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2005 Supreme(Cal) 40
High Court Of Calcutta
Narayan Chandra Sil
NAVIN JHUNJHUNWALA - Appellant
Versus
VIJAY KUMAR SHARMA - Respondent
G. A. 2284 Of 2004
Decided On : 01/20/2005
Bipul Kundalia
A protection order under Section 25 of the Presidency Towns Insolvency Act, 1909, should not be granted to a debtor who has acted dishonestly or has failed to disclose his assets.
Headnote:
INSOLVENCY - PROTECTION FROM ARREST - CONDITIONS - PETITIONER-DEBTOR FAILED TO DISCLOSE ASSETS IN SCHEDULE OF AFFAIRS - PETITIONER-DEBTOR ADMITTED DEBT BUT FAILED TO PAY DESPITE REPEATED REQUESTS - PETITIONER-DEBTOR'S CONDUCT INDICATED DISHONEST INTENTION - PROTECTION ORDER REJECTED.
Fact of the Case:
Petitioner-debtor, Navin Jhunjhunwala, was declared insolvent by the court on the petition of a creditor, Vijay Kumar Sharma. The Official Assignee's report showed that the petitioner-debtor had not left any assets or secured assets. The petitioner-debtor filed a petition seeking a stay of proceedings in a suit against him and protection from arrest or detention under Section 25 of the Presidency Towns Insolvency Act, 1909.
Finding of the Court:
The court found that the petitioner-debtor had not disclosed any assets in his schedule of affairs, had admitted the debt but failed to pay despite repeated requests, and had suits pending against him for payment of debts. The court held that the petitioner-debtor's conduct indicated a dishonest intention to avoid paying his debts and that granting him protection would create a bad example and encourage other debtors to invite insolvency proceedings to avoid paying their debts.
Issues: Whether the petitioner-debtor was entitled to protection from arrest or detention under Section 25 of the Presidency Towns Insolvency Act, 1909.
Ratio Decidendi: The court held that a protection order under Section 25 of the Presidency Towns Insolvency Act, 1909, should not be granted to a debtor who has acted dishonestly or has failed to disclose his assets. The court found that the petitioner-debtor's conduct in the present case indicated a dishonest intention to avoid paying his debts and that granting him protection would create a bad example and encourage other debtors to invite insolvency proceedings to avoid paying their debts.
Final Decision: The court rejected the petitioner-debtor's petition for protection from arrest or detention.
( 1 ) THIS is to consider an application being G. A. No. 2284 of 2004 arising out of insolvency Case No. 7 of 2003 filed by the debtor-insolvent Navin jhunjhunwala.
( 2 ) IT is stated in the petition that the amount of dues was to the extent of Rs. 62,017/- payable by the petitioner/debtor to the creditor as on 31. 03. 2003 which was confirmed by the petitioner/debtor. The dues was confirmed by the petitioner on a number of occasions. In such circumstances, the Court by its order dated 10. 9. 2003 allowed the insolvency case declaring the petitioner insolvent. It is claimed that in terms of the provisions of Section 18 of the Presidency Towns Insolvency Act, 1909, the Court may at any time after making of an order of adjudication stay any suit or other proceedings against the insolvent before any Judge or Judges of the Court or any other Court subject to the superintendency of the Court. It is also mentioned that the Official Assignee in pursuance of the order of adjudication has taken all necessary steps so as to complete the necessary proceedings. It is further mentioned that a suit being C. S. No. 17 of 1995 between the Viswakarma Cement Ltd, v. Navin Jhunjhunwala is still pending before this Court (in other Bench) and it is prayed that the proceeding of that suit be stayed until the insolvency proceeding against the petitioner be finally disposed of. It is also mentioned in the application that in terms of the provisions of Section 25 of the Act the petitioner-debtor is entitled to protection against arrest or detention.
( 3 ) IT is stated in the report of the Official Assignee that on the petition of the creditor Vijay Kumar Sharma the Insolvency Case was allowed on 10th September, 2003 and debtor was declared insolvent. On 8th April, 2004 the adjudication order was published in the Calcutta Gazette. The petitioner-debtor thereafter filed his schedule of affairs to this Court on 20th april, 2004 in terms of Rules, 103 of the Calcutta Insolvency Rules, 1910. It is also stated in the said report of the Assignee that he found in Exhibit 'h' of the said schedule of affairs that the properties of the insolvent was shown as "nil".
( 4 ) THAT being the position the matter for consideration before me to determine when the proceeding will come to its finality and whether the petitioner-debtor is entitled to get all other proceedings stayed and protected from being arrested or detained.
( 5 ) IN order to substantiate his claim Mr. Bipul Kundalia, learned advocate appearing for the petitioner-debtor has contended that Section 24{3) of the Presidency Towns Insolvency Act, 1909 (hereinafter referred to as "act" only) the petitioner is entitled to get the relief as prayed for. Section 24 of the Act reads as under:-" (1) Where an order of adjudication in made against a debtor, he shall prepare and submit to the Court a schedule verified by affidavit, in such form and containing such particulars of and in relation to his affairs as may be prescribed. (2) The schedule shall be so submitted within the following times, namely : (a) if the order is made on the petition of the debtor, within 30 days from the date of the order. (b) if the order is made on the petition of a creditor, within 30 days from the date of service of the order. (3) If the insolvent fails, without reasonable excuse, to comply with requirements of this section, the Court may, on the application of the official assignee or of any creditor, make an order for his committal to the civil prison. (4) If the insolvent fails to prepare and submit any such schedule as aforesaid, the official assignee may, at the expense of the estate, cause such a schedule to be prepared in manner prescribed. "there is no doubt that the schedule of affairs has been submitted by the debtor/insolvent but showing his property as "nil".
( 6 ) MR. Kundalia has also drawn my attention to the provisions of sections 36, 79 and 80 of the Act. Section 36 of the Act deals with d
