The judgment emphasizes that failure to comply with an Insolvency Notice and challenges to the validity of decrees and assignment of debt must satisfy the grounds provided under Section 9(5) of the Presidency Towns Insolvency Act, 1909, to set aside the Notice.

1. This is an Application seeking to set aside the Insolvency Notice issued in I.N. No. 11 of 2009.

2. I have heard Mr. Vineeth Subramani, learned Counsel for the Applicants and Mr. Om Prakash, learned Counsel for the Respondent.

3. The Respondent-Bank filed the Application in I.N. No.11 of 2009, seeking the issue of Insolvency Notice to the Applicants herein in terms of Section 9(2) of the Presidency Towns Insolvency Act, 1909. It is the contention of the Respondent-Bank in the said Application that two companies by name Green Gardens Pvt. Ltd. and Gemini Arts Pvt. Ltd., in which the Applicants herein are the Direction, were enjoying credit facilities with M/s. Ind Bank Housing Limited. As Directors of the borrower companies, the Applicants stood as guarantors for the facilities availed by the companies. Ind Bank Housing Limited filed Civil suits in C.S. Nos. 33 & 52 of 1999 on the file of this Court for recovery of the outstanding dues. Subsequently6, Ind Bank Housing Limited assigned the debts due from the said companies, in favour of the Respondent-Bank, in and by virtue of a Deed of Assignment dated 13.10.2006. Therefore, the Respondent-Bank got substituted as the Plaintiff in those suits and the suits ended in compromise decrees dated 23.6.2007. Ss per the compromise decrees, the borrower companies as well as the Applicants became liable to pay an amount of Rs.29,49,81,355/- & Rs.29,96,00,918/-respectively. But neither the companies nor the Applicants herein paid any amount towards satisfaction of the decree. Therefore, contending that the Applicants have no sufficient means and sources to discharge the decree debt and that therefore, they are liable to declare as insolvents, the Respondent-Bank came up with the Application I.. No.11 of 2009 under Section 9(2) of the Act, seeking the issue of an Insolvency Notice to the Applicants herein.

4. Notice was ordered on 12.3.2009 and Form 14-A was issued on 16.3.2009. It was served on the Applicants on 3.9.2009 and they were supposed to file an Application to set aside the Insolvency Notice within 35 days.

5. However, the Applicants came up with an Application in A. No.399 of 2009 for condoning the delay of 19 days in filing the set aside Petition. It was allowed by an order dated 30.11.2009. Thereafter, the Applicants came up with the above Application, seeking to set aside the Insolvency Notice, on the following grounds:

i. that the Applicants had already tendered payment to the Respondent-Bank and that therefore, they do not owe any money to the Bank;

ii. that Ind Bank Housing Limited, which was the original Plaintiff in both the suits, was not a Bank at all and that in the decrees passed in both the Suits, a record of tender of full payment and receipt of the same by the Bank has been made;

iii. that the Respondent-Bankhas not produced any proof to show the assignment of debt by Ind Bank Housing Limited;

iv. that even the consent decrees passed in the suits record the handing over of postdated cheques for the entire decree amount and hence full satisfaction had already taken place; and

v. that in any case, the decrees have become unenforceable in view of the challenge made to the validity of the same before Debts Recovery Tribunal-I, Chennai and the liberty given by the Division bench of this Court to agitate those issues before the Tribunal.

6. In view of the contentions raised by the Applicants, it is necessary to have look at the decrees passed by consent, on 28.3.2007 in C.S. Nos.33 & 52 of 1999. Since the decrees incorporate the “consent terms” entered into between the Applicants herein and the Respondent-Bank and also since the consent terms and decrees in both suits are identically worded (though the amounts differ) it is sufficient to record the decree in one Suit, since that would give a clue as to the validity of the contentions raise din this Application. Therefore, the decree passed in C.S.No.33 of 1999 is extracted as follows:

“1. That an amo