Racharla Narayanappa vs Kondigi Bheemappa and Others

This is an appeal against the order of the District Judge of Anantapur, dismissing the appellant''s petition to be adjudicated an insolvent. The

appellant stated in his petition that he had debts to the extent of Rs. 25,018-4-0 and that his properties were worth about Rs. 10,000; and he

further stated that he was unable to meet his liabilities. The learned Judge dismissed his application on the ground that he was not satisfied, that the

petitioner was unable to pay his debts. When a person presents a petition to be adjudicated an insolvent that petition itself is treated as an act of

bankruptcy under the Insolvency Law. And when he says that his liabilities are more than his assets, that must be taken as some evidence that he is

unable to meet his liabilities.

u/s 24 of the Provincial Insolvency Act where a debtor is the petitioner, he shall be required to furnish such proof as to satisfy the Court that

there are prima facie, grounds for believing the same. u/s 25, the Court shall dismiss the petition if it is not satisfied of his right to present the

petition. In this case, the learned Judge has taken evidence to consider whether some of the debts mentioned in his petition are real debts. Such an

enquiry should not be held for the purpose of considering whether the application of the appellant should be granted or not. An enquiry into the

bona fides of the insolvent should be held when he comes up for discharge and not before. What the Court has to do is to see whether prima facie

the person applying to be adjudicated insolvent is unable to pay his debts. It cannot be said in this case that the appellant was able to pay his debts

at the time When he made his application to the lower Court. On the evidence on record, we do not think there are no prima facie grounds for

believing that the appellant is unable to pay his debts.

We set aside the order of the District Judge and remand the petition for fresh disposal.

We make no order as to costs.