Gobind Prasad Gir vs Kishun Lall Dhokri and Others

Das, J.—This is an appeal against an order of the learned District Judge of Gaya dated the 1st August 1921, refusing to adjudge the appellant an insolvent under the Provincial Insolvency Act. The petition for insolvency was presented on the 25th of May 1921. The creditors opposed the petition and the learned District Judge examined the insolvent and came to the conclusion that the petitioner before him did not establish that there was a prima facie case that he could not pay his debts. In that view the learned District Judge rejected the petition of the appellant.

In this Court the learned Vakil appearing on behalf of the appellant has argued before us that the learned District Judge decided matters which he had no jurisdiction to decide at that stage and that on the petition presented by the appellant the learned District Judge should have adjudged him an insolvent and the learned Vakil relied on the case of Chhatropat Singh Dugar v. Kharag Singh Lachmiram [1917] 44 Cal. 535 and Udai Chand Moity v. Ram Kumar Khara 15 C.W.N. 213 and other cases.

Now, it is to be remembered that all these cases were decided under Act III of 1907; the present case is under Act V of 1920, and, as I shall presently show, the position has undergone a change since the cases were decided under the former Act. It will be convenient to deal with the various Sections of the new Act in order to show that the view taken by the learned District Judge is entirely correct. Section 7 of the Act provides that "subject to the conditions specified in this Act, if a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor as by the debtor and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent". The explanation provides that the presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this Section and that on such petition the Court may make an order of adjudication. It follows, therefore, that an act of insolvency was undoubtedly committed by the appellant as soon as he presented a petition to be declared an insolvent. The conditions mentioned in Section 7 are, so far as we are concerned, specified in Section 10 of the Act which runs as follows:

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 Rs. 500; or (b) he is under arrest or imprisonment in execution of a 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 is subsisting against his property.

Now it is important to point out that Section 6(3) of the Act of 1907 under which the cases to which we have been referred were decided ran as follows:

The debtor shall not be entitled to present an insolvency petition unless (a) his debts amount to Rs. 500, or (b) he has been arrested or imprisoned in execution of the decree of any Court for payment of money, or (c) an order of attachment in execution of such a decree has been made, and is subsisting against his property.

It will be noticed, therefore, that the words "unless he is unable to pay his debts" have for the first time been brought into the Act by the Act of 1920; in other words, it is necessary for the debtor to establishment, that he is unable to pay his debts and, secondly, that either his debts amount to Rs. 500 or is under arrest or imprisonment in execution of a decree of any Court for the payment of money, or an order of attachment in execution of such a decree has been made and is subsisting against his property. These are the conditions specified in the Act, and when these conditions have been fulfilled the Court has no option but to declare the person presenting the application an insolvent.

Now the question is has he satisfied the Court that the conditions specified hi the Act, that is to say, in Section 10 of Act have been fulfilled? Undoubtedly his debts amount to Rs. 500; there is no question about that, but the learned District Judge is not satisfied that he is unable to pay his debts. No doubt in the cases which were cited before us the learned Judges took the view that it was unnecessary for a person presenting such an application to show that he is unable to pay his debts but that is for the obvious reason that the old Act did not require him to show that be was unable to pay his debts. This is a matter which the Court under (sic) new Act has to investigate, and it can only investigate such matters on such materials as are placed before the Court by the party making the application for adjudication of insolvency. The learned District Judge has dealt with the way in which the appellant gave his evidence and has recorded a finding to the effect that he is not satisfied that he is unable to pay his debts.

We may only take one matter which in my opinion is of importance. Certain properties had been recorded in the Record of Rights in the appellant''s name and the value of those properties comes to about Rs. 2,500. The insolvent states that he was merely a benamidar in respect of those properties. It was, in my view, open to the learned District Judge to come to the conclusion that his explanation ought not to be accepted in view of what appeared in the Record of Rights.

Then as regards the list of creditors, the learned District Judge was not prepared to accept the statement of the applicant as to the debts that were not covered by decrees, and I am unable to say that the learned District Judge was wrong in not accepting the statement of the applicant. In my opinion, the decision of the District Judge is right and must be affirmed.

I would dismiss this appeal.

Adami, J.

I agree.