A.K.SARKAR, - (1.) THE Judgment of the court was delivered by
(2.) THIS case has had a somewhat curious course inasmuch as the two lower courts1000of appeal were under a clear misapprehension as to the finding of a fact by the trial court. It arises out of an application lor adjudication of certain persons (hereinafter called the debtors) as insolvents. The petition in insolvency was by some of the respondents as the creditors of the joint family said to be constituted by the debtors. It was filed on or about 19-5-1950. The relationship between the debtors inter se will appear from the genealogical table set out below: JUDGEMENT_999_AIR(SC)_1958Image1.jpg The petition stated that the debtors constituted a joint family which carried on three separate businesses under the names and styles of Bhowani Pershad-Nanna Mal, Bhowani Pershad Shiv Shankar and Rama Electric Works. The case made in the petition was that Bhowani Pershad was the karta of the joint family and the other members of the family were all karkuns or managers of its businesses and affairs. The petition set out five acts of insolvency of which we are concerned only with one, all courts below having held that the others had not been proved.The act of insolvency with which we are concerned was stated in the petition in the following terms: "The respondents have for about the last one month absolutely stopped payment of debts and have informed all the creditors severally as well as jointly of this fact." This act of insalvency was sought to be established by calling witnesses to prove that on 18/4/1950, some of the creditors along with certain other persons met Bhowani Pershad and Shiv Shankar and demanded payment of their dues whereupon the latter told them that they had no money and could not make any payment and the creditors could do what they liked. With regard to this act of insolvency the trial court stated that it did not believe that such a thing ever happened and that it had not been proved that the debtors had given notice that they had suspended payment of their debts. It also observed that, "Even if it be assumed for the sake of argument that Shiv Shankar had stated that he had no money at the time when the demand was made it does not amount to an act of insolvency." The trial court therefore held that the facts alleged had not been proved & even if they had been they would not have amounted to a notice of suspension of payment of debts within the meaning of S. 6(3) of the Provincial Insolvency Act, that is to say, the act of insolvency alleged. In this view of the matter the trial court dismissed the petition in insolvency. The petitioning creditors went up in appeal to the District Judge, Kamal at Gurgaon from the judgment of the trial court. It appears from the judgment of the learned District Judge that he thought that the trial court had believed the evidence led by the petitioners as to the act of insolvency referred to above but had dismissed the petition in the view that the facts established by that evidence did not prove more than a declaration of inability to pay, and did not therefore amount in law to an act of insolvency. The learned District Judge went into the question of law and came to the conclusion that the trial court was wrong in its view of the law and that the facts, which he thought: the trial court had found to have been established, amounted to an act of insolvency within the meaning of the statute. The learned District Judge was obviously wrong in thinking that the trial court had found that the evidence led by the petitioning creditors had established the incident of 18/4/1950 mentioned earlier. In fact the trial Court had come to quite the opposite finding, that is to say, it had found that the incident had not been proved. The matter was then taken to theHigh court at Simla by Kaushal Kishore andthe other debtors. The High court does notappear to have noticed the error into whichthe District Judge had fallen. The HighCourt stated in its judgment that "The Insolvency court held, that the words used bythese respondents did not amount to an actof insolvency and that mere inability to payor refusal to pay was not an act of insolvency". In this the High court was in error forthe trial court had not held that the debtorshad used any words at all. The High courttherefore had fallen into the same error asthe District Judge as to the finding of factby the trial court. The High court itselfhowever referred to various parts of the evidence and came to the conclusion that theevidence established facts which in law amounted to a notice of suspension of paymentof debts and therefore there was an act ofinsolvency. In the result it confirmed theorder of the District Judge. From this judgment Kaushal Kishore,Brij Kanwar, Kanwar Kishore & Bhowani1001Pershad have appealed to this court withleave granted under Art. 136(1) of the Constitution. Learned Counsel for the appellants hascontended that die evidence led did not establish any of the facts which the petitioningcreditors set out to do. He pointed out that the trial court which heard the evidence,did not believe the witnesses called by the petitioning creditors and that the court offirst appeal did not examine the facts itself but proceeded on an erroneous impressionthat the trial court had believed the evidence. In both these contentions learnedcounsel for the appellants was clearly right. In our view, for the reasons earlier statedthe High court was under the same misapprehension as the District Judge. This undoubtedly affected the examination of theevidence by the High court itself. We have, therefore to examine the evidence ourselves.
(3.) THE fact which the petitioning creditors set out to establish was the incident of18/4/1950. THE petitioning creditors sought to prove that on that date Mohan Lal, Gujjar Mal, Nand Kishore, Ram Dev and Murari Mal and some others went to the debtors' shop of Bhowani Pershad-Shiv Shanker and there met Bhowani Pershad and Shiv Shankar and asked for payment of the monies dueto them and thereupon Shiv Shankar and Bhowani Persliad stated that they had nomoney and would not pay and that the creditors could do whatever they liked. THEquestion is whether this incident happened. THE first witness produced by the petitioning creditors on' this point was Phul Chand son of Kidar Nath. He gave evidence on4/5/1951. He said his wife's brother Umrao Singh was a creditor of the debtors. Abouta year ago he made a demand from the debtors but did not get any reply. He does notsay which of the debtors he met. Neither does he say that any of the debtors said anything in reply to the demand for payment. THErefore the evidence of this witness doesnot establish the statements alleged to have been made by Bhowani Pershad and ShivShanker. He does not say that any one else was with him when he is said to have madethe demand. With regard to this witness the trial court remarked that he was an interested witness. THEre is nothing to show that this remark was not justified. THEHigh court stated that this witness had said that he was told that the debtors were notmaking any payment. THE High court was obviously in error in this. All that the witness appears to have stated is as follows: "THE respondents are not making payment to the creditors nowadays:'' THE witness therefore did not intend to say that he was told by the debtors that theywere not making any payments to their creditors. He only intended to convey that infact at or about the time he was giving evidence which was a year after the date ofthe alleged incident, the debtors were not making payment to their creditors. Withthis we are not concerned. THE High court also remarked that the witness was not crossexamined on this part of his evidence. We are in agreement with learned counsel forthe appellants that there was nothing to cross-examine. THE absence of cross-examination does not establish the incident. THE evidence of tins witness does not, in our view,establish tine facts on which the petitioning creditors rely. Indeed learned counsel forthe petitioning creditors conceded that this witness was not speaking about the incidentof 18/4/1950, at all. The next witness called by the petitioning creditors is also of the name of PhulChand but he is the son of Sham Sunder. He stated that in April 1950, Mohan Lal, GujjarMal, Nand Kishore, Ram Dev and Murari Mal and he himself went to Bhowani Pershad Shiv Shankar, which obviously meant the shop of that name, and asked Shiv Shankar to pay but Shiv Shankar replied that he had no money with him at that time and thatthe creditors could do whatever they liked. This witness stated that he was a Chaudhryof Anaj Mandi at Rewari and a member of the Trade Conciliation Committee of thatplace. With regard to this witness the trial Judge stated that he was a man of ordinarystatus and did not appear to be above approach or corruption. From the materials onthe record we are unable to say that this remark of the trial Judge was not justified.However that may be, it would appear that the incident spoken to by him could not havetaken place if the other Phul Chand was right for the latter said that the shop ofBhowani Pershad Shiv Shankar had been closed for six years prior to May 1951. Thiswitness did not mention the presence of Bhowani Pershad. Then we come to Balmukand. He also said that several people went to makethe demand and Shiv Shankar stated that there was no money at that time, and thatthe creditors could do what they liked. He definitely stated that Bhowani Pershad wasnot present when the demand was made. The High court erroneously thought that this witness had said that Bhowani Pershad was present. ;