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Mohamed Zackeria, Firm Vs. V. Srinivas and Co. and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil;Constitution
CourtChennai High Court
Decided On
Case NumberO.S. Appeal No. 53 of 1956
Judge
Reported inAIR1957Mad403
ActsCode of Civil Procedure (CPC) , 1908 - Sections 107 and 151 - Order 41, Rule 23; Presidency Towns Insolvency Act, 1909 - Sections 9,11, 12 and 13; Provincial Insolvency Act, 1920 - Sections 6 and 11; Constitution of India - Article 14
AppellantMohamed Zackeria, Firm
RespondentV. Srinivas and Co. and anr.
Appellant AdvocateP. Jayachandra Naidu, Adv.
Respondent AdvocateE.R. Krishanan, ;V. Nagarajan, Advs. and ;Official Assignee
DispositionAppeal dismissed
Cases ReferredGokaldoss Govardhandoss v. Parry and Co.
Excerpt:
.....151 and order 41 rule 23 of code of civil procedure, 1908, sections 9, 11, 12 and 13 of presidency towns insolvency act, 1909, sections 6 and 11 of provincial insolvency act, 1920 and article 14 of constitution of india - appeal against order adjudicating appellant insolvent - firm should be deemed to be carrying on business within meaning of section 11 (d) until business debts remain undischarged - when person adjudicated insolvent interests of all secured and unsecured creditors are to be protected by court - otherwise cunning insolvent would settle with one creditor and get adjudication set aside - open to appellant firm to pay all creditors and get free from insolvency - appeal dismissed. - - but we cannot allow the words in the evidence of mohamed zackeria to be extended thus..........mohamed zackeria firm, by sole proprietor mohamed zackeria, insolvent under the' presidency towns insolvency act as he did not pay the debt of about rs. 3000 due to the first respondent, v. srinivasan and co., on dealings, despite the attachment of his house in madras remaining in force for 21 days. .the appellant had urged before balakrishna ayyar j. that he was worth nearly a lakh of rupees and that his debts did not amount to even one fourth of that amount and that it would be improper to adjudicate him insolvent when he could easily pay off all his debts. he had represented that he had rs. 80,000 worth of property in vaniyambadi, in the shape of a house and tannery, and some movable property besides. balakrishna ayyar j. was not impressed by this argument.not only the debt of.....
Judgment:

Panchapakesa Ayyar, J.

1. This is an appeal against the order of Balakrishna Ayyar J. adjudicating the appellant, Mohamed Zackeria firm, by sole proprietor Mohamed Zackeria, insolvent under the' Presidency Towns Insolvency Act as he did not pay the debt of about Rs. 3000 due to the first respondent, V. Srinivasan and Co., on dealings, despite the attachment of his house in Madras remaining in force for 21 days. .

The appellant had urged before Balakrishna Ayyar J. that he was worth nearly a lakh of rupees and that his debts did not amount to even one fourth of that amount and that it would be improper to adjudicate him Insolvent when he could easily pay off all his debts. He had represented that he had Rs. 80,000 worth of property in Vaniyambadi, in the shape of a house and tannery, and some movable property besides. Balakrishna Ayyar J. was not impressed by this argument.

Not only the debt of Rs. 3,000 due to the first respondent, but also a small decree debt of Rs. 400, had remained unpaid though four years had. passed. The appellant also urged before Balakrishna Ayyar J. two other arguments. The first was that he could not be adjudicated insolvent in Madras as he and his firm were carrying on business only at Vaniyambadi. Hut in view of his admission that he was coming to Madras now and then in connection with his business and was purchasing and selling things here on those occasions arid sleeping in a house in Madras, and that he stopped his business in Madras only on 15-7-1954 and had not sold even a single square foot of leather (his trade is in leather) since then, Balakrishna Ayyar J. considered that he was doing business in Madras actively purchasing and selling things till 15th July 1954, and that under the ruling of a Bench of this court in Gokaldoss Govardhandoss v. Parry and Co. ILR 48 Mad 795: AIR 1925 Mad 1249 (A), his firm should be deemed to be 'carrying on business' within the meaning of Section 11(d) of the Presidency Towns insolvency Act so long as its business debts remained undischarged.

In the present case the debt due to the first respondent was a business debt contracted before 15th July 1954, at Madras, and therefore the learned Judge held that the appellant could be adjudicated insolvent here under the Presidency Towns Insolvency Act.

2. The nest contention urged before Balakrishna Ayyar J. by the appellant was that Under Clause (e) of Section 9 of the Presidency Towns Insolvency Act, it is sufficient cause for adjudicating a person insolvent if his property remains under attachment for a period of twenty one days, whereas under Section 6(e) of the Provincial Insolvency Act the attached property of the debtor has to be sold in execution of a. decree for the payment of money before the transaction can be considered to be an act of Insolvency, and that this would amount to discrimination, and a denial of equality before the law and the benefit of equal laws to persons residing in or carrying on business within the presidency towns. Balakrishna Ayyar J. rejected this argument by observing:

'Persons outside the presidency (owns live and trade and buy and sell under conditions very different from those obtaining in the presidency towns. The entire economical structure and the tempo of lifeare different. The distinction between the provisions is therefore one which can be traced to ajust, regional (rational?) and reasonable classification.'In the end, he adjudicated the firm insolvent.Hence this appeal.

3. We have perused the records, and heard Mr. Jayachandra Naidu, the learned counsel for the appellant. He adduced the same three contentions before us. Firstly, he contended that the appellant firm never carried on any business at Madras even before 15th July 1954, in which case alone the ruling in ILR 48 Mad 795: AIR 1925 Mad 1249 (A) would apply. According to him, the sole proprietor of the appellant firm, Mohamed Zackeria, had loosely stated that he was visiting Madras now and then and purchasing goods here, and selling things here till 15th July 1954, whereas really he ought to have said that he was purchasing avaram leaves here and consigning his leather to the first respondent and other commission agents for being sent to London to be sold there.

But we cannot allow the words in the evidence of Mohamed Zackeria to be extended thus when the man himself had stated clearly and unambiguously that he was coming to Madras now and then in connection with his business and was purchasing and selling goods here. There is no ambiguity to be cleared in those statements. So we cannot allow those statements to be extended and made to bear a different meaning, by mere arguments of his counsel. Nor do we see any reason to remand the matter to the learned Judge again as requested by Jayachandra Naidu, for allowing Mohamed Zackeria to give the extended and revised Version.

A remand is not Intended for purposes of adding thus to unambiguous evidence and changing the meaning. So we are satisfied that Balakrishna Ayyar J. was right in holding that the appellant was coming to Madras now and then and carrying on business here, and that, though he closed down his business here on 15th July 1954, he must be deemed to be carrying on his business here so long as the liabilities he incurred in the course of the business remain undischarged. Mr. Jayachandra Naidu relied on the ruling of Panckridge J. In re Benode Behari Saha, 46 CWN 664 (B). That will not help him.

All that was held there was that if a person carried on a retail business in piecegoods in the mofussil, that is, outside Calcutta, but went to Calcutta for the purpose of buying his stock, and stayed in his broker's house for four or five days at a time whenever he went to purchase the stock, paid the vendors of the stock at Calcutta, he could not be deemed to be carrying on business at Calcutta. The facts there will not apply to this case.

Mr. Jayachandra Naidu himself conceded that if that retail merchant had sold his retail goods at Calcutta, in addition to purchasing his stock there, he would be carrying on business in Calcutta. Here, Mohamed Zackeria, the sole partner of the firm admitted in his evidence, that he was purchasing goods at Madras, and selling goods at Madras, in the course of his business visits to Madras. So he was carrying on business at Madras, and could be adjudicated here under the Presidency Towns Insolvency Act, though doubtless, he could also be adjudicated at Vanlyambadi under the Provincial Insolvency Act, by the appropriate Court, for any act of insolvency committed there.

4. The next argument was that Article 14 of the Constitution of India would prevent the section of the presidency Towns Insolvency Act being applied to this firm, since the firm's main place of business was at Vaniyambadi, where the Provincial Insolvency Act would apply, and there was no reason to discriminate against a person carrying, on business in a presidency town by making him liable to be adjudicated insolvent if his Property remained attached, for a debt for 21 days without the debt being paid, when under the Provincial Insolvency Act his property must be actually sold in execution under a decree for the payment of money before he could be adjudicated insolvent.

Mr. Jayachandra Naidu urged that actually, there is no difference between the conditions of business and the tempo of life in Madras and the mofussil, and no just, rational or reasonable classification is indicated by such difference in the provisions of the Presidency Towns insolvency Act and the Provincial Insolvency Act, and so the provision in the Presidency Towns Insolvency Act is ultra vires and must be struck down.

He argues that it is wrong to assume that a debtor in Madras can raise money more easily than a debtor in the mofussil and that, therefore, the denial to a Madras debtor of the extended time for adjudication given to a mofussil debtor amounts in effect to a denial of equality before the law, and the benefit of equal laws and that Balakrishna Ayyar J. went wrong in relying on the just, rational and reasonable classification theory. We cannot agree. It is clear to us that Balakrishna Ayyar J. was quite right in holding that the conditions of business in Madras' & the tempo of life and the whole structure of economics are different from the mofussil.

Indeed Mr. Jayachandra Naidu went on to say that all the laws peculiarly applicable to Madras City and differing from the laws applicable to the moffussil will stand condemned under Article 14.' He could quote no decision in support of this extraordinary and extravagant contention. We cannot agree with him at all on this point.

5. The last contention was that in fact the appellant firm has assets worth over a lakh of rupees and debts of only some Rs. 25000 at the utmost and that none of the creditors except the first respondent is anxious to recover his debt at once, and that the appellant firm is willing to pay off the first respondent's debts within. 24 hours, and so the order of adjudication may be set aside. We are afraid, we cannot accept this argument.

When a person is adjudicated insolvent, It is not a particular creditor alone whose interests are to be protected by the Court but the entire body of creditors, secured and unsecured. Otherwise a cunning insolvent would settle with one creditor and get an adjudication set aside, leaving other creditors in the lurch. It is significant that the first respondent's debt, like the other debt of Rs. 400, has remained unpaid for four long years despite all the alleged riches of the appellant firm.

So too it is significant that the appellant has not given a schedule of creditors and the amount of debts due to them and there is no knowing whether the statement that all the other creditors are willing to allow their debts to remain unpaid for any length of time is true or not. It is always open to the appellant firm to pay all the creditors and get free from this insolvency. It is also open to the appellant firm to enter into a composition with all the creditors and take the usual steps under the insolvency law to get free from the adjudication. There is, in our opinion, little merit in this contention also.

6. In the end, therefore, we confirm the order of adjudication passed by Balakrishna Ayyar J. and dismiss this appeal, with costs, one set.


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