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2008 Supreme(Guj) 83
2008 (2) GCD 1292 (Guj)
Hon’ble Mr. Justice Akil Kureshi
Shah Bakuleshbhai Hasmukulal
Versus
Kaushikkumar Kantilal Modi & Ors.
Special Civil Application No. 2836 of 2008—Decided on 29/02/2008
Appearance :
Ms. Paurami B. Sheth, for the Petitioner No. 1.
None, for the Respondents No. 1 – 64.
Decided in Favour of :
Respondent
Petition Dismissed
Headnote:Point in Issue :
Insolvency Law—Insolvency petition—Issuance of public notice.
Head Note :
Provincial Insolvency Act, 1920 (Central Act 5 of 1920)—Section 19—Bombay Provincial Insolvency Rules—Rule 24—Insolvency petition—Issuance of public notice—Petitioner had instituted the insolvency petition—Petitioner is debtor—In petition, he filed stating that his financial condition is weak and, therefore, he is not in position to incur the expenditure required for public notice—Held, rule suggest that issuance of notice in newspaper is mandatory—It is open for petitioner to approach the Court below and request for reduction of pre-deposit amount on ground that it is not possible for petitioner to weigh such a burden—If such an application is filed, same shall be considered.
Held :
The Rules require that such notice shall be published in the Newspaper and at the discretion of the Court also in Government Gazette. The Rule thus would suggest that issuance of notice in newspaper is mandatory. What is directory or at the discretion of the Court is additional publication of such a notice in the Official Gazette. [Para 8]
It is true that rule position understood as above does create some what piquant situation. Debtor claiming to be insolvent files a Insolvency Petition. Before such a Petition can be heard further he is asked to bear cost of publication of notice in newspaper. In a given case insolvency petition may fail for want of publication of notice in the newspaper. However rule position being as it is, such a situation cannot be helped. It may be noted that the Act provides that Insolvency Petition cannot be brought unless debt is more than Rs. 500/-. Said figure was fixed way back in the year 1920. Situation has undergone substantial change in terms of purchasing power of rupee. [Para14 ]
Akil Kureshi, J.—The petitioner has challenged an order dated 08.08.2007 below Exhibit 6 in Insolvency Petition No. 7/2007 passed by learned City Civil Court, Ahmedabad.
2. The petitioner had instituted the said insolvency petition. The petitioner is the debtor. In his petition, he filed application Exhibit 6 and stated that for issuance of public notice, substantial expenditure would be incurred. His financial condition is weak. No prejudice will be caused to anyone if such a notice is dispensed with and instead Court permits that such a notice be published only in Official Gazette. On this application., learned Judge passed his order on 18.08.2007 which is challenged in this petition.
3. Before me, learned Advocate Ms. Paurami Seth contended that financial position of the petitioner would not permit him to incur the expenditure required for public notice. Public notice is not mandatory and in lieu thereof publication in Official Gazette can be permitted. My attention was drawn to the decision of learned Single Judge of this Court in case of Mohanlal Premjibhai Thakkar & Ors. vs. Shah Atulkumar Kantilal & Ors., reported in AIR 1984 Gujarat 152 in which relying on an earlier decision of the Division Bench of this Court in case of Hasmukh Engineering Works & Anr. vs. Babubhai Chotalal Amin & Anr., reported in 19 GLR 172, it was held that the trial Court had exercised discretion vested in it not to issue public notice before hearing the debtor and that therefore, the Appellate Court was not justified in striking down such an order.
4. Section 19 of the Provincial Insolvency Act, 1920 (here-in-after referred to as “the said Act) provides for procedure on admission of insolvency petition. Section 19 of the said Act reads as follows.
“19 Procedure on admission of petition.—(1) Where an insolvency petition is admitted, the Court shall make an order fixing a date for hearing the petition.
(2) Notice of the order under Sub-section (1) shall be given to creditors in such manner as may be prescribed.
(3) Where the debtor is not the petitioner, notice of the order under Sub-section (1) shall be served on him in the manner provided for the service of summons.”
5. It may be noted that Sub-section (2) of Section 19 does not distinguish between insolvency petitions filed by creditor or debtor. Such a notice is therefore, required to be given in an insolvency petition filed either by the creditor or debtor. Under Sub-section (3) of Section 19 an additional procedure is provided wherein the petition is filed by the creditor, notice of the order under Sub-section (1) is to be served on the debtor also. It may further be noticed that Sub-section (2) of Section 19 provides only for issuance of notice. But the manner in which it has to be issued is to be prescribed.
6. The Bombay Provincial Insolvency Rules (here-in-after referred to as “the said Rules”) have been framed in exercise of powers under Section 79 of the said Act and are admittedly applicable in the present case. Rule 24 of the said rules pertain to notice. Rule 24 to the extent it is relevant reads as follows.
“XXIV. Notice.—(1) The notices to be given under Sections 30 and 37(2) of the Act shall be published in the Bombay Government Gazette in English, and, if the Court so directs, in any suitable English or regional language newspaper, and copies of the notices in English and in the language of the Court shall be affixed to the notice-board of the Court.
(2) The notices to be given under Sections 19 (2), 38(1) and 14(1) of the Act shall be published in any suitable English or regional language newspaper, and if the Court so directs, in the Bombay Government Gazette, and copies of the notices in English and in the language of the Court shall be affixed to the notice-board of the Court.
(3) Notice of the date fixed for the hearing of an insolvency petition under Section 19 (1) of the Act shall be sent by the Court by registered post, if the petition is by the debtor, to all the credito
