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Nathumal Vs. the District Judge of Benares - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Judge
Reported in6Ind.Cas.870
AppellantNathumal
RespondentThe District Judge of Benares
Excerpt:
provincial insolvency act (iii of 1907), sections 15, 16, 43(2) - imprisonment of insolvent--evidence to be taken after charge--court finding fraud on the part of applicant but still declaring him insolvent. - - we wish to clearly express our opinion that the learned judge holding the opinion ho did was clearly wrong in granting the petition of nathu mal and declaring him insolvent. it may well be that the cross-examination would have been different if nathu mal had known that the evidence was being recorded as the foundation for a sentence under section 43. we think that nathu mal may well have been prejudiced......the order applied for notwithstanding very strenuous objections on the part of the creditors. the learned judge says in his judgment of the 11th of march, 1909, 'i, therefore, hold that there were no sufficient grounds for refusing an order of adjudication.' the next sentence proceeds as follows: 'at the same time i must place here on record that it is clearly proved that the applicant is guilty of very bad faith.' he then proceeds to set forth the facts which show that the applicant was fraudulently concealing documents, which would throw light on the state of assets and was also fraudulently understating the amount of his assets. we wish to clearly express our opinion that the learned judge holding the opinion ho did was clearly wrong in granting the petition of nathu mal and.....
Judgment:

1. Nathu Mal, appellant here, applied under Section 16 of Act III of 1907 for an order of adjudication of insolvency. The learned District Judge made the order applied for notwithstanding very strenuous objections on the part of the creditors. The learned Judge says in his judgment of the 11th of March, 1909, 'I, therefore, hold that there were no sufficient grounds for refusing an order of adjudication.' The next sentence proceeds as follows: 'At the same time I must place here on record that it is clearly proved that the applicant is guilty of very bad faith.' He then proceeds to set forth the facts which show that the applicant was fraudulently concealing documents, which would throw light on the state of assets and was also fraudulently understating the amount of his assets. We wish to clearly express our opinion that the learned Judge holding the opinion ho did was clearly wrong in granting the petition of Nathu Mal and declaring him insolvent. Section 15 of Act III of 1907 provides, amongst other things, that if the Court is of opinion for any sufficient reason that the order of adjudication should not be made, the Court should dismiss the petition. In our opinion the facts, set forth in the order of the learned Judge to which we have just referred, were ample grounds for dismissing the petition and that the petition under the circumstances ought to have been dismissed. After the order of adjudication, a Receiver was appointed and he reported to the learned Judge that the insolvent had not produced his books. This led to proceedings under Section 43, Clause (it). The learned Judge framed what we may call four charges. In the order appealed from he deals with these charges and he sentenced the insolvent to six weeks' simple imprisonment. This is the order appealed against. The main ground of appeal argued here is that the sentence is based mainly on the evidence that was given on behalf of the creditors when they were opposing the application for adjudication. The appellant contends that where the Judge framed charges against him he ought to have taken the evidence on each of the charges de novo. Reliance is placed on a ruling In the matter of Rash Behari Roy 17 C.209. In that case it was held that the provisions of the 11 and 12 Vic. Chap., 21, Section 50 were in the nature of a penalty and that the insolvent could not be convicted unless he was shown by legal evidence to have committed an offence on some specific occasion. It is, no doubt, true that in the present case the evidence was taken in the presence of Nathu Mal and he had an opportunity of cross-examining the witnesses. On the other hand, at that time there was no charge against him of having committed any offence under Section 43 of the Provincial Insolvency Act. It may well be that the cross-examination would have been different if Nathu Mal had known that the evidence was being recorded as the foundation for a sentence under Section 43. We think that Nathu Mal may well have been prejudiced. The learned Judge, as we have already pointed out, was prepared to make and actually did make an order of adjudication not with standing the evidence adduced by the creditors, and no action was taken by the learned Judge at that time and it was not until after the Receiver's report that the present proceedings were instituted. It cannot be disputed that the order of imprisonment is mainly based on the evidence that was taken on the first occasion. The only question, which we have any doubt about, is whether or not we should send the case back for a decision de novo. While we quite agree with the remarks of the learned Judge that insolvents acting in a fraudulent manner and committing offence under Section 43 should certainly be punished, we do not think under the circumstances that it would be in the interests of public justice that we should send the case back. Of course, our order will not affect in any way the discretion of the Court below as to withholding the order of discharge. We accordingly allow the appeal, set aside the order of the learned District Judge, dated the 2nd September, 1909. The applicant will bear his own costs. The bail order is discharged.


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