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2000 Supreme(Bom) 915
IN THE HIGH COURT OF BOMBAY
D.G. Deshpande, J.
Re : Shree Steel Centre others.... Judgment Debtors.
Notice of Motion No. 52 of 2000 in Notice No. N/10 of 2000 Along with Notice of Motion No. 58 of 2000 in Notice No. N/11 of 2000 with Notice of Motion No. 59 of 2000 in Notice No. N/12 of 2000, decided on 2-12-2000.
Advocates appeared :
Kishore Jain i/b G.B. Kedia, in Notice of Motion No. 52/2000 in Notice No. N/10, for judgment debtors.
P.V. Shah, in Notice of Motion No. 52/2000 in Notice No. N/10, for judgment creditors.
Kishore Jain i/b. Ramesh Jain, in Notice of Motion No. 52/2000 in Notice No. N/11 of 2000 and 59/2000 in Notice N/12 of 2000, for judgment debtor No. 1 and 2.
P.V. Shah, in Notice of Motion No. 58/2000 in Notice No. N/11, and in 59 of 2000 in Notice No. N/12 of 2000, for judgment creditors.
Subject
Insolvency - Act of Insolvency
Act Referred
INSOLVENCY ACT : S.9(2), S.5(c)
Headnote
It has to be said that Order XXI, Rule 22 is a rule of caution and does not in any manner affect excitability of the decree, the decree is executable but the only rider put on the judgment creditors is to get a show cause notice issued against the judgment debtors.
Therefore, this argument has to be rejected. Therefore in order to find out whether the judgment debtor has committed an act of insolvency after passing of the ex parte decree, the criteria would be whether there is a failure on the part of the judgment debtor to pay the decretal amount in spite of notice from the Court under Order XXI. Rule 22. As rightly argued by the Counsel for the judgment debtors issuance of insolvency notice against a person is a matter of serious consequences and such a notice should not be received at the behest of the judgment creditors merely because they ask for it. Matter has to be carefully scrutinised and examined in order to find out whether the judgment debtor has committed any act of insolvency.
Judgment debtors to the suit, filed by the Union Bank of India, have taken out this notice of motion for setting aside the insolvency Notice being Notice No. N/10 of 2000 dated 16-2-2000 and served on the judgment debtor on 15-3-2000. Obviously, the notice of motion is opposed strongly by the judgment creditors i.e. Union Bank of India.
2. Main bone of the contention of the judgment debtors is that Union Bank of India filed a suit against them in respect of a Bill of Exchange accepted by the judgment, debtors some time on 25-11-1992 and 27-11-1992. The Bank obtained an exparte decree against the judgment debtors on 5-2-1996. The judgment debtors engaged advocates to defend them in the said suit. However, their advocates did not inform them about the progress of the suit and ultimately an exparte decree came to be passed against them.
3. Thereafter the judgment creditors got issued insolvency notice and served it on 15-3-2000. Thereafter judgment debtors have taken out this Notice of Motion for setting aside the insolvency notice. The objection to the insolvency notice i.e. raised by the judgment debtors is that even though the bank obtained decree on 5-2-1996 they did not start execution proceedings within two years or at any time till the insolvency notice was served or even till today and therefore since the period of two years has elapsed from the passing of the decree, under Order XXI, Rule 22 of C.P.C. it was necessary for the bank- judgment creditors to apply to the Court for leave to execute the decree and since that has not been done the insolvency notice cannot be proceeded with and is required to be set aside. Counsel for the judgment debtors drew my attention to Insolvency Laws Amendment Act 1978 (Act of 28 of 1978) wherein section 5 of the said Act and in particular 5(c). Section 5 reads as under:
"(5) Any person served with an insolvency notice may, within the period specified therein for its compliance, apply to the Court to set aside the insolvency notice on any of the following grounds, namely:---
(a) that he has a counter-claim or set off against the creditor which is equal to or is in excess of the amount due under the decree or order and which he could not, under any law for the time being in force, prefer in the suit or proceeding in which the decree or order was passed;
(b) that he is entitled to have the decree or order set aside under any law providing for the relief of indebtedness and that---
(i) he has made an application before the competent authority under such law for the setting aside of the decree or order; or
(ii) the time allowed for the making of such application has not expired;
(c) that the decree or order is not executable under the provisions of any law referred to in Clause (b) on the date of the application."
4. Section 5(c) provides that a person served with the insolvency notice may apply for setting aside the insolvency notice on the ground that decree or order is not executable under the provisions of any law referred to in Clause 9(b) on the date of the application and sub-section (b) of section 5 permits such a person to point out that he is entitled to have the decree or order set aside under any law for the relief of indebtedness. Counsel for the judgment debtor also relied upon Order XXI Rule 22 of the C.P.C. which provides:
"that wherein an application for execution is made more than two years after the date of the decree, the Court executing the decree shall issue a notice to the person against whom execution is applied for requiring him to show cause, on a date to be fixed, why the decree should not be executed against him."
On the basis of these provisions, Counsel for the judgment debtors contended that decree has become unexe
