Law:

Section:

(a) Insolvency (Karachi Division) Act (III of 1909)--- ----Ss. 9 & 15(3)---Sindh High Court Rules (Original Side) Rr.586(2) & 586(1)---Insolvency petitions---Petitioners claimed to be agents working at a car showroom and having taken huge investments from different persons---Contention of the petitioners was that having incurred huge losses and after selling all their movable and immovable properties they were unable to settle their liabilities to the investors and accordingly they should be adjudged as insolvent and discharge certificate be issued in respect of their liabilities---Validity---Petitioners admitted before the court that there was no record of import of vehicles, manner of sales proceeds appropriation and claimed that they did not maintain any bank account or books of accounts and did not produce bank statements or income tax assessments---Petitioners had therefore, not complied with the provisions of the Insolvency (Karachi Division) Act, 1909---Specific grounds must have been stated in an application for declaring insolvency and under S.15(3) of the Insolvency (Karachi Division) Act, 1909; when a debtor's application was admitted, he shall unless the court otherwise directed, produce all his books of accounts---Petitioners had admittedly not given any specific grounds/details and had admittedly not complied with mandatory requirements of S.15(3) of the Act---Petitioners could not be adjudged as insolvent unless they obtained a certificate from the Official Assignee under Rule 586(2) of the Sindh High Court Rules (Original Side) which could not be granted under the said Rule 586(2), unless mandatory requirements of Rule 586(1) were fulfilled by the petitioners---Statements of the petitioners before the Official Assignee as well as the reports submitted by the Official Assignee established that the mandatory requirements of Rule 586(1) of the Sindh High Court Rules (Original Side) had not been complied with by the petitioners---Reports of the Official Assignee or contents thereof had not been denied by the petitioners and it appeared that they had not come to the court with clean hands as genuine debtors---Petitioners had filed the…

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