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Siya Ram Vs. Kishori Lal - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1933All841; 147Ind.Cas.11
AppellantSiya Ram
RespondentKishori Lal
Excerpt:
- - s 24(1)(a) enacts that where the debtor is the petitioner, he shall, for the purpose of proving his inability to pay his debts, be required to furnish only such proof as will satisfy the court that there are prima facie grounds for believing the same and the court, if and when so satisfied, shall not be bound to hear any further evidence thereon. 4. this clearly means that he should declare all his realizable assets. in other words, he did not comply with the provisions of section 13, clause (e) sub-clauses (1), (2), and (3). the learned judge of the court below was, therefore justified in holding that the appellant had failed to show that he was unable to pay his debts......points were established: 1. that the petitioner, his five brothers and their father owned joint family estate paying rupees 3000 yearly as land revenue 2. that the family paid about rs 83 yearly as income tax. 3. that the petitioner held one decree and one mortgage which have not been shown in the insolvency petition.3. the only point argued before us on behalf of the appellant was that in spite of this finding of the learned judge the appellant was entitled to an adjudication order. section 10 of the provincial insolvency act enacts that a debtor shall not be entitled to present an insolvency petition unless he is unable to pay his debts. under this section the court has discretion as to the amount of protection to be afforded to a petitioning debtor in each individual case,.....
Judgment:

Rachhpal Singh, J.

1. This is an appeal by one Siya Ram against the order passed by the Court below dismissing his petition for insolvency. In his petition in the Insolvency Court the appellant stated that debts due by him. amounted to Rs. 1,829, and the value of his assets was only Rs. 20-8-6 One of his three creditors is Kishori Lal respondent, who holds a decree for Rs. 1,748-15-0 which he put in execution and prayed for the arrest of the appellant who thereupon applied for adjudication as an insolvent. Kishori Lal opposed the appellant's application and alleged that he (appellant) owned considelable property which he had not shown in his petition. The Court below found that this allegation of the contesting creditor was correct and so the application made by the petitioner was dismissed. The present appeal has been preferred against that order.

2. The learned Judge of the Court below found that the following points were established: 1. That the petitioner, his five brothers and their father owned joint family estate paying rupees 3000 yearly as land revenue 2. That the family paid about Rs 83 yearly as income tax. 3. That the petitioner held one decree and one mortgage which have not been shown in the insolvency petition.

3. The only point argued before us on behalf of the appellant was that in spite of this finding of the learned Judge the appellant was entitled to an adjudication order. Section 10 of the Provincial Insolvency Act enacts that a debtor shall not be entitled to present an insolvency petition unless he is unable to pay his debts. Under this section the Court has discretion as to the amount of protection to be afforded to a petitioning debtor in each individual case, the debtor being required to show that he is in fact unable to pay his debts. The argument of the learned Counsel appearing for the appellant was that his client under the law was entitled to an adjudication order as soon as he proved that his debts amounted to over Rs. 500. I find myself unable to agree with this contention. Under the present Act inability to pay debts is made a Condition precedent to the presentation of a debtor's petition. Before a debtor can seek the protection of the Insolvency Court he has to satisfy it that lie is unable to pay his debts. If he is unable to prove that he cannot pay his debts, then the Court has power to dismiss his petition under the provisions of Section 25 of the Insolvency Act. The whole object of amending Section 10 of the Provincial Insolvency Act by adding the words 'he is unable to pay his debts' is to prevent the abuse of the debtors filing petitions as a method of evading their liability. After a petition has been presented by a debtor alleging that he is unable to pay his debts the Court is to hold an enquiry under Section 24 of the Provincial Insolvency Act. S 24(1)(a) enacts that where the debtor is the petitioner, he shall, for the purpose of proving his inability to pay his debts, be required to furnish only such proof as will satisfy the Court that there are prima facie grounds for believing the same and the Court, if and when so satisfied, shall not be bound to hear any further evidence thereon. At this stage it is not necessary for the Court to make an elaborate enquiry but it is incumbent on the debtor to make out a prima facie case to the satisfaction of the Court as to his inability to pay his debts. The onus of proving all the essential conditions, required by Section 10 lies on him, otherwise his application must be dismissed under Section 25 of the Provincial Insolvency Act. The expression 'unable to pay his debts' means that the market value of the realization of assets is less than the total amount of his debts. Under Section 13, among other points, the debtor must show:

(e) the amount and particulars of all Ms property, together with,

(1) a specification of value of all such property not consisting of money. (2) the place or places where any such property is to be found; and (3) a declaration of his willingness to place at the disposal of the Court all such property save in so far as it includes such particulars (not being his books of accounts) as are exempted by the Code of Civil Procedure 1908, or by any other enactment for the time being in force from, liability to attachment and sale in execution of a decree.

4. This clearly means that he should declare all his realizable assets. Under Section 2, Clause (d) the word 'property' includes any property over which or the profits of which any person has a disposing power which he may exercise for his own benefit. This definition of the word 'property' is not exhaustive. But it would include all kinds of properties over which he has disposing power. Section 28, Clause (5) of the Provincial Insolvency Act, lays down that the property of the insolvent for the purposes of this section shall not include any property (not being books of account) which is exempted by the Code of Civil Procedure 1908, or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree. In the present case we find that the appellant in his application did not include his share in the joint family property which pays Rs. 3,000 yearly as land revenue. The argument of the learned Counsel for the appellant was that this share in the joint family estate was not available for payment of the creditors of the appellant and so it was not shown in the schedule. I find myself unable to agree with this contention. In order to decide whether the appellant was a person who was unable to pay his debts, the value of his interest in the joint family had to be taken into account. The appellant did not show his interest in the joint estate in the schedule. In other words, he did not comply with the provisions of Section 13, Clause (e) Sub-clauses (1), (2), and (3). The learned Judge of the Court below was, therefore justified in holding that the appellant had failed to show that he was unable to pay his debts. I, therefore, dismiss the appeal with costs.


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