N.M. Rajesh vs The Official Assignee

R. Subbiah, J.—This Petition has been filed under Order 2, Rule 1 of Insolvency Rules read with Section 38 of the Presidency Towns of Insolvency Act, seeking an unconditional discharge to the Applicant/Insolvent. The Applicant has been adjudicated as an insolvent on his own Petition, by an Order dated 3.4.2008. Subsequent to the Order of Declaration declaring him as an insolvent, he filed his Schedule of affairs dated 15.7.2008 disclosing the liabilities to the extent of Rs. 24,56,017/-, property for Rs. 3,00,000/-, household furniture for Rs. 19,100/- and thus, leaving a deficiency of Rs. 21,36,917/-.

After service of Notice of adjudication to all the Creditors, the Insolvency Petition was filed for public examination. Notice to all the Creditors was sent and public examination of the insolvent was held on 2.12.2009 and completed on 9.12.2009. Notices were sent to all 6 Unsecured Creditors on 10.6.2008. So far, one Creditor has filed his claim before the Official Assignee for a sum of Rs. 5,26,689/- and the same is pending for enquiry. Hence, Notice in this Application in A. No. 247 of 2013 was sent to 6 Creditors on 6.1.2014 and on 17.202014 by Registered Post with acknowledgment due, in which, 4 Notices were served and acknowledgements were received and two Notices were returned with Postal endorsement ''Left''. But, none of the Creditors have set their objection against the discharge till date.

The Official Assignee, in his report, has raised an objection stating that in the event of admission of one claim for Rs. 5,28,689/- with the available amount of Rs. 16,000/-, a dividend at the rate of three paise in a rupee can be paid. The Insolvency Estate is not in a position to provide a dividend of 25 paise in a rupee as provided under Section 39(2)(1) of Presidency Towns Insolvency Act, 1909, which is a pre-requisite for granting a discharge.

The objections raised by the Official Assignee against the grant of absolute discharge are directly dealt with by our High Court in the judgments reported in C.D. Desikachari v. Official Receiver, Chingleput and another, AIR (30) 1943 Mad. 26 (DB) and T.P. Kunhiraman, Proprietor, International Typewriter Emporium v. The Official Assignee, Madras, 1995 LW 442.

The principles laid down by our High Court in the judgments referred to above are that--

(i) The proceedings in insolvency shall be dealt with as expeditiously as possible and the Creditors shall be satisfied as expeditiously as possible form the property of the insolvent and that the insolvent shall then be free to start life again unburdened by his debts.

(ii) The law of bankruptcy does not expect that the debtor should always be the slave of the Creditors, but he has to be released at the appropriate time by taking into consideration several factors referred to in Section 39 of the Presidency Towns Insolvency Act.

(iii) It is the discretion of the Court to refuse discharge or suspend discharge for a specified time or grant conditional discharge, having regard to totality of all the factors enumerated in Section 39(2).

(iv) The absolute Order of Discharge does not put an end of the administration of the insolvent''s property.

(v) It is for the Court to decide whether the property should, even after annulment of adjudication, continue to vest with the Official Receiver or not. Whether the administration of the particular insolvency is brought to an end by the Court''s Order of granting the absolute Order of Discharge and is depending upon the nature of the Order made.

(vi) Once there is an unconditional absolute Order of Discharge, the Official Receiver has no longer power to bring any of the properties of the ex-insolvent to sale and any dealing of the property by the Official Receiver in a given situation is against law and is liable to be set aside.

The relief sought for herein, if viewed in the light of the principles drawn form the Authorities cited above, the same would compel this Court to grant the relief as sought for herein.

Here is the case wherein the report of the Official Assignee is to the effect that nothing remains to be done on the part of the Debtor-insolvent and the insolvent did not commit any act which dis-entitle him to seek any Order of Discharge. Most of the Creditors are not interested in making any claim till date. The one Creditor, whose claim is pending disposal before the Official Assignee is likely to get dividend of three paise in a rupee. The relevant provisions of law does not lay down that until the dividend available is minimum 25 paise in one rupee to be paid to the Creditor, no Order of Discharge can be sought for.

That being so, this Court, by applying the views of our High Court in the earliest judgments referred to above, is inclined to relieve this stigma attached to the insolvent and unconditionally discharge the insolvent to lead afresh life unburdened by his debts. The Application is hence, ordered as prayed for.

Witness, the Hon''ble Thiru Sanjay Kishan Kaul, Chief Justice, High Court at Madras, aforesaid this the 13th day of October 2014.