Madras High Court
Vinod K. Sharma vs The Official Assignee on 3 September, 2003
A.(IP) No.483 of 2010 in I.P.No.140 of 2003 VINOD K. SHARMA,J.
This application has been moved by the insolvent for grant of unconditional discharge from insolvency.
2. The applicant was adjudicated as insolvent on his own petition vide order dated 03.09.2003. In consequent to the passing of order, the applicant filed schedule of affairs and notice of adjudication was sent to all the creditors to file their claim before the Official Assignee.
3. After adjudication of all the creditors, the petition was posted for public examination and the public examination commenced on 24.01.2007 and completed on 31.01.2007. There were 22 unsecured creditors to the tune of Rs.40,42,040/- (Rupees Forty Lakhs Forty Two Thousand and Forty only) and 5 unsecured creditors of Rs.3,60,130/- (Rupees Three Lakhs Sixty Thousand and One Hundred Thirty only) in the estate and Debtors to the tune of Rs.33,29,862/- (Rupees Thirty Three Lakhs Twenty Nine Thousand Eight Hundred and Sixty Two only) and the assets valued at Rs.4,73,650/- (Rupees Four Lakhs Seventy Three Thousand Six Hundred and Fifty only). The applicant, after administration in the estate, did not contract any debt nor committed any offence under the provisions of the Presidency-towns Insolvency Act or any other provisions of IPC. The applicant, therefore, prays for unconditional discharge.
4. On notice of the application, a report has been filed by the Official Assignee stating therein that the applicant has not committed any offence pertaining to insolvency proceedings covered under Sections 421 to 424 of Indian Penal Code.
5. The application is opposed by the Official Assignee to discharge the applicant on the ground that the liability of insolvent is to the tune of Rs.40,42,040/- (Rupees Forty Lakhs Forty Two Thousand and Forty only) and that the insolvent has borrowed debt without having any capacity of repayment. It is also stated that the applicant has not been able to satisfy two 25 paise in a rupee, thus, is not entitled to discharge under Section 39(2)(a) and (d) of the Presidency-towns Insolvency Act. The applicant is therefore, said to be not qualified for discharge under Section 39(2)(a) and (d) of the Presidency-towns Insolvency Act.
6. Learned counsel for the applicant on the other hand vehemently contended that applicant is entitled to unconditional discharge, as the condition under Section 39(2)(a) & (d) is only one of the several circumstances for consideration and merely because the applicant is not able to pay 25%of the debt, cannot be the ground to deny discharge.
7. In support of this contention, learned counsel for the applicant relied upon a judgment of this Court in the case of T.P.Kunhiraman, Proprietor International Typewriter Emporium vs. The Official Assignee, Madras, 95 L.W. 442, wherein this Court was pleased to lay down as under:
"4. S.39 states that the court has no discretion but to reject discharge if the insolvent has committed any offence under the Act or under Ss.421 to 424 IPC. That does not arise in this case. So far as the second limb of S.39 is concerned, it is left to the discretion of this Court to refuse discharge or suspend discharge for a specified time or grant conditional discharge. No doubt the Court has the duty to take into consideration several factors set out in S.39(2). It has to be noted that it is the totality of all the factors enumerated in S.39(2) that will have an impact on the order to be passed under S.38.
5. As regards the complaint that the insolvent has not provided O.25 ps in a rupee, by way of dividend, I am to state that it is one among several circumstances, the Court has to take into consideration while dealing with an application for discharge. I have already pointed out that the debtor should not remain an undischarged insolvent for ever. In a case where there is a fair probability of the debtor providing in a reasonable period the minimum of 0.25 ps in the rupee as dividend the court shall hesitate in granting discharge. In the instant case, he will have to remain an undischarged insolvent almost till his lifetime if this condition were to be imposed as a general rule, for, it would take 161 months to make up Rs.32,300 at Rs.200 per month. The above illustration gives a clue that that was not the intent of the Legislature in making that provision."
8. Learned counsel for the applicant also contended that in this case, the applicant has honestly disclosed all the assets and has co-operated in the insolvency proceedings, therefore, this Court can grant absolute order of discharge, as the insolvent had placed all his property, which are under control of the Official Receiver and from the insolvent's point of view, nothing more remains to be done.
9. In support of this contention, reliance was placed on the judgment of this Court in the case of C.D.Desikachari vs. Official Receiver, Chingleput and another, AIR (30) 1943 Madras 26, wherein this Court was pleased to lay down as under:
"There is nothing to prevent the Court granting an absolute order of discharge when it has been satisfied for instance, that the insolvent had placed all his property within the control of the Official Receiver so that from his-insolvent's point of view nothing more remains to be done."
10. From the circumstances explained herein above, the applicant has been able to make out a case for conditional discharge, because as per the condition stipulated under Section 39(2) of the Presidency-towns Insolvency Act, the applicant is not entitled to absolute discharge, but only to conditional discharge in terms of Section 39(1) (d) of the Presidency-towns Insolvency Act, which reads as under:
"39(1)(d) require the insolvent as a condition of his discharge to consent to a decree being passed against him in favour of the official assignee for any balance or part of any balance of the debts provable under the insolvency which is not satisfied at the date of his discharge, such balance or part of any balance of the debts to be paid out of the future earnings or after acquired property of the insolvent in such manner and subject to such conditions as the Court may VINOD K. SHARMA,J.
ar direct; but in that case the decree shall not be executed without leave of the Court, which leave may be given on proof that the insolvent has since his discharge acquired property or income available for payment of his debts."
11. The applicant is, accordingly, granted discharge from insolvency, subject to his filing consent affidavit in terms of Section 39(1) (d) of the Presidency-towns Insolvency Act, within two weeks of receipt of certified copy of this order.
10.12.2011 Index: Yes / No Internet: Yes / No ar Pre-Delivery order in A.(IP) No.483 of 2010 in
I.P.No.140 of 2003