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Issues:
1. Maintainability of insolvency petition under the Provincial Insolvency Act against a corporation or company. 2. Interpretation of section 8 of the Act regarding exemption of corporations from insolvency proceedings. 3. Comparison of protection under the Act for insolvents against the State and corporations. Issue 1: Maintainability of insolvency petition against a corporation or company: The case involved the filing of an insolvency petition by the petitioner against a corporation, the Food Corporation of India, to protect himself from a recovery suit. The Court returned the insolvency petition citing section 8 of the Provincial Insolvency Act, which prohibits insolvency petitions against corporations or companies. The petitioner argued that the Act allows both debtors and creditors to file insolvency petitions, but the respondent contended that the bar in section 8 is absolute. Issue 2: Interpretation of section 8 of the Act: Section 8 of the Act exempts corporations or companies from insolvency proceedings. The Court observed that the exemption for companies and corporations is absolute, regardless of whether the insolvency petition is filed by a creditor or a debtor. The petitioner relied on a Calcutta High Court judgment to argue that if the State is not exempt from insolvency proceedings, companies should not be treated differently. However, the Court emphasized that the language of section 8 does not allow for such distinctions. Issue 3: Protection under the Act for insolvents against the State and corporations: The Court discussed section 31 of the Act, which provides protection for declared insolvents. Referring to the Calcutta High Court judgment, it was clarified that the protection order under section 31 applies even against the State. However, the Court concluded that since insolvency petitions are not maintainable against companies, the protection order against them becomes insignificant. The Court dismissed the revision petition, upholding the decision to return the insolvency petition against the Food Corporation of India. In conclusion, the judgment clarified the absolute exemption of companies and corporations from insolvency proceedings under section 8 of the Provincial Insolvency Act, emphasizing that the distinction between petitions filed by creditors and debtors is irrelevant in this context. The comparison with protection orders for insolvents against the State highlighted the specific provisions of the Act regarding insolvency proceedings against different entities.
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