Bombay High Court: In an insolvency petition raising a question that can a debtor, facing arrears of maintenance ordered under Section 125 of the Criminal Procedure Code, 1973 (‘CrPC’), seek protection under the Presidency Towns Insolvency Act, 1909 (‘Insolvency Act’) by being declared insolvent, a Single Judge Bench of Jitendra Jain, J., while dismissing the petition, held that maintenance obligations are not ‘debts’ within the meaning of the Insolvency Act, and refused to declare the husband as insolvent.
Background:
The petitioner-husband, employed as a dance teacher, married the respondent-wife on 28-01-2014. Within two months, disputes arose, resulting in proceedings being filed by the wife before the Family Court. On 17-05-2021, the Family Court directed the husband to pay Rs 25,000 per month towards maintenance. The husband challenged the order claiming that his monthly income was only Rs 12,000 to Rs 15,000, and the arrears had accumulated to Rs 22,30,000, making compliance impossible. He also filed a criminal revision petition which was pending before the Court.
Additionally, the husband filed the present insolvency petition under Section 14 of the Insolvency Act seeking a declaration that he be declared as an insolvent and further that the execution proceedings in respect of the order directing Rs 25,000 to be paid as maintenance, be stayed. His counsel, relying on Sections 9(1)(f) and 10 of the Insolvency Act, asserted that since his debts exceeded Rs 500, he was entitled to be adjudged insolvent. He also relied on an order dated 15-07-2025 and contended that the act of filing a petition was an act of insolvency, and therefore, the Court could not adjudicate upon the maintainability of the petition.
Issue:
Whether the petitioner can be declared as an ‘insolvent’ under the Presidency Towns Insolvency Act, 1909, if according to him he is unable to pay the amount ordered by the Family Court.
Analysis and Decision:
The Court opined that Section 14(1)(a) of the Insolvency Act only lays down the qualifying amount of Rs 500 for presenting or filing the insolvency petition by a debtor which does not mean that automatically on a petition being filed, the Court has no option, but to declare the petitioner as an insolvent. Section 11 of the Insolvency Act also had no application as the husband was not imprisoned in execution of the decree of a Court for payment of money at the time of the prosecution of the insolvency petition.
The Court noted that Section 10 of the Insolvency Act which empowers the Court to declare a person insolvent, uses the word ‘may’, conferring discretion upon the Court, unlike provisions where ‘shall’ is used by the legislature to make a provision mandatory. The Court opined that the power to adjudicate a person as an insolvent cannot be read to be mandatory, and the Court has the discretion in the peculiar facts of a case to refuse a person from being declared as an insolvent.
The Court observed that the Insolvency Act could not be abused to seek stay of the Family Court’s order granting maintenance when the husband himself had challenged that order in a criminal revision petition. Any relief granted in this petition would amount to the Court adjudicating the said revision petition which is not permissible, and the Court cannot be used as a tool to do indirectly what is not permissible directly.
The Court further opined that reliance on Section 9(1)(f) of the Insolvency Act was misplaced, since Section 9(2) specifically provides that a debtor commits an act of insolvency if a creditor, who has obtained a decree or order for payment of money, serves upon the debtor a notice as provided under Section 9(3), and the debtor does not comply with that notice within the prescribed period. In such circumstances, unless the insolvency notice is set aside on an application by the debtor, he is to be treated as insolvent. As the wife had not issued any notice under Section 9(2), the Court observed that since there was a specific provision under Section 9(2) for dealing with insolvency proceedings on the basis of a decree or order for payment of money, the husband could not bypass this special provision and take shelter of Section 9(1)(f) of the Insolvency Act.
The Court further observed that the husband had adopted separate proceedings to challenge the Family Court’s order and by adopting the present proceedings he was attempting to stall these proceedings and avoid any arrest for non-compliance of any order. The Family Court’s order had already been challenged in the criminal revision proceedings, and therefore, allowing the present petition would permit the husband to adopt two parallel proceedings after electing one.
The Court also clarified that by the order dated 15-07-2025, there was no adjudication of the husband being declared as an insolvent, rather it only directed the Insolvency Registrar to determine whether any of the requirements of Section 14 of the Insolvency Act were satisfied for being adjudicated as an insolvent. Therefore, the order was only for modification of the ad-interim order sought by the objector.
The Court noted that the husband had submitted that he had taken loans prior to and post the Family Court’s order. The Court opined that if the husband’s contention that he was earning only Rs 15,000 and, therefore, was unable to pay maintenance was accepted, then why he did not make an application for being declared as insolvent in 2019 and 2023 when he had taken the loan and his income would have resulted in his incapacity to make the repayment. It was also unbelievable that the persons from whom he had taken a loan would not ask for repayment, nor had any statement of such lenders been furnished waiving the loan.
The Court relied on Hemavathiammal v. Kumaravelu Mudaliar, 1966 SCC OnLine Kar 158, wherein it was held that the amount payable for wife’s maintenance cannot be termed as a debt, but it is a moral duty and, therefore, an order declaring the respondent therein as an insolvent could not be passed under the Insolvency Act. Consequently, the Court observed that since the amount payable under the Family Court’s order could not be a ‘debt’, the present petition under Section 14(1)(a) was not maintainable.
The Court also clarified that Section 45 of the Insolvency Act was also inapplicable as it dealt with the effect of an order of discharge, whereas the present proceedings dealt with whether to adjudicate the husband as insolvent. Further, Section 45(1)(d) of the Insolvency Act provided that an order of discharge shall not release the insolvent from any liability under an order for maintenance under Section 488 of the Criminal Procedure Code, 1898 (‘CrPC 1898’). Section 45(1)(d) does not deal with CrPC, though Section 488 of the old law is pari materia to Section 125 of the new law. However, reading Section 488 of the CrPC 1898 to mean Section 125 CrPC would be rewriting the law and therefore, Section 45 could not support the husband’s case.
Based on the above analysis, the Court dismissed the present petition. Further, the Court held that seeking a stay of the Family Court’s order, the husband, under the guise of insolvency proceedings, would defeat the very purpose of the order, and it would encourage him to escape liability through insolvency. He could not be allowed to take the shield of ‘insolvency’ to protect himself from the sword of the Family Court’s order.
[Mehul Jagdish Trivedi v. Manisha Mehul Trivedi, Insolvency Petition No. 1 of 2025, decided on 20-11-2025]
Advocates who appeared in this case:
For the Petitioner: Siddh Pamecha i/by Kuber Wagle, Advocates.