HONOURABLE SRI JUSTICE C.V. RAMULU C.M.A.No.792 OF 2003 29-07-2010 Between: Nama Jeevan Gupta Appellant And B.Venugopal Setty and others. Respondents HONOURABLE SRI JUSTICE C.V. RAMULU C.M.A.No.792 OF 2003 JUDGMENT: This Civil Miscellaneous Appeal under Order 45 Rule 1 of CPC is directed against the order made in I.P.No.15 of 97, dated 12-12-2002 on the file of the learned Senior Civil Judge, Gooty, Anantapur District, whereunder the Insolvency Petition filed by the appellant was dismissed. 2. It appears this is a second round litigation before this Court. Earlier when the I.P. was dismissed on merits on 31-10-2000, the appellant filed C.M.A.No.3402 of 2000 before this Court. However, the said C.M.A. was allowed and the order made in I.P. was set aside and the matter was remitted back for reconsideration. After reconsideration of the entire matter, the learned Senior Civil Judge, Gooti, came to the same conclusion that the petition is devoid of merits and liable to be dismissed and accordingly dismissed. Aggrieved thereby, the present appeal is filed. 3. According to the appellant-petitioner, the I.P. was filed against the respondents 1 to 7 for declaring that he is an insolvent and to discharge him from all the liabilities which are mentioned in ‘B’ schedule, whereunder various amounts, payable to the respondents and particulars were given with regard to the total amount payable as Rs.4,56,000/-. The appellant except the property mentioned in ‘A’ schedule property, which are wearing apparel of Rs.300/-, does not possess any other property. The liabilities mentioned in ‘B’ schedule are excess to the properties mentioned in ‘A’ schedule. Further, he stated that he is a resident of Guntakal town and was doing business. He sustained loss and unable to recover from the said loss. The appellant was also the Managing Partner of Himagiri Finance Corporation (for brevity ‘the Corporaiton), Guntakal. The respondents are his creditors from whom he obtained money for his business. R-1 to R-3 filed suits against the petitioner and obtained decrees on the file of the learned District Munsif Courts, Gooti and Guntakal. As far as the respondents 5 to 7 are concerned, pronotes were executed in their favour. R-1 has started execution proceedings in E.P.Nos.30, 31, 33 of 1995 in O.S.Nos.2, 4, and 3 of 1993, respectively, on the file of the learned Senior Civil Judge, Gooti, for Rs.1.00 lakh, each. R-2 filed E.P.No.94 of 1997 in O.S.No.304 of 1995 on the file of the Junior Civil Judge’s Court, Gooti for Rs.19,000/- and R-3 and R-4 filed O.S.Nos.199 and 200 of 1995 on the file of Junior Civil Judge, Guntakal, and obtained decrees against the appellant and Corporation. R-1 and R-2 in their execution petitions sought for arrest of the appellant. It is also further stated that there is no possibility whatsoever for him to discharge the debts, in view of the circumstances mentioned in the petition. 4. The respondents 1 and 2 filed separate counters and prayed for dismissal of the petition. The Court below recorded the relevant portion of Para-4 in their counters which shows as under: “In paragraph 4 of the counter of R-1 as well as in the counter of R-2, it is contended that the petitioner has got a house at Guntakal which is worth Rs.8.00 lakhs to Rs.10.00 lakhs. The petitioner also owns house plots at Guntakal which are worth rupees ten lakhs, which he has not shown. These properties are not mentioned in his petition. The petitioner is also doing business in the name of his wife. The petitioner has suppressed true material facts and filed this petition with mala fide intention to evade the debts which are payable to the genuine creditors. It is contended that the petitioner has got every possibility to discharge the debts, if he is honestly intending to pay his debts to the creditors. Both respondents in their counters pleaded that the allegations which the petitioner has made in support of his petition are all made up for filing this petition to evade payment of decree debts to these respondents.” 5. On behalf of the appellant-petitioner, he himself examined as P.W.1 besides examining P.W.2 and Ex.P-1, Notice issued to the appellant by one S.Madanlal Sarada, was marked. On behalf of the respondents, R.Ws.1 and 2 were examined, however, no documentary evidence was marked. 6. After detailed consideration of the entire evidence on record, the Court below recorded its findings as under: “When the petitioner was recalled as per orders in I.A.No.152 of 2002, 153 of 2002, dated 29-10-2002, in chief examination, he deposed that he has received a legal notice issued by Madanlal Sarada through his counsel G.Venkata Reddy which is dated 26-08-1993 which is Ex.P-1. After receiving notice by him he has got the plots registered in favour of Madanlal Sarada, who issued notice to him on behalf of Himagiri Finance Corporation. When cross examination by R-1, he replied that the notice comprised survey numbers were made into 38 house plots. He does not have proper idea with regard to the total extent of the survey number of the land mentioned in Ex.P-1. In Himagiri Finance Corporation, he is the Managing Partner. There are seven more persons including himself which makes eight. He did not produce any documentary evidence in his chief examination that after receiving Ex.P-1, he complied with the same by getting the plots registered in the name of Mandanlal Sarada. He denied the suggestion that R-5 to R-7 of this petition approached the Consumers’ Forum, Anantapur, and got settled their claim. But he replied that R-5 to R- 7 of this petition are the depositors of Himagiri Finance Corporation. Respondents 5 to 7 of this petition in this counter to I.P. are not his creditors. It is true that he is not personally liable to discharge the debts of R-5 to R-7 of this petition since it is joint liability of partners. R-3 and R-4 are also the creditors of Himagiri Finance Corporation. He denied the suggestion that even though he has got capacity to discharge the debts of R-1, purposely he filed the petition to evade the debts payable to R-1 and the deposing falsely, the debt due to R-1 is his personal debt. The 2nd witness for petitioner gave evidence that he knew the petitioner as well as the petitioner. He further deposed that the petitioner was also Managing Partner of Himagiri Finance Corporation. He spoke to the loss suffered in his business. He also deposed that the petitioner has no movable or immovable properties to his knowledge. The petitioner has no cash in the banks. To his knowledge, the petitioner has no capacity to discharge the debts due to the respondent. When cross examined by the counsel for R-1, he admitted that if accounts are perused whether the petitioner is running a business on loss or profit will be known. He earlier admitted that the petitioner is maintaining accounts in the Finance business. He replied that he does not know the turnover of the finance business run by P.W.1. He does not know whether P.W.1 has got plots and sold them to others. He denied that the petitioner is having house plots at Guntakal in Gooty road where he is now residing. He admitted that he gave security to the petitioenr in E.P. connected to facilitate him to file I.P. He is very friendly to P.W.1. He denied that P.W.1 has no capacity to pay the amounts to the respondents; and that he got sufficient funds to discharge the debts. Cross of R-2, Adopted the cross of R-1. After the High Court of A.P. has remanded the above case for disposal, P.W.1 was recalled for the purpose ;of marking the notice issued by the counsel for R-1 to the petitioner on behalf of Madanlal Sarada, S/o.Siva Pratap Sarada, Mandi Bazar, Guntakal. The notice is dated 26-08-1993. It is alleged in the notice that on 23-09-1992, his client S.Madanlal Sarada gave Rs.2.00 lakhs to the petitioner, who is a Managing Partner of Himagiri Finance Corporation for the purpose of purchase of the notice schedule land viz., which are described as plots 3, 4, 5 and 6, plot Nos.7 to 10 with different extents, total extent is 2868, 773 square yards by mentioning terms and conditions of the agreement. The terms and conditions go to show that he has agreed to sell the schedule mentioned lands to his client at the rate of Rs.80/- per square yard. A default clause was mentioned that if the amount was not paid with interest as accrued by 22-09-1993, i.e. within one year from the date of receipt of the said Rs.2.00 lakhs, i.e. on 22-09- 1993, the petitioner will not have any right over the schedule mentioned property. It is mentioned that even though the person who gave the notice under Ex.P-1 was ready to perform his part of contract, the petitioner failed to perform his part of contract. Hence, the notice was issued. When P.W.1 was cross examined after recall though he replied that he complied with the terms of notice issued he did not produce any further material in this enquiry. The main petition I.P. was filed before the Court on 19-12-1997 no documents along with main I.P. have been filed. The petitioner in ‘B’ schedule did not mention the dates of borrowing of the amounts due under the pronotes received from R-5 to R-7. Even though R.W.1 deposed with regard to the facts in I.P. 14 of 1997, in which the respondent mentioned therein, viz., R-3 is his wife, R-4 to R-6 are his daughters, R-7 is his co-brother including the facts of deposit made in the Finance Corporation run by the petitioner another partner, the counsel for the petitioner put suggestions with regard to I.P.14 OF 1997. R.W.1 in his cross-examination, admitted that he did not file any documents with regard to Himagiri Finance Corporation alleged to have been run by the petitioner as a Managing Partner. But, subsequently, the petitioner filed petitions to show before the Court that on behalf of Himagiri Finance Corporation though a notice was issued by the counsel for R-1 with regard to the registration of plots, he complied with the same by transferring the property in the name of the said person. But, in the cross- examination, the petitioner admitted that he has not filed any documents relating to the said transaction. The evidence which is brought on record before the Court by the petitioner, more particularly, his replies in cross-examination originally, when he was cross- examined and subsequently after he is recalled, after the remand by the High Court of A.P., the replies which he has given, I hold that the petitioner did not fulfill the requirements of the Act in proving the conditions which are required to be satisfied by him to be declared as insolvent and as well as the conditions of Section 39 of the Act including the enquiry which is contemplated under Section 24 of the Act. The replies of insolvent P.W.1 which is available on record is very clear that the insolvent though mentioned the names of other respondents 4 to 6 to whom he is said to be due under the pronotes, but did not mention the dates of pronotes and other connected particulars for this Court to hold that really the debts of those respondents is subsisting on the date of filing the petition. When the petitioner was recalled, subsequently after the remand, on his application, he admitted that he has got a right in the house property; under the said property has not been shown in the present insolvency petition for the purpose ;of satisfying the debts due to the creditors, who are the respondents herein. The evidence of the petitioner also goes to show that he has also paid a sum of Rs.6,000/- as per the orders of High Court of AP. All these things, if put together, if considered by the Court, the case of the petitioner that he was unable to pay the debts of his creditors has to be very much doubted. When the Court considers the entire oral and documentary evidence which have been produced before this Court and which is available, I have also gone through the relevant provisions of the Act to answer the remand by their Lordships, by considering the connected provisions of the Act to hold that under Section 6 of the Act the filing of petition by the petitioner debtor is also an act of insolvency. But the petitioner/insolvent by his replies in cross-examination before remand and after the remand, by filing petitions to recall and producing Ex.P- 1, giving evidence with regard to it and as well as the cross-examination by the counsels for R-1 and R-2 unable to establish that the necessary ingredients that are required for the petitioner-debtor to satisfy the points to be declared himself as insolvent under Section 10 and as well as the other connected provisions with regard to declare himself as insolvent which I have already mentioned in my earlier part of order has not at all been proved and established, in order to reach this conclusion that I have elaborately dealt with the commentaries and as well as the commentaries and as well as the rulings which have been referred in earlier part of my order in law of insolvency, New Edition 1997 by Justice P.S.Narayana, the law is very clearly laid down by Their Lordships in their rulings and as well as the commentaries if considered by the Court carefully, and applied to the facts of the present case, I hold that in this case, the petitioner filed by the petitioner to declare himself as insolvent with regard to the alleged debts due to the creditors since except the creditors 1 and 2, viz., R-1 and R-2 the other creditors are not contesting. More over, it is suggested to the petitioner in cross- examination that some of the respondents have compromised the case with the petitioner in Lok Adalat has also been denied by the petitioner to substantiate that they are the real creditors of the petitioner apart from the creditors 1 and 2, namely respondents 1 and 2 has not been proved and established. Even though the petitioner had a house property in which he got a share as admitted by him in cross-examination when subsequently recalled after order of remand, the petitioner has not satisfactorily explained as to why he has not included that item and shown it is the schedule to the Insolvency petition filed by him. He has also admitted that as per the orders of the Hon’ble High Court of A.P. he has also made a part payment to one of the D.Hrs. when he sought for arrest and he carried the matter to the High Court of A.P. and the said Court ordered him to pay the suit amount. Therefore, the source of that amount and as well as payment made by him remains to be explained by the petitioner that in spite of all these aspects, still whether the petitioner can contend that he has no money to pay to all the creditors and thereby he has filed this petition to declare himself as insolvent is very much appears to me not maintainable. The very conduct of the petitioner, if carefully considered by the Court, it is very clear that the petitioner has not made out necessary grounds that are required to be satisfied by him to be declared as insolvent in this case, thereby I take support from the material already available on record and as well as rely upon the very material brought out by the petitioner to hold that the petitioner in this case is not entitled for the relief which he has sought in this petition thereby accept the counter filed by the contesting respondents 1 and 2.” 7. A bare perusal of the impugned order passed by the Court below makes it clear that the appellant firstly did not reveal the properties possessed by him. Further, he admitted in his cross- examination that he possessed house property but he does not know the exact extent of the house and survey number etc. Further, he has accepted that he had sold out the house plots to one Madanlal Sarada just before filing I.P. and he also not denied the fact that he was the Managing Partner of the Himagiri Finance Corporation. All these things will go to show that the appellant was not an insolvent and therefore, the elaborate order passed by the learned Senior Civil Judge, Gooti, on the basis of the entire evidence cannot be said to be either arbitrary or illegal. The learned Judge has recorded cogent reasons and after considering the entire evidence, rightly dismissed the I.P. and therefore, I am of the considered view that the impugned order cannot be interfered with. 8. Accordingly, the appeal is dismissed. There shall be no order as costs. _________________ July 29, 2010 kvr