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Report No. 26

38. Cases in which court must refuse an absolute discharge.-(1) The court shall, on proof of any of the facts hereinafter mentioned, either-

(a) refuse the discharge; or

[Section 42(1), part, RA.]

(b) suspend the discharge for a specified time; or

(c) suspend the discharge until a dividend of not less than twenty-five naye poise in the rupee has been paid to the creditors; or

(d) require the insolvent as a condition of his discharge to consent to a decree being passed against him in favour of the Official Assignee for any balance or part of any balance of the debts provable under the insolvency which is not satisfied at the date of his discharge; such balance or part of any balance of the debts to be paid out of the future earnings or after-acquired property of the insolvent in such manner and subject to such conditions as the court may direct; but in that case the decree shall not be executed without leave of the court, which leave may be given on proof that the insolvent has since his discharge acquired property or income available for payment of his debts.

[Cf. section 39(1) part and (2), part, P.T.A.]

(2) The facts hereinbefore referred to are-

(a) that the insolvent's assets are not of a value equal to fifty naye paise in the rupee on the amount of his unsecured liabilities, unless he satisfies the court that the fact that the assets are not of a value equal to fifty naye paise in the rupee on the amount of his unsecured liabilities has arisen from circumstances for which he cannot justly be held responsible;

(b) that the insolvent has omitted to keep such books of account as are usual and proper in the business carried on by him and as sufficiently disclose his business transactions and financial position within the three years immediately preceding his insolvency;

(c) that the insolvent has continued to trade after knowing himself to be insolvent;

(d) that the insolvent has contracted any debt provable in insolvency without having at the time of contracting it any reasonable or probable grounds of expectation (the burden of proving which shall lie on him) that he would be able to pay it;

(e) that the insolvent has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities;

(f) that the insolvent has brought on, or contributed to, his insolvency by rash or hazardous speculations, or by unjustifiable extravagance in living, or by gambling, or by culpable neglect of his business affairs;

[As to "or" see section 39(1)(f), P.T.A.]

(g) that the insolvent has, within three months preceding the date of the presentation of the petition, when unable to pay his debts as they became due, given an undue preference to any of his creditors;

(h) that the insolvent has on any previous occasion been adjudged an insolvent or made a composition or arrangement with his creditors;

(i) that the insolvent has concealed or removed his books or his property or any part thereof, or has been guilty of any other fraud or fraudulent breach of trust;

[As to "books" see section 39(1)(f), P.T.A.]

(j) that the insolvent has put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any suit properly brought against him;

(k) that the insolvent has, within three months preceding the date of the presentation of the petition, incurred unjustifiable expense by bringing any frivolous or vexatious suit;

(l) that the insolvent has committed any offence under this Act or under sections 421 to 424 of the Indian Penal Code (45 of 1860).

[Section 42(1), P.A.] [Cf. section 39(1), part and (2), part, P.T.A.]

(3) For the purposes of section 37 and of this section, the report of the Official Assignee shall be deemed to be evidence; and the court may presume the correctness of any statement contained therein.

[Section 42(2), P.A.] [Cf. section 39(4), P.T.A.]



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