Delhi District Court
Shri Harish Jain vs Industrial Finance Corporation Of ... on 17 February, 2011
IN THE COURT OF SH. GAUTAM MANAN:
INSOLVENCY JUDGE: CENTRAL DISTRICT: DELHI.
Suit no.21/04
ID no. 02401C6162812004
Shri Harish Jain
S/o Shri Nanak Chand Jain,
R/o. Uttam Farms, Opp. Radha Swamy Ashram,
Opp. Gate no.3, Main Chattarpur Road, Bhatti,
New Delhi110039
.......Petitioner/Debtor
V e r s u s
1. Industrial Finance Corporation of India
Head office Bank of Baroda Building,
16Parliament Street, New Delhi
2. Industrial Credit and Investment Corporation of India
Registered office: 163, Bachbay Reclamation Mumbai
Branch Office: 6th Floor, Jeewn Bharti Building,
124, Connaught Place, New Delhi.
3. Life Insurance Corporation of India,
Zonal office: Jeewan Bharti, 124,
Connaught Circus, New Delhi
Head Office: Yogakshema,
Jeevan Bima Marg, Mumbai
4. Industrial Development, Bank of India,
Head Office: Nariman Bhawan, 227,
Vinay K Shah Marg, Nariman Point, Mumbai
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5. Corporation Bank,
M41, Connaught Circus,
New Delhi
6. Andhra Bank,
Branch office: Sultan Bazar,
Hyderabad (Andhra Pradesh)
7. Bank of India
Head office: Express Towers,
Nariman Point, Mumabi
Branch office: B12, Connaught Place,
New Delhi .........Respondents/Creditors
PETITION UNDER SECTIONS 7, 10, 11 & 29 OR THE PROVINCIAL
INSOLVENCY ACT, 1920 FOR ADJUDICATING THE PETITIONER
AS INSOLVENT.
Institution of Suit : 04.08.2004
Order Reserved on : 10.02.2011
Judgment pronounced on : 17.02.2011
JUDGMENT:
1. This is a petition under Sections 6, 7 and 10 of the Provincial Insolvency Act preferred by Sh Harish Jain to be declared as insolvent.
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2. It has been stated by the petitioner that he was just 3 years old when his father expired and he was taken care by his elder brother Amar Chand Jain who was 22 years of age at that time. After attaining age of majority the petitioner was inducted as formal Director of following Companies by his elder brother Amar Chand Jain:
a) Noida Transmission Ltd, 20/1, Asaf Ali Road, New Delhi
b) Samrat Bicycles Ltd, 20/1, Asaf Ali Road, New Delhi
c) Hindustan Monark Ltd, 20/1, Asaf Ali Road, New Delhi
d) M/s Federal Sports, a partnership firm, A2, Industrial Estate, Sehatnagar, Hyderabad, Hyderabad, Andhra Pardesh.
3. It has been averred by the petitioner that the petitioner signed various documents on asking of his brother in good faith like all male family members of his family. The petitioner later on came to know that the documents got signed by him was as a guarantor for the facilities taken by the companies of the petitioner's family. It has been stated that now all the male members of the petitioner's family have expired and the petitioner remains the only male surviving member. It has been stated that the petitioner also stood 3 as guarantor in good faith owned by his friend namely Udee Electronics and Metals Pvt Ltd.
4. Thereafter, the petitioner ceased to be the Director of Samrat Bicycles Ltd and Hindustan Monark Ltd and also resigned as partner of firm M/s Federal Sports. The petitioner has averred that he stood as guarantor of the companies Hindustan Monark Ltd, Federal Sports & Udee Electronics & Metals Pvt Ltd and the recovery proceedings are pending against the aforesaid companies as per the list of creditors annexed with the plaint as Annexure A. The petitioner has averred that he has no property at all nor has capacity to pay the debts which are more than Rs500.00 hence he be declared insolvent. The petitioner has annexed the list of his assests as Annexure B.
5. None of the respondents have contested the petition.
6. The following issues were framed on 27.07.2006:
(i) Whether the petitioner is entitled to be adjudged as insolvent? OPP
(ii) Relief.
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4. The petitioner in support of their case has examined himself as PW1 and tendered his evidence by way of an affidavit as Ex P1. The petitioner deposed on the lines of the plaint and proved list of creditors is markA, list of the assets is markB and the list of the debtors of the deponent is markC. Photocopy of the passbook of provident fund account wherein the existing balance is Rs.61,682/ is markD. The testimony of the petitioner has gone unrebutted and unchallanged and the petitioner has not been crossexamined by any of the respondents. The respondents have also not led any evidence.
5. I have heard the arguments and have also perused the record and the evidence led therein. The issue wise findings are as under:
Issue no.1: Whether the petitioner is entitled to be adjudged as insolvent?
6. For a petitionerdebtor to succeed to his petition, he has to satisfy the conditions laid down in Section 10 of the Provincial Insolvency Act which are as under: (1) He is unable to pay his debts; and (2) His debate amount to Rs.500/ or more; or (3) He is under arrest or imprisonment in 5 (4) If an Order of abatement in execution of such a decree has been made and is subsisting against his property.
7.The scope of Section 10 was considered in "K.R.K.K. Krishnappa Chettiar Vs. V.V. R. Kasivishwanathan Chettiar & Ors." AIR 1966 Madras 331 wherein it was held that for adjudicating a debtor as insolvent, the court must see whether there is compliance of the provisions of Section 10 of the Provincial Insolvency Act 1920. When all the conditions specified in Section 10 are satisfied, the debtor is entitled to an order of adjudication. The matter does not depend on the discretion of the Court, but it is a statutory right of which he cannot be deprived by the Court on the ground of abuse of process. At the time of the initation of the proceedings, the court has only to be satisfied that the essential conditions for adjudication as provided under the Act are present. There is a stage at which the court can visit on the petitioner its due consequences of misconduct, i.e. when the application for discharge comes before the Court. The same view has been taken in "A.K. Kaimal Vs. Sudersen Trading Co. Ltd. Mysore & Anr." AIR 1976 Knt 203. Similarly, in "Karnakam V. Jayaseelam Chettiar & Ors." AIR 1977 Madras 250, it was held that when the petition for being adjudged an insolvent is made by a debtor, the Court has under Proviso to Section 24(1)(a) of the Provincial 6 Insolvency Act 1920 to be satisfied, prima facie, that the petitioner is unable to pay his debts and on being so satisfied, it is not bound to hear any further evidence on the opulence or the ability of the petitioner to pay his debts. It was further observed that the provisions of Provincial Insolvency Act 1920 do not enable the Court to dismiss the petition for insolvency on superficial enquiry to come to a conclusion that the petition is not a bona fide one and if any such situation areises, the stage at which the court can visit the petitioner for any alleged consequences of any misconduct of the debtor of which the debtor applies for discharge and not at the initial stage when an application under the Act is made by a debtor himself to be adjudged an insolvent. If such an enquiry was contemplated, the Act should have specifically provided for it. The reasons for this appear to be obvious as the Official Receiver who comes into picture after adjudication and who represents the body of creditors, would necessarily investigate into the question for the benefit of the creditors and if any assets have been screened by the debtors, he would bring the same into the pool for the prupose of division of the same amongst the body of creditors. The verdict of Hon'ble High Court of Madras in "K. Krishnan V. S. Ayyathurai & Ors." AIR 1979 Madras 82 is also to the effect that the debtor must satisfy the Court, prima facie, about his unability to pay his debts and it is not necessary for the Court to go into 7 further details as tot he bona fides of the claims of the petitioner. Similar are the observations made in "Pathuri Dharma Rao Vs. Vatluru Co operative Bank & Ors." AIR 1978 AP 4197.
8.The testimony of the petitioner has gone unrebutted and unchallanged. From his testimony, it is clearly established that there exists debts of more than Rs.500/ against the petitioner and he does not have assets to meet their liability. As per Section 6 Clause (1) Subclause
(f) of the Provincial Insolvency Act, a debtor commits an act of insolvency if he petitions to be adjudged an insolvent. Thus, the petitioners have proved all the requirements U/S 10 of the Provincial Insolvency Act to be adjudged as insolvents. The issue is decided in favour of the petitioner.
Issue no.2: Relief 9 In view of the findings on issue no.1, the petitioner is declared
insolvent in terms of Section 27 Clause (1) of Provincial Insolvency Act 1920 and are directed to apply for discharge within a period of two years from the date of this Order. In terms of Section 28 Clause (2) of Provincial Insolvency Act, the whole of the properties of the insolvents shall now vest in the Official Receiver Shri Rajinder Arya, attached to this Court and shall 8 be divided amongst the Creditors in terms of the provisions of the Provincial Insolvency Act. The Official Receiver shall take necessary steps as per the provisions of the Insolvency Act and the rules framed thereunder and shall submit his report by 28th July 2011. The petitioner shall appear before the official Receiver on 01.03.2011. In terms of Section 13 of the Provincial Insolvency Act, notice of the order of adjudication stating the name, address and description of the insolvents, the date of adjudication, the period within which the debtors shall apply for discharge and the court by which adjudication is made, shall be published in the Official Gazette Notification, "Statesman" and "Veer Arjun" at the expenses of the petitioner.
10. The file be now put up on 28.07.2011
11. The copy of this order be also sent to the Official Receiver for compliance.
Announce in the open court (Gautam Manan) On this 17th Day of February, 2011. ASCJ(Central)/Delhi 9 Suit no.21/04 Shri Harish Jain Ve r s u s Industrial Finance Corporation of India & Ors 17.2.11.
Present: None.
Vide separate judgment the petitioner is declared insolvent in terms of Section 27 Clause (1) of Provincial Insolvency Act 1920 and are directed to apply for discharge within a period of two years from the date of this Order. In terms of Section 28 Clause (2) of Provincial Insolvency Act, the whole of the properties of the insolvents shall now vest in the Official Receiver Shri Rajinder Arya, attached to this Court and shall be divided amongst the Creditors in terms of the provisions of the Provincial Insolvency Act. The Official Receiver shall take necessary steps as per the provisions of the Insolvency Act and the rules framed thereunder and shall submit his report by 28th July 2011. The petitioner shall appear before the official Receiver on 01.03.2011. In terms of Section 13 of the Provincial Insolvency Act, notice of the order of adjudication stating the 10 name, address and description of the insolvents, the date of adjudication, the period within which the debtors shall apply for discharge and the court by which adjudication is made, shall be published in the Official Gazette Notification, "Statesman" and "Veer Arjun" at the expenses of the petitioner.
The file be now put up on 28.07.2011 (Gautam Manan) ASCJ(Central)/Delhi/17.2.11 11