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1972 Supreme(Cal) 164
HIGH COURT OF CALCUTTA
Hazra
IN RE: PRAFULLA CHANDRA MITRA - Appellant
Versus
SATET - Respondent
Case 4 Of 1971
Decided On : JULY 13, 1972
AHIN CHOUDHURY, B.K.BACHAWAT, GOPAL, S.C.Ukil, S.K.ACHARYA
A debtor who makes material misstatements in his insolvency petition, suppresses his other business and properties, fails to comply with the rules of the Court regarding the form and contents of the petition, and abuses the process of the Court by filing the petition just when he is facing an application for examination as a judgment-debtor, ought not to be adjudged insolvent.
Headnote:
INSOLVENCY - ANNULMENT OF ADJUDICATION ORDER - ABUSE OF PROCESS OF COURT - DEBTOR'S PETITION DEFECTIVE - NON-COMPLIANCE WITH RULES AND PROCEDURES - SUPPRESSION OF MATERIAL FACTS - FAILURE TO PRODUCE BOOKS OF ACCOUNT - DEBTOR NOT ACTING IN GOOD FAITH.
Fact of the Case:
The insolvent, Prafulla Chandra Mitra, filed an insolvency petition on February 16, 1971, which was granted ex parte by the Master. The decree-holder, Coal Products Pvt. Ltd., filed an application for annulment of the adjudication order under Section 21 of the Presidency Towns Insolvency Act, 1909, alleging that the debtor ought not to have been adjudged insolvent.
Finding of the Court:
The Court found that the debtor had made material misstatements in his insolvency petition, including suppression of his other business, failure to disclose all his properties, and non-compliance with the rules of the High Court regarding the form and contents of the petition. The Court also found that the debtor had not acted in good faith and had abused the process of the Court by filing the insolvency petition just when he was facing an application for examination as a judgment-debtor under Order 21, Rule 41 of the Code of Civil Procedure.
Issues: 1. Whether the debtor ought to have been adjudged insolvent. 2. Whether the debtor had abused the process of the Court. 3. Whether the insolvency petition was defective and in non-compliance with the rules and procedures of the Court. 4. Whether the debtor had suppressed material facts and failed to produce his books of account.
Ratio Decidendi: 1. The Court held that the debtor ought not to have been adjudged insolvent because he had made material misstatements in his insolvency petition, suppressed his other business and properties, and failed to comply with the rules of the High Court regarding the form and contents of the petition. 2. The Court held that the debtor had abused the process of the Court by filing the insolvency petition just when he was facing an application for examination as a judgment-debtor under Order 21, Rule 41 of the Code of Civil Procedure. 3. The Court held that the insolvency petition was defective and in non-compliance with the rules and procedures of the Court because the debtor had failed to state that it was not his first petition for insolvency and had failed to comply with the requirements of Form No. 7-A of the High Court Rules regarding the disclosure of books of account. 4. The Court held that the debtor had suppressed material facts and failed to produce his books of account, which was a breach of Section 15(3) of the Presidency Towns Insolvency Act.
Final Decision: The Court annulled the order of adjudication dated February 16, 1971 and dismissed the insolvency petition.
( 1 ) THE insolvent, in this case is one Prafulla Chandra Mitra. An order of adjudication was passed on February 16, 1971 by this Court on his own application. This application is made by the decree-holder M/s. Coal Products Pvt. Ltd. for annulment of the order of adjudication dated February 16. 1971 under Section 21 of the Presidency Towns Insolvency Act. 1909 (Act III of 1909 ). The relevant portion of Section 21 is as follows:"where, in the opinion of the Court, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the Court that the debts of the insolvent are paid in full, the Court shall, on the application of any person interested, by order annul the adjudication".
( 2 ) THE case of the decree-holder. Coal Products Pvt. Ltd. , is that the debtor in this case, ought not to have been adjudged Insolvent. The learned counsel for the petitioner Mr. B. K. Bachawat placed before me certain facts which appear from the petition and affidavits of the parties and the records and proceedings of this matter and submitted that I should, in the facts of this case, as admitted or proved in this application and in the insolvency proceedings, annul the order of adjudication.
( 3 ) THE relevant facts relied on by Mr. Bachawat are set out hereunder:
( 4 ) ON July 2. 1967 a decree was passed by the Court of appeal in favour of the petitioner. Thereafter on July 10. 1968 an application was made for execution by the petitioner for examination of the judgment-debtor and at the request of the judgment-debtor the matter was adjourned from time to time. On February 4. 1969 the judgment-debtor Prafulla Chandra Mitra made an application under Section 13 (1) of the Provincial Insolvency Act. 1920 in the Court of the District Judge. 24-Parganas, Alipur being Insolvency Case No. 4 of 1969.
( 5 ) IN the petition, the said judgment-debtor. Prafulla Chandra Mitra, gave particulars of pecuniary claims and particulars of creditors and decree-holders. He also gave schedule of particulars of his properties. On May 2, 1969 the judgment-debtor Prafulla Chandra Mitra made a petition for amendment in the Insolvency Case No. 4 of 1969 in the Court of the District Judge at Alipore and stated that through inadvertence he omitted to include his undivided 2/11th share in the property at 5/c. Ramkrishna Lane. Calcutta.
( 6 ) M/s. Coal Products Pvt. Ltd. filed an affidavit of objection on March 28, 1969 to the petition for Insolvency by the judgment-debtor in the Alipore Court. Thereafter on February 16, 1970 and on February 18. 1970 the judgment-debtor Prafulla Chandra Mitra was examined in the said insolvency case. On March 9, 1970 the petition for adjudication was dismissed. A judgment was delivered by Mr. S. N. Koley, Addl. District Magistrate/judge. Alipore and in the judgment the learned Additional District Judge said that the petitioner was not a resident of any local area under the jurisdiction of the Court of the District Judge, 24-Para-eanas at the time of the presentation of the Insolvency petition. Accordingly, the District Judge. 24-parganas had not the territorial jurisdiction to entertain the insolvency petition. The learned Judge refrained from making any observation with regard to the question whether the petitioner is unable to pay his debts or whether the insolvency petition contains particulars of all his properties. The judgment-creditor Coal Products Pvt, Ltd-, in the meantime, proceeded with the application for execution of the decree obtained by it by examination of the judgment-debtor under O. 21, R. 41 of the Code of Civil Procedure and the execution matter appeared in the list of this Court for hearing from time to time. The judgment-debtor failed to attend the Court, and on February 2, 1971 a warrant of arrest was directed to be issued and the Sheriff was directed to act on the signed copy of the minutes. The matter was mentioned on behalf of the judgment-debtor and this Court directed t
