A court exercising jurisdiction under the Presidency Towns Insolvency Act may stay insolvency proceedings under Section 13(6) of the Act when the debtor denies the debt and there is evidence to support the denial.

ORDER :- The petitioning creditors alleged that the debtor who is the first respondent, has committed acts of insolvency under Ss.9(b), 9(g) and 9(d)(ii) and (iii) of the Presidency Towns Insolvency Act, and that therefore he has to be adjudicated as insolvent. The case of the petitioning creditors is as follows : Through a Finance Broker, one Mr. N. Gurumukal, examined as P.W. 2, the first petitioner and the second petitioner claimed that they have advanced on 6-5-1976 and 17-3-1976 respectively sums of Rs, 5000/-and Rs. 6000/- on promissory notes executed in their favour in and by which the first respondent agreed to repay the same with interest at 24% per annum. Towards the promissory note executed in favour of the first petitioning creditor, no amount has been paid. But it is said that towards the second promissory note in favour of the second petitioning creditor, a sum of Rs. 1000/- and interest up to 17-4-1976 is said to have been paid. The balance amount due and payable under the above said two promissory notes still remained unpaid. As on the date of the filing of the petition, it is said that a sum of Rs. 10,675/- in all is payable by the debtor-first respondent to the petitioning creditors. The petitioning creditors would say that the first respondent is heavily indebted besides the liability to pay the debts due and payable to them and that with intent to defeat and delay the creditors, the debtor who was trading under the name and style of Nirmala Textiles at No. 54 LB Road, Adyar Madras-20, has transferred his business to his father, the second respondent herein who is now said to be carrying on the same business under the name of Nirmalathe Textiles at the same address. The transfer, as above, is attacked as a fraudulent transfer being void of consideration and it is also alleged that it is a preferential treatment given by the debtor in favour of the second respondent who claims to be a creditor of the first respondent. The said transfer made by the debtor in favour of the second respondent in or about 17-5-1976 is therefore attacked as an act of insolvency within the meaning of S.9(d) of the Act. The further ground alleged is that the debtor on 25-5-1976 and 8-6-1976 gave to Gurumuklal and the second petitioning creditor, notices of suspension of payment to all his creditors in general that he has sustained loss and transferred his business to his father. It is said that on 8-6-1976, the debtor informed the broker Mr. N. Gurumuklal that he could only pay 30 paise in the rupee to all creditors. By such representation made to the second petitioning creditor and the finance broker on 25-5-1976 and 8-6-76, the debtor has committed an act of insolvency under S.9(g) of the Act. The third ground, on which the present petition is founded, is that the debtor was evading the creditors and departed from his usual place of business and secluded himself so as to deprive the creditors of all the means of communicating with him. It is alleged that the second petitioning creditor examined as P.W. 1 and P.W. 2 attempted to contact the debtor on three occasions in June, 1976, to wit, on 18th June, 23rd June and 28th June, but the debtor was not available. Hence it is said that an act of insolvency within S.9(d) (ii) and 9(d)(iii) of the Act has been committed. It is further alleged that a notice of demand was sent on behalf of the second petitioning creditor on 21-7-1976 and the cover was returned with the endorsement 'left.' The transferee, however, received the notice and replied admitting the transfer, but contending that he was one of the creditors of his son and that the transfer was made because he pressed for repayment and that after taking over, he has discharged debts of the first respondent to the tune of about Rs. 70,000/-. This is brought out in the evidence of the transferee examined as R.W. 2. It is in these circumstances, that the petition has been filed.

2. The first respondent's case is that the petitio