Subsisting debt required for insolvency adjudication until the order is made under the Presidency-towns Insolvency Act.

Under the Presidency-towns Insolvency Act, a petitioning creditor must show a subsisting, enforceable debt not only when the petition is filed but also at the hearing and until the adjudication order is made. Section 12 governs presentation of the petition, while Section 13(2) requires proof of the debt and the act of insolvency at the hearing. The Bombay HC held that a debt which becomes time-barred before hearing cannot support adjudication. The Court also noted that pendency of an insolvency petition does not suspend limitation, and the creditor could preserve the claim by acknowledgment, part payment, or timely suit.

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Issues: Whether a creditor seeking an adjudication order under the Presidency-towns Insolvency Act, 1909 must establish that the debt subsists not only when the petition is presented but also at the date of hearing and up to the making of the adjudication order.

Analysis: Section 12 governs the conditions for presenting an insolvency petition, but Section 13(2) requires proof at the hearing of the petitioning creditor's debt and the act of insolvency. The Court distinguished authorities dealing with proof of debts after adjudication from the present question of whether adjudication itself can be made when the debt has become time-barred before hearing. It held that the statutory requirement of proof at the hearing necessarily means a subsisting and enforceable debt at that stage, and the debt must continue to subsist until the adjudication order is made. The Court also noted that mere pendency of an insolvency petition does not suspend limitation, and the creditor could have kept the debt alive by acknowledgment, part payment, or suit within time.

Conclusion: The debt must subsist at the date of hearing and up to the making of the adjudication order. The issue was answered against the petitioning-creditor and in favour of the debtors.

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