1 mgj IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION Notice of Motion No. 40 of 2009 in Insolvency Petition No. 10 of 2008 Pankaj C.Gandhi ..Petitioner Dr.P.C.Gandhi debtor in person. Mr.Rohit Sanghvi Creditor in person. CORAM: S.J.KATHAWALLA J. 4th August, 2009 P.C. 1 This Notice of Motion is taken out by the petitioner insolvent under section 25 of the Presidency Towns Insolvency Act, 1909 (the Act) read with Rule 90 of the Presidency Insolvency Rules (the Rules). By an order of this Court dated 11th May, 2009 the petitioner was adjudicated insolvent on his own petition. 2 By this notice of motion the insolvent is seeking a judicial order protecting him from arrest and detention in jail for non payment of any decretal amount 2 and/or compensation amount and/or fine and/or costs levied upon him by virtue of any Court orders already passed or that may be passed against him. The petitioner has also sought a specific direction against the Pune Sessions Court in Criminal Appeal No.351 of 2006 not to arrest the petitioner insolvent for his inability to pay the compensation amount of Rs.8,00,000/- as ordered by the Judicial Magistrate, First Class Court No.3 or part thereof and to direct the Pune Sessions Court to unconditionally release him forthwith if arrested in view of the provisions of section 25 of the Presidency Town Insolvency Act. 3 Section 25 of the Presidency Towns Insolvency Act. 1909 and Rule 90 of the Presidency Towns Insolvency Rules are reproduced below. 25. Protection order: (1) Any insolvent who shall have submitted his schedule as 3 aforesaid may apply to the Court for protection and the Court may, on such application, make an order for the protection of the insolvent from arrest or detention. (2) A protection order may apply either to all the debts mentioned in the schedule or to any of them as the Court may think proper, and may commence and take effect at and for such time as the Court may direct, and may be revoked or renewed as the Court may think fit. (3) A protection order shall protect the insolvent from being arrested or detained in prison for any debt to which such order shall apply, and any insolvent arrested or detained contrary to the terms of such order shall be entitled to his release: provided that no such order shall operate to prejudice the right of any creditor in the event of such order being revoked or the 4 adjudication annulled. (4) Any creditor shall be entitled to appear and oppose the grant of a protection order, but the insolvent shall be prima facie entitled to such order on production of a certificate signed by the official assignee that he has so far conformed to the provisions of this Act. (5) The Court may make a protection order before an insolvent has submitted his schedule if it thinks it necessary to do so in the interest of the creditors. Rule 90: Protection order: Every debtor, intending to apply for a protection order, shall give four days previous notice to the Official Assignee and also each execution creditor unless the Court shall think fit to dispense with notice to any such creditors. Every application for protection shall be made by petition setting forth the grounds on which the application is made. 5 4 The Official Assignee has informed this Court that after the certified copy of the order adjudicating the petitioner as insolvent was obtained by the petitioner he has till date not lodged the same with the Official Assignee. He has not come forward to file a schedule as required under section 24 of the said Act. The Official Assignee has, therefore, submitted that the petitioner has so far not conformed to the provisions of this Act and, therefore, granting of protection order in favour of the petitioner does not arise. The creditor at whose instance the order is passed by the Pune Sessions Court has also appeared in person. He has submitted that despite Rule 90, the insolvent, first sought to obtain orders from this Court without giving him any notice. It is only because of the directions of this Court that the petitioner was compelled to give notice to him because of which he is 6 present before the Court. He has also submitted that the insolvent has an ownership flat at Seven Bungalows, Versova, the market value of which is about Rs.85,00,000/- He has submitted that the original sale agreement of the said flat is in his possession and the said agreement shows that the insolvent is the exclusive owner of the said flat. However, in order to swindle his creditors the insolvent after purchasing the said flat has created a record alleging that the said flat belongs to his H.U.F. of which the insolvent, his wife and two sons are members. 5 In response to the aforesaid contentions of the Official Assignee as well as the creditor, the insolvent has submitted that he being a lay person was not aware of the procedure of submitting the schedule to the official assignee and in any event the adjudication order being passed at his 7 instance he had already annexed the schedule of his liabilities in the petition itself. He submits that he and his wife are estranged. He submits that though the sale agreement pertaining to the ownership flat at Andheri is in his sole name, he has subsequently shown the said flat in income tax returns as the property of his H.U.F. He submits that the Family Court has passed orders declaring the said flat as the matrimonial home of his wife and perpetual orders of injunction are also passed against him from dispossessing his wife. 6 From the manner in which the petitioner has put forward his case including legal submissions I am convinced that he has complete knowledge of law more particularly the law pertaining to insolvency. The very fact that he has taken out proceedings under section 25 of the Presidency Town Insolvency Act shows that he was aware of the 8 requirements of sections 24 and 25 of the said Act including submission of the schedule along with the affidavit as set out in section 24 of the Act. The schedule set out in the petition cannot be equated with the schedule required to be filed under section 24 of the Act since the schedule filed in the petition pertains to certain alleged liabilities. Filing of the schedule in the instant case is all the more relevant since as admitted by the insolvent himself the sale agreement in respect of the ownership flat at Vesova is in his exclusive name (i.e. without showing him as Karta of any HUF) and subsequently he has shown the same as the property of his H.U.F. In view of the aforesaid conduct of the insolvent the Official Assignee is correct in his submission that the petitioner has not so far conformed to the provisions of the Act.The petitioner is, therefore, not entitled to any 9 protection under section 25 of the Presidency Town Insolvent Act at this stage. The present notice of motion is, therefore, dismissed. However, liberty is granted to the insolvent to first conform to the provisions of Presidency Town Insolvency Act and then apply for reliefs under section 25 of the Act which will be decided on its own merits. (S.J.KATHAWALLA J.)