act of the principal, even though the agent have no specific authority to commit the act.{For s.9A, applicable to Bombay only, see s.2, ibid.}

Section 10. Power to adjudicate

Subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent.

Explanation.The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.

Section 11. Restrictions on jurisdiction

The Court shall not have jurisdiction to make an order of adjudication, unless

(a) the debtor is, at the time of the presentation of the insolvency petition, imprisoned in execution of the decree of a Court for the payment of money in any prison to which debtors are ordinarily committed by the Court in the exercise of its ordinary original jurisdiction; or

(b) the debtor, within a year before the date of the presentation of the insolvency petition, has ordinarily resided or had a dwelling-house or has carried on business either in person or through an agent within the limits of the ordinary original civil jurisdiction of the Court; or

(c) the debtor personally works for gain within those limits; or

(d) in the case of a petition by or against a firm of debtors the firm has carried on business within a year before the date of the presentation of the insolvency petition within those limits.

Section 12. Conditions on which creditor may petition

(1) A creditor shall not be entitled to present an insolvency petition against a debtor unless

(a) the debt owing by the debtor to the creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees, and

(b) the debt is a liquidated sum payable either immediately or at some certain future time, and

(c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition:

{Added by Act 3 of 1950, s.2} [Provided that where the said period of three months referred to in clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court reopens].

(2) If the petitioning creditor is a secured creditor, he shall in his petition either state that he is willing to relinquish his security for the benefit of the creditors in the event of the debtor being adjudged insolvent or give an estimate of the value of the security.In the latter case he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor.