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- Insolvency petition rejection by respondent No. 2 - Appeal dismissal by appellate court - Exemption of corporations from insolvency proceedings under section 8 of the Provincial Insolvency Act, 1920 The judgment revolves around the rejection of an insolvency petition by respondent No. 2 and the subsequent dismissal of the appeal by the appellate court. The petitioner filed an insolvency petition against Punjab National Bank, seeking to declare himself insolvent due to a decreed amount. However, the bank objected, citing section 8 of the Provincial Insolvency Act, 1920, which exempts corporations from insolvency proceedings. The respondent No. 1 accepted the bank's objection, leading to the rejection of the insolvency petition on 7-1-2001. The petitioner appealed this decision, but the appellate court upheld the rejection on 1-3-2001. The crux of the matter lies in determining whether the bank, being registered as a banking company under the Banking Regulation Act, 1949, can claim exemption from insolvency proceedings under section 8 of the Act. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 nationalized banking companies, including Punjab National Bank, making them a government company under section 617 of the Companies Act. This status as a government company aligns with the exemption clause for corporations under insolvency proceedings, as highlighted in the judgment. The judgment clarifies that the bank's registration as a company under the Companies Act, 1956, and subsequent nationalization under the Banking Companies Act, 1970, solidifies its status as a government company exempted from insolvency proceedings. The courts below correctly interpreted the law, emphasizing that the bank's exemption from insolvency proceedings is legally sound. Consequently, the writ petition challenging the rejection of the insolvency petition is dismissed, affirming the decisions of the lower courts and upholding the bank's exemption from insolvency proceedings.
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