When plaintiff's insolvency bars suit
Full Text
(1) The insolvency of a plaintiff in any suit which the assignee or receiver might maintain for the benefit of his creditors, shall not cause the suit to abate, unless such assignee or receiver declines to continue the suit or (unless for any special reason the Court otherwise directs) to give security for the costs thereof within such time as the Court may direct.
(2) Procedure where assignee fails to continue suit, or give security.—Where the assignee or receiver neglects or refuses to continue the suit and to give such security within the time so ordered, the defendant may apply for the dismissal of the suit on the ground of the plaintiff's insolvency, and the Court may make an order dismissing the suit and awarding to the defendant the costs which he has incurred in defending the same to be proved as a debt against the plaintiff’s estate.
Plain English Summary
Regulates suits instituted by insolvent plaintiffs: the action does not abate if the Official Assignee/Receiver elects to continue and furnishes security for costs, but will be dismissed upon the assignee's refusal or neglect.
Key Legal Elements
- Insolvency Does Not Abate Automatically: Estate vests in Official Assignee / Resolution Professional.
- Assignee's Option to Continue: Official Receiver must elect to maintain the suit for creditors' benefit.
- Security for Defendant's Costs: Mandatory condition protecting the defendant from vexatious litigation.
- Dismissal for Neglect (Sub-rule 2): Defendant can move for dismissal if assignee fails to provide security.
Practical Note
Insolvency & IBC Interface: In modern commercial practice, where an individual plaintiff is adjudicated insolvent under the Provincial Insolvency Act or personal insolvency under the Insolvency and Bankruptcy Code (IBC), 2016, the Resolution Professional must be noticed under Rule 8 to adopt the litigation.
हिंदी पाठ
(1) ऐसे किसी वाद में जिसे समनुदेशिती (Assignee) या रिसीवर (Official Receiver) अपने लेनदारों के फायदे के लिए चालू रख सकता है, वादी के दिवाले से वाद का उपशमन तब तक नहीं होगा जब तक कि ऐसा समनुदेशिती या रिसीवर वाद चालू रखने से अथवा न्यायालय द्वारा नियत समय में खर्चों के लिए प्रतिभूति देने से इंकार न कर दे।
(2) प्रक्रिया जहां समनुदेशिती वाद चालू रखने या प्रतिभूति देने में असफल रहता है— जहां रिसीवर वाद चालू रखने या प्रतिभूति देने में उपेक्षा या इंकार करता है, वहां प्रतिवादी वादी के दिवाले के आधार पर वाद को खारिज करने का आवेदन कर सकेगा, और न्यायालय वाद खारिज कर सकेगा तथा प्रतिवादी के खर्चों को वादी की संपदा के विरुद्ध ऋण के रूप में प्रमाणित करने का आदेश दे सकेगा।