- (1.) THIS is a creditor's first appeal from order directed against the order of the Insolvency Judge rejecting his application to declare the deceased respondent Smt. Jawala Devi as an insolvent.
(2.) THE appellant had moved an application under S. 9 read with S. 13 (2) of the Provincial Insolvency Act (hereinafter referred to as the Act) on the allegation that a loan of Rs. 15,000/- had been advanced to her under a pronote and receipt on 13th April, 1970 but on 21st Oct. l970 she transferred her entire immoveable property in favour of her near relations for a grossly inadequate sum. THE purpose of such transfer was to defeat and delay the creditors. It was further alleged that after the date of transfer, the debtor had been secluding herself in such a manner so as to deprive her creditors of the means of communicating with her. This application was moved on 4th Nov. 1970. The debtor contested the petition on several grounds and denied having taken a loan of Rs. 15,000/ -. She denied having transferred her immoveable property for inadequate consideration or with any such motive as alleged. She asserted that she had not committed any act of insolvency within the meaning of Sec. 6 of the Act. Some other pleas were also taken but we are not concerned with the same in this appeal. During the pendency of this petition, twice the matter was decided ex parte against the debtor but on each occasion applications to set aside the ex parte order were allowed and ultimately the matter was decided on contest between the parties.
(3.) THE sale deeds, which are three in number, were actually executed by the debtor on 21st Oct. , 1970. THEy were, however, registered in the office of the sub-registrar on 21-11-1970. In the intervening period on 4th Nov. , 1970 a petition under S. 9 read with S. 13 (3) of the Act had been moved. THE Court below held that since the effective date for any sale-deed is the date of registration, the cause of action for making such an application had not arisen till 21st Nov. 1970, when the three sale deeds were actually registered. THE petition having been moved on 4th Nov. 1970, the same was held to be premature. THE court held that up to 4-11-70 no act of insolvency had been committed by the debtor and as such the application was not maintainable. Although it held that a loan of Rs. 15,000/- had been advanced to the debtor on 30th April, 1970 yet it went on to hold that the petitioner had failed to prove that the debtor had either absented or secluded herself so as to cut off all means of communication with her. In fact in his statement recorded at the time of hearing the petitioner did not even make a mention to this effect. In view of this the learned Insolvency Judge dismissed the application. Aggrieved by the decision, the creditor, had come up to this court for redress. Shri R. K. Jain, learned Counsel appearing for the appellant has very strenuously urged that the statement of the petitioner which was recorded at the time when the ex parte hearing took place should have been looked into by the Insolvency Judge. He urged that when the ex parte proceedings took place for the second time, the petitioner had clearly stated that the respondent had secluded herself and was avoiding communication with her creditors. Relying on this part of the ex parte statement dt. 31st Aug. , 1974, it is urged that the Court below had wrongly held trial there was no evidence on the record to prove seclusion by the debtor. He has in this connection referred to a decision of Madras High Court in (AIR 1956 Mad 633 ). where a Division Bench of that Court was dealing with a defendant's appeal against a decree awarded to the plaintiff on the basis of plaintiff's statement recorded at the time of ex parte hearing which was subsequently set aside. That case, however, is clearly distinguishable because after the ex parte decree was set aside and the case cane up for hearing, the defendant absented himself once again. The plaintiff wanted that his earlier statement itself may be relied upon for granting ex parte decree which the Court did. On appeal, the defendant urged that such a statement had no legal sanctity and as such the decree should be set aside. The court, in these circumstances held (at p. 634) : "the Plaintiff was not prevented from choosing to treat the evidence given by him at the ex parte trial as evidence after the ex parte decree had been set aside and a fresh trial had commenced. Of course the defendant would have a right to cross-examine the witnesses, who had been examined on behalf of the plaintiff, but it would be an idle farce, if it was necessary that the p1aintiff should re-examine, the witness already examined to repeat what they had said already. ";