- (1.) THIS appeal arises two questions, one which is very simple to decide and the other of some importance. The Appellant was adjudicated insolvent on a petition presented on the 28th of November, 1957 by the Respondent basing the Petition on a debt of Rs. 3251. 75 np and urging as the ground of in solvency that the property of the Appellant had been sold in execution of a decree; and the first question that was considered by the learned Judge below was whether there was a subsisting debt on which the Petition could be founded and the question that arose for consideration was whether a certain document constituted an acknowledgment within the meaning of the Limitation Act or an acknowledgment within the meaning of Art. 1 of Schedule 1 of the Stamp Act. On the decision of this question depended whether there was a subsisting debt or not. Now, the document is a statement of account and it sets out the balance due to one Pramodchandra Chimanlal Mody, the Respondent, from the firm of C. Jivanlal and Co. in which the Appellant was a partner There was an account of the Respondent in the books of the firm and the statement corresponds to the balance that appeared to the credit of the Respondent in the books of the firm. What is urged by the Appellant is that inasmuch as this document was not stamped, it is inadmissible in evidence and if the docu ment is ruled out, the debt due by the firm of C. Jivanlal and Co. in which the Appellant was a partner, is barred by limitation. Now, the question as to whether the document falls witnin Art. 1 of Sch. 1 of the Stamp Act depends, as the article) itself says, on the decision whether the document was given in order to supply evidence of a debt, and numerous authorities, which, it is not necessary to review, have clearly laid down that that must be the paramount intention of the person giving the document and the question that the Court has to ask looking at the document and looking at the surrounding circumstances is whether the document is given in order to supply a statement of account or whether the document is given in order to supply evidence of a debt. The learned Judge has held on consideration of all the facts that this particular document does not fall within Art. 1 of Sch. 1. No authority can help to construe this particular document. Each decision must turn on the facts of its own case; and we have here a very important circumstance and that circum stance is that accounts of the farm of C. Jivanlal and Co. , as admitted by the appellant himself, were made up every year after Diwali and the Appellant says : "in due course the account of moneys brought in by the said Chimanlal Tricumlal Mody, a partner of the firm in the name of his son pramodchandra Chimanlal Mody was made up after Asho, Vadya 30th Sanwat year 2011 i. e. 14th of November, 1955, and Khata acknowledgment was sent to him showing the amount due. " So, the case of the Appellant himself is that ac counts of the firm were made up from time to time, that one of the partners, who is the father of the Respondent, brought in money in the name of his son, the Respondent, and the account of moneys brought in by the father of the Respondent was made up at the end of every year and a statement supplied to the Respondent. Under these circum stances, it is difficult to take the view that the document, which we are considering, constitutes an acknowledgment within the meaning of the Stamp Act and we agree with the learned Judge that this is an acknowledgment within the meaning of the Limitation Act, that limitation is saved by this document and the Petition was well founded to the ex tent that it relied on this document.
(2.) THE second question is whether the debtor committed an act of insolvency and the act of in solvency relied upon is the one set out in S. 9 (1) (e) of the Presidency Towns Insolvency Act: "if any of his property has been sold or attached for a period of not less than twenty-one days in execution of the decree of any Court for the payment of money. " In this case, we are concerned with the first part of this sub-section "if any of his (debtor's) property has been sold" and the relevant facts with regard to this aspect of the case are that one Balubhai Vadilal and Co. , obtained a decree against the Appellant for Rs. 11,444/- in the City Civil Court Suit No. 2676 of 1955. In execution of that decree, the immoveable property of the Appellant situated at Ghod Bunder Road, Andheri, was attach ed on 29-11-1956; the warrant of sale was issued on 13-3-1957 and the proclamation of sale was issued on 11-10-1957 and the property was sold by public auction on 18-11-1957 and knocked down to the highest bidder. The insolvency petition, as already pointed out, was presented on 28-11-1957. Now, the contention of Mr. Desai is that an act of in solvency has not been committed because the property has not been sold. His submission is that for 1959 J. C. Mehta v. P. C. Mody (Chagla C. J.) [prs. 2-5] Bombay 291 the purpose of this sub-section, the property can only be said to have been sold if the sale has been confirmed, as provided under the Civil Procedure Code, O. 21, R. 92. There is a similar provision both in the High Court Rules and the City Civil Court Rules about confirmation of a sale. Now, what is said is that till the sale is confirmed under O. 21, R. 92, the sale is an inchoate sale. It is open to the person, whose property has been sold, to apply to set aside the sale of the property under Rr. 89 and 90 and till his applications are disposed of, the sale does not become absolute. In this case all that had happened was that the Sheriff had knocked down the property to the highest bidder, but the sale never became absolute, it was never confirmed and the property did not vest in the purchaser. Therefore, what was urged was that there was no act of insolvency. It was contended that, under S. 9 (e) of the Insolvency Act, it is only when the sale becomes absolute that an act of insolvency is committed.
(3.) NOW, before turning to the authorities, looking at the language used by the Legislature, what the Legislature has stated is: "if any of his property has been sold. " Now, the sale of a pro-party and the sale being confirmed or becoming absolute are two different concepts which are well recognised under the Indian law. The Civil Procedure Code, O. 21, R. 89 uses language identical with S. 9 (e) of the Insolvency Act. Rule 89 says: "where immoveable property has been sold in execution of a decree", any person, either owning such property or holding an interest therein, may apply to have the sale set aside. Therefore, the Legislature clearly recognises that there is a sale of property which is antecedent to its confirmation or its becoming absolute under R. 92. The same is the language used in R. 90 where an application can be made to set aside a sale on the ground of irregularity or fraud. Here also, the language used is: "where any property has been sold in execution of a decree" and the concept of the sale becoming absolute arises when you come to O. 21, R. 92. Therefore, as we have just said, these are two entirely separate legal concepts, - the sale of an immoveable property and the sale becoming absolute. Now, if the Legislature intended that the act of insolvency should only occur when the sale became absolute, there was no reason why the Legislature should not have used appropriate language to convey that intention. The Legislature has advisedly used the expression that the property has been sold and not when the sale has become absolute or has been confirmed. The reason behind this language is that, for the purpose of insolvency, the Legislature is concerned more with the position of the debtor rather than the rights of the purchaser under the sale. Mr. Desai says that till the sale becomes absolute, the property does not vest in the purchaser. That idea is to be found in S. 65 of the Civil Procedure Code: "where immoveable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when the property is sold and not from the time when the sale becomes absolute. " So that although under S. 65 the vesting can only take place, if the sale has become absolute, the time of vesting is not when the sale became absolute but from the time when the property is sold. But, we are not concerned with the rights of the purchaser or with the vesting of the property in the purchaser. What we are concerned with and what the Insolvency Act is concerned with is either the acts of the debtor or his financial condition. It is true, as pointed out by Mr. Desai, that an act of insolvency may be voluntary act of the debtor or in some cases it may be the result of the acts of others and this is one of those cases where it is not the act of the debtor which constitutes the act of insolvency. It is his creditor who brings his property to sale which results in the act of insolvency. But even so, the very fact that the debtor has permitted his property to be sold may be looked upon by the Legislature as a sufficient ground for taking the view that he has committed an act of insolvency. Normally, a solvent person does not permit his property to be sold at a public auction and to be knocked down to the highest bidder. It is only when the person is in a very embarrassing financial circumstance that he allows his property to be sold at a public auction and therefore, it is not surprising and on the contrary it is natural that the Legislature should have considered the selling of the property in the sense of its being knocked down to the highest bidder as an act of insolvency, and not the sale becoming confirmed or becoming absolute under O. 21, R. 92 of the Civil Procedure Code. O. 21. R. 92 is more concerned with the rights of the purchaser. Section 9 (e) of the Insolvency Act is more concerned, if not with the act of the debtor with his condition and position, and when we realise that the distinction between a sale and a confirmation of a sale becomes clear.;