ORDER :- Aggrieved by the Insolvency Notice 39 of 2001 issued under S. 9(2) of the Presidency Towns Insolvency Act (III of 1909), T.T.V. Dhinakaran, applicant herein, has filed Application No. 177 of 2001 to set aside the said Notice.

2. Enforcement Directorate (Foreign Exchange Regulation Act - now FEMA) through its Deputy Director, Shastri Bhavan, Chennai-6 - petitioning creditor has filed Insolvency notice No. 39 of 2001 before this Court for issuance of Insolvency Notice to T.T.V. Dhinakaran, Chennai-20 under S. 9(2) of the Presidency Towns Insolvency Act and Form No. 14-A of the Insolvency Rules. In the affidavit filed in support of the above Notice, the Deputy Director of the petitioning creditor has stated that it has obtained an order in F.No. T.3/22-D/95 (32)on the file of the Special Director, Enforcement Directorate (Foreign Exchange Regulation Act - now FEMA) at New Delhi on 6-2-98, for a sum of Rs. 31 Crores, towards payment of penalties, which was subsequently modified to a sum of Rs. 28 crores by the order dated 5-5-2000 in Appeal No. 51 of 1998, on the file of the Foreign Exchange Regulation Appellate Board, New Delhi. Against the aforesaid order of the FERA Board, the debtor herein preferred C.M.A. No. 914 of 2000 on the file of this Court. The stay application filed in C.M.P. No. 8587 of 2000 along with the said C.M.A. was argued at length and ultimately the Division Bench of this Court indicated that the orders of the FERA Board could be stayed, on the debtor herein depositing 50 per cent of the amount due and furnishing a bank guarantee for the balance. At this stage, the stay petition was withdrawn by him and the same was dismissed as withdrawn by order dated 28-7-2000. Therefore, as on date, there is no stay of the aforesaid order of FERA Board which has become due and payable by the debtor herein. The debtor has not paid any amount towards the due till now. In such a circumstance, the Enforcement Directorate has prayed for issuance of insolvency Notice to the debtor T.T.V. Dhinakaran under S. 9(2) of the Presidency Towns Insolvency Act and Form No. 14-A of the Insolvency Rules.

3. Pursuant to the order of the Master dated 1-3-2001, Notice was issued on 2-3-2001 to the debtor. Questioning the said Insolvency Notice, the applicant-T.T.V. Dhinakaran has filed the above application praying for an order to set aside the said Notice for adjudicating him as an insolvent under Section 9(2) of the said Act.

4. In the affidavit filed in support of the said application i.e., A. No. 177 of 2002, the applicant has stated that the petition filed invoking the provisions of Insolvency Act by the Enforcement Directorate is a serious abuse and a misuse of the power, as the factors enumerated in the affidavit would show that the said petition filed by the Enforcement Directorate to adjudicate him as an insolvent is a wanton misuse of power. The allegation that he is an insolvent and liable to be declared so is prima facie defamatory. The object of any insolvency petition ought only to be distribution of the estate of the insolvent amongst the creditors. The application filed by the respondent does not even mention the barest requirement of the Act; hence it is liable to be dismissed in limine. The Special Director of Enforcement Directorate under FERA issued a memorandum of show cause notice under Section 50 of the FERA. In the said notice, he has alleged that the petitioner was a Director of the company registered under the Companies Act of British Virgin Island. Qua a Director of the said company, he had received certain drafts which instruments were in the name of the company viz. Dipper Investments when the petitioner was out of India. He had sent the drafts for collection to the accounts maintained by the said company in England. It is on this show cause Notice was issued stating that the petitioner had acquired the foreign exchange and therefore he had committed a violation of Sections 8(1) and 9(1)(d) of the FERA Act.

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