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1967 Supreme(AP) 201
Andhra Pradesh High Court
Gopal Rao Ekbote, J.
Paidimarri Balasubba Chetty - Appellant
Versus
Jutur Reddiya - Respondent
Decided On : 12-06-67
A court has the discretion to refuse an adjudication order in a second insolvency petition if it considers that the adjudication would be a vain and useless proceedings.
Headnote:
INSOLVENCY - ADJUDICATION - SECOND PETITION - PROPERTY ALREADY VESTED IN RECEIVER - PURPOSE OF SECOND ADJUDICATION - COURT'S DISCRETION TO REFUSE ADJUDICATION.
Fact of the Case:
The appellants filed a suit against the respondents and attached their property before judgment. The suit was decreed, and the attached house was sold. The sale proceeds were distributed among the decree-holders. Subsequently, the respondents filed an insolvency petition, and they were adjudicated as insolvents. The appellants then filed a second insolvency petition against the respondents, alleging that the filing of the first insolvency petition constituted an act of insolvency. The lower court adjudicated the respondents as insolvents again.
Finding of the Court:
The court held that the second insolvency petition was not barred under the Act, but when once the adjudication order is made and the property is vested in the Receiver, what has to be seen in this case is whether there are any circumstances for adjudicating the respondents insolvents or the petition can be refused on the ground that an Official Receiver was already appointed and since the property is also sold, there is no purpose in adjudicating the respondents again as insolvents and appointing another Official Receiver as it is not likely to benefit all the Creditors.
Issues: Whether a second insolvency petition can be filed against a debtor who has already been adjudicated insolvent.
Ratio Decidendi: The court held that a second insolvency petition can be filed against a debtor who has already been adjudicated insolvent, but the court has the discretion to refuse the adjudication order if, having regard to all circumstances of the case, it is considered that all adjudication would be a vain and useless proceedings.
Final Decision: The court allowed the appeal, set aside the judgment of the court below, and dismissed the second insolvency petition.
( 1 ) THIS is an appeal against an order of the Additional District Judge, Cuddapah passed on 19-10-1964 whereby he adjudicated respondents 1 and 2 as insolvents and directed that the estate of the debtors will vest in the Official Receiver for purposes of administration and fixed the time for discharge as one year.
( 2 ) THE necessary fats are that the appellants before me filed O. S. No. 69 of 1961 in the Court of the District Munsif, Cuddapah to recover a sum of Rs. 1532-4-0 against respondents 1 and 2 herein. They attached certain property before judgment. The suit was decreed on 30-5-1961. The decree-holder filed E. P. 288 of 1961 on 12-6-1961. The attached house was brought to sale on 20-11-1961. the sale was confirmed on 2/05/1962. The sale proceeds were distributed rateably amongst the decree-holders in the above said suit as well as other decree-holders against the same respondents on 4-5-1962.
( 3 ) I. P. No. 9 of 1961 was filed by the respondents 1 and 2 on 29-6-1961 before the sub-ordinate Judges Court Nellore to adjudicate them insolvents. I. A. No, 698 of 1961 was filed therein seeking stay of the sale which was to be held on 20-11-1961 in the decree passed in O. S. 69 of 1961. That petition was dismissed. C. M. A. No. 23 of 1961 which was filed was also dismissed on 12-2-1962. The 1st and 2nd respondents were subsequently adjudged as insolvents on 18-2-1963.
( 4 ) WHILE the matter stood thus, I. P. 5 of 1964 out of which this appeal arises was filed by two petitioning creditors and the third was subsequently joined for adjudicating respondents 1 and 2 as insolvents. The act of insolvency alleged in the petition was that the respondents had filed I. P. 9/61 which constitutes an act of insolvency. This petition was resisted by the other creditors, particularly the decree-holder in O. S. 69 of 1961. Their contention was that the present petitioners were parties to I. P. 9 of 1961 and once respondents 1 and 2 were adjudicated insolvents in that proceedings it is not permissible for these petitioners to file an application to adjudicate the same respondents as insolvents which could now vest in the Official Receiver. If appointed in these proceedings. They contended that respondents 1 and 2 had only one house and they have no other property. That house was sold and is now in the possession of the purchaser and the sale proceeds distributed amongst different decree-holders who had applied for the same.
( 5 ) THE petitioners examined one witness and the respondents one witness. They also marked certain documents. Upon this material, the learned Additional District Judge Negativing the contention that the second petition for adjudicating dies not lie adjudged respondents 1 and 2 as insolvents. It is this view that is now questioned in this appeal.
( 6 ) THE Principal contention of the learned Advocate for the appellants is that once the respondents 1 and 2 were adjudicated as insolvents. Unless the adjudication is annulled, the respondents cannot be adjudged as insolvents in another proceedings. He further contended that since the only property of the insolvents was already auctioned and the sale proceeds distributed amongst the decree-holders, nothing remains which could be vested in the Receiver appointed. In this insolvency petition after the respondents 1 and 2 are adjudicated as insolvents. In support of this contention reliance was placed on Ram Das v. Sultan Husain Khan, AIR 1929 Oudh 149.
( 7 ) NOW, under Section 11 of the Provincial Insolvency Act, an insolvency petition can be presented to the Court in whose jurisdictional limits the debtor ordinarily resides or carries on business. or personally works for gain, or is in custody under arrest or imprisonment. It is thus plain that the debtor may be adjudged insolvent by the Court having jurisdiction in each of the places where he ordinarily resides or where he carries on business. It is to provide for such an eventuality that Section 36 of the A
