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G. Ramachander Vs. the Collector, Excise, Hyderabad and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAndhra Pradesh High Court
Decided On
Case NumberA.O. No. 604 of 1975
Judge
Reported inAIR1977AP346
ActsProvincial Insolvency Act, 1920 - Sections 6, 7 and 10; General clauses Act, 1897 - Sections 13(2)
AppellantG. Ramachander
RespondentThe Collector, Excise, Hyderabad and anr.
Appellant AdvocateP. Satyanarayana, Adv.
Respondent AdvocateGovernment pleader for G.A.D.
Excerpt:
.....clauses act, 1897 - whether debtor is precluded from filing insolvency petition if there is only single creditor - no special significance is attached to use of words 'creditors' and 'debts' by legislature - from mere use of those words in plural object of insolvency law cannot e ascertained - section 10 of provincial insolvency act which lays down conditions precedent for filing insolvency petition nowhere speaks of more than one creditor - section 13 (2) of general clauses act says that words in singular included plural and vice versa - held, insolvency petition filed by debtor is maintainable even if there is single creditor. - - and 'creditors' used in several of the provisions, opined that as far as the scheme of the hyderabad insolvency act as well as the scheme of the..........insolvency act, 1920. the learned judge, in so dismissing the petition followed the decision of a single judge of this court in m. somaiah v. p. padma bai (1969-2 andh wr 274).2. the question that falls for consideration in this civil miscellaneous appeal is whether a debtor is precluded from filing an application for adjudication if there is only a single creditor. the appellants is working in sagar sanitary works, secunderabad. he was the highest bidder at an auction held for the issue of licence for a today shop at kavadiguda, hyderabad. he bid at that auction at the instance of one eswaraiah. eswaraiah was managing the business along with the appellants. a relation of his financed the business. according to him, he never looked into the accounts, with the result that the business.....
Judgment:

Obul Reddi, C.J.

1. The Civil Miscellaneous appeal is directed against the order of the Additional Judge, City Small Causes Court, Hyderabad, dismissing an application filed by a debtor under section 6, 7 and 10 of the Provincial Insolvency Act, 1920. The learned Judge, in so dismissing the petition followed the decision of a single Judge of this Court in M. Somaiah v. P. Padma Bai (1969-2 Andh WR 274).

2. The question that falls for consideration in this civil miscellaneous appeal is whether a debtor is precluded from filing an application for adjudication if there is only a single creditor. The appellants is working in Sagar Sanitary Works, Secunderabad. He was the highest bidder at an auction held for the issue of licence for a today shop at Kavadiguda, Hyderabad. He bid at that auction at the instance of one Eswaraiah. Eswaraiah was managing the business along with the appellants. A relation of his financed the business. According to him, he never looked into the accounts, with the result that the business resulted in loss and he could not pay arrears of rentals to the tune of Rs. 86,000. As he was not in a position to pay arrears due to the respondents (the Collector of Excise and Superintendent of Excise), he filed the application for adjudication as an insolvent. The application was opposed by the respondents, on the grounds that he is possessed of moveable and immoveable properties and that he deliberately concealed those properties.

3. The only question that fell for consideration before the Court below was whether the appellants was entitled to be declared an insolvent. As already pointed out, relying upon the decision of this Court referred to above, the learned Additional Judge dismissed the application.

4. Mr. P. Satyanarayana appearing for the appellants contended that the provisions of the Act impose no bar for petition being filed by a debtor even if there is a single creditor and the decision in M. Somiah v. P. Padma Bai (1969-2 Andh WR 274) goes against the scheme and object of the Provincial Insolvency Act.

5. The question of maintainability of an insolvency petition against a single creditor came up for consideration in M. Somiah v. P. Padma Bai (1969-2 Andh WR 274). That was a case arising under the Hyderabad Insolvency Act. But the material provisions of that Act are almost identical with the provisions of the Provincial Insolvency Act. The learned Judge, noticing the words, 'debts; and 'creditors' used in several of the provisions, opined that

'as far as the scheme of the Hyderabad Insolvency Act as well as the scheme of the Provincial Insolvency Act, 1920 are concerned, the very purpose of the exercising of the insolvency jurisdiction in any given case, is only for the benefit of the body of the creditors and not for the benefit of any single creditor.'

We are unable to endorse the view of the learned single Judge in that case. The object of enacting the insolvency law is to give relief to a debtor, who is unable to discharge the debts and protect him from harassment by his creditors and also to prevent a scramble among creditors to somehow get at the assets of debtor fraudulently or in collusion between creditor and debtor. The Act also provides a machinery by which the claims of genuine creditors could be equitable met. We see no special significance in the Legislature using the words 'creditors' and 'debts'. From the mere use of those words in plural, the object or the underlying policy of the insolvency law cannot be ascertained. The scheme, object the purpose of the Act can be ascertained on a proper construction of the relevant provisions. The expressions 'creditor' and 'debtor' have been defined. 'Creditor' includes a decree-holder, 'debt' includes a judgment-debt. Section 6 details the acts of insolvency. It clearly says that a debtor commits an act of insolvency in each of the cases enumerated in Clauses. (a) to (h). Section 7 entitles a creditor or debtor to make an application for adjudicating a debtor an insolvent. A debtor can file an application if he commits an act of insolvency. Section 10 lays down the conditions to be satisfied to entitle a debtor to present an insolvency petition and this Section, to the extent relevant, reads :-

'Section 10(1): A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and -

(a) his debts amount to five hundred rupees or

(b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or

(c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property.'

None of the clauses of Sub-section (1) of Section 10 speaks of more than one creditor. All that a debtor has to satisfy is one or other of the conditions specified in the above three clauses. Any single creditor may make an application under Order. 21, Rule. 37, Civil Procedure Code in execution of the decree obtained by him. He can ask for arrest and detention of the judgment-debtors in a civil prison. Any sole creditor can have the property attached in execution of the decree obtained by him against the debtor. Section 51, Civil Procedure Code deals with the powers of Court to enforce execution. The Court may enforce a decree in execution by attachment and sale or by sale without attachment of any property or by arrest and detention in prison. So far as the execution of a money decree is concerned, that is subject to the proviso to Section 51. If we are to agree with the view expressed by the learned single Judge, then no sole creditor can ever as for execution of the decree in the manner specified in Section 51, or Order. 21, Rule. 37, Civil Procedure Code. Section 13(2) of the General Clause Act (10 9f 1897) says that the words in the singular shall include the plural and vice versa. Therefore, no special significance need be attached to the words 'debts' or 'creditors' used in several of the provisions of the Provincial Insolvency Act.

6. The basis for the Provincial Insolvency Act is to be found in the English Law of Bankruptcy. We may, therefore, with advantage, see what the English law is on a particular point in respect of which there is no authoritative decision in India.

7. We get it from Halsbury's Laws of England that all that is required is that a debtor must allege in his petition that he is unable to pay his debts. The question came up in one case in Re Bullen, Ex Pate Arnaud (1888) 5 Morr 243, (CA) whether a debtor who had only one creditor was not entitled to present a bank-ruptcy petition. But, that point was not answered, as it was not raised till after adjudication (see Halsbury's Laws of England, Vol. 2, Third Edition, Para 571 at p. 300). In the case of Ex Parte Painter in Re Painter (1895) 1 QB 85, it was held that the fact that there was practically only one creditor is not a reason for annulling the adjudication and that the presentation of the petition by the debtor under such circumstances was not an abuse of the process of the Court. That was also a case where a debtor had filed an application for adjudication as an insolvent.

8. For the reasons recorded, we are unable to persuade ourselves to the view expressed by the learned single Judge in M. Somiah v. P. Padma Bai (1969-2 Andh WR 274).

In the result, the order under appeal is set aside and the lower Court is directed to entertain the application and dispose it of on merits. The Civil Miscellaneous appeal is allowed. No costs.

9. Appeal allowed.


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