1. This is a revision by Kishenlal (Respondent No. 3 in the Court of Civil Judge) against the order dated 31-3-1978 passed by the District Judge, Kolar in M.A. 20/76 reversing the order dated 6-3-76 passed by the Civil Judge, Kolar inI.C. 4/67 dismissing the petition filed under Section 6 of the Insolvency Act.
2. Respondent No. 2-Nathumal Satia executed a mort-gage in favour of Respondent No. 1's sonUdaychand for Rs. 6000/- on 27-9-1963. Respondent No. 2 also executed a simple mortgage in favour of Respondent No. 1-Gissoolal for Rs. 16,000/- on 24- 4-1974 as perEx.D1.
3. According to Respondent No. 1, Respondent No.2 Satia executed a pronote-Ex.D2 for Rs. 3,500/- in his favour on 30th April, 1964. According to him, the Respondent No. 2 borrowed again Rs. 1,200/- from him on 22-6 64 as per Ex.P2. Notwithstanding the several demands made,Respondent No.2 did not pay the said pronote debts and mort-gage debts. According to Respondent No. 1 - G.Gissoolal, Satia-Respondent No. 2 sold the 'B' schedule properties in favour of Respondent No. 3 Kishenchand on 20-2-65 under Ex.P6 with a view to defeat or delay his (RespondentNo.1's) claim and the claims of other creditors. Hence, he filed I..C. 1/65 before the District Judge, Kolar. He filed I..C.2/65 before the Civil Judge, Kolar. He filed another I.C. in theMunsiff Court. However, as the amount involved in the insolvency petition was less than Rs. 20,000/-, the District Court trans-the insolvency case to the Court of Civil Judge, Kolar. The Civil Judge has numbered it as I.C.4/67. The parties led both oral and documentary evidence. The Civil Judge held that the insolvency petition was a collusive one between Respondents 1 and 2 and that it was also fraudulent and it was only meant to avoid the sale deed executed byRespondent No. 2 in favour of Respondent No. 3. He accordingly, dismissed the petition. Respondent No. 1 who was the creditor-petitioner in the insolvency case, approached the District Judge with M.A. 20/76. The District Judge allowed the appeal and set aside the order passed by the Civil Judge and adjudged . Respondent No. 2 - Nathumal Satia as an insolvent. Hence, the revision byKishenlal (i.e. Respondent No. 3 in I.C. 4/67) who is a purchaser of 'B' Scheduleproperties from Respondent No. 3.
4. Learned Counsel Narasimhan appearing for Respondent No. 1-Gissoolal and Learned Counsel Sri Kamath appearing for RespondentNo. 2-Nathumal Satia submitted that the pre sent revision had been filed under the proviso of Section 75(1) of the Provincial Insolvency Act 1920 and this Court sitting in revision cannot interfere with the findings recorded by the District Judge at all. Sri Narasimhan quoted Chengayya v. M.V. Swaminatha Mudaliar & Others : AIR1979Mad116 . It reads :
'The High Court would not interfere under Section 75(1) merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court could not have arrived. The powers of revision of the High Court under Section 75(1) are narrow and interference is possible by this Court only on a question of law. The findings or fact rendered by the Tribunals created under the Act are findings which are final as provided for in Section 75(1) itself.'
The Madras High Court has referred to Srinivasa Naicker v. Engammal : AIR1962SC1141 , Narayana v. Kannabiran Mudaliar, 1974 Mad. L.J. 303, Official Receiver v. Lakshmi Ammal, 1974(2) Mad. L.J. 597 and Narayana Iyerv. A.C.A. Funds, CRP 107 of 1975. It is true that merely because another interpretation and another conclusion on the same facts is possible, the High Court sitting in revision will not bejustified in reappraising or reappreciating the evidence. Sri. Narasimhan then placed before me Sher Singh (dead) through L.. Rs v. Joint Director of Consolidation & Others, 1978 SC 1341. It reads :
'Section 48 of the U.P Consolidation of Holdings Act is in pari materia with Section 115 of the Civil P.C.. which provides for re visional jurisdiction of the High Court. It is well settled that the revisional jurisdiction of the High Court is confined to cases of illegal or irregular exercise or non-exercise or illegal assumption of the jurisdiction by the subordinate Courts. If a subordinate Court is found to possess the jurisdiction to decide a matter, it cannot be said to exercise it illegally or with material irregularity even if it decides the matter wrongly. In other words, it is not open to the High Court while exercising its Jurisdiction under Section 115 C.P.C. to correct errors of fact however gross or even errors of law unless the errors have relation to the jurisdiction of the Court to try the dispute itself.'
The said decision deals with the powers of the High Court under Section 115 C.P.C. It is nota case dealing with the revision provided by the proviso to Section 75(1) of the Insolvency Act. The wordings in the proviso to Section 75(1) of the Insolvency Act are entirely different from the wordings used in Section 115 C.P.C.
5. Then Learned Counsel Narasimhan relied on M/s. Chandrana Brothers v. Mrs. Jalajalaxmi S. Bhat : AIR1985Kant33 , This Court held :
'Where the Trial Court in a money suit, granted permission to the defendant to defend suit unconditionally but on terms the High Court could interfere with the order as the Trial Court committed a breach of the provision of law. The use of the conjunction 'or' in sub-rule (5) clearly shows that leave can, in law, be granted either unconditionally or upon terms. It cannot be both ways.'
This Court further held in the said case :
'The scope of Section 115 may be stated as follows. A subordinate Court should have jurisdiction and it should exercise it. It should commit an act in exercise of such jurisdiction. In doing so, there should be no breach of some provisions of law or material irregularity i.e. committing some error of procedure in the course of the trial, that may have affected the ultimate decision ; which can only have relation to jurisdiction. For example grabbing at jurisdiction. Though asubordinate Court has jurisdiction to decide finally on fact, such as, in an application under Section 5 of the Limitation Act and concludes on facts and if such conclusion is not based on evidence or material available or if such conclusion is arrived at after ignoring crucial evidence or material, the High Court has jurisdiction under Section 115(l)(c) to interfere with such an order as the ultimate decision on these facts relates to jurisdiction of the Court. If a subordinate Court renders a decision contrary to the law laid down by the High Court of a State or takes a wrong view of a legal provision, the High Court does have jurisdiction under Section 115(1) to interfere with such decision. The High Court has nojurisdiction to interfere in decision of subordinate Court on interpretation or construction of document though interpretation or construction of a document is generally deemed to be a question of law.'
6. Section 75(1) of the Provincial Insolvency Act, 1920 reads :
'The debtor, any creditor, the receiver or any other personaggrieved by a decision come to or an order made in the exercise of insolvency jurisdiction by a Court subordinate to a District Court may appeal to the District Court, and the order of the District Court upon such appeal shall be final :
Provided that the High Court, for the purpose of satisfying itself that an order made in any appeal decided by the District Court was according to law, may call for the case and pass such order with respectthereto as it thinks fit.'
Section 115 of Civil Procedure Code reads :
'The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such subordinate Court appears -
(a) to have exercised a jurisdiction not vested in it by law, or
(b) to have failed to exercise a jurisdiction so vested, or
(c) to have acted in the exercise of its jurisdiction illegally or with material irregularity
The High Court may make such order in the case as it thinks fit.'
Therefore, it is crystal clear that the High Court under Section 115 C.P.C may call for the records from thesubordinate Court and modify the order only if the subordinate Court has exercised jurisdiction not vested in it or has failed to exercise the jurisdiction which is vested in it or acted illegally or with material irregularity in exercising its jurisdiction. Therefore, the power for interference in revision under Section 115 C.P.C. is rather extremely limited and its scope is absolutely narrow. So far as the revisionaljurisdiction provided the proviso to Section 75(1) of the Provincial Insolvency Act is concerned, it cannot be equated with the revisional jurisdiction mentioned in Section 115 C.P.C. Revisional jurisdiction under the proviso to Section 75(1) of the Provincial Insolvency Act is undoubtedly larger in scope than the one provided by Section 115 C.P.C.
7. Learned Author Shri Mulla in The Law of Insolvency in India, Third Edition, at page 675 has stated :
'By the first proviso to Section 75(1) the High Court has power, for the purpose of satisfying itself that an order made in any appeal decided by the District Court was 'according to law', to call for the case and pass such order with respect thereto as it thinks fit. This proviso is in terms similar to Section 25 of the Provincial Small Causes Courts Act, 1887. The power given to the HighCourt by this proviso is very wide. In the exercise of this power the High Court may set aside any order if it is not 'according to law'. This power is much wider than the power of revision under Section 115 of the Code of Civil Procedure, 1908. Under that Section the High Court has no power to interfere unless the subordinate Court has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested, or has acted in the exercise of its jurisdiction illegally or with material irregularity. Only one right of appeal is provided by the Insolvency Act under Section 75 so far as decisions other than decisions under Section 4 of the Act concerned. The finally of the appellate order of the District Court can be challenged only by way of revision to the High Court as provided by the proviso to Section 75(1).'
It further reads as:
'Section 75 clearly contemplates that the High Court should be very reluctant to interfere in revision with the findings arrived at by the District Judge unless the order is perverse or palpably wrong.'
It is no doubt true that even in insolvency cases the High Court can exercise its revisional jurisdiction under Section 115 C.P.C. even apart from the revisional jurisdictionconferred on it by the proviso to Section 75(1) of the Provincial Insolvency Act. Learned Author Mulla has stated at page 676, on this aspect of the matter, in the following words :
'Revision under Section 115 of C.P.C.
By virtue of Section 5(21 the High Court has power to revise an order under Section 115 of the Code made by a District Court in the exercise of its insolvency jurisdiction. The only case, however, in which that section may be availed of is one where leave to appeal has been refused by the High Court under sub-section (3). As regards appellate orders of a District Court other than those mentioned in the second proviso tosub-section (J), no litigant would resort to Section 115 in preference to the first proviso tosub-section (1), the powers of the High Court under that proviso being much larger than those under Section 115 of the Code.Further, the powers of the High Court under Section 115 can only be invoked in cases in which no appeal lies to the High Court. There can therefore be no revision under that section of any of the orders referred to in sub-section (2), for such orders areappealable to the High Court. Nor can there be any revision of any of the orders specified in sub-section (3) unless the High Court has refused leave to appeal from such order. This then is the only case in which recourse may be had to Section 115. But the chances of the High Court entertaining a revisional application under that Section in a case when it has refused leave to appeal are on the face of it almost nil.'
Therefore, it becomes clear that the High Court in exercise of its revisional jurisdiction conferred on it by proviso to Section 75(1) can step - in and revise the order if the order is perverse and palpably wrong. The perversity of the order can be with reference to the approach made by the Appellate Court to the material on record. Ifthe Lower Appellate Court has not taken into consideration all the important material on record and has in a way wrongly interpreted the evidence, the order passed by the District Court will have to be charachcharacterised as perverse or palpably wrong. The decision can be said to be ''not according to law' if it runs contrary to the evidence on record or if the materials on record are misinterpreted or if the material on record has not been considered by the Court at all. Similar is the discussion in the commentary by C. Subramanya Shastry in his book Provincial Insolvency Act, 3rd Edition, 1959 at pages 508 and 509.
8. In the Provincial Insolvency Act, A.I.R. Manual, 4tb Edition, page 209 it is stated as :
'The High Court has wider powers under Section 75 than under Section 115 C.P.C Under Section 75 the High Court can interfere if it is not satisfied that the order made in appeal was 'according to law'. A.I.R. 1933 Nagpur, 39, (2) 1976 Rajdhani LR 613 (61)3. (3) ILR 1976(2) Delhi 474, (4) , (5) AIR 1938 All. 489(489)(DB), (6) AIR 1932 Oudh 61 : 3SCR944 -'
It is further said that the power conferred on High Court under 1st Proviso to Section 75(1) is not co extensive with that given to it under Section 100(l)(a) Civil P.C. It is further said that the Court has to refer to the overall decision and should ascertain if there is miscarriage of justice due to a mistake of law. It is further said that interference isproper when order of lower Court is not 'according to law'. It is further said at page 210 that though the scope of revision under Section 75 is wider than that under Section 115 C.P.C. High Court will not interfere under Section 75 simply because there is error of law. High Court will, however, interfere if the Lower Court has treated an award which is really one under C.P.C. as one under Arbitration Act and on misunderstanding of rulings on which it relied, refused to hear award as decree for payment. Thus, on a careful perusal of the various comments on the Insolvency Law and the ruling above referred to, it appears to me that the revisional power vested in the High Court under the proviso to Section 75 of the Insolvency Act is wider than one under Section 115 C.P.C. Merely because Section 75(1) of the Insolvency Act says that the order passed by the District Judge is final, it does not mean that the order passed by the District Judge cannot be interfered at all. If the High Court finds that the order passed by the Lower Appellate Court is not according to law, then it is the bounden duty of the High Court to step-in and rectify the order passed by the Lower Appellate Court. The words 'according to law' mean that the conclusions arrived at by the Lower Appellate Court must be inconsonance with the evidence and the material on record. It means that if the Lower Appellate Court has misread the oral and documentary evidence and has interpreted the material in a way not justified by material on record and has omitted to refer to some material evidence while arriving at the conclusion, the decision rendered by the Lower Appellate Court is not 'according to law'. Therefore, the argument of learned Counsel Narasimhan that the revisional jurisdiction conferred on the High Court under the proviso to Section 75(1) is narrower than the one under Section 115 C.P.C. only merits to be rejected.
9. In this case the Trial Court has referred to the oral evidence in its entirety and in greater detail. It has referred to Exs P1 to P30 and Exs. D1 to D7 and Exs. R1 to R24 in greater detail. The Lower Appellate Court has notconsidered the material alterations which are obvious in the pronote Ex. P2. It has not considered the relevant documents like R9, R18, R19, R21 and R26. By these documents respondent No.2 has admitted that he has valuable assets in Rajasthan. The material alterations which are quite obvious in Ex. P2-the pronote would clearly spell out the collusion between respondent No.1 and respondent No. 2 in O.S. 80/65 filed by respondent No.l against respondent No. 2 on the strength of the pronote Ex.P2. The lower Appellate Court also has not considered the offer made by respondent No. 3 to respondent No. 1 to accept the amounts due under both the mortgages. It has not considered the effect of the refusal by respondent No. 1 to receive the said amounts. It has not considered the written statement Ex. R4 filed by respondent No. 2 in O.S 80/65 wherein he has contended that the pronote was materially altered. The said alterations are so obvious even to a naked eye. But, suddenly respondent No. 2 changes the front and moves hand in glove with respondent No. 1 and consents to a decree being passed. No sane man would have consented to a decree when no decree could have been passed on such an altered pronote at all. Therefore, in my opinion, the order passed by the lower Appellate Court is not according to law at all and it is absolutely perverse, unreasonable, capricious and opposed to the material on record. It has not considered the vital documents and vital pieces of evidence available on record. Therefore, this is a fit case in which this Court sitting in revision under the proviso to Section 75(1) of the Provincial Insolvency Act should step-in and revise the order so that it should be according to law and according to the evidence adduced by the parties.
10. Learned Counsel Narasimhan contended that if this Court comes to the conclusion that the order passed by the lower Appellate Court is not according to law, it should send back the matter to the lower appellate Court for fresh consideration. The parties have been fighting tooth and nail ever since 1965. Nearly, 20 years have rolled by. More than sufficient material had been let-in by all the parties concern-ed. Therefore, it may not be proper at this distance of time to send back the matter to the lower Appellate Court for fresh consideration. This Court can look into the matter itself and arrive at a proper conclusion.
11. The following facts are undisputed.
Respondent No. 2 - Nathumal Satia had executed a simple mortgage for Rs. 6000/- in favour of Respondent No. l's son Udaychand on 27-9-1963. Respondent No. 2 had executed another mortgage in favour of Respondent No. 1 Gissoolal for Rs. 16,000/- on 24th April, 1964 as perEx.D1. That the amounts under both the mortgages were due, is also admitted. The sale deed Ex.P6 dated 20th February, 1965, though it might have been registered on 4-3-65, clearly shows that Respondent No.2 sold the B Schedule properties to Respondent No. 3 for the payment of the said mortgage debts and for clearing the other debts incurred by him. Therefore, it cannot be said that Respondent No. 2 alienated or sold the B schedule properties to Respondent No. 3 with a view to defeat or delay the claim of Respondent No. 1 and his son. Even the sale deed Ex.P1O executed by Respondent No. 3 in favour of the revision petitioner also provides for the payment of the said two mortgage debts. Therefore it cannot be said that the sale transactions had been entered into by Respondent No. 2 with a view to defeat or delay the payment of the debts due to Respondent No. 1 and his son under both the mortgages.
12. Now let me consider O.S 80/65 filed by Respondent No. 1 against Respondent No. 2 on the strength of the pro-note Ex.D2. The said case was filed in the year 1965. Ex. R4 is the written statement filed by Respondent No.2 in that pronote suit O.S.80/65. Respondent No.2 has stated in his written statement that the months and years have been altered in the said pronote and that the said pronote is a fabricated one and thus the suit is liable to be dismissed. A look at ExD2 would show that at the top it was mentioned as Robertsonpet, 30-2-1962. The figures 196 are printed and the figure 2 is written in ink. Even a naked eye can find out that the figure No 2 written in ink is converted into figure 4 by putting a stroke adjoining the figure 2. Even the figure 2 written after the figures 196 is changed to 4 in the same manner. Below it it had been written as 30-2-1962. The month figure 2 in ink is changed to 4. So also the ink figure 2 regarding the year has been changed in the same manner. The date is found below the signature of Respondent No. 2 in the pronote. Even there the month was written as 2. It has been changed to 4 by putting a stroke adjoining 2. So is the case with the year. Even Respondent No. 1 admits in his evidence that the alterations are quite obvious. Respondent No.2 also had referred to these material alterations in his written statement Ex.R4. Therefore, when the pronote was so materially altered, no Court would have ever passed a decree at all. But, suddenly Respondent No. 2 changes the front and consents to a decree. The said decree had been passed on 24-3-65. If the pronote is executed on 30th February 1962 the suit would have been prima facie barred by limitation itself. It appears there is an endorsement on the back of the pronote. But no reference has been made to that endorsement by respondent No.2 in the course of the evidence. Therefore, the very fact that respondent No. 2 suddenly changed the front, would itself show that he started colluding with Respondent No. 1 later on. The first saledeed executed by him is dated 20-2-65 The second sale deed executed in favour of the revision petitioner is dated 31-3-65. The sale deed Ex. P.10 is attested by Respondent No.2. After realising that Respondent No.3 had sold away the property in favour of revision petitioner, Respondent No.2 might have thought that he would lose his 'B' schedule property once for all. So with a view to save the property he must have started acting hand-in-glove with Respondent-1 and consented to a decree in order to enable Respondent No. 1 to file the insolvency application. Learned Author Mulla in his book 'The Law of Insolvency in India' has stated at page 119 as:
'Creditor privy to act of insolvency:
A creditor who has been privy to an act of insolvency cannot present a Petition founded on that act of insolvency-'
The effect of Respondent No. 2 becoming a turn-coat suddenly, has not been considered by the lower Court. Further, it can be seen from the evidence of Respondent No.2 that according to him, he had not borrowed any money after executing the hypothecation deed dated 21-4-1964 in favour of Respondent No. 1. This admission coupled with the alterations in the pronote show that this pronote was brought into existence with a view to create an act of in-solvency on the part of Respondent No. 2.
12. On 22nd June, 1964 the respondent No. 2 was alleged to have borrowed from respondent No. 1 under pronote Ex. P2. There appears to be alteration even in Ex. P2. Notwithstanding it, he has not filed any suit on that pronote. He naturally thought that it was' no use filing a suit on the strength of Ex,P2. He might have thought that obtaining one decree in O.S.80/65 would satisfy the requirement of the commission of an act of insolvency.
13. Further, it is strange that though he has obtained the decree on 29-7-1965 he he not sued out theexecution at all till today. Sri. Narasimhan urged that respondent No. 1 had stated that he did not sue out the execution as he had filed an insolvency case. That is no excuse at all. No protection order had been passed in the case. He did not file the execution because he knew fully well that the decree was shrouded in suspicion and he did not think it wise to spend his precious money over execution of the decree. It is only after respondent No. 2 sold the property to respondent No.5 that he issues the notice Ex.P5.
14. In I.C.2/65 pending on the file of the Civil Judge, respondent No. 2 had filed his objections opposing the adjudication. Ex. R19 is the affidavit of respondent No. 2 filed in I.C.2/65. He has mentioned therein the properties owned by him in Rajasthan State. In I.C. 2/65 the Civil Judge passed an order on 19-4-1965 allowing 1A.l and appointing an Official Receiver. Respondent No. 2 being aggrieved by that order filed R.A.6/65. He also filed affidavit Ex. R21 in that appeal showing clearly that he owns lands and houses in Rajasthan. On 31-7-65 respondent No.2 files a memo in R.A.6/65 contending that he does not press the appeal. But no orders were passed on that memo. It can be seen that by 31-7-65 O.S.80/65 had been decreed by consent. Respondent No.2 does not stop there. He engages a Counsel and files I.A.3 in R.A.6/75 praying for its dismissal. On account of this memo, the Court was helpless and it had to dismiss the appeal. The very fact the respondent No.2 was over zealous in getting that R.A.6/65 dismissed, if judged in the light of the consent decree passed in O.S. 80/65, would go to show that the respondents 1 and 2 started colluding with each other later.
15. Respondent No.2 has stated that B Schedule property was worth Rs. 50,000/- He has sold it for Rs. 30,000/-. There-fore, the consideration cannot be said to be grossly inadequate Further, it cannot be forgotten that he had sold itto respondent No. 5, who is his own sister's son. In para No.7 respondent No. 2 has stated that he wanted to pay off even his pronote debts. The conduct of respondent No.1 in even refusing to receive the mortgage amounts calls for serious consideration. Even though the money was offered he was reluctant to receive it. It appears from material on record that a Commissioner had to be appointed by the Courtto count the money offered by the revision petitioner to satisfy the mortgage.
16. It becomes clear from the material on record that respondent No. 2 owns a big house and valuable property in Rajasthan. Therefore, it is not as if respondent No. 2 became a pauper by selling B Schedule property in favour of respondent No.3. He owns other properties which would be sufficient to pay off the pronote debts which are petty in nature. Merely because respondent No. 2 owns some other property it cannot be said that the insolvency petition should be thrown out. But the fact remains that though respondent No. 2 still possessed sufficient property he became hand in-glove with respondent No. 1 in his attempt to save the B Schedule property, which he had already sold to respondent No. 3. Therefore, under these circumstances, it cannot be said that respondent No. 2 had committed any act of insolvency by selling B Schedule property in favour of respondent No. 3
17. It is no doubt true that the Trial Court committed a mistake by saying that in order to maintain the insolvency petition there should be a body of creditors. Learned Author Mulla in his book ' The Law of Insolvency in India', 3rd Edition, at page 119 has said :
'A man who is the only creditor of a debtor can present a Petition against him. The mere fact that a man has only one creditor is not a sufficient ground for saying that insolvency proceedings cannot bemaintained against him. The reason for this is that the Official Assigneeor Receiver may be able to set aside transactions and get in assets which could not be set aside or got in without an adjudication of insolvency.'
He has further said at page 121 that an Insolvency Petition may be presented by a single creditor where the debt amounts to Rs. 500/- or more.
19. Learned Counsel Narasimhan placed before me Abdul Waheed Khan v. Alan Chafas. The Division Bench consisting of late Justice Sabhahit and Justice Rajasekhara Murthy held that even a sole creditor can maintain insolvency petition. Therefore, the argument of learned Counsel Nagaraj that there should be a body of creditors and atleast more than one creditor in order to sustain the riling of insolvency case, is rejected.
20. In the result, the order passed by the lower Appellate Court is set aside. The revision is allowed. The order passed by the Civil Judge dismissing the insolvency petition is restored. The insolvency petition filed for getting respondent No. 2 adjudged as an insolvent is dismissed. All the parties are ordered to bear their own costs throughout.