Marikar Motors Ltd. vs C. Kumaran Nair and Others

P.K. Shamsuddin, J.—The Respondent herein was having a business in automobile spare parts at Quilon. The business ended in loss. The Petitioner owned Rs. 800 to the 1st. Respondent as per a decree passed in O.S. 224/1976 on the file of the Munsiff''s Court, Trichur, Rs. 12,000 to the 2nd Respondent as per decree passed in O.S. 93/1979 on the file of Sub Court, Trivandrum, and Rs. 9,084.26 towards the sales tax arrears to the State and Rs. 300 being arrears of professional tax due to Quilon Municipality. The Respondent filed an application seeking to adjudge him as an insolvent. The learned Sub Judge dismissed the application stating that the evidence disclosed that after his business was stopped, he sold the articles and also the immovable properties and that in the circumstances, the Petitioner failed to establish that he is unable to pay his debts. On appeal, the learned District Judge, Quilon reversed the finding of the trial Court, passed, an order adjudging the Petitioner to be insolvent and directed the Petitioner to apply for his discharge within a period of three months. Aggrieved by the said, order, the 1st Respondent in the O.P. has filed this Miscellaneous Second Appeal.

In this appeal, learned Counsel for the Appellant contended that the 1st Respondent has sold the articles in the shop room on 20th October 1980 and also an immovable property with an extent of 2.70 acres on 28th November 1978 and that therefore the lower appellate Court acted illegally in reversing the finding of the trial Court.

I am unable to agree with the contention. raised by learned Counse for Appellant. Appellant has no case that the Petitioner in the O.P. has omitted disclose any of his assets. Section 24 of the Act makes it clear that enquiry contemplated of the debtor''s inability to pay his debt is of a summary nature and that the Court is not expected to make an elaborate borate enquiry at that stage to find out whether the debtor has committed acts of dishonesty in respect of his property or whether documents executed by him are sham and created to defeat the creditors. Such matters can be considered at a later stage when proceedings are taken under Sections 54 and 55 of the Insolvency Act for discharge. This conclusion is in conformity with the view expressed in Thomas v. Mathai 1977 KLT 307. That is also the view taken in Krushna Chandra Das Vs. The Orissa Textile Mills Ltd. and Others, and in Lingasami Goundar v. Subramanian 1974 (II) M.L.J. 163. The decision of the Privy Council in Chhatrapat Singh Dugar v. Kharag Singh Lachmiram ILR Cal. 535 also supports this view. The Appellant will get ample opportunity to adduce evidence to prove his contentions based on the conduct, dealings and property of the applicant when the debtor moves for discharge.

It follows that there is no merit in the appeal and it is accordingly dismissed. However, the parties will bear their respective costs.