GURUSIDESHA S/O. RACHAPAP HATROTEA vs CANARA BANK

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IN THE HIGH COURT OF KARNATAKA AT DHARWAD



TH
DATED THIS THE 11 DAY OF JUNE, 2026

BEFORE

THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM


WRIT PETITION NO. 100802 OF 2021 (GM-CPC)

BETWEEN:

GURUSIDESHA
S/O. RACHAPPA HATROTE,
AGE: 56 YEARS, OCC: NIL,
R/O. KUMARA NILAYA,
DESHPANDE NAGAR, HUBBALLI,
DIST: DHARWAD-580020.
… PETITIONER
(BY SRI DINESH M. KULKARNI, ADVOCATE)

AND:

CANARA BANK,
REPRESENTED BY ITS MANAGER,
R/O. TRAFFIC ISLAND BRANCH,
HUBBALLI, DIST: DHARWAD-580020.
… RESPONDENT
(BY SRI C.V.ANGADI, ADVOCATE)

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227











MOHANKUMAR
B SHELAR

Digitally signed by
MOHANKUMAR B
SHELAR
Location: High Court of
Karnataka, Dharwad Bench
Date: 2026.06.20 11:30:02
+0530
OF THE CONSTITUTION OF INDIA, PRAYING TO ISSUE WRIT IN THE
NATURE OF CERTIORARI BY QUASHING THE IMPUGNED ORDER
DATED 23.02.2021 PASSED BY PRL. SENIOR CIVIL JUDGE AND JMFC,
HUBBALLI IN O.S. 118/2018 ON I.A.NO.3 VIDE ANNEXURE-F AS
NULL AND VOID AND ETC.,

THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN
B’GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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ORAL ORDER

(PER: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM)


The present writ petition is filed by the defendant
assailing the order passed on I.A.No.3 by the Court of first
instance in O.S.No.118/2018, whereby the application filed
by the petitioner under Section 10 of the Code of Civil
Procedure, 1908 (for short ‘CPC’) seeking stay of further
proceedings in the recovery suit, on the ground of
pendency of insolvency proceedings in I.C.No.30/2015,
came to be rejected. Aggrieved by the said order, the
defendant has approached this Court under Article 227 of
the Constitution of India.
2. Learned counsel appearing for the petitioner,
reiterating the grounds urged in the writ petition, would
vehemently contend that the Court below has committed a
serious error in rejecting the application seeking stay of
the suit proceedings. Elaborating his submissions, he
would contend that the petitioner had initiated insolvency

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proceedings much prior to the institution of the recovery
suit by the respondent-Bank and therefore, once the
insolvency Court was seized of the matter, the
respondent-Bank could not have pursued parallel
proceedings before the Civil Court. Placing reliance on
Section 29 of the Provincial Insolvency Act, 1920 (for
short, ‘the Act’), he would argue that the object of the Act
is to centralize all claims against an insolvent before one
forum and consequently, continuation of the recovery suit
would defeat the very scheme of insolvency law. He would
therefore submit that the Court below ought to have
stayed further proceedings in O.S.No.118/2018 till the
culmination of insolvency proceedings.
3. I have given my anxious consideration to the
submissions made by the learned counsel for the
petitioner. I have also carefully examined the order
impugned and the material placed on record.

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4. The undisputed facts indicate that the
respondent-Bank has instituted O.S.No.118/2018 seeking
recovery of the amount allegedly due from the petitioner.
The petitioner, however, sought stay of the said
proceedings by filing I.A.No.3 contending that insolvency
proceedings initiated by him in I.C.No.30/2015 were
already pending consideration before the competent
Insolvency Court and therefore, the subsequently
instituted recovery proceedings were liable to be stayed.
5. In order to appreciate the rival contentions, it
would be necessary to examine the scope and ambit of
Section 29 of the Provincial Insolvency Act, 1920, which
reads as under:
“29. Stay of pending proceedings.- Any
Court in which a suit or other proceeding is pending
against a debtor shall, on proof that an order of
adjudication has been made against him under this
Act, either stay the proceedings, or allow it to
continue on such terms as such Court may impose.”

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6. A plain and meaningful reading of Section 29
would indicate that the provision does not create an
automatic bar against institution or continuation of civil
proceedings merely because an insolvency petition is filed.
The legislative mandate contained in Section 29 becomes
operative only upon proof that an order of adjudication has
been made against the debtor under the provisions of the
Act. Therefore, the crucial event which triggers the
applicability of Section 29 is not the filing of an insolvency
petition, but the passing of an order adjudicating the
debtor as insolvent.
7. The expression “adjudication” occurring in
Section 29 has a definite legal connotation under the
insolvency jurisprudence. An order of adjudication is a
formal judicial determination by the Insolvency Court
declaring a person to be an insolvent after examining the
requirements prescribed under the Act. Such adjudication
is not a mere procedural step. It is only upon adjudication
that the debtor acquires the legal status of an insolvent

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and the statutory consequences flowing from such
declaration come into existence. Upon adjudication, the
estate of the insolvent becomes subject to the control and
supervision of the Insolvency Court and the rights of
creditors are regulated in accordance with the scheme of
the Act.
8. It is therefore evident that until an order of
adjudication is made, the debtor continues to retain his
ordinary legal character and his assets do not vest in the
receiver by operation of law. Correspondingly, the
creditors are not deprived of their ordinary remedies
available under law. Mere presentation of an insolvency
petition or pendency of insolvency proceedings does not
create any statutory embargo against creditors pursuing
independent proceedings for recovery of their dues. The
language employed by the Legislature is explicit and
unambiguous. The Court cannot substitute the expression
“filing of insolvency petition” in place of the phrase “order
of adjudication” occurring in Section 29.

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9. The words employed by the Legislature,
namely, “on proof that an order of adjudication has been
made against him under this Act” constitute a condition
precedent for invoking Section 29. Unless such
adjudication is demonstrated, the question of staying a
suit or proceeding does not arise. The legislative intent is
manifest that only after the Insolvency Court assumes
complete jurisdiction over the estate of the insolvent by
passing an order of adjudication, the other Courts are
required to consider staying parallel proceedings.
Therefore, the petitioner’s contention that mere pendency
of insolvency proceedings would attract Section 29 is
wholly misconceived and contrary to the plain language of
the statute.
10. If the facts of the present case are examined in
the light of the above principles, it becomes evident that
when the respondent-Bank instituted the recovery suit in
O.S.No.118/2018, the petitioner had merely initiated
insolvency proceedings by presenting a petition under

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Sections 7 and 10 of the Act. Admittedly, no order
adjudicating the petitioner as insolvent had been passed
by the competent Court. In the absence of an adjudication
order, the essential jurisdictional requirement
contemplated under Section 29 was conspicuously absent.
Therefore, the petitioner could not have sought stay of the
recovery suit by placing reliance on Section 29 of the Act.
11. During the course of hearing, this Court
specifically enquired with the learned counsel for the
petitioner regarding the present status of Insolvency
Petition No.30/2015. Learned counsel fairly submitted that
the insolvency petition itself has been rejected by the
competent Court and that the petitioner has challenged
the said order by filing a Miscellaneous First Appeal, which
is presently pending consideration before this Court.
12. This subsequent development further fortifies
the conclusion reached by the Court below. Once the
insolvency petition itself stands rejected, the petitioner

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cannot derive any benefit from the pendency of the
insolvency proceedings. Mere pendency of an appeal
challenging the rejection of the insolvency petition cannot
be equated with an order of adjudication contemplated
under Section 29. Unless and until an adjudication order is
passed declaring the petitioner as insolvent, the
respondent-Bank cannot be restrained from pursuing its
independent remedy before the competent Civil Court.
13. The Court below, on a proper appreciation of
the statutory scheme and the material available on record,
has rightly concluded that Section 29 of the Act has no
application to the facts of the present case. The reasoning
assigned by the Court below is in consonance with the
plain language of the statute and does not suffer from any
legal infirmity. This Court does not find any jurisdictional
error, patent illegality or perversity in the order impugned
warranting interference in exercise of supervisory
jurisdiction under Article 227 of the Constitution of India.

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14. For the reasons stated supra, the writ petition is
devoid of merits and is accordingly dismissed .
No order as to costs.

Sd/-
(SACHIN SHANKAR MAGADUM)
JUDGE

CA
CT:GSM
List No.: 2 Sl No.: 8