The interpretation of the term 'able to pay debts' under the Presidency Towns Insolvency Act and the burden of proof on the debtor to establish their ability to pay debts.

JUDGMENT

Rankin, C.J. - This is an appeal from an order made by my learned brother Ameer Ali, J., whereby he dismissed a creditor's petition for, the adjudication of the two respondents as insolvents under the Presidency Towns Insolvency Act. The petition was brought on 4th March of the present year and the learned Judge proceeded upon the ground that, in his opinion, it was not made out by the creditor that the debtors were not in a position to pay their debts. It is quite true that one of the reasons for which the Court is enabled to dismiss a creditor's petition is the reason given in Section 13, Presidency Towns Insolvency Act, which says that:

the Court shall dismiss the petition if the debtor appears and satisfies the Court that he is able to pay his debts.

2. It will be seen that the burden of proof is entirely on the debtor. In the present case the question appears to be what is meant by saying that the debtor has to prove that he is able to pay his debts. The case made by the respondents was not a case that they were able to pay their debts, if it be carefully examined; though they do say in so many words we are still in a position to pay all just and reasonable debts." But the case they make is that they are entirely unable at the present to pay the petitioning creditor's debt, to speak of that alone, apart altogether from any other debts. They say they have got a number of immovable properties; that the mortgages will be less than the value of these properties. They wind up by saying that they are not insolvents, but, in the circumstances, they have no ready cash to pay. What the statute means by ability to pay debts is not merely that the man has assets which, if liquidation proceeds, may, in the result, provide sufficient money to discharge his debts. It means that he is not so em-harassed that he cannot meet his debts in the ordinary way by making legal tender and discharging his debts.

3. The circumstance that a man has assets and the assets are not liquid assets and therefore be cannot pay his debts is a circumstance which stands in favour of having a liquidation and not against having a liquidation. The judgment to be exercised on this ground in connexion with a petition for adjudication is exercised on very much the same lines as the discretion to annual an adjudication on the ground that the debts have been paid or that the debtor ought never to have been adjudicated. It was never the intention of the statute that a man, having a petitioning creditor's debt and proving an act of bankruptcy, should be told that no provision whatever will be made for the payment even of his debt, and that the petition is to be dismissed on the ground that the debtors are able to pay all their debts. If, to a petitioning creditor who has knowledge of an act of bankruptcy, tender of money is made for his own debt, he is not, in a usual case, at all obliged to receive the money and have the petition dismissed, because it may very well be that other creditors may proceed in insolvency and that the payment will be held bad against the official Assignee. But, if coupled with such an offer, it can be shown that there are no other debts or that the debtors are prepared and able to pay off all the other debts, then no doubt a strong case arises for dismissal of the petition. In my judgment the learned Judge has misapplied the terms of the section, on which he has relied, and the judgment cannot be supported upon the ground on which it has been based.

4. Before us, the appeal has been supported by a contention to the effect that the only act of insolvency shown is that premises No. 38, Baratola Street, belonging to the debtors were attached on 19th January 1982, and continued under attachment for more than 21 days. It is said that attachment was an irregular or illegal attachment altogether. It appears that the Court appointed a. receiver over the properties of the debtors including this property. It appears that the petitioning creditors,