Linga Reddy Veera Reddy vs S. Govindaraju Gouda and Others

B. Veerappa, J.

This Civil Revision Petition is filed against the order dated 19.3.2013 made in Misc.Case.50/20111, allowing the petition under Section 5 of the Limitation Act, treating the same as one under Order 9 Rule 4 CPC, restoring Insolvency Case (I.C.) No. 34/2013 to file.

The present petitioner filed I.C. 34/2013 before the Principal Civil Judge, Bellary, under the provisions of Sections 7 and 10 of the Provincial Insolvency Act, 1950, seeking for declaration to the effect that the petitioner should be adjudged as insolvent and grant time to apply for discharge and the said petition was adjourned for the third time for taking steps and it was dismissed for non-prosecution on 12.06.2008.

Though the petitioner did not prosecute the said proceedings, the respondents-1 to 18 who are creditors filed Misc.50/2011 under Section 151 CPC to restore the case, by contending that they are the agriculturists and they have come from Kolagal village, which is not developed. They are illiterates and not in a position to understand the intricacies of law. In sum and substance they are not worldly wise. Respondent No. 1 is also an agriculturist, but of late started venturing into the business and commercial activities and well versed with the city life and developed many contact business and commercial activities in and around Bellary city. The 1st respondent instigated petitioners to lend certain amounts, thereby could develop his business and regularly pay interest on the amount lent by the petitioners. Petitioners believing the words of the respondent selling the valuable movable property according to their ability. In the year 2003 the dreams of the petitioners were shattered when they received notices in IC.34/2003 initiated by the 1st respondent. As 1st respondent become indebted nearly Rs. 25 lakhs as shown in the petition and he also shown his agricultural lands in the petition. He requested the court to sell his agricultural lands and distribute the amounts to the petitioners. Petitioners have engaged advocates and appeared in the proceedings when they received the notice through the court. Advocates for the petitioners informed them that the insolvency proceedings are bound to prolong for number of years and it was also informed that the property of respondent will be sold in public auction and the amounts will be distributed, for that petitioners kept quiet. Now they came to know that the agricultural lands shown in ''B'' schedule in I.C.34/2003 is acquired by KIADB and price amount will be paid to the persons. Petitioners recently came to know that I.A.34/03 was dismissed on 12.6.2008 for non-prosecution. Immediately, they applied for certified copies. Hence seek for setting aside the order of dismissal of Insolvency Petition. Further contended delay in filing petition was not intentional, but under the impression insolvency case will ensure to the benefit of the creditors of the present petitioners. Advocates were also under the impression that the petitioners could have filed suits in civil courts. The land shown in the schedule in I.C.34/2003 were sought to be acquired by the 5th respondent KIADB and he is liable to account to all the creditors and hence he is also made a party to the petition. Hence seeks to restore I.C. No. 34/2003.

The said petition was contested by the present petitioner, by filing objections, disputing the allegations made in the petition and admitting engaging of advocates in the proceedings and also admitted that the acquisition of land in B-schedule in I.C. No. 34/by the KIADB and also release of amount to the persons who have title to the property and also denied dismissal of I. C. 34/2003. It is stated that the applicants/petitioners before trial court in the Miscellaneous proceedings are fully aware of the fact of dismissal of I.C.34/03 and they have not taken steps to get I.C.34/03 restored to file in time and there is delay of 39 months 15 days in filing the petition, etc. Therefore, sought for dismissal of miscellaneous petition.

The respondents 2 and 3 in Miscellaneous Petition also filed objections as well as petitioners filed I.A.1 under Section 5 of the Limitation Act for condonation of delay.

Based on the material documents and pleadings, the learned trial Judge framed the following issues:

"1. Whether the petitioners have made out justifiable grounds for delay of 39 months and 15 days in filing the petition and for restoration of I.C.34/2003 by setting aside the order dated 12.6.2008?

Whether the petitioners made out justifiable grounds for setting aside order passed on 12.6.2008 in I.C. No. 34/2003?

What Order?"

The 1st petitioner in Miscellaneous Petition was examined as PW.1 and marked documents as Ex. P.1 and P.2 and the 1st respondent i.e. the present petitioner filed affidavit evidence and examined R.W.1.

After considering the objections, the learned Principal Judge of Family Court was pleased to allow the said application, treating the same as one filed under Order IX Rule 4 CPC and restored I.C.34/2003 to file. Therefore, the present revision petition is filed by the petitioner.

Sri. V. Bhimakkanavar, learned Counsel for petitioner, has contended that the very application for restoration at the instance of respondents 1 to 8 is wholly erroneous and not at all maintainable. Since he had filed application under the Insolvency Act, he was not desirous of continuing the petition. Therefore, learned Judge ought not to have restored the said Insolvency case. Further, since there was delay of 39 months 15 days, the trial court ought to have rejected the I.A.1 for condonation of delay. Therefore, he sought for setting aside of the impugned order.

Sri. Gode Nagaraj, representing respondents 1 to 7 and 10, 11, 13, 17 and 18 has contended that they are creditors and in order to protect their interest they have filed application u/s. 151 CPC and the learned Judge has treated the said applications as one under Order 9 Rule 4 CPC and passed the impugned order, the same is in accordance with law. Accordingly, sought to justify the impugned order.

I have heard the learned Counsel for the parties and perused the records.

The fact that the present petitioner has not disputed that respondent Nos. 1 to 18 are creditors and it is also not in dispute that before the dismissal of Insolvency Case (I.C) No. 34/2003 for default on 12.06.2008, respondent Nos. 1 to 18 were not heard. The specific case of respondent Nos. 1 to 18 in Misc. Case No. 50/2011, as can be seen from the evidence of PW-1, that they were not aware of the dismissal of Insolvency Case (I.C) No. 34/2003 and they only came to know through their advocates. It is an admitted fact that the petitioner instituted Insolvency Case (I.C) No. 34/2003 to declare him as insolvent and for prorata payment of the amounts due to the creditors by selling his assets i.e., agricultural lands shown in the petition and it is also admitted that the insolvency petition came to be dismissed for default. The dismissal of Insolvency Case (I.C) No. 34/2003 for default affected not only the interest of the debtor, but more of the interest of creditors, who are the respondents in Insolvency Case (I.C) No. 34/2003, than the interest of the debtors-respondent Nos. 1 to 20.

The trial court, based on the evidence of PW-1 and RW-1 and material documents, recorded the finding that the certified copy of the order sheet in Insolvency Case (I.C) No. 34/2003 indicates, dismissal of the petition for default affected the interest of creditors i.e., respondents in Insolvency Case (I.C) No. 34/2003 and the said order was passed without hearing the respondents, since, the same affects the interest of the creditors and no notice was issued to them. In fact, the case was posted on 12.06.2008 for recording of evidence of the present petitioner. For failure on the part of the present petitioner to tender evidence, the petition could not have been dismissed by the Court in toto as the interest of the respondents suffered by the said order of dismissal for default. It is further observed that the Court ought to have afforded an opportunity to respondent Nos. 1 to 18 before passing the order. That has not been done. For the fault of the present petitioner as well as on the part of the Court, the petition came to be dismissed without even notice and an opportunity to the respondents whose interest will be affected. Taking into consideration the entire material on record, the Principal District Judge has allowed the petition filed under Section 151 of CPC, treating it as one under Order IX Rule 4 CPC and restored IC No. 34/2003 on the file. Therefore, the petitioner has not made out any ground to interfere with the impugned order and has not stated as to what is the prejudice to be caused to him if Misc. Petition is allowed by providing an opportunity to both parties.

In that view of the matter, no ground is made out to interfere with the impugned order passed by the Civil Judge by this Court exercising the power under the provisions of Section 115 of Code of Civil Procedure.

Accordingly this CRP is dismissed.