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1976 Supreme(Mad) 199

Madras High Court
RAMAPRASADA RAO
Karnagam - Appellant
Versus
Jayaseelam Chettiar - Respondent
Decided On : 03/26/1976

Advocates:
R. Harikesavan, for Petitioner; K. Sengottiar, for Respondents.

Judgement

ORDER :- The Court below ought not to have dismissed the petitioner's application for adjudication as an insolvent under S. 10 (1) of the Provincial Insolvency Act, 1920. The petitioner's case in his petition was that he has incurred loans in cultivation and agricultural operations and incurred debts to the tune of Rs. 7,200 which is inclusive of a decree debt admittedly obtained against him by one of his creditors who is the first respondent in the application filed in the lower Court. It is not in dispute that the first respondent obtained a decree in O. S. No. 418 of 1971 on the file of the District Munsif's Court, Nagapattinam and that he has levied execution against him and obtained also an order of arrest in execution of the decree. Consequent upon such harassment by his creditors and his inability to pay the debts disclosed by him in the schedule to the petition, the petitioner came to Court with an application for voluntary adjudication, of himself as an insolvent. Excepting the first respondent, other creditors did not contest. The first respondent's case was that the debts disclosed by the petitioner other than the decree debt owing by him to the first respondent, were not true and genuine. According to the first respondent the petitioner is a rich mirasudar and that he owns amongst other things, a flour mill at Nagapattinam. He would contend that there has been an obvious suppression of such assets by the petitioner and that therefore the petition has to be dismissed. The learned Sub-Judge found that the petitioner owed the decree debt. But he would accept the first respondent's case that the petitioner owns a running flour mill besides a building and that as the petitioner is running the same, he should be presumed to be the owner thereof. The case of the petitioner in the lower Courts and before me is that the mill does not belong to him and it is not one of his assets. Nevertheless the Courts below found that the petition was not a bona fide one and dismissed the application for adjudication. It is as against this the present C.R.P. has been filed. The application for adjudication made by the debtor and initiated on his own volition is one which has to be scrutinised and disposed of in accordance with the provisions of the Provincial Insolvency Act as this is arising under that Act. When a person who claims himself to be a debtor wants to badge himself as an insolvent by invoking the process of law and stating that he is unable to pay his debts to his creditors, then such an overt expression of inability on the part of the debtor cannot lightly be disregarded by Courts on a priori considerations. In the instant case the first respondent has not only obtained a decree, but in execution he is seeking to arrest the petitioner. Obviously in order to avert an arrest and also for the reason that he was unable to pay his debts, the petitioner has filed the pre- sent application under S. 10 of the Provincial Insolvency Act. The petition contains the contents which an insolvency petition should contain and the act of insolvency thereto is that he is unable to pay his debts. The first respondent, as creditor, opposes this on the ground that there has not been a true and full disclosure of the assets of the petitioner. In particular his case is that the flour mill in Nagapattinam is an asset belonging to the petitioner and he having not disclosed the same should be deemed to have presented this application without any bona fides and that therefore the application merits dismissal. But the Act itself prescribes the procedure to be followed on the date when such an application is set for hearing. It says under proviso to S. 24 (1) (a) of the Provincial Insolvency Act that where the debtor is the petitioner, he shall, for the purpose of proving his inability to pay his debts, be required to furnish only such proof as to satisfy

the Court that there are prima facie grounds for believing the same and the Court, if and wh


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