Insolvency Proceedings Can't Be Abused To Evade Family Court's Maintenance Order: Bombay High Court

The Bombay High Court has held that proceedings under the Presidency-Towns Insolvency Act, 1909, cannot be invoked as a mechanism to frustrate or indirectly obtain a stay of a Family Court's maintenance order. The Court observed that insolvency relief cannot be granted to undermine a subsisting maintenance order, and clarified that insolvency proceedings cannot be used to obstruct the execution of Family Court directions.Justice Jitendra Jain was hearing an insolvency petition filed by the husband seeking a declaration that he be adjudged an insolvent on the ground that he was unable to pay arrears of ₹22,30,000 arising out of an order of the Family Court directing him to pay monthly maintenance of ₹25,000 to his wife. He contended that since his income was only ₹12,000–₹15,000 per month, he satisfied the requirements of Sections 9(1)(f) and 14(1)(a) of the Insolvency Act and was therefore entitled to be declared insolvent. The Court noted that the phrase used in the Explanation to Section 10 of the Act is that the Court “may” make an order, and hence, it is at the discretion of the Court whether to make an order of adjudication or not. The Court observed that the petitioner cannot be declared as insolvent as the petitioner had filed a Criminal Revision against the maintenance order, which was pending adjudication, and that the present petition was an attempt to stall the execution of the Family Court's order. “The Insolvency Act cannot be abused to seek stay of the Family Court order granting maintenance when the petitioner himself has challenged that order in Criminal Revision Petition. Any relief granted in this petition would amount to this Court adjudicating the said Revision Petition which is not permissible. The object of the Insolvency Act is not to encourage this course of action,” the Court observed. The Court further held that Section 14(1)(a), which merely prescribes the minimum debt required to file an insolvency petition, does not entitle the debtor to an automatic declaration of insolvency. The Court observed that the petitioner could not rely on Section 9(1)(f) (general acts of insolvency) when Section 9(2) specifically governs cases involving a decree or order for payment of money. No insolvency notice had been issued by the wife under Section 9(2), and therefore, the petitioner could not bypass the statutory scheme. The Court further remarked that the order of the Family Court has been challenged by the petitioner and, therefore, the sum directed to be paid may undergo a change. Even on this count, “debt”, assuming it is, has not crystallized and reached finality. Accordingly, the Court dismissed the petition, holding that seeking a stay of the Family Court order, the petitioner, under the guise of insolvency proceedings, would undermine the very purpose of the order passed by the Family Court and would embolden the debtor to escape liability through insolvency proceedings. Case Title: Mehul Jagdish Trivedi v. Manisha Mehul Trivedi [INSOLVENCY PETITION NO. 01 OF 2025]Click Here To Read/Download Order

Insolvency Proceedings Can't Be Abused To Evade Family Court's Maintenance Order: Bombay High Court

Saksham Vaishya

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