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Krushna Chandra Das Vs. the Orissa Textile Mills Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtOrissa High Court
Decided On
Case NumberM.J.C. No. 170 of 1956
Judge
Reported inAIR1961Ori91
ActsProvincial Insolvency Act, 1920 - Sections 10, 24, 24(1) and 24(2)
AppellantKrushna Chandra Das
RespondentThe Orissa Textile Mills Ltd. and ors.
Appellant AdvocateM. Mohanty and ;A. Mohapatra, Advs.
Respondent AdvocateS. Patnaik, ;B. Rath, Adv. General and ; U.N. Rath, Adv.
Cases Referred(Narayan Mistri v. Ram Das
Excerpt:
.....the court, if and when so satisfied, is not bound to hear any further evidence. all that is required, at the present stage, is whether the court is satisfied that there are prima facie grounds for believing the petitioner's evidence that he is unable to pay his debts. 5. in the present case, on the evidence of the petitioner, i am satisfied that there are prima facie grounds for believing that the petitioner is unable to pay, his debts......therefore clear that where the petitioner is adjudged an insolvent in the initial proceedings under section 10 it is not that the creditors, if their objections have any merits, -- are left without any remedy because the questions, -- whether there has been any fraudulent concealment of his property or books of account, or whether he has transferred his property benami to defraud his creditors, --are matters to be dealt, with upon the debtor's application for discharge. 5. in the present case, on the evidence of the petitioner, i am satisfied that there are prima facie grounds for believing that the petitioner is unable to pay, his debts. accordingly, i adjudge him an insolvent. the nazir, district court, cuttack, is appointed receiver. time for discharge is six months. i direct that the.....
Judgment:
ORDER

S. Barman, J.

1. This is an application by a debtor that he may be adjudged insolvent under Section 10 of the Provincial Insolvency Act (Act V of 1920) on the ground that he is unable to pay his debts, in the circumstances stated in the petition. This application was opposed by his creditors the Orissa Textile Mills Ltd., one Gorisankar Sangnaria, the Official Liquidator of Puri Bank Ltd., the State o Orissa representing the Divisional Forest Officer, Athgarh.

The learned Advocate-General appearing for the State of Orissa, however, retired from the case, after making a statement to this Court that the dues against some defaulting contractors of Athgarh, including the present petitioner for insolvency, had been written off by the Government and therefore the State of Orissa representing the Divisional Forest Officer, Atgarh, is no longer one of the Creditors.

2. The petitioner Krushna Chandra Das was examined in chief by the learned counsel appearing for him and he was also cross-examined quite at length by all the learned Counsel appearing for the creditors opposing this application. The gist of the petitioner's evidence, as analysed, is to the effect that the total amount of his debts to the creditors, as appears from the list in Schedule A to the petition, is over Rs. 40,000/-, that he has absolutely no property of his own and whatever meagre moveable properties he is possessed of are set out in Schedule B valued at Rs. 26/- only, and that he Ss unable to pay his debts,

3. The application was strongly opposed, on behalf of the creditors, mainly on the grounds, inter alia, that, according to them, the petitioner had fraudulently concealed his property as also the books of account of the business he Carried on; and that the present application was not bona fide.

4. The scope of enquiry under Section 10 of the Act is very Jimited. The debtor has only to furnish such proof as to satisfy the court that there are prima facie grounds for believing that he is unable to pay his debts; and the Court, if and when so satisfied, is not bound to hear any further evidence. The Court is not bound to go into an elaborate inquiry. All that is required, at the present stage, is whether the Court is satisfied that there are prima facie grounds for believing the petitioner's evidence that he is unable to pay his debts.

The proviso to Sub-section (1) of Section 24, which lays down the procedure for hearing, requires the debtor to furnish only such proof as to satisfy the court that there are prima facie grounds for believing that he is unable to pay the debts; under Sub-section (2) the creditors have a right to question the debtor as regards his conduct, dealings and property but there is nothing in the section which would empower the creditors to produce substantive evidence as regards the concealment of property by the debtor; it is only at the stage of making the order of discharge that the question as regards the concealment of property or the ques-tion of the debtor being guilty of any fraud or fraudulent breach of trust can be raised and it is only at that stage that the creditors are entitled to adduce evidence on these points, (Narayan Mistri v. Ram Das, AIR 1928 Pat 477).

It is therefore clear that where the petitioner is adjudged an insolvent in the initial proceedings under Section 10 it is not that the creditors, if their objections have any merits, -- are left without any remedy because the questions, -- whether there has been any fraudulent concealment of his property or books of account, or whether he has transferred his property benami to defraud his creditors, --are matters to be dealt, with upon the debtor's application for discharge.

5. In the present case, on the evidence of the petitioner, I am satisfied that there are prima facie grounds for believing that the petitioner is unable to pay, his debts. Accordingly, I adjudge him an insolvent. The Nazir, District Court, Cuttack, is appointed Receiver. Time for discharge is six months. I direct that the order of adjudication of the petitioner as insolvent be published in the Orissa Gazette and also in the Eastern Times, Samaj and Ganatantra, for wide publicity, as prayed for, on behalf of the opposing creditors herein.


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