1. This First Appeal From Order arises out of proceedings under the Provincial Insolvency Act, 1920.
2. The appellant filed a petition under Section 10 of the Act before the court of the District Judge, Mathura for being declared an insolvent on the ground that he was unable to pay his debts amounting to Rs. 50,000/-from his assets. The petition was contested by the Income-tax Officer and the Sales Tax Officer, Mathura, who, along with other creditors, are opposite parties to this appeal.
3. A date was fixed for the hearing of the petition, as provided under Section 24 of the Act, and the appellant examined himself in support of his case, in his statement the appellant admitted that he had not shown certain items of his properties in the list of assets gives in the petition. He categorically stated that he had omitted to show in his assets the number and the value of the 500 shares which he owned in the paid up capital of some Textile Mills, as also, a necklace of pearls consisting of 100 to 125 beads, whose weight or value he was unable to give before the Court. On being questioned he expressed his inability to give the details of the whereabouts of the Textile mills in which he owned his shares, as he did not know the same. It was also brought out in his evidence that there was a Motor Lorry No. US. 0852 which was owned by Thakur Ladll Raman Trust and was plying at Tundla-Etah Road, and the appellant was a trustee in the Trust. This Trust was alleged by him to have been created by his wife, and the expenses of the Trust were stated to be met by the income derived from running the lorry as a public vehicle. It was also brought out in his evidence that he had certain money decrees against certain parties but had not taken proper steps to realise the same. The appellant did not produce any other evidence in support of his petition.
4. In this state of evidence, the learned District Judge Mathura came to the conclusion that the appellant had deliberately concealed certain items of his properties by omitting to show them in the list of the properties attached to his petition and he had deliberately refrained from giving to the court any approximate value of those concealed items. The learned District judge held that the appellant did not want to pay off his creditors and he had manipulated the ownership of the Motor Lorry in such a way that it may be beyond the reach of his creditors. The learned Judge disbelieved his evidence and held that as the appellant had deliberately withheld properties from being shown in his petition as his assets, and as he had been inactive in realising his assets to pay off his debts, he was not entitled to protection of the insolvency court. In effect, the learned Judge was of the view that the appellant had failed to discharge the onus which lay on him to prove that he was unable to pay off his debts, and, therefore, he rejected his petition.
5. Learned counsel for the appellant has contended before us that the order passed by the learned District Judge is unsustainable, because it has been satisfactorily proved that the appellant, with all his resources, was not in a position to pay off his debts. He has also contended that the learned District Judge did not apply his mind to this aspect of the question and has not given any finding that the appellant was not unable to pay his debts, and that the learned Judge had on the other hand erroneously rejected his petition on the ground that he had concealed a few items of his properties, which, the learned counsel contended, cannot in law be a ground for rejecting the petition at this stage. In support of his proposition the learned counsel relied on a judgment of the Privy Council reverted in Chhatrapat Singh Dugar v. Kharag Singh Lachmiram, 15 All LJ 87 : (AIR 1916 PC 64), and also on a Full Bench decision of this Court In the case of Triloki Nath v. Badri Das, reported in 1LR 36 All 250 : (AIR 1914 All 17 (2)).
6. We may point out here, that the decisions cited by the learned counsel for the appellant are in respect of cases which had arisen under the Provincial Insolvency Act 1907 and, therefore, are not of much help in deciding the present appeal.
7. Section 6(3) of Act of 1907 under which the cases to which we have been referred were decided, runs as follows :
'The debtor shall not be entitled to present an insolvency petition unless-
(a) his debts amount to five hundered rupees;
(b) he has been arrested or imprisoned in execution of the decree of any court for the payment of money; or
(c) an order of attachment in execution of such adecree had been made, and is subsisting, against hisproperty'.It will be noticed here, that the words 'unless he isunable to pay his debts' are not to be found in thissection as it stood in the year 1907.
8. Section 10 of the Provincial Insolvency Act, 1920, provides as follows :-
'A debtor shall not be entitled to present any insolvency petition, unless he is unable to pay his debts end-
(a) his debts amount to five hundred rupees:.....
Thus it is evident that a substantial change was madein the law by the enactment of Provincial InsolvencyAct of 1920, which for the first time made it a condition precedent, far a debtor to entitle him to presentan application for being declared an insolvent, to prove,prima facie, that he is unable to pay his debts. It isonly when the conditions prescribed under Section 10 ofthe Act have been fulfilled that a court has no optionbut to admit him to the protection of the insolvencycourt. This condition was absent in the Act of 1907and, therefore, it was not then incumbent on the debtor,when presenting the petition, either to allege his inability to pay his debts, or to prove the same to entitlehim to an order from the court. The change in the lawand its effect was noticed by a Division Bench of thePatna High Court, in the case of Gobinda Prasad Gir v.Kishun Lall AIR 1924 Pat 166 with which we are in respectful agreement.
9. The question which requires determination in this appeal is whether on the basis of the material on record, the court could possibly come to a finding that the appellant was unable to pay his debts. We have carefully gone through his statement and have also perused the order under appeal. When the appellant had deliberately omitted to mention certain valuable items of his assets in his petition, and, when he had deliberately refused to assist the court in making an appraisal, by not disclosing the details of the Textile mills wherein he owned his shares, or the value of the pearl necklace, it was impossible to come to a definite finding, even prima facie, that the appellant was unable to pay his debts. Unless the assets of the appellant, along with his liabilities, were fairly presented before the Court, for which a duty is cast on the appellant under the law, it cannot be held that the Court was in a position to come to a finding on the question about inability of the appellant to pay his debts. In this view of the matter we are of the opinion that the finding of the learned Judge that the appellant was not entitled to protection of Court was correct and must be upheld on the groundthat he failed to discharge the onus cast on him under the law to prove that he was unable to pay his debts.
10. We are, therefore, of the opinion that the order passed by the learned District Judge dismissing the petition presented by the appellant is correct, and this appeal has no force.
11. The appeal is dismissed with costs.