THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY C.M.A.No.656 of 2003 JUDGMENT: This appeal is filed under Section 75(2) of Provincial Insolvency Act, 1920 against Order and decree passed in I.P.No.4 of 2000 dated 31.12.2002 on the file of Principal District Judge, Kurnool filed by the appellant under Sections 10 and 13 of Provincial Insolvency Act, 1920 to adjudge him as an insolvent dismissing the claim on the ground that he failed to show all his assets for the purpose of adjudication as pleaded. 2. The appellant is the petitioner and the respondents are the respondents in the Insolvency Petition. 3. The claim of the appellant is that he got more liabilities than assets shown in the petition schedules, whereas he has to pay various debts to the respondents 1 to 17 and hence prayed to declare him as insolvent under the relevant provisions of Provincial Insolvency Act 5 of 1920 (for short ‘the Act’). 4. The Respondents 1 to 3, 11 and 4 to 17 contested the matter whereas remaining respondents were set exparte and they did not participate in the proceedings. 5. It is the main contention of learned counsel for appellant relying upon the judgements in PATHURI DHARMA RAO v. VATLURU COOPERATIVE BANK AND OTHERS[1] a n d KARNAGAM v. JAYASEELAM CHETTIAR AND OTHERS[2] that the fact that the appellant has suppressed some of his assets or that he has shown some bogus debts in the petition are not matters to be taken into consideration while holding enquiry under Section 24 of the Act and the Court below failed to appreciate the matter properly and, hence the impugned order is liable to be set aside and the petition is to be allowed as prayed for. 6. On the other hand, it is contention of learned counsel for respondents that suppression of some of the assets of the appellant which are substantial in nature vitiates the proceedings by virtue of Section 13(1)(e) of the Act relying upon the decision in DASARI SRIHARI RAO v. TALLURI HARINADHA BABU[3]. 7. Therefore, it is to be decided as to whether suppression of some of the assets of the appellant is a ground to dismiss the petition or that fact should not be taken into consideration and the consequential proceedings are to be taken up before the official receiver concerned with. 8. Section 10 of the Provincial Insolvency Act reads as under: “Conditions on which debtor may petition: (1) A debtor shall not be entitled to present an insolvency petition, unless he is unable to pay his debts and; (a) his debts amount to (five hundred rupees); or (b) he is under arrest or imprisonment in execution of the decree of any Court for the payment of money; or (c) an order of attachment in execution of such a decree has been made, and subsisting, against his property”. Further, Section 45 of the Act mandates; “Debt payable at a future time: A creditor may prove for a debt not payable when the debtor is adjudged an insolvent as if it were payable presently, and may receive dividends equally with the other creditors, deducting therefrom only a rebate of interest at the rate of six per centum per annum computed form the declaration of a dividend to the time when the debt would have become payable, according to the terms on which it was contracted.” 9. As contended by the learned counsel for appellant in the decisions relied upon by him, it is observed that the fact that the appellant has suppressed some of his assets or that he has shown some bogus debts are not matters to be taken into consideration while the enquiry under Section 23 of the Act and they are matters to be taken into consideration when the application was moved before the Courts and the observations made under similar circumstances made in KARNAGAM v. JAYASEELAM CHETTIAR AND OTHERS (2 supra). 10. In DASARI SRIHARI RAO v. TALLURI HARINADHA BABU (3 supra), Division Bench of this Court held as under: “Thus, Section 13(1)(e) of the Act imposes an obligation on the debtor making the application, to furnish the particulars of all his property in his application and as could be seen from the opening words of the Section which mandates by the use of the expression ‘Shall’. Though mere use of the expression ‘shall’ do not by itself is the determinative factor to decide whether the provision is mandatory or directory, having regard to the fact that one of the questions in an insolvency application being that the debtor is unable to pay his debts, could only be ascertained on prima facie view of the fact that the value of the debts of the debtor exceeded his assets and as such he is unable to discharge them and also in view of the fact that the assets of the insolvent vest in the court on making the order of adjudication under Section 28(2) of the Act, the prescription under Section 13(1)(e) of the Act is mandatory. Under Section 25 of the Act, the court is empowered to dismiss the application if the court is not satisfied of the debtor’s right to present the petition. Thus, a cumulative reading of the above provisions makes it clear without any ambiguity that the debtor shall show that he is unable to discharge his debts and satisfy one of the conditions stipulated in Section 10 and on his furnishing all the information as is required by Section 13, he can be adjudicated as an insolvent. On the failure of the above, the application is liable for rejection under Section 25(2) of the Act”. 11. Therefore, in view of the above decision, it has been obligatory on the part of the appellant to incorporate all his assets in the relevant schedule of the petition as provided under Section 13(1) (e) of the Act, which is a mandatory provision. If he got no obligation to do so, the purpose of the section will be defeated. Further, absence of such obligation, makes the adjudication of similar claims before the Insolvent Courts meaningless by reason of which those claims need not be filed before those Courts and can be directly filed before the official receiver concerned, which is actually not the intendment of the legislature. 12. Thus, the observations made by the Division Bench of this Court holds good and the principle laid down in the said decision cited by the learned counsel for appellant is not applicable consequently. In the result, I find that there are no merits in the appeal and the appeal deserves to be dismissed and accordingly dismissed. _________________________ G.KRISHNA MOHAN REDDY, J Date: .4.2011 DA THE HON’BLE SRI JUSTICE G.KRISHNA MOHAN REDDY C.M.A.No.656 of 2003 .4.2011 [1] AIR 1978 AP 197 [2] AIR 1977 Madras 250 [3] 2002 (3) ALD 456 (DB)