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Jagannath Vs. Badri Prashad and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtPunjab and Haryana
Decided On
Reported inAIR1949P& H359
AppellantJagannath
RespondentBadri Prashad and ors.
Cases ReferredKastur Chand Rai Bahadur v. Dhanpat Singh Bahadur
Excerpt:
.....the conditions laid down in the presidency towns insolvency act. in the first and the third of the rangoon cases the act of insolvency complained of was the giving of a notice of suspension of payment but the time when and the place where such notice was given was not alleged and in the second rangoon case it was not even alleged that the debtors had departed from their place of business with intent to defeat or delay their creditors. i am not satisfied that the formal defect now complained of has resulted in any substantial injustice which requires my interference at this late stage in revision. the onus of satisfying the court was clearly, therefore, on the debtors, and i do not think that the objection urged by mr......8th august 1946 one badri prashad and one manohar lal claiming to be the creditors of the firm of jagan nath ram nath presented a petition in the court of the insolvency judge, delhi, for adjudicating jagan nath, ram nath (the minor son of jagan nath) and piarey lal as proprietors of the firm. later on, some more creditors came in and were added as petitioning creditors and an amended petition was filed on 10th october 1946. it may also be mentioned here that at some subsequent stage the name of the infant ram nath was struck out from the record and the proceedings continued against jagan nath and piarey lal.3. the acts of insolvency on which the petition was founded were set out in para. 8 of the petition an english translation of which made by rosy reader and accepted by learned.....
Judgment:
ORDER

S.R. Das, C.J.

1. This is a petition by one Jagan Nath for revision of the order of the learned District Judge, Delhi, dated 7th July 1948 which affirmed the order made on 16th December 1947 by the Insolvency Judge, Delhi, whereby the petitioner and one Piaray Lal were adjudged insolvents. The facts shortly are as follows:

2. On 8th August 1946 one Badri Prashad and one Manohar Lal claiming to be the creditors of the firm of Jagan Nath Ram Nath presented a petition in the Court of the Insolvency Judge, Delhi, for adjudicating Jagan Nath, Ram Nath (the minor son of Jagan Nath) and Piarey Lal as proprietors of the firm. Later on, some more creditors came in and were added as petitioning creditors and an amended petition was filed on 10th October 1946. It may also be mentioned here that at some subsequent stage the name of the infant Ram Nath was struck out from the record and the proceedings continued against Jagan Nath and Piarey Lal.

3. The acts of insolvency on which the petition was founded were set out in para. 8 of the petition an English translation of which made by rosy reader and accepted by learned Counsel for both parties appearing before me as correct is as follows:

3. The debtors have committed the following acts of insolvency within the last three months:

(a) that the debtors have transferred to the Bullion Association, Delhi, a major portion of their outstandings for the benefit of the creditors.

(b) that the debtors have made alienations of their properties with a view to defeating and delaying their creditors, although according to this Act and other Acts in force these transfers, being undue preference, are void in case they are declared insolvents.

(c) with the intent to defeat and delay their creditors:

(i) they have stopped their ordinary business, have left it and have concealed themselves;

(ii) they have informed their creditors that they have stopped payment of the debts due from them.

4. The petition was tried on evidence on the following issues framed by the Insolvency Judge:

(1) Are the petitioners entitled to present this application 1

(2) Is the respondent able to pay his debts?

(3) Has the respondent committed the acts of insolvency complained of?

5. The petitioning creditors examined nine witnesses and the debtors examined two including one of themselves, namely Piarey Lal.

6. The learned Insolvency Judge held on issue (1) that the debts due to the petitioning creditors exceeded Rs. 600 and that accordingly they were entitled to present their application.

7. The learned Judge answered issue (2) against the debtors for want of evidence on the side of the debtors proving that they had property with which to pay up their debts.

8. On issue (3) the learned Insolvency Judge held that the debtors had committed an act of insolvency under Section 6(d), Provincial Insolvency Act. In other words, the learned Judge found that the debtors had committed the act of insolvency alleged in para. 3(c)(i) and accordingly made an adjudication order against both the debtors, Jagan Nath and Piarey Lai. Jagan Nath alone preferred an appeal under Section 75, Provincial Insolvency Act, before the District Judge, Delhi, who, in agreement with the Insolvency Judge upheld the latter's order and dismissed the appeal. Jagan Nath has now moved this Court in revision.

9. Mr. Grover, appearing for the petitioner, urges with commendable ability and clarity that the insolvency petition on which the order of adjudication wis made does not satisfy the requirements of the Act in that it does not specify the dates of the alleged acts of insolvency as required by Section 13(2)(a) of the Act. There is no doubt that it is necessary for the petitioning creditor to allege the acts of insolvency complained of by him in the petition and specify particulars as to the time and place of their com-mission, as pointed out by Rahim, C.J. in Krishna Das Ray v. Charulata Pal Chawdhary : AIR1932Cal290 ) and by Page, C.J. in M.S.M.M. Ckettiar Firm v. P. Doraswamy Moodialiar A.I.R.1933 Rang.41, in A.M.M. Murugappa Chettiar v. N.C. Gallaira A.I.R.1934 Rang.87 and finally in C.A.P.C.S. Chettiar Firm v. V.V.R. Chtttiar Firm A.I.R.1935 Rang.352 and by Macleod C.J. in Muthu K.R. Alagappa Chettiar v. Nagindas Fulchand Chinoy : AIR1926Bom383 .

10. It will, however, be observed that in the Calcutta case not only no specific date was mentioned but that it was not ever alleged that the act of insolvency complained of had been committed within three months before the presentation of the petition so that the petition on the face of it did not comply with the conditions laid down in the Presidency Towns Insolvency Act. In the first and the third of the Rangoon cases the act of insolvency complained of was the giving of a notice of suspension of payment but the time when and the place where such notice was given was not alleged and in the second Rangoon case it was not even alleged that the debtors had departed from their place of business with intent to defeat or delay their creditors.

11. In the case now before me the petitioning creditors alleged the requisite intention and stated that the act of insolvency had been committed within three months before the presentation of the petition. I cannot overlook the fact that while it is quite easy to specify the exact date and place of the giving of a notice of suspension of payment, it may not be always possible to give the exact date or time of the departure of the debtor from his dwelling house or place of business for the exact date or time of such departure may not be within the knowledge of the petitioning creditor. Further, while it is primarily for the creditor to present his petition in proper form and while it is also the duty of the Court itself to insist on a meticulous compliance with the requirements of the statute, it nevertheless is also open to the debtor to object to the form so that the Court may reject the petition in limine or in a proper case give leave, to the creditor to amend his petition by supplying the necessary particulars or curing the formal defects. In this case no objection, as is now insisted on, appears to have been taken in the trial Court or even in the lower appellate Court and evidently the debtors did not in any way feel embarrassed in contesting the proceedings by reason of the absence of the exact date of the commission of the act of insolvency alleged against them. I am not satisfied that the formal defect now complained of has resulted in any substantial injustice which requires my interference at this late stage in revision.

12. Mr. Grover next urges that the Insolvency Judge wrongly placed the onus of issue (2) on the debtors. It appears to me that issue (2) was raised only for the purpose of enabling the debtors to avail themselves of the benefit of Section 25, Provincial Insolvency Act. Section 6 enumerates the acts of insolvency. Section 7 provides that

subject to the conditions specified in this Act if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make area order adjudging him an insolvent.

The conditions referred to in Section 7 are to be found in Section 9 of the Act. Under the last mentioned section a creditor cannot present the petition unless:

(a) the debt owing by the debtor to him amounts to Ave hundred rupees, and

(b) the debt is a liquidated sum payable either immediately or at some certain future time and

(c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition.

13. So far the ability or otherwise of the debtor to pay hia debts is not relevant at all. Then comes Section 13 which prescribes the contents of the petition. Sub-section (1) of that section requires amongst other things that the petition presented by a debtor shall contain a statement that the debtor is unable to pay his debts. No such averment is required in the case of a creditor's petition by Sub-section (2) of that section. A creditor presenting a petition, therefore, need not aver in his petition that the debtor is unable to pay his debt. The question of ability of the debtor to pay his debt is only material under Section 25 for the ability to pay his debt is one of the grounds on which the Court may dismiss the petition. Issue (2) was, therefore, raised for the benefit of the debtors so as to enable them to satisfy the Court that they were able to pay the debts. The onus of satisfying the Court was clearly, therefore, on the debtors, and I do not think that the objection urged by Mr. Grover under this head is of any substance.

14. Finally, Mr. Grover strenuously contends that the finding that the debtors had, with the intent to defeat or delay their creditors, departed from their dwelling house or their usual place of business cannot be supported, on the evidence on record. I have been taken through the entire evidence and I am not of opinion that the concurrent findings of the lower Courts are not sustainable. The evidence of some wit-nesses relied upon by the learned Counsel for the petitioner to the effect that the debtors were found at their place of business in the earlier part of the month of June 1946 does not necessarily militate against or falsify the evidence of other witnesses who found the debtors absent from their usual place of business in the later part of June 1946 or in the beginning of July 1946. The fact that the present petitioner Jagan Nath kept away from the witness-box and did not contradict the evidence adduced on behalf of the petitioning creditors appears to me to be extremely significant. On an analysis of the evidence on record it is quite clear to me that the debtors stopped their business, their creditors could not find them at their usual place of business and the debtors did not tell even their own servant as to their whereabouts. These facts to my mind constitute sufficient departure from, their usual place of business with intent to delay and defeat the creditors within the meaning of Section 6 (d)(ii) of the Act. I find support for this conclusion from the observations of learned Judges in several English decisions. It will suffice to quote only the observations of Lord Alverstone, C.J. in In re Worsley `, which was a case under the English Bankruptcy Act, 3883, Section 4, Sub-section (1)(d). At p. 314 the learned Chief Justice said:

In my opinion, when you find a shop is shut up, no address left, and no means of finding out where the trader has gone, and when the evidence is sufficient, as it is here, to show an intention to evade service of proceedings, that is an 'absenting' within the subsection.

15. The case of Kastur Chand Rai Bahadur v. Dhanpat Singh Bahadur 23 Cal.26, relied upon by Mr. Grover appears to me to be distinguishable on facts.

16. In my judgment no ground has been made out for my interference in revision and I dismiss this application with costs.


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