1. This appeal is directed against an order of the District Judge of Midnapore, dated 22nd April 1931, refusing the application of one Sashi Bhusab Maity, now appellant before us, whereby he sought to be adjudicated an insolvent. The petition for insolvency was filed on 21st November 1930, and in the said petition it was stated that the debts of the petitioner were in excess of Rs. 500 and that the petitioner was unable to pay his debts. The applicant for insolvency gave his evidence in the case and he stated in Court that properties would be worth about Rs. 8,000 although in his petition he stated that he had assets to the extent of Rs. 4,608-8-0. The learned District Judge has noticed the circumstance, but he has really based his decision on the two transactions which he considers are merely colourable transactions and must be taken into account for the purpose of considering as to whether the assets of the petitioner are in excess of the amount of his debt. The first transaction is one which is referred to as a deed of dedication in favour of the family idol, dated 14th July 1928, executed more than two years before the application for adjudication. He has also relied on the second transactions, namely a potta executed by the appellant Sashi Bhusab Maity on a selami of Rs. 6,000, and that was in the year 1336 B. S., corresponding to some time in 1929.
2. It has been centended on behalf of the appellant by Mr. Brojolal Chakraburty that in arriving at a conclusion adverse to the petitioner, now appellant before us, the learned District Judge should not have relied on these prior transactions and that was really a matter which should be considered at a later stage of the proceedings. On this point he has drawn our attention to a number of authorities both of this Court and of other Indian High Courts. The true legal position under the Provincial Insolvency Act of 1920 has bean formulated in the very learned Tagore Law Lectures on Insolvency Lecture No. 5 at p. 142. The learned author points out this:
If there are prima facie grounds for believing that he is unable to pay his debts, the Court should not hold an inquiry for the purpose of determining whether some of the debts mentioned in his petition are real debts or whether there has been fraudulent concealment of his property or whether he has transferred his property benami to defraud his creditors. These are matters to be dealt with upon the debtor's application for his discharge.
3. The learned author cites a number of authorities of the different High Courts of India in support of this view. We are of opinion that this contention of the learned advocate for the petitioner appellant is well founded and is supported by the authorities which have been cited in the Tagore Law Lectures. In this view we think that the learned District Judge was not justified in refusing the application of the petitioner appellant to be adjudicated an insolvent. It appears also from the statements of some of the creditors themselves that the debts are in excess of what is stated in the petition for adjudication As for instance reference may be made to the statement of objection of the creditor No. 10, Govinda Chandra Bhakta, at p. 25, where he says that as payment was not made according to the terms of the solenama a sum of Rs. 2,075 had become due to the objector from the applicant. In those circumstances the creditor was entitled to get a sum of Rs. 2,075 without any deduction, whereas the debt is shown to be Rs. 600 odd. Similarly another creditor -creditor No. 11-Bepin Behari Bera, at p. 21, para. 8, of the paper-book states that the applicant borrowed Rs. 476 by executing a handnote in favour of this objector on the 25th Baisakh 1336 B. S., and that the applicant fraudulently made a false statement that the said handnote was for Rs. 400. In these circumstances we are of opinion that a prima facie case has been made out on the evidence of the applicant which entitled him to an order of adjudication.
4. The result is that the judgment and order of the District Judge are set aside and we hold that the appellant is entitled to be adjudicated an insolvent. There will be no order as to costs.
M.C. Ghose, J.
5. I agree.