RANA NARENDRASINHJI JORAWARSINHJI Vs. DIPCHAND GATORBHAI AND CO A REGISTERED PARTNERSHIP FIRM
LAWS(GJH)-1988-1-11
HIGH COURT OF GUJARAT
Decided on January 19,1988

RANA NARENDRASINHJI JORAWARSINHJI Appellant
VERSUS
Dipchand Gatorbhai And Co A Registered Partnership Firm Respondents


Referred Judgements :-

M/S. DAVID SASSON AND CO. LTD. [REFERRED TO]
CHANAHALU SIVA REDDI AND ANR. V. OFFICIAL RECEIVER BELLARY AND ORS. [REFERRED TO]
FIRM MUKUND LAL VEERKUMAR VS. PURUSHOTTAM SINGH [REFERRED TO]
STRUCTEE MECH INDIA PARTNERSHIP FIRM VS. BHARATKUMAR PAHLAJRA [REFERRED TO]


JUDGEMENT

R.A.MEHTA - (1.)he main question involved in this appeal is whether the appellants-debtors who are partners alongwith respondent Nos. 7 8 and 9 can be said to have committed any act of insolvency and could be adjudged insolvent.
(2.)The respondent Nos. 1 to 5 being creditors of a partnership firm in the name of M/s. Labhshanker Jorawarsinh at Limbdi had filed an Insolvency Petition No. 4 of 1970 alleging that the respondents debtors had committed acts of insolvency and therefore prayed that the six partners be adjudged insolvents. In the insolvency petition it was alleged that the defendants were carrying on business in partnership as commission agents for cotton and cotton pods and ginning and pressing cotton. It is not in dispute that originally the partnership consisted of only two partners namely Jorawarsinh Chandrasinh and Acharya Devsbanker Jadavji having equal shares. That partnership deed dated 1-6-1964 is at Ex. 216. It also provided that in case of death of any partner the firm would not stand dissolved but the heirs of the deceased partner would become automatically partners of the firm. I: July 1969 one of those two partners namely Jorawarsinh Chandrasinh expired and a new partnership was constituted by a partnership deed dated 29-7-1969 (vide Ex. 217) and three sons of Jorawarsinh namely Narendrasinh Jorarvarsinh Dilawarsinh Jorawarsinh and Harisinh Jorawarsinh (the three appellants) were taken as partners and 50 paise share of deceased Jorawarsinh was divided in equal three shares among the three sons. That partnership deed also provided that in case of death of any partner the firm would not stand dissolved but the legal heirs of the deceased partner would automatically become partners in place of the deceased partner On 20-8-1970 another partner Devshanker died and it appears that by virtue of the aforesaid clause in the partnership deed his three sons were taken and continued as partners of the firm.
(3.)The insolvency petition further alleged that after the death of Devshanker his legal heirs who were taken and continued as partners were carrying on the business in the same name and title. It further showed that the five creditors pointed out their individual claim totaling to Rs. 1 13 366 and by addition of other creditors the total debts of the firm were said to be Rs. 4 12 0 It is further alleged that the defendants had committed acts of insolvency by defendant No. 3 departing from his dwelling house and leaving his usual place of business on 14-10-1970 with an intention to defeat or delay the claim of the creditors. From that date i.e. 14-10-1970. the business of the firm was completely closed and it was closed with a view to defeat the delay the claim of the creditors. It is further alleged that the petitioner Nos. 2 and 4 had approached defendant No. 2 and the defendant No. 2 had stated in categorical tenants for himself and on behalf of the firm that the debts of the firm were very large and they were not able to discharge the debt even at a later stage and neither the firm nor the partners bad any money to make payments to the creditors and that neither the firm nor the partners had any intention to make any payment to any individual creditor in any circumstances and that they would not make the payment and the creditors may do whatever they liked. Similarly when other creditors approached the defendant Nos. 2 and 6 they had also given the same reply that they would not make any payment and the creditors may do anything they liked and thus the defendants had clearly told and given notice that they had suspended the payment of their debts. These are the averments in para 9 of the insolvency petition. In para 10 it is further stated that the Chief Munim of the firm Chhagandas Popatlal had also departed and absconded from the usual place of business and when he returned the applicants had met him and he had told them that the firm was unable to make any payment to the creditors and that the creditors may do whatever they liked. In para 11 of the insolvency petition it is stated that thereafter the applicants bad total defendant Nos. 2 and 5 that they would have to face the legal proceedings. On this the defendant Nos. 2 and 5 had expressed a desire to have a settlement with the creditors and thereupon on behalf of the firm and the partners (the debtors) defendant Nos. 2 and 5 and Mehtaji Chhabildas and on behalf of the creditors the applicants had gathered together at the place of Dipchandbhai and there were proposals and counter proposals. The defendant Nos. 2 and 5 had initially proposed payment of 60% of the debts and ultimately it was raised to 65% and the remaining 35% was to be set off. Thereafter drafts for the settlement were prepared. However ultimately the settlement could not be finalised because no initial payment in cash was made. In this talk of composition deed the defendant Nos. 2 and 5 had participated on behalf of the firm. Thus it is alleged that in the preceding three months the defendants-debtors had committed acts of insolvency and therefore it was prayed that the defendants be adjudged insolvent.
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