JUDGMENT
1. The petitioner being creditor made this insolvency petition on the two grounds and one added ground namely :
(a) The Debtors have transferred a substantial part of their properties from their said place of business at 25. Strand Road, Calcutta as well as from the dwelling house of Debtor No. 2, at Flat No. 6B, Arihant Garden 81, Southern Avennue, Calcutta with intent to defeat or delay their creditors.
(b) The Debtors No.2 since 2nd week of August, 1996 has secluded himself from his said usual place of business and dwelling house with a view to deprive the petitioner and his creditors of the means of communicating with him.
(c) The three cheques issued by the debtors as mentioned in paragraph 4 herein above have been dishonoured on presentation to the bank, inter alia, for the reason that there was insufficient fund. On the entry made by the bank on the reverse of one of the said dishonoured cheques, it appears that on the relevant date only a sum of Rs. 18, 437.42 was lying in Debtors’ bank account as debit balance. The dishonouring of cheques as issued by the Debtors in suspension of payment and amounts to acts of insolvency within the meaning of section 9 of the Presidency Towns insolvency Act.”
2. The respondents being debtors filed their written objection mainly taking two fold defences. Firstly, the ground as taken by the creditor petitioner is not enough for the purpose of declaration of a person having reputation in the society as insolvent and secondly the petitioner/creditor is a regular money lender doing money lending business and for nonpayment of such sum cannot be treated as an act of insolvency.
3. Mr. S.P. Sarkar, learned counsel appearing for the debtors contended that in order to get an order of adjudication applicability of section 10 of the Presidency Towns insolvency Act is obvious but such application should be sparingly made. Just because a person is debtor one cannot said to be insolvent. Act of insolvency and winding up of a company cannot be placed similarly. Section 9 of the Act prescribes which cases will be considered as act of insolvency. Conditions of section 9 of the Act is not fulfilled. Therefore, the creditor/petitioner is not entitled for any relief under this petition. Moreover a creditor /petitioner shall not be entitled to present an insolvency petition against debtors unless he fulfil all the conditions laid down under section 12 of the Act at a time.
4. Mr. J.K. Gupta, learned counsel was called to make his submission in support of the petition of creditor/petitioner when he stated that : (a) payment is admitted by the debtor or debtors; (b) execution of Promisory Note is made by the debtor no. 1; (c) debtor no. 3 issued three cheques which was dishonoured. Such admissions will find place in the paragraph 5 of the written objection. He acceded to the position that he is a money lender having licence prescribed by Bengal Money Lenders Act but the same is not a disqualification to obtain an order of insolvency in the circumstances. He stated that act of insolvency is prescribed under section 9 of the Presidency Towns insolvency Act and question is only to fulfil the conditions. According to him, dishonouring the cheques cause suspension of payment which tantamounts to act of insolvency. Moreover as and when the special remedy is available there is no necessity of filing Civil Suit as an alternative general remedy. Section 118 of the Negotiable instruments Act prescribes that a promisory note, if and when, executed It will be an accepted position that consideration is passed. Under these circumstances, he will be entitled to have an order of adjudication.
5. In support of the contentions, Mr. Gupta, learned counsel appearing for the creditor/petitioner cited a Judgment reported in AIR 1933 Rangoon 363 (Firm) Soonfram Romniranjan Das v. S.A.R.M. Chettyar (firm) and relied upon head notes therein which says that dishonouring of cheques is suspension of payment under Presidency Towns insolvency Act. He further relied upon 1968 India Law Reports. (Cal.) 248 (Srilal Kajaria v. Jiwanmal Butoria) and relying upon page 249 therein again emphasized that although the creditor has always the remedy of instituting civil suits to realise his debt, but this ordinary remedy does not extinguish or diminish the creditor’s statutory right to proceed under the insolvency Act. Therefore, the creditor/ petitioner is entitled to have an order of adjudication against the debtors herein.
6. Mr. Sarkar, on the other hand, reiterated his old submissions by saying that the application is hit by demunable cause since there is no specific grounds of committing the cause of insolvency. There is no nexus between transfer of property as indicated in paragraph 10 of the petition with demolition of claim or to establish that the same is done to avoid or defeat the claim of the creditor/petitioner. If the person is solvent by furnishing bank guarantee court cannot proceed with the cause of insolvency.
7. On enquiry by the court as to whether there should be any pleading of evidence in the petition or not, Mr. Sarkar stated that at least there should be foundation of the evidence in the pleading.
8. However, I have carefully considered the rival contentions of the parties. I do not think that paragraph 10 and sub-paragraphs thereunder are treated to be a mechanical representation without any foundation of the evidence to lead towards order of adjudication. This has to be remembered by the court that the foundation of the evidence is not the statement, of the petitioner/creditor alone. Pleading means pleading in its totality both petition as well as written objection. There is a clear admission on the part of the debtor as to the acceptance of the sum and non-payment which has also supported by dlshonourment of cheques. Therefore, suspension of the payment cannot be said to be unfounded.
9. It is also to be remembered that there are various clauses under section 9 of the Act out of which section 9(1)(i) is very important in this respect which prescribes that “If the petitions to be adjudged insolvent”. This clause is an exceptional clause which definitely prescribes for adjudgment of the court upon visualising the situation to come to a conclusion that in the facts and circumstances of the case whether the matter is to be adjudicated or not. So far section 12 is concerned, although I am agreeable with the argument of the counsel of the debtors that clauses of section 12 of the Presidency Towns insolvency Act are to be read together not in isolation but factually this case is not as an isolated case fit for any of the clause but applies in its totality. No doubt he is a debtor and no doubt there is liquidated sum to be paid immediately or on a future time and it has commenced within the prescribed period prior to the presentation of the petition.
10. According to me each Act has to be read as to its proper prospective as well as per desire of the society. If the Act is read without considering the need of the society it should be said to be academic. The Presidency Towns insolvency Act like other insolvency Act is a special tool of judiciary. Therefore. I cannot invalidate such Act because of general law applicable in the present case. Therefore, the question of equity comes in. Equity prescribes that a defaulter trying to get escaped from the scope and ambit of the Act by insisting the creditor/petitioner to a regular suit so that the delay can be caused. Therefore, again this court is emphasizing on section 9(1)(f) which says if the petition to be adjudged at insolvent and obviously it should be done by the Court if It thinks, fit and proper. The debtors have no way out in the present days’ in the society there are various competitions in the commercial and economical world. Everyone including the judicial luminaries are trying to cut short the ways so that speedy and efficacious relief can be given to an appropriate aggreived party. In the present situation, as and when a tool of judiciary is available for the purpose of expeditious proceedings as to why the creditor should be sent back to the civil suit is unknown to this court. The commercial communities of the Presidency towns had not ceased to urge-reformation of the Presidency Towns insolvency Act based on the English Bankruptcy Act of 1896 even in commenting on the Code of Civil Procedure Bill in 1902. They observed the necessity for public interests particularly in the interest of the trading community. Therefore, this being the history of formation of the Act and necessity can there be any change of application specially when the society needs the same. My answer is ‘no’. There can not be any deviation but will be applicable more.
11. Moreover, a balance of convenience is to be considered. A deposit of security to the court subsequent to presentation of tills application cannot invalidate the order of adjudication. A person has to be considered as solvent or insolvent at the material point of time when cause of action arose. In the instant case cause of action arose at the time of dishonourment of cheques or priar thereto but not when money was deposited with the court subsequently as a security to obtain a defence.
12. Under these circumstances, I allow this application with cost. There will be an order of adjudication accordingly against the debtors.
Prayer for stay is made, considered and refused.
Parties will act on a signed copy minute of the operative part of the order.
13. Application allowed