ORDER
1. This revision is against the orders passed by the District Judge, Nagercoil dated 25-3-1988 in A.S. No. 63/1983 preferred against the order passed by the Sub-Judge, in I.P. No. 6 of 1980.
2. The petitioner’s case is as follows: The petitioners filed a petition under Section 9 of the Provincial Insolvency Act to adjudge the first respondent as an insolvent, contending that the first respondent who has borrowed Rs. 100/- from the petitioner on a promissory note had committed an act of insolvency on 25-8-1979 by entering into an agreement of sale of the 8th respondent. The first respondent has borrowed to the tune of Rupees 48,230-50/- under various respondents 2 to 7. The property for which he had entered in to an agreement is the only property owned by him. The 5th and 6th respondents have filed suits against the first respondent for the recovery of the amounts due to them under promissory notes. The 4th respondent has been transposed as the second petitioner after the death of the first petitioner.
3. The first respondent in his counter has admitted the borrowing from respondents Nos. 2 to 7. He has stated that he is not in a position to pay of the dues and that he is entitled to the benefits under the provisions of the Tamil Nadu Debt Relief Act. According to the first respondent, he had entered into an agreement of sale of the property with the 8th respondent with the bona fide belief of paying off his debts out of the consideration.
4. The respondents 2, 3, and have filed separate counters contending that the first respondent has borrowed money from them on executing promissory notes. They have also stated that the first respondent in collusion with the 8th respondent, has filed the suit for specific performance. The 5th and 6th respondents to whom the first respondent owes certain amount, had filed two separate suits against them.
5. The 8th respondent in his separate counter has stated that the promissory note in favour of the firs! petitioner is a sham and nominal one and the first petitioner was set up by the first respondent to defeat the interests of the creditors. According to the 8th respondent, an agreement of sale in his favour was executed by the first respondent on 25-5-1979 and the petition having been filed beyond a period of three months is not maintainable.
6. On the above pleadings the learned Sub-Judge held an enquiry and passed an order adjudging the first respondent as insolvent.
7. Against the said order, the 8th respondent has preferred an appeal before the District Court.
8. The learned District Judge has held that the petitioner have failed to establish that the first respondent has committed any act of insolvency and allowed the appeal dismissing the insolvency petition.
9. It is against this judgment, the 2nd petitioner has preferred the Civil Revision Petition.
10. The learned counsel appearing for the revision petitioner would argue that the petitioner who has filed the Insolvency Petition to adjudge the first respondent as an insolvency died and the 4th respondent from whom also the first respondent had borrowed money, has been transposed as the second petitioner and after the enquiry, the trial court has held that the first respondent has committed an act of insolvency by entering into an agreement of sale and declared him as an insolvent and the 8th respondent who had entered into an agreement of sale with the first respondent, has preferred an appeal to the District Court and the District Court has held that the execution of an agreement of sale would not amount to transfer of an interest in the property and therefore, it cannot be stated that there is an act of insolvency committed by the first respondent and that the District Court has also held that the petition to adjudicate the first respondent as insolvent having been filed beyond a period of three months, the petition is not maintainable and the said finding of the District Court is erroneous on the ground that the debtor viz., the first respondent himself has stated that he is unable to pay the debts to the creditors. Section 2(i) of the Provincial Insolvency Act defines a transfer of property as one includes a transfer of any interest in the property and the creation of a charge upon the property. By virtue of the agreement in which 8th respondent had with the first respondent, there is no transfer of any interest in the property for which the said agreement has been entered into and there is no creation of any charge on the property. Section 54 of the Transfer of Property Act does not by itself create any interest or charge over the property. Therefore, under the provisions of the Transfer of Property Act, the execution of an agreement for sale cannot be held to be sufficient to attract the provisions of Section 6 of the Provincial Insolvency Act. It is only if the debtor conveys a right which he had in the property, in favour of another, that too with the intention of defeating the interests of his creditors, Section 6 of the Provincial Insolvency Act can be attracted. In the present case, the 8th respondent who has
entered into an agreement of sale with the first respondent on 25-5-1979, has issued the notice under Ex. A.2 after nearly six months since the agreement provides for six months period for the exection of one sale deed. In this notice, the 8th respondent had expressed his readiness and willingness to purchase the property and called upon the first respondent to have the sale deed executed. The first respondent has sent a reply to the 8th respondent in which he has stated that some of the creditors are contemplating to file Insolvency Petition. Within two days of the said notice, the Insolvency petition has been filed by first petitioner. The version of the second petitioner who is the Revision Petitioner herein that the first respondent had colluded with the 8th respondent and had filed the suit for specific performance, therefore cannot be given any weight on the ground that there is no evidence for the alleged collusion between them. On the other hand, from the correspondence and the fact of the filing of the Insolvency Petition, it appears that the first respondent and first petitioner have colluded together. The filing of the Insolvency petition even before the 8th respondent has filed the suit for specific performance, would only indicate that there cannot be any collusion between the first respondent and the eighth respondent and the version of the eighth respondent that there is collusion between the first petitioner and the first respondent is more probable. As I have already observed, mere agreement of sale by debtor does not confer any transfer of interest. Therefore, the execution of the agreement of sale by debtor cannot be considered as an act of insolvency committed by the first respondent. The Insolvency petition was relied on 21-12-1979 nearly after six months after the agreement dated 25-5-1979. Section 9(1)(c) of the Provincial Insolvency Act contemplates the filing of an Insolvency Petition only within three months of the alleged act of insolvency. Therefore even assuming the act of execution of the agreement is an act of insolvency the filing of the insolvency petition by the first petitioner is Barred by limitation cannot be disputed. In this connection, I only wish to refer to the
Decision reproted in Chenchuramana v. Arunachalam (AIR 1935 Mad 857) and G.. Curuvamma v. C. Gopalam wherein it has been held that Section 9(1)(c) is a condition precedent to the filing of the petition, that is to say, the petitioning creditor must, on the day when he presents his petition, have in view some act of insolvency which the debtor has committed within the preceding three months. It has also been held in the above decisions that an Insolvency Petition cannot be presented where three months have expired during the alleged act of insolvency. The learned District Judge has rightly allowed the appeal before him after considering the above propositions of law and there is nothing to interfere with the same. The contention of the revision petitioner that the debtor has admitted that he is unable to pay and therefore, the finding of the lower appellate court that he had not committed an act of insolvency is improper cannot hold water in view of the fact that the petition filed by the petitioner is a creditor petition and not a debtor petition. It is only in a debtor petition, where the debtor has made a statement that he is unable to pay the amount due to his creditors, the said representation can be taken as an act of involvency and on that basis, he could be adjudged as an insolvent. In view of the fact that the present petition is a creditor petition, it cannot be done. In that view also, I hold that the order passed by the learned District Judge is well founded and does not call for any interference by this court.
11. In the result, the Civil Revision Petition is dismissed. No costs.
12. Revision petition dismissed.
