when all the conditions specified under the Provincial Insolvency Act are satisfied, a debtor is entitled to an order of adjudication

It is sufficient for this Purpose to refer to the enunciation of the true legal position in regard to a matter of this nature where a debtor himself approaches the Court to be adjudged as an insolvent, in the case of Krishnappa Chettiar v. Kasiviswanathan Chettiar, , with which we are in respectful agreement. The relevant passage reads:

" ... ....... As Pointed out by the Privy Council in Chhatrapat Singh Dugar v. Kharg Singh Lachmiram, ILR 44 Cal 535 = (AIR 1916 PC 64), when all the conditions specified under the Provincial Insolvency Act are satisfied, a debtor is entitled to an order of adjudication. The matter does not depend on the discretion of the Court, but it is a statutory right of which he cannot be deprived by the Court on the ground of abuse of process. There is a stage at which the Court could visit on the Petitioner its due consequences of misconduct, that is when the application for discharge comes before the Court. At the time of the initiation of the proceeding, the Court has only to be satisfied that the essential conditions for adjudication s provided under the Act are present..

Karnataka High Court

A.K. Kaimal vs Sudarsen Trading Co. Ltd. And Anr. on 1 January, 1800

Equivalent citations: AIR 1976 Kant 203, ILR 1976 KAR 834, 1976 (1) KarLJ 342

Bench: B Venkataswami, D Noronha

1. This appeal under Section 75(2) of the Provincial Insolvency Act (Insolvency Act) is directed against an order made by the District Judge at Mysore in Insolvency Case No. 4 of 1972, whereby the appellant's petition preferred under Section 7 of the Insolvency Act had been dismissed.
2. The appellant preferred a petition under Section 7 of the Insolvency Act to be adjudged as an insolvent as he was unable to pay two items of debts due to the respondents. One of the items represents a debt of Rs. 3,010/- and evidenced by a decree Passed in 0. S. No. 543 of 1971 on the file of the First Munsiff at Mysore. The other item consists of a sum of Rs. 13,319-96 with interest alleged to be due to the second respondent on account of supplies of superphoshpate made by the second respondent to the appellant.
3. The learned District Judge on an examination of the appellant came to the conclusion that the first debt had been established and the second could not be accepted as subsisting even if the transaction alleged was true. He, however, dismissed the petition on the ground that the appellant who on his retiring from service under Chamundy Curing Works in the year 1969 had received a sum of Rs. 6,000 to 7,000, presumably as a retirement benefit, was unable to account as to the manner in which he dealt with or spent the said amount. In short, the Court, as it appears to us, came to the conclusion that the petitioner's claim that he was unable to Pay the said debts could not be believed. Hence this appeal.
4. In support of the appeal, Sri M. Shivappa, the learned counsel, contended that having regard to the provisions of Sections 7 and 10(1) of the Insolvency Act, it was premature for the Court to have examined the bona fides of the appellant in the context of his inability to pay the debts. He further contended that at that stage all that the Court was required to examine was whether or not a Prima facie case had been made out having regard to the provisions of the Act particularly Section 10(1) of that Act. It seems to us that this contention is well founded and this appeal clearly deserves to succeed.
5. It is sufficient for this Purpose to refer to the enunciation of the true legal position in regard to a matter of this nature where a debtor himself approaches the Court to be adjudged as an insolvent, in the case of Krishnappa Chettiar v. Kasiviswanathan Chettiar, , with which we are in respectful agreement. The relevant passage reads:
" ... ....... As Pointed out by the Privy Council in Chhatrapat Singh Dugar v. Kharg Singh Lachmiram, ILR 44 Cal 535 = (AIR 1916 PC 64), when all the conditions specified under the Provincial Insolvency Act are satisfied, a debtor is entitled to an order of adjudication. The matter does not depend on the discretion of the Court, but it is a statutory right of which he cannot be deprived by the Court on the ground of abuse of process. There is a stage at which the Court could visit on the Petitioner its due consequences of misconduct, that is when the application for discharge comes before the Court. At the time of the initiation of the proceeding, the Court has only to be satisfied that the essential conditions for adjudication s provided under the Act are present.... ... ... ... ..."
6. In the result, this appeal succeeds and is accordingly allowed. Consequently the order made by the District Judge at Mysore in Insolvency Case No. 4 of 1972 is hereby set aside and the petition concerned therewith stands allowed. The matter, however, is remitted to the Court below to proceed further in accordance with law. In the circumstances, no costs.
7. Appeal allowed.