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Lakhsminarayana Aiyar Vs. C.R. Subramaniya Aiyar, the Official Receiver - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in73Ind.Cas.74
AppellantLakhsminarayana Aiyar
RespondentC.R. Subramaniya Aiyar, the Official Receiver
Cases ReferredKumud Nath Roy Choudhry v. Jatindra Nath Chaudhry
Excerpt:
provincial insolvency act (v of 1920), sections 10, 24(1)(a), proviso, 35 - jurisdiction of district court--residence, what amounts to--unable to pay his debts,' meaning of. - .....the debtor throughout has alleged that he was, at the date of the petition, a resident in west tanjore district, and there is the verified statement in his petition to that effect and also a counter-affidavit filed in the present proceedings in the lower court. it is further not shown that he was cross-examined in any way on his allegations. against that, there is only the fact that the present respondent, first creditor, did not actually deny the residence in the district and has never said where, in his opinion, the debtor in fact resides, but only in his petition under section 35 put the debtor to proof of his residence in the following terms: 'the alleged insolvent has not given prima facie proof of his right to present the petition or that the district court has jurisdiction to.....
Judgment:

1. This is an appeal against an order by the District Judge of Tarjore West annulling the adjudication of the appellant-debotr under Section 35, Provincial Insolvency Act. The lower Court has given two reasons for its orders. First, that the debtor was not resident on the date of the presentation of the petition within its jurisdiction; secondly, that he was not proved to be, as Section 10 requires, unable to pay his debts.

2. As regards the question raised by each of these grounds M decision, it must be pointed out that the amount of proof which can be expected of the debtor, the burden undoubtedly being on hint, will vary very greatly with reference to the circumstances of the case.

3. Here the debtor throughout has alleged that he was, at the date of the petition, a resident in West Tanjore District, and there is the verified statement in his petition to that effect and also a counter-affidavit filed in the present proceedings in the lower Court. It is further not shown that he was cross-examined in any way on his allegations. Against that, there is only the fact that the present respondent, first creditor, did not actually deny the residence in the District and has never said where, in his opinion, the debtor in fact resides, but only in his petition under Section 35 put the debtor to proof of his residence in the following terms: 'The alleged insolvent has not given prima facie proof of his right to present the petition or that the District Court has jurisdiction to entertain the same.' The contentions of the opposing creditor being thus indefinite, in our opinion, it was not necessary for the lower Court to complain of the absence of additional affirmative evidence on the part of the debtor. It in fact proceeded mainly with reference to the returns on certain processes addressed to it. There is, first, the return dated January 1920, that he was not to be found in his house at Tirupapuliyar. South Arcot District, because he had left it for a place in West Tanjore. That return, however, so far as it is evidence on the material point, the debtor's possession of a house and residence in Tirupapuliyar, does not necessarily involve more than that the process-server adopted for his purpose, the assertion of the present respondent, at whose instance the process was issued, that the debtor was residing in Tirupapuliyar, and further this piece of evidence, so far as it is admissible, relates to a date 8 months before the date of the presentation of the debtor's petition. Next, reference has been made by the lower Court to the fact that, when another notice was sent on 25th March 1920, the return was that the debtor had gone away and his whereabouts were unknown. There is also the fact that the insolvent in his counter-petition in these proceedings gave his address as Kuttalam in the Mayawaram Taluq. That is no doubt just outside the border of the West Tanjore District, but it is very near to the adjoining border of East Tanjore District. We have been referred to definitions of 'residence' adopted by two learned Judges of the Calcutta High Court for the purpose of construction of Order IX, Civil Procedure Code, in Kumud Nath Roy Choudhry v. Jatindra Nath Chaudhry 9 Ind. Cas. 189 : 38 C. C. 394 : 13 Cri.L.J. 221 : 15 C.W.N. 399. But we are not prepared to adopt those definitions as exhaustive. We can quite understand that a person, especially a person in the financial position of the debtor, may not have any permanent or continuous residence. It is, in our opinion, sufficient that we have no reason for doubting that he has remained, as he said, within the limits of the District of West Tanjore, though he raw have occasionally gone outside the District and returned to it. It should be said that the debtor in the lower Court and in his ground of appeal here was foolish enough to rely on a case of residence in a house in Kuttalam, which belonged to him and which he had let to somebody else. That he has given a bad reason in support of his contention does not debar us from holding that it is sufficiently supported otherwise by his own statement in his petition and his counter-affidavit, which has not been shown to be incorrect.

4. Turning to the second ground on which the lower Court annulled the adjudication that the debtor was not proved to be unable to pay his debts, we refer to the proviso to Section 24(1)(a), Provincial Insolvency Act, as showing that the debtor can, for the present purpose, be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing his allegation. The facts as set out in his petition, and those facts were not disputed in the lower Court and are not disputed here, are that his debts amount to over Rs. 40,000 and his assets to over Rs. 51,000. No doubt, there is, on these figures, a balance of about Rs. 8,000 in his favour. But he has contended further that, all his property being under attachment by the second respondent and his petition for permission to execute a private sale of the properties having been practically negatived, the surplus of assets over debts is only apparent. We have not been given the exact terms of the proposal for a private sale or of the order of the Court rejecting it. It is, however, sufficient that the properties are under attachment and presumably would be sold and that it is accordingly not possible for the debtor to realize the price himself or to use them for the payment of his debts.

5. There is, next, the material consideration that the realisation by the debtor under pressure or by the Official Receiver or otherwise by the Court by public sale is not likely to be advantageous and it is even less likely to result in the property fetching a fair price. That is the common experience of private sales under pressure and of Court sales. It is, of course, impossible to say with any accuracy how for the price which would be realized in these circumstances, would be less than the fair value of the properties, if realized with reference to ordinary considerations. It is not, in our opinion, clear that the margin between what, it is not disputed, would be the fair value of the properties and the debts will not be wiped out in the course of an immediate realization. There is enough in the undisputed allegations of the debtor as to his circumstances to satisfy the requirements of the provision of law already referred to, and there is nothing in evidence on the other side. We, therefore, must dissent from the lower Appellate Court's conclusion that the debtor has failed to prove inability, to pay his debts.

6. These findings entail the success of the appeal and the setting aside of the lower Court's order with costs throughout. The cases will go back to the Official Receiver who will proceed with the administration of the estate.

A.A.A.O. No. 37 of 1922.

7. The order annulling the adjudication of the present appellant debtor having been set aside, we must set aside the decision of the lower Appellate Court in Appeal against Appellate Older No. 37 of 1922 and remand the appeal to it for disposal in the merits.

8. Costs to date will be costs in the cause and be provided for in the order to be passed.


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