The definitions of creditor, debtor, and debt under the Presidency Towns Insolvency Act are inclusive, allowing for civil liabilities from penalties imposed by an adjudicatory process under other statutes to be considered enforceable debts.

JUDGMENT

(Prayer: Original Side Appeal filed under Order 36 Rule 11 of the Original Side Rules and Clause 15 of the Letters Patent, to set aside the order made in Application No.177 of 2001 in I.N.No.39 of 2001 dated 17.09.2002 and allow the appeal. Prayer : Writ Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorai calling for the records of the 1st respondent dated 25.07.2008 made in G2/68311/2000 and quash the same.)

Common Judgment

R. Subramanian, J.

1. The Enforcement Directorate is on appeal against the order of the Hon'ble Single Judge allowing the application under Section 9 (5) of the Presidency Towns Insolvency Act 1909, thereby setting aside the insolvency notice issued to the respondent herein.

The facts that are necessary for disposal of the appeal are:

2. The respondent was accused of violation of the provisions of the Foreign Exchange Regulation Act, 1973. Since the violation amounted to an offence under the provisions of the said Act and it also made him liable for penalty, proceedings were initiated by the appropriate Authority under the Foreign Exchange Regulation Act, 1973 for adjudication of the penalty. The Adjudicating Authority viz., the Special Director of Enforcement by its order in original dated 06.02.1998 imposed a penalty of Rs.31 Crores. Aggrieved the respondent preferred an appeal in A.No.51 of 1998 before the appellate Authority viz., the Foreign Exchange Regulation Appellate Board. The Appellate Board modified the order dated 05.05.2002 and reduced the penalty as Rs.28 Crores. The respondent had preferred an appeal in CMA.No.914 of 2000 questioning the order of the appellate Board. Even during the pendency of the CMA, the Enforcement Directorate invoked Sub- Section 2 of Section 9 of the Presidency Towns Insolvency Act 1909 and got a notice of insolvency issued on 28.02.2001. On receipt of the said notice an application was filed by the respondent in A.No.177 of 2001 seeking to set aside the insolvency notice under Sub- Section 5 of Section 9 of the Presidency Towns Insolvency Act 1909, 1909. Several grounds of attack were made by the respondent in impugning the insolvency notice. Prominent among them are (1) There is no statutorily enforceable debt within the meaning of Section 2 (b) of the Act and the applicant is not a debtor within the meaning of Section 2 (b) of the Act; (2) The Enforcement Directorate is not a creditor within the meaning of Section 2 (a) of the said Act; (3) The order imposing penalty has not become final and (4) The Enforcement Directorate is not the Authority vested with the power of execution of the orders of the adjudicating Authorities and therefore the application at the instance of Enforcement Directorate is not maintainable.

3. The learned Single Judge who heard the application agreed with the contentions of the respondent herein on the first three questions. He however held that the Enforcement Directorate could represent the Union of India and therefore the application filed by the Assistant Director of Enforcement Directorate is maintainable. Upon the conclusion that there is no legally enforceable debt and the Enforcement Directorate is not a creditor within the meaning of Section 2 (a) of the Presidency Towns Insolvency Act 1909, the Hon'ble Judge set aside the insolvency notice. The third ground was that the order imposing penalty has not