M. Satyanarayana Murthy, J.

1. This Civil Miscellaneous Second Appeal is filed challenging the Decree and Judgment dated 31.03.2010 in A.S. No. 43 of 2008 on the file of V Additional District Judge (Fast Track Court), Guntur, whereby the Order passed by the Additional Senior Civil Judge, Tenali, in LP. No. 2 of 2004, dated 28.11.2007, was confirmed. For convenience of reference, the ranks given to the parties before the Additional Senior Civil Judge, Tenali, will be adopted throughout the Judgment.

2. The petitioner filed insolvency petition under Section 9 of the Provincial Insolvency Act, 1920 (for short, 'the Act, 1920') to adjudge respondents 1 to 3 as insolvents and to appoint an Interim Receiver or the Official Receiver to administer the properties of respondents 1 to 3, alleging, that the first respondent is partnership firm, consisting of respondents 2 and 3, carrying on wholesale business in tamarind and other items. Representing the firm - the first respondent, the 2nd respondent borrowed an amount of ` 95,000/- from the petitioner on 01.01.2002 with the consent of the 3rd respondent for business purpose, executed promissory note with his own handwriting agreeing to repay the same with interest @ 18% per annum (compound interest) either to the petitioner or to her order on demand. Despite the demands made by the petitioner, the respondents 1 to 3 failed to discharge the debt due to the petitioner, though the respondents 2 and 3 jointly and severally liable to discharge the debt due by the first respondent.

3. While the matter stood thus, respondents vacated the shop, discontinued their business and the petitioner came to know on 27.11.2003 that the 3rd respondent with an intention to defraud and delay the creditors, executed registered sale deed dated 06.10.2003 in favour of the 4th respondent, thus committed an act of insolvency. It is further contended that the property worth Rs 1,00,000/- covered by sale deed dated 06-10-2003 was sold for meager amount of Rs. 6,00,000/-. Thus, such suppression of consideration amount to an act of insolvency and prayed for the aforesaid reliefs.

4. During pendency of the petition, the 2nd respondent died intestate on 15.08.2007. His legal heirs were brought on record as respondents 5 and 6, who are jointly and severally liable to discharge the debt due to the petitioner and that the sale deed executed in favour of the 4th respondent by the 3rd respondent is illegal.

5. The 2nd respondent representing the 1st respondent filed counter separately admitting that respondents 2 and 3 are partners of the first respondent firm, including borrowing of ` 95,000/- for the benefit of the first respondent business, execution of sale deed in favour of the 4th respondent by the 3rd respondent, while contending that the 3rd respondent took responsibility to discharge the debt due to the petitioner as respondents 1 and 2 became insolvent, consequently the firm was closed. But the 3rd respondent did not discharge the debt due to the petitioner.

6. It is further contended that the 2nd respondent is a Cardiac and Diabetic patient. The petitioner with a malafide intention got filed the petition to harass these respondents. Finally, prayed to dismiss the petition against respondents 1 and 2.

7. Respondents 3 and 4 filed separate counter. The main contentions urged in the counter are as follows:

"(a) The 3rd respondent did not actively participate in the business, he was only a nominal partner and that he did not borrow any amount on behalf of the firm.

(b) It is further contended that the 2nd respondent with an intention to cause substantial loss to respondents 3 and 4, got executed promissory notes and that the 3rd respondent never borrowed amount and executed promissory note in favour of the petitioner. Therefore, he has no intention to delay and defeat the claims of the petitioner and the alienation of the schedule property to a tune of Rs. 6,00,000/- in favour of the 4th respondent does not amount