P.P.V.C.T. Chidambaram Chettiar vs Daivani Achi

Cornish, J.—The petitioner before me was adjudicated insolvent on the consolidated petitions of six creditors. The act of insolvency was a

transfer of property effected by Ex. A in favour of four persons creditors and relations which transfer was alleged to be a fraudulent preference.

The document Ex. A was described as a Security Bond. It recited the petitioner''s inability to pay the amount due to them, and gave them landed

property as security.

In determining whether this was a fraudulent preference the lower Court took into consideration evidence of other transfers made by the

petitioner in favour of other relations who were likewise creditors. It was contended that in so doing the lower Court misdirected itself. Exhibit A is

dated October 20, 1932. Six sale deeds in favour of the petitioner''s wife for an aggregate amount of Rs. 67,000, were proved to have been

executed by him between May 23, 1932, and February 8, 1933. Besides there was a conveyance to petitioner''s daughter of property for Rs.

47,000 on December 2, 1932, and on the same date a conveyance to his brother''s son for Rs. 25,000.

I think that proof of these other transfers was relevant to the question of the petitioner''s intention in executing Ex. A. In re Ramsay (1913) 2 K

B 80 : 82 L J K B 526 : 108 L T 495 : 20 Manson 15 : 29 T L R 225 it was held that evidence of other acts of preference committed by the

debtor shortly before and shortly after the particular act of preference alleged as an act of insolvency was admissible. Mr. Justice Phillimore said:

I think that, when one has to look into the mind of the bankrupt any act of his at the time or about the time, any matters in pari materia may be

looked into to see what was passing in his mind.

For the same reason I hold that this cluster of. other transfers in favour of his relations in the present case are so similar and sufficiently close in

point of time to Ex. A that they were rightly admitted as evidence. Then it is said that the release deed Ex. 1 executed by the transferee of EX. A

indicated that the petitioner had no intention to favour these creditors. But Ex. 1 was given only after the filing of the Insolvency Petition and I think

that this circumstance discounts any value it might otherwise have had in this direction.

Lastly, it has been streneously contended that the Insolvency Court ought to have exercised its power in favour of the debtor u/s 25, Provincial

Insolvency Act, because the Court should have been satisfied that the debtor was able to pay his debts. If a balance of assets over liabilities is

alone enough to prove solvency this argument would succeed. In this schedule the debtor showed his assets at Rs. 11 lakhs and liabilities as Rs. 6

lakhs odd. The lower Court was not apparently, entirely satisfied with the correctness of the debtor''s valuation. But the debtor in his evidence

stated that it would take him 18 months to realise and pay his creditors. It seems to me that the scheme of Section 25 is that a debtor, in order to

escape adjudication on a well-founded petition and act of insolvency must satisfy the Court that he has a present ability to pay creditors, and it is

not sufficient for him to show that he will be able to pay in the more or less distant future. In Pratapmal Rameshwar Vs. Chunilal Jahuri, it was held

that Section 13 (4)(b) of the Presidency Insolvency Act which is not materially different from Section 25(1) of the Provincial Act, meant that the

debtor is not so embarassed that he cannot meet his debts in the ordinary way by making legal tender and discharging his debts. This, the petitioner

before me, was, on his own evidence, unable to do.

In my judgment, therefore, this Revision Petition fails and is dismissed with costs. The creditor in C.R.P. No. 1020 will also get his costs out of

the estates.