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Abdul Wahid Khan Vs. Alan Chafas - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Case NumberM.F.A. No. 207 of 1979
Judge
Reported inILR1984KAR712; 1984(2)KarLJ202
ActsProvincial Insolvency Act, 1920 - Sections 6
AppellantAbdul Wahid Khan
RespondentAlan Chafas
Appellant AdvocateShankaranarayan, Adv.
Respondent AdvocateLeslie D' Silva, Adv.
Excerpt:
.....himself in order to defeat or delay a particular creditor, viz, the petitioner, out of several creditors.;a sole creditor can institute an insolvency petition and obtain an adjudication.;on facts it was held that respondent has proved the averments. - karnataka land reforms act, 1961.[k.a. no. 10/1962]. section 121-a : [subhash b. adi, .j] revision under-mysore (personal & miscellaneous) inams abolition act, 1954 - section 10 - determination of claims -rejection of claim one more application by the successor in interest - held, if an issue as regard to the grant of occupancy rights has been decided earlier between the parties, same is binding on the parties and the successor in interest. in this case, the father of the deceased petitioner herein having suffered the said order,..........order that the present appeal is instituted by the original respondent in that petition.4. the learned counsel for the appellant strenuously urged before us that the respondent-appellant was not given proper and adequate opportunity before the trial court. he further submitted that the petition itself was not maintain-able under section 6(d)(ii) and (iii) of the act and according to him the evidence on record was not at all sufficient to prove that the respondent was a debtor of the petitioner. as against that the learned counsel appearing for therespondent in this appeal argued repelling the submission made by the appellant and supporting the reasons advanced in the judgment by the trial court.5. the points, therefore, that arise for our consideration in this appeal are :1. whether.....
Judgment:

Sabhahit, J.

1. This appeal by Abdul Wahid Khan is directed against the Order dated 22nd November, 1978, made by the III Additional District Judge, Bangalore inI.C.No. 16 of 1968, on his file, declaring the present appellant insolvent under Clauses (ii) and (iii) of Section 6(d) of the Provincial Insolvency Act, 1920.

2. The creditor Alan Chavas, filed a Petition against Abdul Wahid Khan, as respondent to declare him as an insolvent on the following averments.

The respondent in the Petition was engaging in forward trading in Stock Exchange, through the Petitioner as per the Stock Exchange Rules and in that regard he became liable to pay to the Petitioner a sum of Rs. 1,00,5785 as per the statement of accounts. The debt was not secured. Within three months immediately before the presentation of the Petition, the respondent committed acts of insolvency by departing and absenting himself from his dwelling house which is his usual place of business and further he secluded himself so as to defeat and delay his creditors. The petitioner on several occasions called at the residence of the respondent in the Petition, in order to obtain payments; he was, however, not available and though several registered letters and notices were sent, the respondent evaded to receive the same and they were returned with an endorsement that the addressee was not available at the delivery time. Therefore, the petitioner has filed the Petition praying that the respondent be adjudged as insolvent under Clauses (ii) and (iii) of Section 6(d) of the Provincial Insolvency Act.

3. The respondent could not be served through Court or by registered post. Ultimately he was served by substituted service by publishing the notice in the daily newspaper ' Deccan Herald ' dated 14th July, 1969 and he appeared through lawyer on 12-8-l969. The Court after hearing dismissed the petition by its order dated 14-1-1972. The petitioner came up in appeal before this Court in MFA No. 319 of 1972. In that appeal this Court on 29-1-1974 set aside the order of the trial Court and remanded the matter for fresh disposal after giving opportunity to both parties to adduce additional evidence, if any, on their behalf. After remand the Counsel for the respondent was served and the Court fixed the case for hearing on 25-10-1976. On that date the petitioner closed his case by examining himself and the case was posted for the respondent's evidence on 22-11-1976. The respondent was absent. Again it was posted on 6-12-1976 on which date also the respondent and his Counsel remained absent. Accordingly, the Court closed the case of therespondent and fixed the case for arguments on 11-1-1977. On 11-1-1977 Petitioner's Counsel prayed for time for argument and it was adjourned to 20-1-1977 and again it was adjourned to 2-2-1977 on which date the Respondent's Counsel prayed for time. It was again adjourned to 8-2-1977 and then to 19-2-1977. On 19-2-1977 again the respondent's Counsel prayed for time. Thereafter the arguments were heard and since the Presiding Officer was transferred the case was again adjourned from time to time and ultimately thearguments were heard on 15-11-1978 and the matter was posted for orders on 20-11-1978 and from that date to 22-11-1978 on which date the orders were passed holding that the respondent was an insolvent. It is against that order that the present appeal is instituted by the original respondent in that petition.

4. The learned Counsel for the appellant strenuously urged before us that the respondent-appellant was not given proper and adequate opportunity before the Trial Court. He further submitted that the petition itself was not maintain-able under Section 6(d)(ii) and (iii) of the Act and according to him the evidence on record was not at all sufficient to prove that the respondent was a debtor of the Petitioner. As against that the learned Counsel appearing for therespondent in this appeal argued repelling the submission made by the appellant and supporting the reasons advanced in the judgment by the trial Court.

5. The points, therefore, that arise for our consideration in this appeal are :

1. Whether there is substance in the submission that the appellant was not given adequate opportunity before the Trial Court?

2. Whether the Petition itself is not maintainable ?

3. Whether the Trial Court was justified in holding that prima facie the Petitioner proved that the respondent was a debtor in a sum of more than Rs. 500/-?

6. Point No. 1: We have quoted above the extract of the order sheet; that would clearly show that several opportunities were given to the respondent to examine himself and his witnesses, but the respondent failed to avail of the opportunity and examine himself before the Trial Court. Therefore, it is clear that sufficient opportunity was given to the respondent before the Trial Court. The contention of the learned Counsel for the appellant that adequate opportunity was not given to the present appellant-respondent before the Trial Court has no substance.

7. Point No. 2 : The learned Counsel invited our attention to the wordings of Clauses (ii) and (iii) of Section 6 (d) of the Act. It reads :

'(d) if, with intent to defeat or delay his creditors,-

(i) ..........

(ii) he departs from his dwelling house or usual place of business or otherwise absents himself.

(iii) he secludes himself so as to deprive his creditors of the means of communicating with him ;'

The learned Counsel submitted that the Legislature in its wisdom has used the word 'creditors' and not 'creditor'. Therefore, he submitted that in order to attract the clauses there must be a body of creditors and not merely one creditor. In support of his submission he relied upon a decision of the Rangoon High Court, in the case of Maung Nyun Tin -v.- SawEu Hoke1. The decision merely states that under Section 6(d) of the Act, it is an essential feature of an act of insolvency that the act should be done with intent to defeat or delay the creditors generally by the debtor. It is insufficient to allege and prove that the act was done with intent to defeat or delay any particular creditor. An attempt by the debtor to deprive any one creditor of the fruits of a decree against him is not an act of insolvency Thus it is clear that what all the decision states is, the intent should be to defeat or delay the entire1. AIR. 1935 Rangoon 281,body of creditors and not merely a particular creditor. In the instant case, the Petitioner in the Petitioners clearly averred : -

'That the said Abdul Wahid Khan, within three months before the date of presentation of this petition, has committed the following acts of insolvency, namely with intent to defeat and delay his creditors, of whom I am one, departs and absents himself from his dwelling house, which is usual place of business, and further secludes himself so as to deprive his creditors, of whom I am one, of the means of communicating with him.'

Thus it is averred in the Petition that the debtor absents himself from the house or secludes not merely from a particular creditor viz., the petitioner, but is specifically averred that he does so to evade the entire body of creditors including the present petitioner. After the institution of the Petition, notice was published in the Gazette, but no other creditor appeared. Hence, this is not a case where it is averred that the debtor is trying to seclude or absent himself in order to defeat or delay a particular creditor, viz , the petitioner, out of several creditors.

8. The next point that was urged before us is that since the Legislature in its wisdom has used the word 'creditors' in sub-clause (iii) of Clause (d) of Section 6 of the Act, it would not be enough if there was one creditor instead of a body of creditors. We are constrained to say there is no substance in this point. Creditors include the sole creditor also. In fact, the learned Counsel for the respondent invites our attention to Section 9(1) of the Act, which says :-

(1) A creditor shall not be entitled to present an insolvency petition against the debtor unless -

(a) ............

(b)...........

(c) ..............

That shows that a sole creditor can institute an insolvency petition; that apart this point came up forconsideration specifically, whether a sole creditor can obtain an adjudication in insolvency under Section 6(d)(ii) and (iii) of the Act, before a Division Bench of the Madras High Court in the case of Sarangapani Chetty-v.-Perumal Naidu, : AIR1968Mad216 . His Lordship Chief Justice Anantanarayanan, in para 7 of the judgment has ruled that it is not enough if the debtor transfers his interests to a particular creditor among the body of creditors; but the sole creditor can bring an application under Section 6(d)(ii) and (iii) of the Provincial Insolvency Act. The Rangoon Decision is distinguished. It is specifically observed therein after reviewing the authorities that the Insolvency law has always recognized that the sole creditor of a debtor can obtain an adjudication in insolvency. We respectfully agree with the proposition. Therefore, there is no substance in the sub-mission made by the learned Counsel that the sole creditor cannot bring an application for adjudicating the respondent as insolvent under Section 6(d)(ii) and (iii).

9. Point No. 3: The next point that was urged before us by the learned Counsel for the appellant is that there is no evidence on record to show that the appellant was a debtor of the petitioner prima facie to the extent of more than Rs. 500/- The petitioner has examined himself as PW-1 and has sworn that he is engaged in business as Stock Broker in the Bangalore Stock Exchange and respondent had business with him for the purchase and sale of stocks and shares by issuing oral and written orders and in that regard he was liable in a sum of Rs. 1,00,578.85 P. He has also produced the books relating to business and they are Exs. P. 1 to P.4. He further stated how prior to the date of Exs. P.1 (a), which is dated 3-5-68 the respondent did not owe him any-thing in respect of the business and in that regard he also referred to Ex. P1 (b), the previous statement of accounts datedl9-4-1968. He has further stated that he was sending the statement of accounts in the prescribed form to the Respondent once in every fortnight as per the Stock Exchange Rules. It is elicited in his cross-examination that on 19-4-1968 the petitioner was due to the respondent in a sum of Rs 2,097 as mentioned in Ex. P. 1 (b). The petitioner has averred that on 16-2-1968 the respondent was due to him in a sum of Rs, 7,426 01 and on a demand made by him for the amount as per the statement of accounts presented, the respondent paid him Rs. 7,400/- by means of a cheque. These are elicited in the cross-examination of the petitioner. That would clearly establish that the Respondent had business with the Petitioner in the matter of purchase and sale of stocks in the Stock Exchange.

10. The Petitioner has further sworn that on 3-5-68 the Respondent owed him Rs. 79,748.85 as per the account sheet Ex. P.l(a) and thereafter in respect of the further transaction as stated in Ex.P.l(c) he became due in a sum of Rs, 20,830/-as on 17-5-1968, thus, making up a total of Rs. 1,00,578.85 P. He has further sworn that the originals of Ex P.1(a), l(b) and I(c) have been forwarded to the Respondent. It is elicited in his evidence that in respect of the transactions he was dealing in, contract forms used to be prepared and sent. He has spoken to Ex.P.3(a) and 4(a) to P.4(k) which are the contract forms relating to the Respondent's transactions. The Learned Trial Judge, has believed the version of the Petitioner in view of his own testimony, supported by documents mentioned above and the non-examination of the Respondent, In that view the Trial Court has come to the conclusion that the respondent was due to the Petitioner prima facie in a sum of more than Rs.500/- at any rate and that finding was necessary to be given under the Act. It may also be noted that the respondent either before remand or after remand did not care to enter the box and deny the averments made by the Petitioner. Therefore, in view of the testimony of the Petitionersupported by the documents, we have no reason to differ from the finding of the Trial Court that the Respondent was due to the Petitioner prima facie in a sum of Rs. 500/- at the time of presenting the Petition. In addition to the sworn testimony of the Petitioner, the Petitioner has sent letters as per Exs, P.5 and P.6, under certificate of posting as per Ex.P.7 demanding the amount due. He did not receive back the originals. This raises a presumption that the originals must have been received by the Petitioner. He did not raise his little finger against it. That further corroborates that the Petitioner had to recover more than Rs. 500/- from the Respondent. Hence there is no substance in the submission made before us by the Learned Counsel for the appellant that the Trial Court was not justified in holding that the Respondent was prima facie due in a sum of more than Rs. 500/- to the Petitioner.

11. Adverting lastly, to the point urged before us by the Learned Counsel for the appellant, viz., that the evidence on record is not sufficient to show that the Respondent absented himself with a view to defeat or delay the creditors or that he secluded from the creditors, the Trial Court has discussed this aspect at length. The petitioner sent two registered notices to the Respondent as per Ex. P. 8 and P. 16 to the address of the Respondent. They were returned as the addressee was not found for delivery. The Petitioner has further sworn that he went 3 to 4 times to the house of the Respondent, but he could not find him in the house. His wife told him that he was not in station. It is true that if this was the only evidence, then perhaps the Court could not have come to the conclusion that the Respondent was trying to evade or seclude himself with a view to defeat or delay the creditor. But the entire conduct of the Respondent is to be seen. The Petitioner, not being able to trace out the whereabouts of the Respondent got a notice published in the Deccan Herald dated 11-7-1968 giving public notice to all concerned to inform the whereabouts of the Respondent, if they had any knowledge about it. The notice reads :-

' Any information regarding the present whereabouts of Mr. Abdul Wahid Khan (formerly of Savanur) residing at 13, Benson Road Bangalore, may kindly be forwarded to the undersigned.

Allan Chaves,

19/3, Cunningham Road,

Bangalore '

In spite of it, the Respondent did not turn up and present himself. Exs. P. 14 and P. 15 are the bills and vouchers given by the Deccan Herald Office. Respondent could not be served the suit summons when it was sent through bailiff or registered post. Ultimately it had to be got published in the Deccan Herald daily newspaper dated 14th July, 1969. Respondent did not present himself before the Court for examining himself either before remand or after remand. It is in these circumstances, that the Trial Court has come to the conclusion that the Petitioner has proved the averments made in the Petition under Clauses (ii) and (iii) of sub-section (d) of Section 6 of the Provincial Insolvency Act. We have no reasons to differ.

In the circumstances, we have no reasons to differ from the findings of the Trial Court. We are constrained to hold that the appeal is devoid of merits and the same is liable to be dismissed. Accordingly, we dismiss it.

Order on the oral Application for Grant of Certificate of fitness to appeal to the Supreme Court.

After the judgment was pronounced the Learned Counsel for the appellant prayed for grant of certificate of fitness to appeal to the Supreme Court.

We are of the considered view that this case does not involve any substantial question of law of generalimportance, which requires to be determined by the Supreme Court of India.

Hence, the certificate prayed for is refused.


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