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M.S. Narayana Iyer Vs. A.C.A. Funds, Palayamkottai and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1979)1MLJ392
AppellantM.S. Narayana Iyer
RespondentA.C.A. Funds, Palayamkottai and ors.
Cases ReferredMalini Naicker v. Seth Manghraj
Excerpt:
- .....judge, tirunelveli mooted out for contentions the point as to whether the petitioner debtor has prima facie established that he is unable to pay off his debts from the available sources. evidence, oral and documentary, was adduced both by the petitioner-debtor' and the respondents-creditors. on an investigation of the materials placed before him, the subordinate judge came to the conclusion that the petitioner-debtor is possessed of sufficient means to pay off his debts, and there is no need to adjudge him an insolvent and in that view, dismissed his petition.2. aggrieved by the above decision, the petitioner-debtor filed an appeal, c.m.a. no. 88 of 1973, which came to be heard and disposed of by the district judge tirunelveli on 25th april, 1974. the appellate court formulated for.....
Judgment:
ORDER

S. Nainar Sundaram, J.

1. The petitioner-debtor in I.P. No. 17 of 1972 on the file of the Subordinate Judge, Tirunelveli is the petitioner in this revision. The said petition was filed by him under Sections 10 and 13 of the Provincial Insolvency Act (hereinafter referred to as 'the Act') to adjudge him an insolvent on the ground that his debts exceeded his assets and hence he was unable to pay them. He set forth the necessary particulars in support of his case. Some of the creditors, who were arrayed as respondents, contested the said petition by saying that the debtor had enough means to pay off all his debts; and they projected the necessary particulars in support of their contention. The Subordinate Judge, Tirunelveli mooted out for contentions the point as to whether the petitioner debtor has prima facie established that he is unable to pay off his debts from the available sources. Evidence, oral and documentary, was adduced both by the petitioner-debtor' and the respondents-creditors. On an investigation of the materials placed before him, the Subordinate Judge came to the conclusion that the petitioner-debtor is possessed of sufficient means to pay off his debts, and there is no need to adjudge him an insolvent and in that view, dismissed his petition.

2. Aggrieved by the above decision, the petitioner-debtor filed an appeal, C.M.A. No. 88 of 1973, which came to be heard and disposed of by the District Judge Tirunelveli on 25th April, 1974. The appellate Court formulated for consideration the point as to whether the petitioner-debtor is prima facie unable to pay his debts, and on consideration of the materials on record, found the point against him and dismissed the appeal. The present revision is filed by the petitioner-debtor against the said orders, under Section 75(1) of the Act.

3. Mr. T.R. Mani, learned Counsel for the petitioner, would contend that the Courts below have transgressed the rules of consideration of the questions involved in a debtor's petition under Sections 10, 24 and 25 of the Act and hence the orders of the Courts below stand vitiated. The learned Counsel relies on the following decisions in support of his contentions:

In Chhatrapat v. Kharaq (1917) 44 I.A. 11 : 32 M.L.J. 1 : A.I.R. 1916 P.C. 64., it is stated:

The Provincial Insolvency Act entitles a debtor to an order of adjudication when its conditions are satisfied. This does not depend on the Court's discretion, but is a statutory right : and a debtor who brings himself properly within the terms of the Act, is not to be deprived of that right on so treacherous a ground as an abuse of the process of the Court. Any misconduct of a debtor is to be visited with its due consequences at the time of the debtor's application for discharge and not on the initial proceeding.

5. In Lakshminarayana Aiyar v. Subramania Aiyar (1925) 45 M.L.J. 129 : A.I.R. 1923 Mad. 585, referring to the proviso to Section 24(1)(a) of the Act, it was pointed out that the debtor can be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing his allegation. On the admitted facts, it was found that the debtor's debts amounted to over Rs. 40,000 and his assets to over Rs. 51,001 and that the properties which constituted his assets were under attachment and presumably would be sold, and it was accordingly no possible for the debtor to realise the price for himself or to use them for the payment of his debts; and hence there was sufficient prima facie proof of inability to pay debt's.

5. In Ramaswami v. Narayanasami : (1925)48MLJ100 , I find from the facts stated therein that originally one creditor filed the petition, that afterwards three more petitioners were added, and one creditor opposed the petition and a Division Bench of this Court held:

Where the insolvent himself gives evidence saying that he is unable to pay the debts and where the situation is as if he is himself the petitioner, there is no purpose in closely scrutinizing the acts of insolvency.

6. In Naraymappa v. Bheemappa : AIR1926Mad494 , a Division Bench of this Court discountenanced an enquiry as to the reality of some of the debts.

7. In Perianambi Srirangachariar v. Narasimha Aiyar (1928) 59 M.L.J. 597 : A.I.R. 1928 Mad. 1113, Devadoss, J., pointed out that the proof that is required of a debtor, who filed an application to be adjudicated an insolvent, that he is unable to pay his debts, is only a prima facie proof.

8. In Venkatachala Udayar v. Kasi Pandaram : (1964)1MLJ261 , Venkatadri, J., was concerned with a case where apart from the fact that the debtor applied for adjudication as insolvent on the ground of inability to pay his debts, the opposing creditor having obtained a decree against the debtor was taking execution by way of arrest, and the learned Judge held that it is not necessary for the debtor to prove each and every debt mentioned by him.

9. In Krishnappa v. Kasi Viswanathan : AIR1966Mad331 , Natesan, J., laid down that where a debtor applies for adjudicating himself as insolvent, all that the Court has to see is whether there is compliance with the provisions of Section 10 of the Act, and the statutory right of the debtor cannot be deprived of on the ground that it is an abuse of the process of Court.

10. In Mohanakrishna v. Gopalaswami Naidu : (1969)2MLJ140 , Ramaprasada Rao, J., referring to a debtor's petition, observed:

when once he satisfies the prescribed conditions which the Legislature has set as a sine qua non enabling him to get himself adjudicated an insolvent, the Court has no option except to consider his request and grant the prayer, the other requirements being satisfied.

11. In Lingasami Goundar v. Subramanian : (1974)2MLJ166 , Ramaprasada Rao, J., while defining the scope of enquiry under Section 24 of the Act, laid down:

When the statute uses the word prima facts grounds 'for believing the statement of the debtor of his inability to pay his debts, the degree of the burden of proof that is called for by the statute is not to be equated to the degree of proof as is always necessary in an ordinary civil litigation.... In my view such a detailed examination is not warranted. If a person approaches the Court by inflicting on himself the ignominy of his inability to pay his debts and in consequence seeks for an order adjudicating him insolvent, then, unless there is strong evidence to disprove such a voluntary confession made by him, the Court need not at that stage employ itself in a deep enquiry regarding the opulence of the debtor and his ability to pay his debts. A summary enquiry is indicated; prima facts proof is called for and if that is undertaken and if a decision is rendered by the appropriate Court, then it cannot be said such an order is without jurisdiction or suffers from any material irregularity. The High Court also, under Section 75(1) of the Act, is Only expected to see whether the order of the appellate Court is in accordance with law or not. The lower Court says that prima facie it is satisfied that the respondent is unable to pay his debts. This is a finding based on appreciation of material considered by the Court below. The order otherwise cannot be said to be not in accordance with law.

12. With regard to the scope of interference under Section 75(1) proviso of the Act by the High Court, in revision, certain principles have been recognised and laid down by this Court as well as the Supreme Court. It will be pertinent to refer to the dictum laid down by Ramaprasada Rao, J., in District Official Receiver v. Lakshmi Ammal : (1974)2MLJ397 , wherein the learned Judge observed:

The scope of the powers of the High Court under Section 75(1) of the Provincial Insolvency Act is narrow. Interference is possible by the High Court against the order of the District Court only on a question of law. The findings of fact rendered by the tribunals created under the Act are findings which are final provided for in Section 75(1) itself.

13. In Malini Naicker v. Seth Mangiraj : [1969]3SCR698 , while defining as to when a decision will be not 'according to law' within the meaning of Section 75(1), proviso (1) of the Act, the Supreme Court laid down that a decision being contrary to law as provided in Section 100(1)(a) of the Civil Procedure Code is not the same thing as a decision being not according to law as prescribed in the first proviso to Section 75(1) of the Act. It has been further laid down that a wrong decision on facts by a competent Court is also a decision according to law and if the Legislature intended to confer power on the High Court under the first proviso to Section 75(1) of the Act, to re-examine both questions of law and fact, it would have conveyed its intention by appropriate words as has been done under various other statutes. As to when a decision would be not 'according to law', the Supreme Court observed as follows:

Though it may not be possible to give an exhaustive definition of the expression 'according to law' instances in which the High Court may interfere under the provision can be given. They are cases in which the Court which made the order had no jurisdiction or in which the Court has based its decision on evidence which should not have been admitted, or cases where the unsuccessful party has not been given a proper opportunity of being heard, or the burden of proof has been placed on the wrong shoulders. Wherever the Court comes to the conclusion that the unsuccessful party has not had a proper trial according to law, then the Court can interfere. But, the Court ought not to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a conclusion which the High Court would not have arrived at.

14. Keeping the ratio laid down by the above decisions in mind, we find that certain principles do emerge with reference to the consideration of the questions involved under the provisions of the Act with regard to a petition for adjudication filed by the debtor on the ground that he is unable to pay his debts. Inability to pay the debts is made a condition precedent in the presentation of a debtor's petition. The Court has got to be satisfied, of course, prima facie that the debtor is not in a position to pay his debts. An enquiry by the Court will not exclude an investigation of the fact for itself. Of course, the Court is not required to go into an elaborate enquiry as to the validity or otherwise of the debts and it is sufficient if the Court is satisfied prima facie about the inability of the debtor to pay his debts. If a debtor fails to make out a prima facie case, his petition must fail. The question of abuse of process of Court and the question of genuineness of the debts are not very germane for consideration of a debtor's petition under the provisions of the Act. At the same time, it is not for this Court, under the first proviso to Section 75(1) of the Act, to interfere with appreciation of materials considered by the Court unless it is possible to hold that the decision of the Court below is not in accordance with law. As for instances when the decision of the Court can be said to be not 'according to law' guidelines have been set down by the decision of the Supreme Court in Malini Naicker v. Seth Manghraj : [1969]3SCR698 , referred to above.

15. I have been taken through the orders of the two Courts below and I cannot say that the Courts below have transgressed the limits of the scope of enquiry into a debtor's petition as laid down by the judicial precedents referred to above. The Courts below have correctly set out the point for consideration, viz., as to whether the debtor has prima facie established that he is unable to pay off his debts. It is not as if a consideration of this question will not involve some amount of enquiry and an investigation is totally excluded. In fact, in an enquiry, an investigation, of course not a deep one, is expected of the Courts when they enquire into a debtor's petition for self-adjudication. I am not able to persuade myself to hold that the enquiry held and the consideration of this question by the Courts below have transgressed the principles set out above. The two Courts below having found that it cannot be held that the debtor is prima facie unable to pay his debts, it is not competent, in the exercise of the revisional jurisdiction under the first proviso to Section 75(1) of the Act, to interfere with such decisions. In this view, the revision is dismissed, but there will be no order as to costs.


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