HON’BLE SRI JUSTICE N.R.L. NAGESWARA RAO C.M.S.A.No.17 OF 2006 JUDGMENT: The appeal is filed against the order in A.S.No.114 of 2004 on the file of the I Additional District Judge at Ongole, where-under the order in I.P.No.8 of 2000 on the file of the Senior Civil Judge at Parchur, which was filed by the 1st respondent to declare him as insolvent, was dismissed, was allowed by the appellate Court and declared the 1st respondent as an insolvent. 2. The lower Court found that the 1st respondent has not declared his assets properly and further he has alienated the property in favour of one A.Bhagya Laxmi and those transactions are not true and therefore, as the 1st respondent has not approached the Court with clean hands, the petition was dismissed. The appellate Court, however, has taken into consideration that the essential requirement of declaring a person as insolvent is the liabilities shown by him and the assets owned by him and on this aspect as there was no finding of the insolvency Court, the appellate Court has found that the 1st respondent can be declared as an insolvent. 3. So far as this appeal is concerned, essentially it is a question of fact as to whether the 1st respondent has committed an act of insolvency and the lower appellate Court has found that the debts are more than the assets. There is no question of law involved, but however the learned counsel for the appellant contends that under Section 6 of the Provincial Insolvency Act (for short, ‘the Act’), when an alienation has taken place, it is a fraudulent preference and therefore, it comes to an act of insolvency. But in this case, the debtor cannot plead the same and it is a sham transaction. It is to be noted that the truthfulness of the debts and the alienations, if any, effected by the debtors have to be determined during the enquiry by the Official Receiver. 4. So far as the insolvency Court is concerned, it cannot take upon itself the task of determining the truthfulness or otherwise of the debts of the petitioner, who sought to be declared as insolvent. The only ground that can be considered is whether there are any assets that were suppressed. In this case, the contention of the appellant is that the B-Schedule property is the self-acquired property of the alleged insolvent, whereas he has only shown 1/3rd share in the petition. Admittedly, the sons of the 1st respondent have filed a suit for partition. Whether the insolvent has got 1/3rd share or whether the property is the self-acquired property of the insolvent can also be determined by the Official Receiver during the enquiry. Merely because some of the creditors are shown as relatives of the insolvent, it does not mean that all the debts are fabricated. It is needless to say that the Official Receiver is to determine the genuineness of the debts and also the genuineness of the alienations if any that have taken place prior to the presentation of the insolvency petition. The Official Receiver under Section 53 of the Act can also file an application for annulment of any sale transaction if it is found to be fraudulent. Therefore, in view of the above circumstances, I do not find any reasons to interfere with the order of the lower appellate Court. Accordingly, the Civil Miscellaneous Second Appeal is dismissed. There shall be no order as to costs. _________________________ N.R.L. NAGESWARA RAO, J Date:06.09.2011 INL