Provincial Insolvency Act, 1920

The Provincial Insolvency Act, 1920 sets out the process for declaring an individual person (not a company) legally insolvent -- essentially personal bankruptcy law for areas of Pakistan outside the Karachi Division (Section 1). It defines who counts as a "creditor," "debtor," and "secured creditor" (Section 2), and gives District Courts jurisdiction to hear insolvency cases (Section 3).

The Act lists the "acts of insolvency" that let a creditor or the debtor themselves start proceedings (Section 6), and spells out the petition process: who can petition and under what conditions (Sections 9-10), how a petition is verified and its required contents (Sections 12-13), and how the court decides whether to admit it (Sections 18-19). Once someone is formally adjudged insolvent (Section 27), the order protects them from having pending lawsuits continue against them (Section 29) and triggers publication of the adjudication (Section 30).

A large part of the Act deals with what happens to the insolvent person's property: appointing a receiver to take control of it (Sections 56-59), figuring out who gets paid first when there isn't enough money to cover everyone ("priority of debts," Section 61), and how dividends are calculated and paid to creditors (Sections 62-64). It also lets the court undo transfers the debtor made shortly before insolvency if they were essentially gifts to favoured creditors (Sections 53-54).

The debtor can apply for a "discharge" that releases them from the debts once the process concludes (Section 41), though the court must refuse an absolute discharge in certain circumstances, such as suspected fraud (Section 42). The Act also creates criminal offences for debtors who conceal property or otherwise abuse the process (Section 69), and for undischarged insolvents who dishonestly obtain credit (Section 72).

This is a very old law (1920) that has been amended repeatedly -- the extract shows numerous "Subs. by," "Ins. by," and "omitted by" footnotes tied to adaptation orders from 1949, 1964, 1975, and 1981. Readers should treat it as a historical framework and verify current wording, especially since insolvency law in Pakistan has evolved through later legislation.