Skip to content


M. Ratchaganadan Vs. Kishindas Shamadasunder and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Case NumberO.S. App. No. 34 of 1964
Judge
Reported inAIR1967Mad279
AppellantM. Ratchaganadan
RespondentKishindas Shamadasunder and anr.
Cases ReferredPratapmal Rameswar v. Chunilal Jahuri
Excerpt:
.....appellant with the indian bank, kothavalchavadi branch. there seems to be no doubt that the real place of business of the appellant was at panruti, that he was having factory there, and that he had extensive properties there, both a number of houses as well as lands. 2) is concerned, his failure to contact the appellant at no. it is perfectly possible, and even probable, that he was using this place, which belonged to his friend govindaswami, as an address for purposes of account transactions and that it was not a branch office at all. on the contrary, both the factory and the office appear to have been working, and persons like the manager, were available there. the plea of the appellant that he was then away at tiruchirapalli on private business, may be perfectly true, as far as we..........p. 2 dated 29-12-1962 sent by post, was returned unserved. but, admittedly, that relates to the madras address alone. as we have pointed out earlier, the madras address might merely have been a nominal and convenient designation, for the purposes of loan transactions at madras. there seems to be no doubt that the real place of business of the appellant was at panruti, that he was having factory there, and that he had extensive properties there, both a number of houses as well as lands. hence, the fact that the notice ex. p. 2, was returned unserved relating to the madras address is of no significance whatever; as an panruti the addressee was perhaps temporarily absent. as far as the evidence of the broker prabhat singh (p.w. 2) is concerned, his failure to contact the appellant at no......
Judgment:

M. Anantanarayanan, Offg. C.J.

(1) The appeal is from the judgment of Venkataraman J. in an insolvency proceeding before the learned Judge, and, the learned Judge allowed the proceedings and adjudicated the appellant (Ratchaganathan) as insolvent, the under S. 13 read with S. 9(d)(ii) and (iii) of the Act, mainly on this conclusion of fact that the appellant (insolvent) departed from his dwelling house or usual place of business, and also secluded himself, under such circumstances as to warrant the inference that he did so with intent to defeat or delay his creditors. Since most of the facts are not in dispute, it is sufficient for us to deal with matter fairly briefly, on the merits of the evidence adduced before the learned judge.

(2) As far as the present respondent (petitioning creditor) is concerned, he had to meet a preliminary ground of absence of the requisite territorial jurisdiction in the court, but we do not propose to dilate on this, for the simple reason that it appears to be very clear to us that, on the materials placed before us and on the principles of law applicable the adjudication of the appellant cannot be sustained. For the purpose of argument, therefore, we shall assume that the learned Judge had the requisite jurisdiction. We shall also take for established the main facts. viz., that the appellant, who was a cashewnut merchant at Panruti, apparently with very substantial property, had also an address at Madras which was 52 Ayyappa Chetti Street, Mannadi, Madras, and that the appellant did borrow Rs. 5000 from the present respondent, a firm of indigenous bankers, furnishing this address at Madras. There has been controversy between the parties whether the rubber stamp bearing this address in the hundi Ex. P. 1, as a stamp affixed at the instance of the respondent for a technical that the appellant had such a branch place of business at Madras. However that might be and assuming that the appellant had such an address at Madras, it is clear enough from the evidence of the appellant (R W 1) and the rest of the record that this place really belonged to one Govindaswami and that the telephone at that place belonged to that person Govindaswami, the reputed friend of the appellant. Hence it may very well be that this was not an actual branch but a convenient address furnished by the appellant as is also indicated by the pass book of the appellant with the Indian Bank, Kothavalchavadi branch.

(3) The other facts are very simple, and the record is quite clear and definite. The broker who transacted this loan on behalf of the respondent (P.W.2) tried to establish contact with the appellant, both at Madras and at Panruti, when the loan became due and was not paid. The learned Judge has stressed certain possibilities for his view that the facts spoken to by the broker might justify the inference that the appellant had not merely departed from his usual place of business and absented himself, but that he had secluded himself, so as to deprive the creditors of the means of communicating with him. But we are afraid, that, as the records stand, such an inference would appear to be quite unwarranted. The notice Ex. P. 2 dated 29-12-1962 sent by post, was returned unserved. But, admittedly, that relates to the Madras address alone. As we have pointed out earlier, the Madras address might merely have been a nominal and convenient designation, for the purposes of loan transactions at Madras. There seems to be no doubt that the real place of business of the appellant was at Panruti, that he was having factory there, and that he had extensive properties there, both a number of houses as well as lands. Hence, the fact that the notice Ex. P. 2, was returned unserved relating to the Madras address is of no significance whatever; as an Panruti the addressee was perhaps temporarily absent. As far as the evidence of the broker Prabhat Singh (P.W. 2) is concerned, his failure to contact the appellant at No. 52 Ayyappa Chetti St. Madras, is again, not significant, for the very simple reason that this was merely a nominal address for the purpose of the transactions of the appellant at Madras; it is perfectly possible, and even probable, that he was using this place, which belonged to his friend Govindaswami, as an address for purposes of account transactions and that it was not a branch office at all.

(4) The real graveman of the charge against the appellant is that this Prabhat Singh (P.W. 2) also went to Panruti to the business place or quarters of the appellant, and could not find the appellant there. Nor was he able to obtain information where the appellant was. He went to Pondicherry in order to contact the father-in-law of the appellant; there again he drew a blank. But we must point out that the evidence, in this regard falls far short of the requirements of S. 9(d)(ii) and (iii) of the Act earlier referred to. The broker does not say that he found the factory or the place of business, shut up or abandoned. On the contrary, both the factory and the office appear to have been working, and persons like the Manager, were available there. The broker, apparently, did not proceed to the house of the appellant in order to make any enquiry at that house, of the members of the family of the appellant, where he had gone. The plea of the appellant that he was then away at Tiruchirapalli on private business, may be perfectly true, as far as we can judge.

(5) The law on this subject has been stated in a number of decisions, the principles of which are conveniently and tersely set forth by Mulla in this law of Insolvency, Lecture IV page 120, paragraph 119 of the 1958 Edn. The pertinent extract is as follows:

'Absenting oneself is no act of insolvency, unless it be with intent to defeat or delay creditors. Whether the intention exists is a question of fact...... If a trader shuts up his shop during business hours, or departs from his dwelling house, without leaving instructions where is to be found if creditors call, or without making arrangements for carrying on his business, he must be presumed to have left to avoid his creditors; but the absence may be satisfactory accounted for and the presumption may be rebutted. No such presumption however arises where the debtor has left a representative behind......'

(6) The difficulty of applying the criteria to the present meager facts on record will at once be evident. We need not stress that insolvency is a status to which no person should be reduced, unless an act of insolvency is fully established to the satisfaction of the court. A creditor, in particular, ought not to be permitted to utilise this mode of obtaining an adjudication as insolvent as a kind of pressure in order to realise to debt more economically or by swifter means. In the present case, as far as Prabhat Singh's evidence about Panruti is concerned, it is clear that the creditor himself never went there, and that only the broker did so. Even P.W. 2 found the factory and the place of business intact and working, and there were representatives of the absent debtor, if they could not furnish any relevant information. P.W. 2 could have proceeded to the house of the appellant in the same town, and made enquiries of the members of the family which clearly he did not do.

(7) We did not want to leave the matter merely there, for it could be said that the record does nevertheless justify some suspicion against the appellant that his absenteeism could be devise, to put in one word. Hence, we were also concerned with the general situation of the debtor, in order to judge if it would be at all likely that the debtor had secluded himself from creditors, with intent to defeat or delay their claims. Further, under S. 13(4)(b) 'if the debtors appears and satisfies the court that he is able to pay his debts the court has the power and duty to dismiss the petition. For judging the general situation this appeal was adjourned twice, and particulars were called for, as elaborately as we could do so, concerning the total assets and estate of the appellant, the total indebtedness of the appellant, and the extent to which he could be characterised as solvent today. We found, certainly, to our surprise, that the appellant has a large number of houses at Panruti, and substantial landed properties and, in the light of a report that his wife, may lay claim to certain of these properties as properties held in her own right, an affidavit from the wife also been filed, disclaiming any such pretentious on her part. Naturally, at the moment we are not embarking upon a meticulous enquiry into the assets and liabilities of the appellant and our conclusion can only be approximate and tentative. Even so, the inference seems to be irresistible that the appellant has a very substantial estate, perhaps worth between three to four lakhs of rupees, even on a conservative estimate, while the total of his liabilities, as placed before us, within two lakhs of rupees. It may be that these conclusions may have to be modified by a thorough enquiry, but, as broad indications, we do not doubt their truth. We thus find that the appellant is a man possessed of assets substantially exceeding his liabilities, and we have no doubt that he is a position to satisfy all his creditors within reasonable time.

(8) Our attention has been drawn to a passage in the judgment of Rankin C. J. in Pratapmal Rameswar v. Chunilal Jahuri : AIR1933Cal417 , to the effect that the test is not whether the debts could be paid if liquidation is proceeded with, but whether the debtor could fully satisfy his creditors, provided of course that some reasonable time was given. We must also take judicial notice of the appreciating values of the immovable properties today, particularly in urban or semi-urban areas, and the case with which such properties could be sold, and converted into liquid cash. We have no doubt that if the date made available to us are correct the appellant can fully satisfy his creditors in cash, within a quite reasonable period. On that inference, we must hold that it is most unlikely that his temporary absence on the occasion in question was due to an intention to defeat or delay this particular creditor, or his creditors in general. Further, since the hundi was only of the value of Rs. 5,000 this is quite a small claim against a fairly wealthy man, as far as we can judge.

(9) For these reasons, we are unable to support the order of adjudication of the learned Judge (Venkataraman J.) on the facts and on the principles of law applicable to these facts. The appeal will therefore have to be allowed, and the order of adjudication set aside. Needless to say, this does not imply that other creditors of the appellant are not at liberty to take such action as is available to them in law, with regard to their claims. We must carefully refrain from expressing any view on that matter, one way or the other.

(10) The parties will bear their own costs. The costs of the Official Assignee will come from the assets in his hands.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //