CHAMPAKLAL CHHOTALAL SUTARIA Vs. SHAH AMARCHAND VAJECHAND A REGISTERED FIRM

JUDGEMENT

(1.) These two Revision Applications arise out of a petition filed by one Dahyabhai Dhanjibhai Shah to adjudicate Champaklal Chhotalal Sutaria Kusumchand Ramniklal and Navalchand Ramniklal ( hereinafter referred to as Opponents Nos. 1 to 3 ) as insolvents. The petition was filed on 10th October 1949. It was preceded by a notice dated 3rd October 1949 to which no reply was sent by Opponents Nos. 1 to 3. Dahyabhai Dhanjibhai Shah ( who will hereinafter be referred to as the petitioning creditor ) alleged in the petition seven acts of insolvency. The first act of insolvency was that Opponents Nos. 1 to 3 had executed on 11th July 1949 a transfer of their joint family property bearing Survey No. 378 for Rs. 24 999 with intent to defeat or delay their creditors and to give preference to one of the creditors. The second act of insolvency alleged was that Opponents Nos. 1 to 3 had effected an equitable mortgage of their property in Bombay to secure a sum of Rs. 70 0 This allegation obviously did not constitute an act of insolvency and it was therefore rightly not pressed by the creditors as an act of insolvency. The third act of insolvency which the petitioning creditor alleged in the petition was that Opponents Nos. 1 to 3 had transferred by sale their immovable property bearing Survey No 792 for Rs. 21 999 to one Narottamdas Durlabhdas on 6th September 1949 It is important to note that no allegation was made that this transfer was effected by Opponents Nos. 1 to 3 with intent to defeat or delay their creditors or to give preference to any creditor. Then followed the fourth act of insolvency which according to the petitioning creditor was constituted by the allegation that Opponents Nos. 1 to 3 had suspended payment of their debts and were not paying their debts as they became due. Three other acts of insolvency were set out thereafter but they are not material for the purpose of the present Revision Applications barring the act of insolvency based on the allegation that Opponents Nos. 1 to 3 had removed and disposed of their valuables with a view to secreting the same and preventing their creditors from being able to proceed against the same in satisfaction of their claims against Opponents Nos. 1 to 3. The petition was opposed by Opponents Nos. 1 to 3 who contended inter alia that no act of insolvency was committed by any of them and that they were therefore not liable to be adjudicated insolvents. Now though the petition was filed as early as 10th October 1949 it was for reasons which can hardly be justified not disposed of until 23rd July 1958. It ran a long drawn out course much to the detriment of Opponents Nos. 1 to 3 and ultimately ended in a victory for Opponents Nos. 1 to 3. On 23rd July 1958 it was dismissed on the ground that no act of insolvency could be said to have been committed by Opponents Nos. 1 to 3. It maybe mentioned at this stage that pursuant to a rule enacted by the High Court with the previous sanction of the State Government under section 79 of the Provincial Insolvency Act notices were issued to the transferees of the two properties bearing Survey Nos. 378 and 792 in respect of which the allegation was made in regard to the property bearing Survey No. 378 that it was transferred by Opponents Nos. 1 to 3. As I have pointed out above no allegation was made in the petition that this latter transfer was effected by opponents Nos. 1 to 3 with intent to defeat or delay their creditors or to give preference to one of the creditors and no notice need therefore have been issued to the transferee under that transfer but in fact I find that a notice was so issued. The interesting part of the story however is that these notices were not issued immediately on the filing of the petition but were issued sometime after the hearing of the petition had commenced and some evidence had already been taken. The petitioning creditor and Amarchand Vajechand a supporting creditor who was joined as a party to the petition as a result of a proceeding adopted by him were both examined as witnesses in support of the petition before notices were issued to the transferees. After the transferees appeared pursuant to the notices issued to them the transferees filed their respective written statements and an opportunity was given to the transferees to cross-examine the petitioning creditor. No such opportunity was however given to transferees to cross-examine Amarchand Vajechand to whom I shall refer as the supporting creditor. After the evidence in support of the petition was concluded evidence was led on behalf of Opponents Nos. 1 to 3 and thereafter the transferees examined themselves as witnesses. It was on this record that the learned trial Judge came to the conclusion that no act of insolvency was proved and he accordingly dismissed the petition.

(2.) Being aggrieved by the order of dismissal passed by the learned trial Judge the petitioning creditor filed Appeal No. 56 of 1958 in the District Court Surat. The supporting creditor also filed Appeal No. 57 of 1958 against the same order. The transferees were not made parties to these appeals but notices were issued to them and in pursuance of the notices the transferees appeared and contested the appeals. A preliminary objection was urged against the appeals and it was that the appeals were barred by the law of limitation. The objection on the ground of limitation was two-fold. The first objection was that the appeals were not filed against Opponents Nos. 1 to 3 within the time prescribed by the law of limitation and the second objection was that the transferees were necessary parties to the appeals and since the notices were issued to the transferees and the transferees appeared in the appeals long after the period of limitation for the filing of the appeals had expired the appeals were barred by the law of limitation. So far as the first objection was concerned it appears that at the hearing of the appeals Opponents Nos. 1 to 3 realising the futility of the objection conceded that Appeal No. 57 of 1958 was within time. Though the contention was pressed that Appeal No. 56 of 1958 was not within time the learned Assistant Judge who heard the appeals came to the conclusion that the contention was without substance and he accordingly rejected the contention. The certified copy of the judgment was applied for by the petitioning creditor on 4th August 1958 and the certified copy was ready for delivery on 5th November 1958. The appeal was filed on 5 December 1958. Now the certified copy of the judgment applied for by the supporting creditor was ready for delivery on 21st November 1958 and the petitioning creditor stated that he was therefore under the bona fide belief that the certified copy of the judgment applied for by him was also ready for delivery on the same day namely 21 November 1958 and hence both the appeals were presented on 5th December 1958. The learned Assistant Judge therefore in any event condoned the delay if there was any in the filing of the appeal of the petitioning creditor and treated the appeal of the petitioning creditor as within time. The learned Assistant Judge on the merit of the appeals came to the conclusion that Opponents Nos. 1 to 3 had given notice to the petitioning creditor and the supporting creditor suspending payment of their debts and has therefore committed the act of insolvency specified in sec. 6(g) of the Provincial Insolvency Act. The learned Assistant Judge also came to the conclusion that the transfers of the properties bearing Survey No. 378 and 792 were effected by Opponent Nos. 1 to 3 with intent to defeat or delay their creditors and that these transfers constituted an act of insolvency within the meaning of sec 6(g) of the Provincial Insolvency Act. The learned Assistant Judge also found that Opponents Nos. 1 to 3 had fraudulently made over the movables belonging to them to the names of the female members of their family. This circumstance was however relied on by the learned Assistant Judge not as an independent act of insolvency but as a circumstance indicative of the intention of Opponents Nos. 1 to 3 to defeat and delay their creditors. The learned Assistant Judge on this view of the matter passed an order adjudicating Opponents Nos. 1 to 3 as insolvents. This order was passed by the learned Assistant Judge in both the appeals. Opponents Nos. 1 to 3 thereupon preferred two Revision Applications in this Court challenging the order made by the learned Assistant Judge.

(3.) Mr. A. M. Joshi learned advocate appearing on behalf of Opponents Nos. 1 to 3 contended before me that the appeals before the learned Assistant Judge were barred by the law of limitation and that they should not therefore have been entertained by him. Mr. A. M. Joshi reiterated the same arguments which were urged before the learned Assistant Judge. But for the same reasons which found acceptance with the learned Assistant Judge I hold that the appeals were within time and that even if Appeal No. 56 of 1958 was not within time the learned Assistant Judge exercised his discretion rightly in condoning the delay if any in filling that appeal. The learned Assistant Judge was therefore right in proceeding to hear and dispose of the appeals on merits.