Whether under sec.28 (2) of The Provincial Insolvency Act , the money recovery suit is not maintainable pending Insolvency Petition ? - No. Or. VII, rule 1 C.P.C. - Money recovery suit filed after receiving Insolvency Petition Notice - Whether maintainable under sec.28(2) of Provincial Insolvency Act - Trail court dismissed the I.A. - Hence this C.R.P. - Their Lordships held that Pendency of proceedings as referred under Section 28(2) of the Provincial Insolvency Act refers to the pendency of proceedings subsequent to adjudication of the application, but not on mere filing of application seeking declaration of applicant as insolvent.- So the suit is maintainable - 2015 Telagana & A.P. msklawreports



Whether in view of pendency of insolvency
proceedings in I.P.No.34 of 2010, the suit filed by the 1st respondent is
barred under Section 28(2) of the Provincial Insolvency Act, 1920.

the petitioner/1st defendant has filed the present application in I.A.No.777
of 2014 under Order 7 Rule 11 r/w.Sec.151 CPC, for rejection of
plaint on the ground that the same is barred under law.  It is the case
of petitioner that he has already filed insolvency petition which is
pending in I.P.No.34 of 2010, seeking to declare him as insolvent and
soon after receipt of summons in the aforesaid I.P., the 1st
respondent/plaintiff has filed suit for recovery of money.
Trail court dismissed the I.A.
Hence this CRP
held that
From a reading of the provision under Section 28(2) of the
said Act, it is clear that, on making of an order of adjudication, the
whole of the property of the insolvent shall vest in the Court or in a
receiver as provided in the said Section and shall become divisible
among the creditors, and thereafter, after adjudication, it is not open to
any creditor to commence any suit or other legal proceeding, except
with the leave of the Court and on such terms as the Court may
impose.  It is clear from the said provision that Section 28(2) comes
into effect only after adjudication of the application filed by the
applicant under the provisions of the Provincial Insolvency Act, 1920.
Therefore, after adjudication of the application filed by the applicant
seeking to declare him as insolvent and during pendency of further
proceedings for division of properties to the creditors, no creditor can
institute any suit or commence any legal proceedings without the
leave of the Court.  Pendency of proceedings as referred under Section
28(2) of the Act refers to the pendency of proceedings subsequent to
adjudication of the application, but not on mere filing of application
seeking declaration of applicant as insolvent.

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