Bhagirath Chaudhry and Another vs Mt. Jamuni and Others

Adami, J.—This is an appeal against an order of the District Judge of the Santal Parganas, dismissing an application for adjudicating the appellants as insolvents. The two appellants are joint and in their schedules to their petition of insolvency they showed the debts due by them to the amount of Rs. 2,331 and as assets, bullocks worth Rs. 100, 6 bighas of land valued at Rs, 120, and a thatched house valued at Rs. 40. An objection was put in against the petition made by the present appellants. Two of the creditors objected, but only one of them attended and gave evidence. The objector, who is the respondent in this appeal, objected that the debtors had failed to show an area of 45 bighas which, it was averred, belonged to the two debtors and also a plot of 13 bighas, with regard to which it was the case of the debtors that out of the area of 13 bighas, 7 bighas had been sold to the mother-in-law of the present Appellant No. 2.

The learned District Judge examined nine witnesses on behalf of the debtors and five witnesses on behalf of the objectors. With regard to the 13 bighas plot, the objectors alleged that the 7 bighas had been transferred under a benami transaction in order to escape the liability as against the creditors, also. With regard to the 45 bighas, the creditors'' allegation was that the debtors father and one Purandar, his cousin, held jointly 90 bighas of land and the share of these 90 bighas which had come to the debtors was 45 bighas, which was in their possession. The case of the objector then was that the debtors had concealed some of their property and were able to pay their debts, and so could not be adjudged insolvents.

The learned District Judge allowed evidence to be given on both sides to show whether the transaction with regard to the 13 bighas was a benami transaction or not, and also with regard to the question whether Purandar and the father of the debtors were joint, and whether the debtors had come into possession of the 45 bighas. He passed no order as to the 13 bighas, but with re-regard to the 45, bighas, he believed the evidence of the patwari that these 45 bighas had fallen to the share of the two debtors, and on this finding he held that the debtors had sufficient funds to pay their debts, and, therefore, he dismissed the application of the debtors.

Before us it is urged that the learned District Judge has failed to observe the procedure which is now required under Act 5 of 1920. It is contended that the application for insolvency has to show that the applicant has a prima facie case to establish that he is unable to pay his debts, and the proviso to Section 24 of the Act is relied on. At the stage of the application for adjudication no very careful inquiry is necessary with regard to the inability to pay debts. If the Court is satisfied that a prima facie case is established by the debtor, the Court will adjudicate him to be an insolvent; and indeed the consideration of the further question as to whether there has been a concealment of property and as to title to property is deferred till the stage when the discharge is applied for.

I think that in the case it is clear that the learned District Judge tried to decide the question of the benami character of the transaction and of the title to property alleged on one side to be joint and on the other side to be the separate property of the different branches of the family. The Act does not contemplate that an inquiry into such points of the benami character of a transaction or the jointness or separateness of a family should be made.

The debtors in this case put forward their statement of the property they were in possession of and made out a prima facie case. Such case having been made out, the learned District Judge should have granted the application and passed an order of adjudication of the debtors as insolvents and should have left the further enquiry to a later stage.

Having come to this finding, the order of the learned District Judge must be set aside and the two debtors, who are the appellants before us, must be adjudicated as insolvents.

There will be no order for costs.

Scroope, J.

I agree.