The petitioner filed a creditors’ I.P., against the 1st respondent, in the Court of Senior Civil Judge, Kadapa, and the same was numbered as I.P.No.34 of 2001. It was alleged that the 1st respondent is due huge amount to the tune of Rs.9,00,000/- to him, which includes principal and interest, and that with a view to defeat his rights and claims, the 1st respondent has sold away an item of immovable property, through sale deed, dated 09.11.2000, in favour of respondents 2 and 3. It was alleged that the sale was illegal and void, and that the same deserves to be set aside. Respondents 2 and 3 remained ex parte. The 1st respondent alone contested the I.P. He narrated the nature of business relations between himself and the petitioner and stated that the I.P. is not maintainable. According to him, the promissory notes, relied upon by the petitioner, are not supported by consideration, and if at all anything, the 1st respondent has to file separate suits for recovery of the amount. It was also pleaded that he has several immovable and movable properties to meet the claims, if any, proved by the petitioner.

Through its order, dated 21.11.2005, the trial Court allowed the I.P. Aggrieved thereby, the 1st respondent filed A.S.No.27 of 2006 in the Court of Family Judge-cum-Additional District Judge, Kadapa. The appeal was allowed, on 31.08.2009, and the order passed by the trial Court was set aside. Hence, this revision petition, under Section 115 of C.P.C. Sri V.Jagapathi, learned counsel for the petitioner, submits that the insolvency Court is conferred with ample power under Section 4 of the Provincial Insolvency Act, 1920 (for short ‘the Act’), to decide all questions relevant to the claims and that the trial Court has examined the matter in detail. He contends that the promissory notes executed by the 1st respondent were filed in the I.P., and the trial Court recorded clear findings, be it as to the indebtedness of the 1st respondent, or the illegality of the sale effected by him. According to the learned counsel, the lower Appellate Court ought not to have recorded the said findings.

The petitioner wanted the 1st respondent to be declared as insolvent and the sale of an immovable property effected by the latter as invalid. The 1st respondent opposed the I.P., on several grounds. On behalf of the petitioner, PWs.1 and 2 were examined and Exs.A.1 to A.9 were filed. The 1st respondent deposed as RW.1 and Exs.B.1 to B.6 were filed. The trial Court allowed the I.P., but the decree passed by it, was reversed by the lower Appellate Court.

The Act provides facility to a creditor as well as to debtor, to seek declaration that the debtor has become insolvent. Several legal consequences ensue, once an individual is declared as insolvent. Essential conditions for institution of the proceedings under the Act are that (a) the individual, sought to be declared as insolvent must be a debtor and that (b) the properties held by him are insufficient in value, to liquidate the debts. A debtor can approach an insolvency Court, normally when he figures as judgment debtor, in various decrees; the value of which exceeds the value of the properties held by him. In a given situation, a debtor may even approach the insolvency Court to declare him as insolvent, though no decrees, as such, were passed against him. In such cases, an unequivocal declaration made by him, as to his indebtedness, can be taken on its face value.

The I.P. filed by a creditor under Section 9 of the Act, however, stands on a different footing. Before he invokes the jurisdiction of the insolvency Court, there must exist the adjudication of the debt or the debts, vis-à-vis the proposed insolvent in his favour. That can be in the form of a decree passed by the competent Court of civil jurisdiction or an unequivocal declaration on the part of the proposed insolvent, before the proceedings are instituted. To put it differently, a creditor cannot institute proceedings under Secti