ORDER
1. Mrs. Kundanbai, Proprietrix, Industrial Engineering Insulation Company is the petitioning creditor. The respondent is the debtor to the petitioning creditor. The
petitioner has filed this insolvency petition under Ss. 9, 12 and 13 of the Presidency Towns Insolvency Act (hereinafter referred to as the Act) to pass an order of adjudication, adjudicating the respondent as insolvent and for other consequential relief.
2. The petitioning creditor is a proprietary concern which deals in copper cables and other allied products. They supplied copper cables, rods, ingots and other materials received from its principals to various manufacturers of transformers and other allied electrical equipments for the State of Tamil Nadu and one such suppliers of raw materials required for the manufacture of transformers namely of the respondent is that of the petitioner. The petitioner was approached by the respondent for the supply of various gauges of copper cables, wires, rods etc., for the manufacture of transformers by the respondent. Various quantities of raw materials have been supplied to the respondent which have been duly accepted by the respondent. The amounts due under the said supplies are due and payable by the respondent to the petitioner. A sum of Rs. 3,87,899.16 p. was due and payable by the respondent to the petitioner as on 27-5-1986 which was the last date of supply and the last quantity of materials ordered by the respondent to the petitioner. The respondent by his letter, dated 26th July, 1986 has categorically admitted the whole of the out-standings for the supplies made by the petitioner to the respondent without any demur or dispute. The said letter is in unequivocal terms, is an admission of the liability of the respondent to the petitioner, which was expressed to be liquidated in a phased manner due to the unforeseen circumstances of the introduction of ‘Molavat’ scheme which resulted in reorganizing their formalities viz., of the respondent in connection with the submission of various statements relating to the manufacture of transformers to the concerned Central and State Government Departments.
3. The petitioner wrote several letters to
the respondent, requesting them to make
payments of the outstandings on 6-8-1986,
11-8-1986, 12-8-1986, 13-8-1986 and 14-8-1986 etc., which were all sent by registered post with acknowledgment due and received by the respondent, but were not replied by the respondent. The respondent was also contacted by the petitioner on various occasions over phone and also in person and the respondent made representations to the petitioner that as he has not received payment from the Tamil Nadu Electricity Board for the supplied effected to the Tamil Nadu Electricity Board and that the amount due to the petitioner on the various supplies he has effected to the Electricity Board for manufacture of transformers and supplied to the department will be paid immediately on receipt of the payment from the Electricity Board. It is further stated that the Electricity Board had retained a sum of 10 per cent of the value as retention money and a sum of Rs. 10 lakhs is due from the Electricity Board to the respondent, which has been retained by the Electricity Board for supply of transformers effected to them. The respondent has also utilised the raw materials supplied by the petitioner for the manufacture of transformers or of the allied electrical equipments in the name of the proprietary concern, owned by the respondent’s wife with an intent to defeat, defraud and cheat the various creditors of the respondent. In fact the respondent has issued various cheques as specified below :
S.No
Cheque No.
Amount
Dated
1.
001410
Rs. 1,10,000/-
30-8-1986
2.
001408
Rs. 1,10,000/-
30-8-1986
3.
001411
Rs. 1,10,000/-
30-8-1986
All the above three cheques were given with specific instructions that the cheques may be presented and that the respondent will make all arrangements for honouring the instruments. Accordingly, all the cheques were presented on 8th September, 1986. The instrument was returned with the endorsement ‘refer to drawer’. Likewise the second cheque for Rs. 1,10,000/- was also returned on 17-9-1986. The petitioner issued a notice through her counsel on 12-9-1986 which was received by the respondent on 18-9-1986. The
third instrument for Rs. 1,10,000/- was also deposited by the petitioner on 22-9-1986 which was returned as ‘payment having been stopped by the respondent’. The said act of the respondent will amount to an act of insolvency committed by the respondent in seeking to suspend the payments of all his debts. It is not only in the case of the petitioner, but also in the case of other creditors. The respondent has gone to the extent of issuing a cheque in the account of a bank viz., the erstwhile bank of Cochin, which as subsequently merged with the State Bank of India with the full knowledge that the prior account with the said Bank has been closed. The respondent has wilfully indebted and with an intent to defeat and defraud the claims of the respondent’s creditors has now started doing business in the name of his wife and has also diversified the materials purchased by the respondent for the manufacture of transformers in the name of his wife’s concern, which act will amount to an act of insolvency with an intent to defeat and defraud the creditors and has secreted or dealt with the properties by transferring the same in the name of his benami concerns.
4. The petitioner being a lady, her business is being looked after by her son. The petitioner’s son contacted the respondent on many occasions and whenever the respondent was contacted, the respondent was giving evasive reply to the petitioner’s son. The representatives of the petitioner if visited the respondent’s factory on many occasions, but have found that the respondent was avoiding to meet them and a stock reply that respondent was not available was given. The respondent for the first time disputed the quality and quantity of the materials supplied and has also stated that the amounts which have been paid have also not been credited in the account properly. It is strange that the respondent who has given the petitioner Form XVII declarations under the Sales Tax Act declaring the quantity of materials supplied by the petitioner have been actually the amount of supplies received by them for their manufacturing purposes, has stopped to the extent of denying the liability. In the letter dated 26th July, 1986 the respondent has
admitted the liabilty and has also promised that the monies of the petitioner are all safe and will be repaid shortly in a phased manner. The petitioner submits that the respondent has suspended the payments and has done acts, deeds and things detrimental to the interest of the creditors and has committed a fraud and has played a game of deception. According to the petitioner, as on the date of filing of this petition, a sum of Rs. 3,87,899.16 p. is due and payable by the respondent towards principal along with interest at the rate of 24 per cent per annum from the dates of various supplies effected totalling in all a sum of more than Rs. 4.85 lakhs.
5. This petition was resisted by the respondent b; filing his counter affidavit. His contentions are :
1. The reference to the letter dated 26-7-1986 will not confer higher rights on the petitioner to take away the rights of the respondent;
2. The respondent had not committed any act of insolvency and therefore the petitioner cannot invoke the jurisdiction of the Insolvency Court;
3. The letter dated 26-7-1986 was written at the instance of Mr. B. M. Ved to help the petitioner to get over certain difficulties;
4. It is not correct to state that the respondent had admitted the entire outstanding as alleged by the petitioner without demur or dispute. It cannot be construed as admission of the liability without any reservation;
5. Failure to send any reply to the letters of the petitioner will not amount to acceptance of quantum supplied, quality of the materials supplied and of the amount thereof.
6. The respondent had not utilised or diverted the goods in the name of his wife’s proprietrix concern with a view to cheat or defraud creditors.
7. Non-payment or non-settlement of the bills will not amount to any act of insolvency;
8. The cheques given by the respondent
were only for the sole purpose of helping the petitioner get over the problems posed by the petitioner’s principal M/s. Conductors, Bombay.
9. The cheques were never intended to be encashed or made use of without the knowledge and consent of the respondent;
10. The respondent was always available in his premises and the allegations made in the petition that the respondent was not available is not correct.
11. The respondent never suspended the payment to the creditors or committed any other act which could be formed as an act of insolvency.
12. The respondent has not suspended the payment or done acts, deeds or things which could be characterised as fraud or suspension;
and
13. The only equitable remedy available to the petitioner is filing a regular suit. Therefore, the petition is not maintainable both in law and on facts.
6. On behalf of the petitioner, her son Bhagavandas M. Ved was examined as P.W. 1 and on behalf of the respondent, P. N. Pararneswaran was examined as R. W. 1 Exts. P. 1 to P. 12 and R. 1 to R. 20 were marked on behalf of the respective parties.
7. The petitioning creditor complains that that debtor has committed acts of insolvency under Ss. 9, 12 and 13 of the Act. The facts leading to the filing this petition have been susmmarised in detail in the earlier part of this Order. The main allegations arc that the respondent has failed and neglected to pay a sum of Rs. 3,87,899.16 p. to the petitioner which was due to the supply of various quantities of raw materials supplied and in spite of the periodical reminders for the payment of the bills and the amounts outstanding the respondent has not settled the claim, but has expressed his inability to make payment, due to the policy introduction of ‘Modavat’ which resulted in reorganising the respondent’s formalities and procedures in connection with the several Government
Departments, vide letter dated 26-7-1986. According to the petitioner, the letter dated 26-7-1986 marked as Ex. P 5 is in unequivocal terms, is an admission of the liability of the respondent to the petitioner of the sum of Rs. 3,87,896. 16 p. Many letters have also been written, by the petitioner to the respondent to make payment of the outstanding, which were all sent by registered post with acknowledgment due and duly received by the respondent. But the respondent has not chosen to send any reply to the said letters. In fact the respondent had issued three cheques on 30-8-1986 each for Rs. 1,10.000/- with specific instructions that the cheques may be presented and that the respondent will make all the necessary arrangements for honouring the instruments. When the cheques were presented for payment, they were all returned as mentioned in the earlier paragraph of this Order. It is the specific case of the petitioner that the repsondent could not be contacted by her and that the respondent was avoiding to meet the representatives deputed by the petitioner and a stock reply that the respondent was not available was given to the representatives of the petitioner. The respondent was never found either in his place of business or in his factory and the letters confirming the visits of the petitioner’s son have been returned and none of the letters have been replied to by the respondent. After the issue of a Lawyer’s notice the respondent was again contacted and the respondent made it clear to the petitioner’s son that he has suspended payment to his creditors and even went to the extent of abusing the said Mr. B. M. Ved in the presence of the workers. It is further stated by the petitioner that the respondent for the first time disputed the quality and quantity of the materials supplied.
8. The respondent has denied the allegations of the petitioner and contended that he has not suspended the payments and that the cheques were issued in favour of the petitioners only to help him to get over some problems in a transaction.
9. I shall now take up the evidence of P.W. 1 and R.W. 1. P.W. 1 is the son of the petitioner. He speaks to the debt due and
owning by the respondent. In answering to a question whether he demanded the amount due under the transaction, he answered in the affirmative. It is seen from his evidence that the respondent by his letter dated 26-7-1986 has admitted the outstanding payment of about Rs.4,03,000/- and expressed his inability to make the payment. It is useful to extract Ex. P5 in this context;
“In connection with the subject mentioned we wish to clarify our position as herein below written.
We confirm having received your reminders for payments of your outstanding payment of about Rs.4,03,000/-. We wish to state that the due to introduction of MODVAT Scheme we had to reorganise our formalities for maintenance of our records. In advertently it followed with more procedures and formalities from several other connected departments. We have overcome the procedure and we are making arrangements for payments of your outstanding bills in a phased manner. We assure your payments in course of about three months and request you to bear with us till such time. All our moneys are blocked with Electricity Departments. Please be rest assured your moneys are safe and will be repaid shortly in a phased manner. Till then please bear with us.”
According to P. W. 1, the respondent has made payment of Rs. 15,000/- after the letter dated 26-7-1986, (Ex. P5), it is also in evidence that P.W. 1 used to meet him on various occasions. The five questions and answers in the chief examination of P.W. 1 may also be usefully referred to in this connection :
“Q. Have you gone and met the respondent personally?
A. Yes. Constantly i used to contact him, he would give evasive reply and he will make payment only after getting release from the Electricity Board, That he was not in a position to get the payment and if at all he can just offer ten naya paise per rupee to settle my account.
Q. Have you sent any letters confirming
your personal meeting with him?
A. I have sent several letters by registered post.
Q. Whether the respondent is now carrying on business in that place?
A. He is not carrying on business, he had stopped the business P. N. Engineering Co., and P. N. Transformers Manufacturing Co., and he has diversified the funds for the purpose of manufacturing in the name of his wife, namely, Devi Enterprises.
Q. Now in the address wherein the respondent was carrying on business, who is carrying on business?
A. Devi Enterprise is carrying on by the wife of the respondent.
Q. What was the reason given by him for the non-payment of the monies to you?
A. First reason he gave was that due to some introduction of Modavat system he had to reorganize his entire accounts. The next reason given was that all his monies were blocked with Tamil Nadu Electricity Board by way of deposit and earnest money.”
10. In cross-examination P.W. 1 deposed as under :
“Q. What is the act of insolvency?
A. The one thing is that he himself has told that he transferred his business in the name of Devi Enterprises, sales tax registration also. The other thing is after the return of the cheque he says that he is not in a position to make payment to me for another five years. I did not approach him. He is not in a position to clear his debts. He has suspended his payment. He will settle at 10 paise per rupee for the time being.
Q. I put it to you that Mr. Parameswaran did not make any such representation to you at any point of time?
A. He has made it.
Q. This is the notice issued by a Lawyer. You can go through the contention elaborately. I am just asking, is this the notice sent by
you to Mr. Parameswaran through your Lawyer?
A. (Ex. P. 12 shown to the witness. After going through the document, the witness answers) ‘Yes’.
Q. What is the date of the notice?
A. 12th September, 1986 (Document has been marked as Ex. P. 12)
Q. Who gave instructions to your Lawyer?
A. T have given instructions.
Q. Now, 1 put it to you that Mr. Parmeswaran had not committed any act of insolvency and he had come only with this false case before this Court?
A. I deny.”
11. R. W. 1 in his chief examination has denied the issues of cheques to the petitioner on 30-8-1986. But however, in answering to the next question, he says that the cheques which were issued were not intended for encashment. In the cross-examination, R. W. 1 says as under :
“Q. These are the letters and acknowledgment sent by the petitioner to you (Ex. P. 6 series)?
A. Yes.
Q. In all these letters they have demanded the money?
A. Yes.
Q. These are the letters (Ex. P. 7 series) written by you to the petitioner on 7th December, 1985?
A. Yes.
Q. These are the three cheques that have been issued by you?
A. The cheques have been signed by me.
Q. You have issued them, or not?
A. I have issued the cheques.
Q. Your Banks are Central Bank of India?
A. Yes.
Q. This cheque bearing No. 1406 has been returned by your Bankers?
A. Yes.
Q. The reason has been mentioned by your Bankers ‘Refer to drawer’ (Ex. P. 9 series)?
A. Yes.
Q. Similarly cheque No. 1210 has also been returned by your Bankers as ‘Refer to drawer’?
A. Yes.
Q. This instrument bearing No. 1410 (Ex.P9 series) was returned on 17-9-1986 by your Bankers?
A. Yes.
Q. This instrument No. 1411 in Ex. P. 9 series has been returned by your Bankers on 23-9-1986?
A. Yes.
Q. Only for this the Banker has stated that “All payments stopped?
A. Yes.”
…..
Q. Have you got the factory premises P. N. Engineering and P. N. Transformers at Porur?
A. At present I do not have,
…..
Q. Without obtaining the permission or factory licence, you are functioning?
A. We are now running the factory without licence.”
Though R. W. 1 in his evidence assured that he would produce documents in regard to the assessment for the year 1988 and his objections regarding quality or quantity of the materials supplied by the petitioner and copies of some of the letters, none of them were produced by him before this Court.
12. It is now to be seen whether the statements made by R. W. 1 by himself are sufficient to adjudicate the respondent as insolvent. In the instant case, according to the petitioner, the respondent has suspended payment. Insolvency law says that a debtor commits an act of insolvency if he gives notice to any of his creditors that he had suspended,
or that he is about to suspend, payment of his debts. The act does not require any particular form of notice. Nor does it require that it should be in writing. A verbal statement will do, but whether verbal or written, it must amount to a notice. The notice must amount to a declaration that the debtor has suspended, or that he is about to suspend payment of his debts. Suspension of payment is a business term usually applied to traders, which means failure to meet one’s engagements and to pay debts in the ordinary course of business as they became due and payment is called for.
13. In the instant case, it is clearly seen from the evidence of P.W. 1 that the respondent has told the petitioning creditor’s son that he transferred his business in the name of ‘Devi Enterprises’ and that he would be in a position to make payment to the petitioning creditor in another five years and he was also not in a position to clear his debts by then, that he has suspended his payments and that he will settle at 10 paise in a rupee for the time being. This categorical statement, in my opinion amounts to suspension of payment of debts. The section requires a notice of suspension of payment. The notice as stated above may be in any form either verbal or written. In the instant case there is a notice of suspension, i.e. a statement which is intended to give the creditor to understand that the debtor has in fact suspended payment. It is important to note that suspension of payment is something different from and over and above inability to pay. A statement made by a debtor to a creditor that he is unable to pay his debts does not of itself and without reference to context or circumstances amount to a notice that he has suspended payment or is about to suspend payment of his debts so as to constitute an act of insovlency within the meaning of the Act. In my opinion, the evidence of P.W. 1 in regard to payment has to be accepted as true statement, taking into account the totality of the circumstances of the case. I have no reason to disbelieve the version of P.W. 1 and I accept the same. The intention of the debtor is clearly seen from the statement made by him to the petitioner. The said statement will clearly show the intention of the debtor with regard to the settlement of dues to his
creditors. In my view, the notice given by the debtor in this case that he intends suspension of payment of his debts will amount to an intimation that the debtor is about to suspend payment of his debts due to the petitioner and to all his creditors as well.
14. Gangu Veerabrahmam v. Gangu Jagannadhacharyulu, AIR 1935 Mad 589(2) : Vol. 69 MLJ 184 was a ease decided by a Division Bench of our High Court, consisting of Chief Justice and Cornish, J., whereunder the appeal was filed by a creditor against the dismissal of his petition by the District Court, East Godavari, dated 30-6-1933 in I.P. No. 31 of 1932. Though three acts of insolvency were alleged in the petition, only one was considered in the appeal which is under S. 6(g) of the Provincial Insolvency Act viz., that the debtor gave notice to a creditor to the petitioner/creditor that he had suspended or was about to suspend payment of his debts. The question before the Bench was, what was the effect of the intimation given by the debtors to the creditors. The learned District Judge failed to apply the proper test for determining the question. Applying the criteria laid down in :
1. Crook v. Morley (1891) AC 316
2. Clough v. Samuel (1905) AC 442 and
3. The Mercantile Bank of India Ltd., Madras v. Official Assignee of Madras (1913) ILR 39 Mad 250.
the Division Bench of our High Court said that the intimation given by the debtors to the petitioner amounted to a notice that they had suspended or were about to suspend payment of their debts. The ruling given by the Division Bench of our High Court on the identical question in the said decision Gangu Veerabrahamam’s case is as follows :
“Now applying these criteria to the present case, we feel no doubt that the intimation given by the debtors to the petitioner amounted to a notice that they had suspended or were about to suspend payment of their debts. The debtors were in insolvent circumstances. The sale of their property was the last resource available to them for meeting their creditor’s
claim and the sale proceeds were far from sufficient to pay those claims in full. We think it clear that when the debtors informed the petitioner that they could pay no more than three annas nine pies in the rupee to their creditors they in effect gave notice that they were about to suspend payment of their debts. That was an act of insolvency. It has been suggested that the petition is a vindictive one, and there seems some foundation for the imputation. But we have no concern with the petitioner’s motives, or whether the adjudication is likely to benefit him. He has satisfied the conditions imposed by the Act for filing a petition and for having the debtors adjudicated on that petition. The appeal is accordingly allowed and the order will be that the respondents be adjudicated insolvents. Costs out of the estate. Discharge to be applied for within one year.”
In my opinion, the above ruling of the Division Bench of our High Court will apply to the facts and circumstances of the present case. In my opinion, the requirements imposed by the Act for filing a petition are fully satisfied and for having the debtors adjudicated on that petition. Khiaram v. Kamadhenu Drinks, is another Judgment of our High Court by V. Sethuraman, J., learned Judge in the said decision held as under (at page 259 Mad) :
“The essence of an act of insolvency under S. 9(g) is that the debtor must give sufficient indication to show that he had suspended payment of all the debts. No particular form of expression is necessary. What is necessary is that the words should unmistakably leave the impression in the mind of the creditor that the debtor has actually suspended or is about to suspend payment of all his debts. The words used by the debtors must be reasonably construed. A creditor cannot approach the. Court with a petition for insolvency by merely misunderstanding what was stated by the debtor.”
In Ramaswami Chettiar v. Muthilalswami Chettiar, AIR 1928 Mad 903 the question as to whether the debtor had suspended payment arose on the following facts. The debtors in that case were carrying on business
and were in involved circumstances. There was a pressure for payment of the debts. On one such occasion when the creditors made a demand for payment, the debtors offered their properties consisting of two houses and a garden, omitting the house in which they were living in discharge, of the debts. No settlement was reached on that day, subsequently a few days later there was a discussion between the debtors and creditors as to how the debts were to be discharged. It was stated on that occasion that the title deeds for the sale of the properties had been given to one of the creditors, on these facts, this Court held as follows :
“In the case before us though all the creditors might not have been present there is no doubt that what was discussed at the meeting was the payment of all the creditors and the impression that was left on their minds was that the appellants were unable to pay debts and would suspend payment of debts unless this offer of discharge of all the debts by the sale of the properties is accepted.”
On the facts, it was held that there was an act of insolvency.”
In the present case as already seen several meetings were held between the petitioner’s son and the respondent. The evidence recorded goes to show that the petitioner had telephoned to the respondent. There is also ample evidence in regard to the issue of cheques by the debtor in favour of the petitioning creditor. Thus, taking into consideration of the evidence let in on behalf of the petitioning creditor it is clear that there is suspension of payment by the respondent within the meaning of S. 9(g) of the Act.
The decision reported in M/s. Sugesan Finance Investment (1988) 102 MLW 125 can also be usefully noticed in support of the contention of the petitioner. That was a case relating to a letter to the effect that the debtors would start releasing payments in instalment of Rs. 500 per month only from May/June, 1986 would constitute an act of insolvency since the debtors’ liquidity position did not permit them to start any earlier payment. The statement therein that post dated cheques
either 1988 1989 would be released by the debtors to all their depositors would produce an impression on the mind of the creditors that the debtors are going to suspend payment of their debts. The learned single Judge in the said decision held as under :
“The statement that payment in instalments of Rs. 500/- per month would be kept flowing without any interruption in respect of matured deposits by post dated cheques dated either of the year 1988 or of the year 1989 to all their depositors clearly indicate suspension to all the creditors. The words ‘all our depositors’ indicate the entire body of creditors.”
A Court of equity should not extend its helping hands to persons like the respondents who have contributed to the prevailing anxious inflation which is rocking not only the economy of the Nation but also the honest, as a result of manipulation of the money, which the respondents have collected in the manner aforesaid. The first respondent firm has lured gullible persons by making attractive advertisements tempting attractive interests and created an impression of financial soundness and thereby collected amounts which the first respondent could not have collected through proper means and wanted to enrich the family members of the first respondent. So as to enable them to lead a luxurious life. The gullible persons both educated and uneducated have fallen a prey to the advertisements made by the first respondent, without realising that the advertisements are nothing but a trap to hell.”
15. In the instant case, the respondents have issued cheques to the creditor, though he now says that the purpose for which the cheques were issued were different. I am unable to accept the statement now taken by the respondent/debtor when he has categorically admitted under Ex. P. 5 about the outstanding to the tune of Rs. 4,03,000/- to the petitioning creditor. The statement now made is only an afterthought and cannot be accepted at all.
16. Mr. Sundararajan, learned counsel appearing for the respondent contended that
there should be suspension of payment with an intent to defeat or delay his creditors in order to constitute that an act of insolvency committed by the debtor and that contemplates a plurality of creditors and not a single creditor and therefore the petition filed to adjudicate the respondent as insolvent is not in order. Learned Counsel relied on certain decisions reported in Ratchaganadan v. M/s. Kishindas Dr. S. K. Subramaniam v. Vellaswami, (1989 TLNJ 364) and also Krishna Kumar Singhvi & Sri Viroomal Finance Corpn. v. S. Lalchand and Babulal M. Mehta (1980 Vol. I L. S. I) in support of his contention).
17. In my view the intention of a party whether exists or not is a question of fact and each matter has got to be decided depending upon the facts and circumstances of the case and the evidence let in by the parties. In the instant case, I am satisfied that an act of insolvency has been committed by the respondent and that a case has been made out under S. 9(g) of the Act. In the instant case the petition could be maintained at the instance of one petitioner. The statement made by the debtor as spoken to by the petitioner in his evidence as extracted above will clearly show that the intention expressed by the debt of that he was not in a position to make payment to the petitioner for five years, that he suspended the payment and that he would settle at 0.10 p. per rupee for the time being has to be construed as an statement and an act of insolvency committed by the debtor towards all his creditors. Hence, a petition filed by one creditor, in my opinion is sufficient and maintainable. Another decision cited by Mr. Sundararajan learned counsel for the respondent is Krishna Kumar Singhvi’s case (1980 LS 1) (T. P. Nos. 4 and 6 of 1978, dated 3-1-1979,) whereunder, Padmanabhan, J. held as follows :
1. “There is no particular form of the manner in which the notice has to be given. The notice of suspension of payments of debts may be oral or in writing. But it must be a notice deliberately given and must amount to an intimation to the creditors and that the debtor intends to suspend payment of his debt due to all his creditors.
2. A mere statement by a debtor that he is unable to pay his debts, however insolvent he may be, is not necessarily a notice within the Act that he is suspending or about to suspend payment.
3. One has to ascertain what the words used by the debtor would reasonably and ordinarily convey to the mind of the creditor. The true test is whether the effect of the notice on the mind of a creditor receiving it is that the debtor was about to stop payment or had stopped payment.
4. Lastly in construing the statement of the debtor it has to be seen whether he has closely indicated that not only is he not going to pay a particular creditor but that he intends to deal with his creditors collectively. ”
In the instant case, it can be ascertained from the statement made by the debtor is not only in respect of the petitioner, but in respect of others as well. The effect of notice on the mind of a creditor receiving it is that the debtor was about to stop payment or had stopped payment. In my view, the statement can be easily construed that the debtor has closely indicated that not only is he not going to pay a particular creditor but that he intends to deal with his creditors collectively.
18. I have given my anxious and deep consideration to the facts and circumstances of the case and particularly the evidence tendered both oral and documentary and I am of the view that the respondent/debtor is liable to be adjudicated as insolvent. Accordingly, respondent/debtor is adjudicated as insolvent. All his assets will vest with the Official Assignee for administration and the cost of this proceeding will come out of the estate.
19. Petition dismissed.