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Debi Charan Basu Vs. Sudhindra Nath Dutta - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 798 of 1976
Judge
Reported inAIR1978Cal141,81CWN745
ActsProvincial Insolvency Act, 1920 - Sections 10, 13, 13(1) and 35; ;Code of Civil Procedure (CPC) , 1908 - Section 115
AppellantDebi Charan Basu
RespondentSudhindra Nath Dutta
Appellant AdvocateKanai Basu, Adv.
Respondent AdvocateRameswar Saha, Adv.
DispositionPetition dismissed
Cases ReferredHyderabad v. Ajit Prasad Tarway
Excerpt:
- .....provisions of section 13 of the provincial insolvency act such as the place of residence of the debtor-opposite party has not been mentioned in the insolvency petition, that the amount and particulars of all the pecuniary claims against him were not stated and that the account books were not produced, were raised in his written-objection to the application under section 13 of the said act. all these objections were duly considered by the court below and after hearing the petitioner as well as the opposite party the court below was of the view that the debtor-opposite party prima facie proved that he was unable to pay his debts and as such he was adjudged an insolvent and the insolvency application was allowed, in the petition for annulment of the said adjudication filed by the.....
Judgment:

B.C. Ray, J.

1. This is an application under Section 115 of the Civil P. C. and it is directed against Order No. 47 dated Jan. 16, 1976 passed by the Additional District Judge, Second Court, Alipore in Insolvency Case No. 17 of 1971 dismissing the petitioner's application under Section 35 of the Provincial Insolvency Act, 1920.

2. The salient facts of the case is that the petitioner came to be acquainted with the opposite party who was working as & finance broker and the opposite party introduced to the petitioner a firm known as Pioneer Stereotype Company as being in temporary need of some loans. Theopposite party recommended highly the said firm as absolutely solvent and trustworthy. On such representation of the apposite party the petitioner and some of his relatives lent and advanced several sums of money to the said firm sometime in 1965-66 against several hundies executed by the said firm in favour of the petitioner and his relatives. Sometime thereafter in 1966 the opposite party repeatedly represented to the petitioner as well as to the other creditors that the firm had been involved in great financial difficulties and it might close down any day and advised the petitioner and other creditors to file suit for realisation of the sums advanced against Hundies to the said firm immediately otherwise it would not be possible to get the said sums recovered. The opposite party also repeatedly stated to the petitioner and other creditors that he was morally bound to them for the moneys advanced by them and as such he requested the petitioner and other creditors for filing suits against the said firm. The opposite party also entreated the petitioner and others to entrust him with the task of filing suit by endorsing the hundies executed by the said firm in his favour in order to enable him to file a single suit against the said firm forthwith on the basis of the said endorsed hundies and the opposite party also promised to make over the moneys to the petitioners and other creditors as soon as the same would be realised. In proof of his sincerity and honesty the opposite party offered to furnish the petitioner and other creditors with equal number of hundies of identical value in exchange for the said firm's hundies which were to be endorsed in his favour. Persuaded by the entreaties of the opposite party and believing in the same the petitioner and other creditors endorsed the firm's hundies in favour of the opposite party who filed a suit being Title Suit No. 966 of 1966 in this Hon'ble Court against the said firm sometime on May 19, 1966 for recovery of the said sums of money advanced. The opposite party also obtained some loans from the petitioner and his relatives on the plea that he required the same for meeting his personal needs as well as to meet the expenses of the said suit. Thereafter the opposite party intentionally avoided to keep any contact with the petitioner and other creditors and did not inform them of the position and progress of the said suit. As a result of such conduct of the opposite partythe petitioner became suspicious and made enquiries about him. It was revealed on such enquiries that the opposite party who was the Managing Director of Calcutta Commercial Bank Limited was convicted for misappropriating the Bank's money and suffered imprisonment. The petitioner also came to know that in the suit being No. 966 of 1966 the said firm deposited a sum of Rs. 15,0007- in court to obtain leave to defend in the said suit. It also appeared that suddenly the opposite party made a compromise with the said firm reducing the claim of the suit from Rs. 33,590/- to Rs. 31,000/- and on the date of compromise, that is, 30-11-1966, the opposite party received a sum of Rs. 16,000/- in cash. On December 30, 1966, the opposite party withdrew from court the aforesaid deposit of Rs. 15,000/-. The opposite party, however, managed to keep the petitioner and other creditors absolutely in dark about the compromise of the said suit and also his realisation of the said sum. The petitioner, thereafter, filed a suit against the opposite party in this Court being Suit No. 389 of 1967 and the summons of the said suit was duly served on the opposite party who did not come forward to contest the said suit as he knew that he had no defence to offer. The said suit was decreed for a sum of Rs. 35,084/-. The opposite party then levied Money Execution Case No. 5 of 1968 in the First Court of Subordinate Judge at Alipore. On April 28, 1967, the opposite party filed an application under the provisions of Presidency Insolvency Act, 1909 before this Court and this was numbered as Insolvency Case No. 7 of 1967 for declaring him an insolvent. In the said petition the petitioners stated his residence to be at 14 S, Surendra Nath Banerjee Road, Calcutta. The opposite party was adjudged an insolvent on May 20, 1967 by this Court. The creditor petitioner, however, applied for annulment of the said declaration and adjudication and on December 18, 1970. This Court held that it had no jurisdiction to decide the case and an order annulling the declaration and adjudication was passed on December 18, 1970. The opposite party, thereafter, filed an application under Section 13 of the Provincial Insolvency Act, 1920 on April 20, 1971 in the Court of the District Judge at Alipore for adjudging him an insolvent on the ground that he was unable to pay his creditors and he had small assets which he was ready to surrender to the court. This was registered as Insolvency Case No. 17 of 1971. The said application was opposed by the petitioner and after contested hearing the opposite party was adjudged an insolvent 'by Order dated March 28, 1973. The petitioner, thereafter, filed an application under Section 35 of the said Act for annulment of the said order of adjudication on the ground that the opposite party did not comply with the provisions of Section 13(1), Clauses (b), (d) and (e) by not mentioning his ordinary place of residence, not disclosing his debts to the Central Bank of India, Netaji Subhash Road Branch, Calcutta and also by not stating in his application that he was the author of two Bengali books. It has also been stated therein that the opposite party did not comply with the provisions of Section 22 of the said Act by not producing his books of account and the opposite party has not satisfactorily established his inability to pay his debt and as such prayed for annulling the said order adjudicating the opposite party as an insolvent.

3. The opposite party filed an objection on November 28, 1975 stating inter alia that all those objections were taken by the petitioner in his written objection filed in the said insolvency case and the same was heard and decided on contest by the court by its order No. 33 dated March 28, 1975. It has also been stated that the petitioner duly supplied the particulars of all his debts and he maintains no account books. It was also stated therein that the two books written by him were seldom sold in the market and they did not fetch any income at all It has further been submitted that there is no substance in the petition and as such there is no question of annulling the said adjudication.

4. On Jan. 16, 1976, the Additional District Judge, Second Court, Alipore by Order No. 47 held that the particulars mentioned in Section 13 of the said Act had all been furnished in the petition. It was further held that in the order of adjudication dated March 28, 1973 it had already been decided that the over-draft account standing in the name of the debtor with the Central Bank of India did not represent any debt to the bank and debts of the opposite party were fully disclosed in the petition. It was also held that there was no evidence to show that the debtor reserved the copyrights and that the books have demands and circulation in the market. Such non-inclusion of this fact in the insolvency petition did not render the application void and illegal. There was no evidence that the debtor used to keep his personal accounts. It was so held that the petition under Section 35 of the said Act was without any substance and as such it was rejected on contest.

5. It is against this order the instant application has been moved and a rule and an ad interim stay of all further proceedings in the insolvency case No. 17 of 1971 was also obtained.

6. An affidavit-in-opposition has been filed on behalf of the opposite party stating inter alia that he had no ability to pay debts and that the insolvency petition was filed in due compliance with the provisions of Section 13 of the said Act stating therein the required particulars. It has also been stated that he did not deceive the court by making false statements nor did the manage to get himself adjudged and declared insolvent as falsely alleged in the petition.

7. Mr. Kanai Basu, learned Advocate appearing on behalf of the petitioner has submitted that the court below acted illegally in not annulling the order adjudicating the opposite party an insolvent inasmuch as the petitioner did not mention the particulars required by Clauses (b), (d) and (e) of Section 13(1) of the Provincial Insolvency Act. It has also been submitted that though it is evident from the certified copy of the statements of the Central Bank of India that there was a debit balance of Rs. 7,990.07 paisa which constituted the personal debt of the debtor to the said bank at the material time yet this was not shown in the insolvency petition. The Court below was in error in not holding that the provisions of Section 13 of the said Act had not been complied with. It has also been submitted that the court below erred in holding that there was no evidence to show that the debtor reserved copyrights of the two books written by him overlooking the legal aspects of the copyright. It has also been contended by Mr. Basu that the opposite party did not produce the account books deliberately and as such it ought to have held that the opposite party wilfully failed to perform the duty imposed on him by Section 22 of the said Act and committed an offence under Section 69 of the said Act.

8. Mr. Rameswar Saha, learned Advocate appearing on behalf of the opposite party, on the other hand, joined issue and submitted that the oppositeparty had mentioned all the particulars in his application under Section 13 of the said Act. It has also been contended by Mr. Saha, learned Advocate for the apposite party that the opposite party has duly stated in the insolvency petition that he was unable to pay the debts and mentioned the value of the movable assets. There was no omission of any amount and particulars of the pecuniary claims against him and as such the impugned order is not liable to be revised. Mr. Saha has also contended that the same objections were raised by the petitioner in his written-objection against the insolvency petition and the same were duly heard and the order adjudicating the opposite party as insolvent was passed by the court below. As such the application for annulment of the adjudication was rightly rejected by the court below. Mr. Saha has lastly contended that there is an appeal under Section 75 of the said Act against an order passed under Section 35 of the Act and so this revisional application under Section 115 of the Civil P. C. is not maintainable. Mr. Saha has also submitted that the court below has justification to decide the application for annulment of the adjudication and there being no lack of jurisdiction of the court below in passing the impugned order the same cannot be revised on an application under Section 115 of the Civil P. C.

9. Before considering the merits of the contentions advanced by the learned Advocates for the petitioner and the opposite party it is necessary to refer to the relevant provisions of the Provincial Insolvency Act, 1920. Section 10(1) reads as follows :--

'A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and--

(a) his debts amount to five hundred rupees; or

(b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or

(c) an order of attachment in execution of such a decree has been made, and is subsisting, against his property.

Section 13(1) : Every insolvency petition presented by a debtor shall contain the following particulars, namely--

(a) a statement that the debtor is unable to pay his debts;

(b) the place where he ordinarily resides or carried on business or personally works for gain, or, if he has been arrested or imprisoned, the place where he is in custody;

(c) the Court (if any) by whose order the has been arrested or imprisoned, or by which an order has been made for the attachment of his property, together with particulars of the decree in respect of which any such order has been made;

(d) the amount and particulars of all pecuniary claims against him, together with the names and residences of his creditors so far as they are known to, or can by the exercise of reasonable care and diligence be ascertained by him;

(e) the amount and particulars of all his property, together with--

(i) a specification of the value of all such property is to be found; and

(ii) the place or places at which any such property is to be found; and

(iii) a dcclaration of his willingness to place at the disposal of the court all such property save in so far as it includes such particulars (not being his books of account) as are exempted by the Civil P. C., V of 1908, or by any other enactment for the time being in force from liability to attachment and sale in execution of a decree;

Section 24(1) : On the day fixed for the hearing of the petition, or on any subsequent day to which the hearing may be adjourned, the Court shall require proof of the following matters, namely,--

(a) that the creditor or the debtor, as the case may be, is entitled to present the petition :

Provided that, where the debtor is the petitioner, he shall, for the purpose of providing his inability to pay his debts, be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing the same and the Court, if and when so satisfied, shall not be bound to hear any further evidence thereon;

(b) that the debtor, if he does not appear on a petition presented by a creditor, has been served with notice of the order admitting the petition; and

(c) that the debtor has committed the act of insolvency alleged against him.

(2) The Court shall also examine the debtor, if he is present, as to his conduct, dealings and property in the presence of such creditors as appear at the hearing, and the creditors shall have the right to question the debtor thereon.

Section 25(2) : In the case of a petition presented by a debtor, the Court shall dismiss the petition if it is not satisfied of his right to present the petition.'

10. Thus it is evident that a debtor in order to 'be entitled to file an insolvency petition must state his inability to pay his debts and that his debts amount to Rs. 500/- or more. Section 13 of the said Act specifies the particulars which are required to be stated in the insolvency petition. Section 24(1) provides that when the insolvency petition is filed by the debtor he shall have to furnish such proofs which will satisfy the court to believe that there are prima facie grounds that he was unable to pay his debts otherwise the court will not hear the application. Section 25 provides that if the debtor-petitioner fails to satisfy his inability to pay the debts his application shall be dismissed. So the only question which is required to be considered in an insolvency petition is whether the debtor has furnished prima facie grounds to prove his inability to pay the debts and whether he has disclosed in the insolvency petition all the parties specified in Section 13 of the said Act.

11. It appears that the petitionerraised all these objections as to the non-compliance with the provisions of Section 13 of the Provincial Insolvency Act such as the place of residence of the debtor-opposite party has not been mentioned in the insolvency petition, that the amount and particulars of all the pecuniary claims against him were not stated and that the account books were not produced, were raised in his written-objection to the application under Section 13 of the said Act. All these objections were duly considered by the court below and after hearing the petitioner as well as the opposite party the court below was of the view that the debtor-opposite party prima facie proved that he was unable to pay his debts and as such he was adjudged an insolvent and the insolvency application was allowed, In the petition for annulment of the said adjudication filed by the petitioner under Section 35 of the said Act the self-same objections have been raised and an order for annulling the said declaration and adjudication has been prayed for. The Court below has rightly held that the said objections have been decided by the court already in the adjudication proceeding and as such the application was without any substance. We do not find any infirmity or illegality in the said finding which impels us to interfere with the said order.

12. In : AIR1972AP221 , Bonagiri Yellau v. Nagulavaram OhenchuSubbaiah it has been observed that it is an essential pre-requisite for the debtor-petitioner to get an order of adjudication to satisfactorily establish that he is unable to pay his debts. That requirement of Section 10 has to be necessarily satisfied by the debtor. Unless the court is satisfied that there are prima facie grounds for believing that a debtor-petitioner, for the purpose of proving his inability to pay his debts, has furnished prima facie proof, the court shall not be bound to hear any further evidence thereon

13. In 108 Ind Cas 208 : (AIR 1928 Mad 394), Alamelumanga Thayarammal v. Balusami Chetty it has been observed that the whole of the insolvency jurisdiction is provided for the case of persons who are unable to pay their debts and not of persons who are merely unwilling to pay their debts although about to do so.

14. An order adjudicating a person as an insolvent under the Presidency Towns Insolvency Act can be annulled under Section 21 of the said Act if the allegation of his inability to pay his debts is found to be false.

15. In 105 Ind Cas 569 : (AIR 1928 Lah 202), Moti Ram Prem Chand v. Kewalram Dharamchand it has been held that under Section 10 of the. Provincial Insolvency Act of 1920 a debtor cannot be adjudicated an insolvent unless he makes out a prirna facie case to the satisfaction of the court that he is unable to pay his debts.

16. In a Bench decision reported in AIR 1933 All 841, Siyaram v. Kishorilal it has been observed that the onus of proving all essential conditions required by Section 10 of the Act lies on the debtor otherwise his application must be dismissed under Section 25 of the said Act. It is incumbent on the debtor to make out a prima facie case to the satisfaction of the court as to his inability to pay his debts.

17. All the above decisions clearly lay down that the petitioner in order to be adjudged an insolvent must have to prove prima facie that he is unable to pay his debts. It has also been laid down by the said decisions that in order to have an adjudication and declaration of insolvency annulled it is to be established I hat the allegation of inability to pay the debts as made by the debtor is false. In the instant case the learned Additional District Judge after hearing boththe parties has clearly held that the petitioner has proved his inability to pay his debts and he has also complied with the requirements of Section 10 and Section 13(1), Clauses (b), (d) and (e) of the Provincial Insolvency Act. It was also held that the debts of the debtor-opposite party has been fully disclosed in the petition for insolvency. In view of these findings of the court below there is no room to contend that the impugned order rejecting the application under Section 35 of the said Act is illegal.

18. With regard to the contention put forth on behalf of the opposite party that this revisional application was not maintainable in view of the provision of appeal against the impugned order it is evident from Schedule 1 that an appeal lies against an order annulling adjudication. In this case the application for annulling the order adjudicating the opposite party as insolvent has been rejected. So no appeal lies against such an order and the revisional application is maintainable in law. The order passed by the Additional District Judge is not without jurisdiciton as the Additional District Judge is competent to pass the impugned order. In : (1972)ILLJ170SC , Managing Director, Hindustan Aeronautics Ltd., Balangar, Hyderabad v. Ajit Prasad Tarway it has been observed by their Lordships of the Supreme Court (at p. 77) :--

'In our opinion the High Court had no jurisdiction to interfere with the order of the first appellate court. It is not the conclusion of the High Court that the first appellate court had no jurisdiction to make the order that it made. The order of the first appellate court may be right or wrong, may be in accordance with law or may not be in accordance with law; but one thing is clear that it had jurisdiction to make that order. It is not the case that the first appellate court exercised its jurisdiction either illegally or with material irregularity. That being so, the High Court could not have invoked its jurisdiction under Section 115 of the Civil P. C.'

19. For the reasons aforesaid all the contentions raised on behalf of the petitioner having failed the Rule is discharged. There will he no order as to costs

N.C. Mukherji, J.

20. I agree.


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