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. Precisely, it is the case of petitioner that 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.=Section 28 deals with the effect of an order of adjudication by the competent Court. 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. 6. Coming to the judgments relied on by the learned counsel for petitioner, Kalamalla Babakkas case (2 supra) deals with the issue of date of vesting of properties of insolvent in the receiver of the Court. Further, in Pentala Githavardhana Raos case (1 supra), a Division Bench of this Court has considered the scope of Section 28(2) of the Act and held that the intendment and purpose of Section 28(2) is broadly two-fold; (i) to make the entire estate of the insolvent vest in the Court or in a receiver the moment an order of adjudication is made and to make it available for distribution among the body of creditors, and (ii) to prohibit any creditor of the insolvent from proceeding against his property in respect of his debt or commence any suit or other legal proceeding, without the leave of the insolvency Court during the pendency of the insolvency proceedings. So, even in this judgment, it is not held that the provision under Section 28(2) of the Act comes into play on mere filing of application for declaration of petitioner as insolvent.
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. Precisely, it is the case of petitioner that 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.=Section 28 deals with the effect of an order of adjudication by the competent Court. 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. 6. Coming to the judgments relied on by the learned counsel for petitioner, Kalamalla Babakkas case (2 supra) deals with the issue of date of vesting of properties of insolvent in the receiver of the Court. Further, in Pentala Githavardhana Raos case (1 supra), a Division Bench of this Court has considered the scope of Section 28(2) of the Act and held that the intendment and purpose of Section 28(2) is broadly two-fold; (i) to make the entire estate of the insolvent vest in the Court or in a receiver the moment an order of adjudication is made and to make it available for distribution among the body of creditors, and (ii) to prohibit any creditor of the insolvent from proceeding against his property in respect of his debt or commence any suit or other legal proceeding, without the leave of the insolvency Court during the pendency of the insolvency proceedings. So, even in this judgment, it is not held that the provision under Section 28(2) of the Act comes into play on mere filing of application for declaration of petitioner as insolvent.