Report No. 26
Sub-clause (1).-Follows existing section 9(1) of the Provincial Act, as amended in 1950 and section 12(1), Presidency Act. Language of the latter Act has been followed.
Sub-clause (2).-Follows section 9(2) of the Provincial Act. [Compare section 12(2) of the Presidency Act].
Transactions assented to by creditors.-It was decided in England as early as the 18th century that a creditor who assented to a deed of arrangement was precluded from relying on it as an act of bankruptcy, vide Bamford v. Baron, (1788) 2 TR 594, and that has been accepted as the law ever since, notwithstanding that successive statutes on bankruptcy had remained silent on the question1.
That principle has been accepted in the law of this country2, vide Kheta Mal v. Chuni Lal, 1879 ILR 2 All 173 and Rukmani Ammal v. Rajagopala, 1924 ILR 48 Mad 294. The question whether an express provision enacting this principle and extending it to all transactions, written or oral, to which the creditor has consented, should be embodied has been considered. It is felt that it is unnecessary to do so.
Registration.-The three months period for presentation of the petition is to be counted from registration where the act of insolvency is constituted by an instrument requiring registration3-4. That has been clarified in view of the uncertainty prevailing on the subject.
Sub-clause (3).-Is new. It is framed on substantially the same lines as section 14(1), Limitation Act, 1963. The present5 position is that no extension of time is allowed on the ground of the period spent in an unsuccessful insolvency proceeding previously prosecuted in a wrong court. It is considered that such a relaxation should be allowed. It, however, appears unnecessary to allow this relaxation for defects other than want of jurisdiction.
1. Williams, p. 4.
2. Mulla, (1958), p. 157.
3. See case-law discussed in Ramasubba v. Official Receiver, AIR 1963 Mys 257 (September, 1963, Hegde J).
4. Compare clauses 54 (55).
5. See Mulla, (1958), pp. 162 and 163.