A transfer of property made with an intent to defeat or delay all the creditors is an act of insolvency under Section 6 (b) of the Provincial Insolvency Act, while a transfer of property made with an intent to give fraudulent preference to some creditors over others, and where the debtor is unable to pay his debts at the time of the transfer, is an act of insolvency under Section 6 (c) of the Act.

GOPAL RAO EKBOTE, J.

( 1 ) THIS revision petition is filed under Section 75 of the Provincial Insolvency Act (hereinafter called the Act) by the defendant. I. P. 5/58 was filed by a petitioning creditor, 1st respondent, to adjudicate the petitioner herein as an insolvent. The grounds on which the adjudication was sought were that the first respondent executed a sale deed Ex A-5 and also executed a mortgage, Ex. A-6 thereby delaying and defrauding the petitioning creditor and that in view of this act of insolvency he should be adjudicated insolvent.

( 2 ) THIS petition was resisted by the petitioner mainly on the ground that he has not committed any act of insolvency. I am not concerned with the other questions dealt with by the Courts below as they were not pressed before me, nor anything turns upon them in so far as this revision petition is concerned.

( 3 ) THE trial Court dismissed the petition after a proper enquiry holding that the sale deed executed by the petitioner is supported by consideration and that the mortgage deed is supported by consideration except to the extent of Rs. It was found by the trial court that as there was only one creditor left at the time of these transfers the petitioner could not be said to have committed an act of insolvency within the meaning of Section 6 (b) of the Act.

( 4 ) AGGRIEVED by that judgment the petitioning creditor carried the matter in appeal. The Additional District Judge, Chittoor, allowing the appeal held that the petitioner herein has committed an act of insolvency. Although the learned District Judge agreed with the conclusion of the trial court that the petitioner did not commit an act of insolvency under section 6 (b) of the Act, he held that by the said transfers he has given fraudulent preference to some of the creditors as against the petitioning creditor and thereby committed an act of insolvency under section 6 (c)of the Act. It is this view of the learned District Judge that is now assailed in this revision petition.

( 5 ) THE question which has to be determined in this case is whether the facts as found by the Courts below attract the provisions of Section 6 (b) or Section 6 (c) of the Act. Section 6 (b) and Section 6 (c) are in the following terms:--"6. A debtor commits an act of insolvency in each of the following cases namely:-- (b) if, in India or elsewhere, he makes a transfer of his property or any part thereof with intent to defeat or delay his creditors: (c) if, in India or elsewhere, he makes any transfer of his property, or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent:"a careful reading of the Section, particularly the above said two provisions, would reveal that the Section is exhaustive with regard to what constitutes an act of insolvency. It is therefore plain that nothing can be considered as an act of insolvency unless it can be brought under one or the other clauses of Section 6. Adjudicating a person an insolvent results in bringing about serious consequences. It becomes therefore necessary to take particular care to see that the provision of law is observed strictly and correctly applied. The Section discloses that the condition precedent to adjudicate a debtor insolvent on the petition of a creditor is that the debtor must have committed one or the other of the acts of insolvency set out in Section 6. It is, therefore, necessary before he is adjudicated an insolvent that the facts alleged must constitute and act of insolvency within the meaning of Section 6.

( 6 ) NOW in order to establish an act of insolvency under Clause (b) of Section 6 it is necessary for the petitioning creditor to prove that the transfer or transfers relied on by him were made with an intent to defeat or delay the creditors. This clause must clearly be distinguished from Clause (c ). These two clauses provide separately for two different acts of insolvency.

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