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Niyati Bhusan Ta Vs. Bejoy Chandra Ghosh and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 310 of 1956
Judge
Reported inAIR1958Cal319
ActsProvincial Insolvency Act, 1920 - Section 6
AppellantNiyati Bhusan Ta
RespondentBejoy Chandra Ghosh and ors.
Appellant AdvocateChandidas Roy Choudhury and ;Girija Bhusan Hazra, Advs.
Respondent AdvocateTarun Kumar Banerjee, Adv.
DispositionAppeal dismissed
Cases ReferredLahore v. Seth Yusaf Ali Ismail Ji
Excerpt:
- .....creditors were neither fraudulent nor did they prove the inability of the debtor to pay up his debts. the debtor further asserted that he was possessed of sufficient assets for paying up his debts and he did not commit any act of insolvency as alleged by the petitioning creditors. 5. both parties adduced evidence in support of their respective cases and the learned district judge who heard the matter held that the two kobalas relied on by the petitioning creditors had been executed with intent to delay or defeat the petitioning creditors. accordingly it was held by the learned district judge that the debtor had committed an act of insolvency by executing the two kobalas and the debtor was adjudged an insolvent. 6. the present appeal has been preferred by the debtor from this order of.....
Judgment:

Renupada Mukherjee, J.

1. This appeal arises out of an insolvency petition filed by the respondents of this appeal against appellant Niyati Bhusan Ta in the Court of the learned District Judge of Hooghly.

2. The main allegation of the petitioning creditors was that the appellant had borrowed a sum of Rs. 2,000/- from each of them and executed a promissory note in favour of each agreeing to pay interest at the rate of 10 p. c. p. a. These handnotes are said to have been executed on 30th Chaitra, 1358 B. S. corresponding to 12-4-1952. The allegation of the petitioning creditors was that the appellant had become seriously involved in debts and he had many other creditors and he was not in a position to pay off either the petitioning creditors or those other creditors. The allegation of the petitioning creditors further was that in order to defeat and delay his creditors the debtor had executed two sale-deeds, one on 17-6-1952 and another on 18-6-1952 in the names of two of his friends. The application was filed on 15-9-1952.

3. Before dealing with the objection filed by the appellant debtor we may mention that another creditor, viz., Kasi Nath Singha Boy made an application for joining in the petition and for entering his name as a scheduled creditor. Subsequently he withdrew his application alleging that his claim was going to be time-barred and so he wanted to institute a suit. This application was allowed by the Court.

4. The objection of the debtor was that the transfers impeached by the petitioning creditors were neither fraudulent nor did they prove the inability of the debtor to pay up his debts. The debtor further asserted that he was possessed of sufficient assets for paying up his debts and he did not commit any act of insolvency as alleged by the petitioning creditors.

5. Both parties adduced evidence in support of their respective cases and the learned District Judge who heard the matter held that the two Kobalas relied on by the petitioning creditors had been executed with intent to delay or defeat the petitioning creditors. Accordingly it was held by the learned District Judge that the debtor had committed an act of insolvency by executing the two Kobalas and the debtor was adjudged an insolvent.

6. The present appeal has been preferred by the debtor from this order of adjudication.

7. Mr. Roy Choudhury who appeared on behalf of the appellant debtor with Mr. Hazra could not dispute before us that the appellant has been involved in heavy debts. It is an admitted fact that the debts incurred by the appellant on three handnotes from the three petitioning creditors amounted to Rs. 6250/-, including principal and interest at the date of the filing of the objection. There was another item of debt amounting to Rs. 4,000/-. In the Inventory of debts filed by the debtors it was alleged that he was liable only for 173rd share of the above amount. We are not in a position to understand how the debtor could be liable only in 1/3rd share. The debtor was certainly liable jointly with his co-sharers and also severally for the above amount of Rs. 10,250/-. Besides the above amount, the debtor had also business debts to the extent of Rs. 7,274/- in his own share. The total indebtedness of the debtor appellant, therefore, comes up to a figure of Rs. 17,524/-. As against this debt, the assets of the debtor amount only to Rs. 14,260/- out of which a sum of Rs. 8,060/- is said to be due from some persons by way of business credit. There is no knowing what portion of the amount said to be due to the appellant by way of business credit may be realised. In these circumstances the admitted assets of the debtor appellant are much smaller than his debts. It cannot, therefore, be controverted that the appellant has become heavily indebted and he is not in a position to pay up his debts at the present moment.

8. The next question, and which is the real vital question, is whether the Kobalas which were marked Exhibits 2 and 2 (a) in the trial court were executed with the object of defeating or delaying the creditors of the appellant. The apparent consideration for these two Kobalas is a total sum of Rs. 10,000/-. The learned District Judge has pointed out several suspicious circumstances attaching to this Kobala. One circumstance is that the debtor and his co-vendors have retained possession of some of the properties sold by the Kobalas in their character as lessees. Although the total amount of consideration for the two Kobalas is Rs. 10,000/- the debtor has succeeded in proving that only a sum of Rs. 5,792/- was paid to one Surath Nandi for satisfaction of his decretal dues. This amount appears to have been paid under compulsion because the properties of the appellant were under attachment in connection with the decree obtained by Surath Nandi. The decretal amount which was paid to Surath Nandi was paid on 25th June1953 that is, one year after the execution of the Kobalas. It would, therefore, appear that the appellant satisfied the decretal dues of Surath Nandi under compulsion and not out of his own free will. Under these circumstances we are of opinion that there are very cogent and valid reasons for holding that the two Kobalas which were executed by the appellant were intended to delay or defeat the creditors of the appellant.

9. Mr. Roy Chowdhury argued on behalf of the appellant that the finding of the District judge is that the Kobalas were executed with intent to delay or defeat the petitioning creditors only and not the entire body of creditors of the appellant. In this connection he drew our attention to Clause 6(b) of the Provincial Insolvency Act wherein it has been laid down that a debtor commits an act of insolvency if he makes a transfer of his property or any part thereof with Intent to defeat or delay his creditors. Mr. Boy Chowdhury contended that the word 'creditors' occurring therein must mean the creditors of a debtor generally, and not some particular creditor or creditors of the debtor. We agree with this construction of the word 'creditors' in this connection. We may refer to a case reported in Ko Po Yin v. Daw Hnin Thet, AIR 1934 Rang. 242 (A) wherein it has been held that the mere finding that the effect of a transfer would be to defeat one creditor is really quite immaterial. The transfer has got to be made with intent to defeat the creditors as a whole. The above Bangoon case has been cited with approval in a Lahore case reported in Peoples Bank of Northern India Ltd., Lahore v. Seth Yusaf Ali Ismail Ji, AIR 1937 Lah 495 (E). Agreeing with these decisions we hold that in order that a creditor may file an insolvency petition against a debtor on the ground that he has committed an act of insolvency by transferring his property it must be shown that the transfer was made with intent to defeat or delay the creditors of the debtor generally and not some particular creditor or creditors.

10. Mr. Roy Chowdhury submitted in the above connection that the finding of the learned District Judge is that the transfers in this particular case were made by the appellant with intent todelay or defeat the petitioning creditors only It is no doubt true that the finding of the learned District Judge has been recorded in that manner which is rather unhappy. But if we are to peruse carefully the entire order of the learned District Judge we would find that he has held In substance that the Kobalas under consideration are questionable documents and that beyond paying the decretal dues of Surath Nath Nandi amounting to Rs. 5,792/- no other portion of the consideration money was applied towards satisfaction of the debts due to any other creditors although the number of such creditors is quite large. Under these circumstances we hold that the transfers were made with intent to defeat or delay not only the petitioning creditors but the entire body of the creditors of the appellant. An act of insolvency was committed by the appellant by executing the Kobalas in question and the petitioning creditors had the right to file an insolvency petition against the appellant for that reason.

11. It was last of all contended on behalf of the appellant that the object in filing the present application was to lower the appellant in the estimation of the public and to put pressure upon him for paying the hand-note dues of the petitioning creditors. We are not satisfied that there is any valid reason for accepting this argument of the appellant because the respondents are genuine creditors and the appellant was not in a position to pay them off when they made demands for payment.

12. For grounds set forth above we are of opinion that there is no substance in this appeal. This appeal is accordingly dismissed with costs to the respondents.

Banerjee, J.

13. I agree.


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