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Triloki Nath Vs. Badri Das and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Judge
Reported inAIR1914All17(2); (1914)ILR36All250
AppellantTriloki Nath
RespondentBadri Das and ors.
Excerpt:
.....additional judge amounted to no more than this that he was not satisfied on the evidence that the debtor's debts exceeded his assets. 500. the debtor was, therefore, clearly 'entitled to present' an insolvency petition. 4. we have now to see whether the petition in the present case could have been dismissed under section 15 (1). this clause is taken almost verbatim from section 7(3) of the english bankruptcy act of 1883. this section deals entirely with a creditor's petition and does not apply in any way to a debtor's petition, it seems to us that the words 'or is satisfied by the debtor that he is able to pay his debts or that for any other sufficient cause no order ought to be made, the court shall dismiss the petition 'refer to the court being satisfied by the debtor that some..........additional judge amounted to no more than this that he was not satisfied on the evidence that the debtor's debts exceeded his assets. he seems to have been largely influenced in arriving at this opinion because he thought that the alleged will and deed of relinquishment would not have been upheld in a court of law. he does not appear to have found or intended to find that the documents were forgeries. the petition was dismissed.2. the petitioner debtor has appealed to this court, and it is argued on his behalf that under the circumstances of the case the court was bound to adjudicate him an insolvent under section 16 (1) of the act.3. on behalf of the respondents it is contended that under the provisions of section 15 (1) the court has power for any 'sufficient cause ' to dismiss the.....
Judgment:

Henry Richards, C.J. and Ryves and Piggott, JJ.

1. This appeal arises out of insolvency proceedings under Act III of 1907. The petitioner presented a petition asking that he should be adjudicated an insolvent. His petition complied with the provisions of Section 11, and contained a statement that he was unable to pay his debts, which exceeded Rs. 500. Notice went in the ordinary course to the creditors, some of whom were represented or appeared when the debtor was examined and opposed adjudication. The debtor was examined and stated that his debts exceeded Rs. 500 and that his means and property were quite insufficient to pay those debts. At the instance of the opposing creditors his brother was examined, and he produced certain documents connected with the property of the family to which the debtor belonged. The learned Additional Judge appears to have considered that the documents which were produced were devices for saving the property of the debtor from his creditors. One of these documents purported to be a will of the debtor's father, the other purported to be a deed of relinquishment made by the debtor in favour of his father in the life-time of the latter. It seems to us that the opinion of the learned Additional Judge amounted to no more than this that he was not satisfied on the evidence that the debtor's debts exceeded his assets. He seems to have been largely influenced in arriving at this opinion because he thought that the alleged will and deed of relinquishment would not have been upheld in a court of law. He does not appear to have found or intended to find that the documents were forgeries. The petition was dismissed.

2. The petitioner debtor has appealed to this Court, and it is argued on his behalf that under the circumstances of the case the Court was bound to adjudicate him an insolvent under Section 16 (1) of the Act.

3. On behalf of the respondents it is contended that under the provisions of Section 15 (1) the Court has power for any 'sufficient cause ' to dismiss the petition and that the fact that the petitioner debtor was unable to satisfy the Court that his debts exceeded his assets was quite sufficient cause for dismissing the petition. It was further contended that even if Section 15 (1) did not apply, still the Court had power under its inherent jurisdiction to dismiss the petition in the present case as an abuse of the process of the court. Section 6, Clause (3), provides that a debtor shall not be entitled to present an insolvency petition unless his debts amount to Rs. 500, or he has been arrested or imprisoned in execution of a decree of any court for payment of money, or an order of attachment in execution of such a decree bag been made and is subsisting against his property. It is admitted in the present case that the debts did amount to Rs. 500. The debtor was, therefore, clearly ' entitled to present' an insolvency petition. An act of bankruptcy had been committed under Section 5 by the presentation of his petition. Section 16 (1) provides that where a petition is not dismissed under the preceding section and the debtor is unable to propose any composition or a scheme which shall be accepted by the creditors and approved by the Court in the manner thereafter provided, the Court shall make an order for adjudication.

4. We have now to see whether the petition in the present case could have been dismissed under Section 15 (1). This clause is taken almost verbatim from Section 7(3) of the English Bankruptcy Act of 1883. This section deals entirely with a creditor's petition and does not apply in any way to a debtor's petition, It seems to us that the words ' or is satisfied by the debtor that he is able to pay his debts or that for any other sufficient cause no order ought to be made, the Court shall dismiss the petition ' refer to the Court being satisfied by the debtor that some 'sufficient cause exists why the order should not be made. It seems to us that there is a fundamental distinction between the adjudication of a person as an insolvent on his own petition, and an adjudication on the petition of a creditor. All the disgrace and other consequences which flow from an adjudication of insolvency in the case of a petition by the debtor himself are the result of his own petition. Furthermore, the creditors would not as a general rule be prejudiced or Suffer loss by as adjudication of insolvency. All the assets of the debtor ought to be available in payment of his debts, and if his assets exceed the latter so much the better for the creditors. We are very far from saying that there is no inherent power for the Court by its orders in insolvency matters to prevent an abuse of the process of the Court; and in certain cases it may be quite necessary to dismiss a debtor's own petition to be adjudicated an insolvent. All that it is necessary for us to say in the present case is that in our opinion the presentation by the debtor of his petition in this case did not amount to an abuse of the process of the Court.

5. The view that we take of Section 15 is supported by the case of Uday Chand Maiti v. Ram Kumar Khara (1910) 15 C. W. N. 213. and also by the case of Kali Kumar Das v. Gopi Krishna Ray (1911) 15 C. W. N. 990. A similar view was taken by this Court in the case of Girwardhari v. Jai Narain (1910) I. L. R. 32 All. 645. and the case of Bidhata Din v. Jagannath (1912) 9. A. L. J. 699.

6. The case of Nathu Mal v. The District Judge of Benares (1910) I. L. R. 32 All. 547. has been referred to. It is clear that the remarks in the judgment cannot be regarded as a decision on the point now in question. The question there related entirely to a criminal trial and the question which arises in the present appeal was neither argued nor discussed. Reliance is placed by the respondent upon the case of Ponnusami Chetti v. Narasimma Chetti (1913) 26 Mad. L. J. 545. In that ease the facts were not altogether unlike the facts in the present case. The Court, however, came to the conclusion on the facts before it that the presentation of the petition amounted to an abuse of the process of the Court. We have already stated that in our opinion the facts of the present case do not constitute an abuse of the process of the Court. The question whether or not the assets would or would not exceed the debts would depend upon the result of a suit at law.

7. In our opinion the present appeal ought to be allowed. We accordingly allow the appeal, set aside the order dismissing the petition, and under the provisions of Section 16 (1) we adjudicate the petitioner an insolvent and direct that the record be returned to the court below so that the matter may be proceeded with according to law. The cost of the appeal will be in the discretion of the court below when making its final order.


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