Retirement of partner of the firm.

Petition under sections 9 (b) and 9 (d) (ii) and (iii) and 10 to 13 of the Presidency Towns Insolvency Act, 1909, to adjudge respondents 1 to 4 as insolvents. The 1st respondent Messrs. Gitanjali, is a registered partnership, of which the partners were respondents 2 to 4. The petitioner claims to have advanced a sue of Rs. 5,000 on a promissory note dated 8th June, 1971, executed by the second respondent on behalf of the firm. It is alleged in the petition that on 7th August, 1971, the debtors issued a cheque for Rs.5,000 towards the principal, that the cheque, when presented, was returned dishonoured, and that the debtors failed and neglected to pay the amount. It is also alleged that on 7th August, 1971, the debtors transferred the entire business in favour of the 5th respondent, who put up his name board at the place of business premises, that the transfer was fraudulent, that in spite of the efforts taken to contact the second respondent at his residence and also at his other place of business in No. 3/39, Godown Street, he could not be traced, that the said business place of the second respondent was also locked and closed from 10th August, 1971, and that the second respondent secluded himself with a view to deprive his creditors of the means of communicating with him and also departed from his dwelling house and the usual place of business. It is further alleged that the transfer of the entire business in favour of the fifth respondent was made with a view to defeat and delay the creditors and that thereby the debtors committed acts of insolvency falling under sections 9 (b) and 9 (d) (ii) and (iii) of the Act.

2. Respondents 1, 2 and 4 appear by a Counsel and contend that on 31st March, 1970, the third respondent retired from the partnership, and that from 1st April, 1970 the firm consisted of only two partners, namely, respondents 2 and 4. Their case is that even on the date of the loan itself, namely, 8th June, 1971, the financial broker Mishnilal Dharwal, took a post-dated cheque for Rs. 5,000, dated 7th August, 1971, and also took interest for two months by cheque. Though the broker was informed that the cheque should be presented only after arrangements had been made for its encashment, the cheque was presented contrary to the understanding. The allegation that the business was transferred with a view to defeat and delay the creditors is denied. Their case is that the transfer was effected bona fide for valuable consideration in pursuance of an arrangement which the second respondent had entered into with the Bank of India who had given overdraft facilities to the firm on the guarantee of the fifth respondent for a sum of Rs. 1 lakh. It is alleged that out of the sum of Rs. 1,12,000 for which the transfer was made, a sum of Rs. 1 lakh was retained by the fifth respondent for payment towards overdraft account and the balance of Rs. 12,000 was paid in order to enable the second respondent to pay arrears of rent to the landlord of the premises No. 3/39) Godown Street,and also for the purpose of improving his wholesale business which he was conducting in the said premises. The allegations that the second respondent made himself scarce and secluded himself so as to deprive his creditors of the means of communicating with him or that he departed from his dwelling house and the place of business are denied as false. It is further alleged that no act of insolvency, as alleged by the petitioner, is committed.

3. The third respondent alleged in his counter-affidavit that on the date of the loan, he was not a partner of the firm, he having retired from partnership even on 31st March, 1970, that, as such, he cannot be deemed to have been benefited by the loan and that he is not concerned with the alleged acts of insolvency attributed against the second respondent. The case of the fifth respondent is that he purchased the business in discharge of a liability of the firm to the bank in respect of the overdraft account fo