K.R.K.K. Krishnappa Chettiar vs V.V.R. Kasiviswanathan Chettiar and Others

Natesan, J.—This is a revision u/s 75 of the Provincial Insolvency Act by a debtor whose application to be adjudged as insolvent was

dismissed by the learned Subordinate Judge of Sivaganga and was confirmed in appeal by the District Judge, Ramanathapuram at Madurai. Both

the courts were of the view that the present proceeding initiated by the debtor was an abuse of process of court. Earlier the debtor had relied upon

a particular debt as the basis of his personal indebtedness and initiated I.P. 10 of 1959 seeking adjudication. The debt was found to be a fictitious

one and he failed in those proceedings Subsequently and pending those proceedings the creditor in respect of that very debt obtained a decree

against the petitioner herein and applied for and got his arrested. It is in those circumstances that the petitioner came up with another application for

adjudication.

The courts below have failed to appreciate one aspect of the matter. For adjudicating a debtor an insolvent, the court must see whether there is

compliance with the provisions of Section 10 of the Provincial Insolvency Act and whether the debtor has committed an act of insolvency. A

debtor commits an act of insolvency. A debtor commits an act of insolvency even if he petitions to be adjudged an insolvent under the provisions of

the Act. u/s 10 his debt must amount to Rs. 500 or he must be under arrest or imprisonment in execution of the decree of any court for the

payment of money. The decree debt in question exceeds Rs. 500 and that apart he was even arrested in execution. The fact that the petitioner is

seeking to get round the original dismissal of his application is neither here not there is the face of the mandatory provisions of the Act. As pointed

out by the Privy Council in Chhatrapat Singh Dugar v. Kharag Singh Lachmiram, ILR Cal 535: AIR 1916 PC 64 when all the conditions specified

under the Provincial Insolvency Act are satisfied, a debtor is entitled to an order of adjudication. The matter does not depend on the discretion of

the court, but it is a statutory right of which he cannot be deprived by the court on the ground of abuse of process. There is a stage at which the

court could visit on the petitioner its due consequences of misconduct, that is when the application for discharge comes before the court. At the

time of the initiation of the proceeding, the court has only to be satisfied that the essential conditions for adjudication as provided under the Act are

present. In this case, the decree debt exceeds Rs. 500 and the debtor has applied for being adjudicated. That will be sufficient, leave alone the

further fact that he had been arrested also in execution of the decree.

In the circumstances, the revision petition has to be allowed. The petitioner is entitled to be adjudicated. The matter will go back to the

Subordinate Judge at Sivaganga for further orders on adjudication in the light of the observations made herein. The revision is allowed accordingly.

No order as to costs.

Petition allowed.