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Report No. 76

3.12. Sectio.- Provisions in case of insolvency.-

The effect of insolvency on arbitration is dealt with in section 7. Sub-section (1) provides that where it is provided by a term in a contract to which an insolvent is a party that any difference arising thereof or in connection therewith, shall be referred to arbitration, the said term shall, if the Receiver adopts the contract, be enforceable by or against him (the Receiver) so far as it relates to any such differences. The common law rule was that insolvency did not itself cause a revocation of the submission nor did it give the trustee in bankruptcy an authority1 to revoke it. But insolvency was a ground to be taken into consideration for granting leave to the other party for revocation of the submission.2

1. Andrews v. Palmer, (1821) 4 B&L 250; Sircar Law of Arbitration in British India, (1942), p. 103.

2. Marsh v. Wood, (1829) 9 B&C 659.

Arbitration Act, 1940 Back

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