(1) On the date fixed for the hearing of an application made under section 24, the Court shall decide the following points as preliminary issues, that is to say:-
(a) whether the person for the adjustment of whose debts the application has been made is a debtor within the meaning of clause (d) of section 23;
(b) whether the creditor or creditors are holding a valid decree against such debtor;
(c) whether the creditor or creditors have any other debts against the debtor on the basis of valid documents and accounts maintained by him or them in the regular course of business.
(2) If the Court finds that such person is not a debtor or that the creditor or creditors are not holding a valid decree or have no other debts against the debtor, the Court shall dismiss the application forthwith.
(3) If the Court finds the person making an application under section 24, or the person against whom an application is made under that section, to be a debtor, the Court shall proceed to take accounts and reduce the debt in the manner hereinafter provided.
(a) whether the person for the adjustment of whose debts the application has been made is a debtor within the meaning of clause (d) of section 23;
(b) whether the creditor or creditors are holding a valid decree against such debtor;
(c) whether the creditor or creditors have any other debts against the debtor on the basis of valid documents and accounts maintained by him or them in the regular course of business.
(2) If the Court finds that such person is not a debtor or that the creditor or creditors are not holding a valid decree or have no other debts against the debtor, the Court shall dismiss the application forthwith.
(3) If the Court finds the person making an application under section 24, or the person against whom an application is made under that section, to be a debtor, the Court shall proceed to take accounts and reduce the debt in the manner hereinafter provided.
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More sections of this act
Section 1 · Short title, extent and commencement.Section 2 · Definitions.Section 3 · Revival of all discharged debts under Ordinance VII of 1975.Section 4 · Discharge of certain debts and consequences thereof.Section 5 · Prohibition against disposal of pledged property, etc. and penalty.Section 6 · Power of certain officers to enforce delivery of possession of property to debtor.Section 7 · Creditor may dispute debtor’s claim.Section 8 · Power of entry and search.India Code, Government of India. Text fetched 18 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.