Bombay High Court
Re : Smt. Kanta Pravin Mehta, Insolvent. vs Unknown on 1 January, 1800
Equivalent citations: AIR1993BOM100
JUDGMENT
1. This notice of motion has been taken out by one K. P. P. Nayar as the applicant. Smt. Kanta Pravin Mehta is the insolvent. Dr. Kishan Baldev Mehta and Smt. Mridula Mehta arc the petitioning creditors. By prayer (a) of the notice of molion, the applicant seeks permission to remain present at the time of private examination of the insolvent to assist the Official Assignee in the interest of the general body of creditors. By prayer (b), the applicant seeks permission to furnish to the Official Assignee specific information regarding the estate and affairs of the insolvent which she is to be asked in her private examination and this the applicant seeks in the interest of the general body of the creditors of the insolvent. This notice of motion was taken out on 15th December, 1990.
2. The notice of motion was made absolute granting both the aforesaid prayers by Daud J. by his order dated 18th June, 1991.
Against that order, the insolvent preferred Appeal No. 561 of 1991. That appeal was disposed of by the Division Bench (P.D. Desai, C.J. & K. Sukumaran, J.) by its order dated 4th July, 1991 and the order of Daud, J. was sef aside. The notice of motion was remanded to the single Judge with a direction to give an opportunity to the parties to place on record further materials, if any, in support of their respective versions and to decide the notice of motion afresh in the light of all the factual and legal contentions which may be advanced. Pending further hearing and disposal of the notice of motion, the further examination of the insolvent was stayed.
3. In pursuance of the direction given by the Division Bench, the applicant has filed further affidavit in support of the notice of motion which is dated 2nd September, 1991. The insolvent has filed affidavit in reply dated 1st October, 1991 and the applicant has filed affidavit in rejoinder dated 19th November, 1991.
4. Heard arguments of Mr. Gursahani, the learned Counsel appearing for the applicant, and Mr. Madan, the learned Counsel for the insolvent who opposed the notice of motion. The petitioning creditors have not remained present and no Counsel appeared for them. Mr. Rajani, Advocate, who is present in Court, stated that he was 'watching' the proceedings on behalf of the petitioning creditors.
5. The relevant facts that are necessary to he stated in order to appreciate the background in which the applicant seeks permission to remain present at the private examination of the insolvent by the Official Assignee are these :
6. The petitioning creditors filed the in-solvency petition on 27th June, 1989 seeking an order of adjudication against the insolvent debtor on the ground that the debtor has refused to make payment to them towards the amounts deposited with her by them. According to the petitioning creditors, the debtor was indebted to them in the sum of Rs. 1,17,344.81. An order of adjudication was passed on the said petition on 1st August, 1989 recording that the debtor had committed an act of insolvency on 29th May, 1989. As a consequence of the order of adjudication, all the estate and effects of the insolvent vested in the Official Assignee.
7. In course of time, private examination of the insolvent under S. 27 of the Presidency Towns Insolvency Act, 1909, was fixed the Official Assignee. The applicant intended to remain present at the said examination and engaged services of Advocate Mr. G. J. Bijlani and authorised him to appear on behalf of the applicant before the Deputy Official Assignee in the private examination of the insolvent in order to assist him in the instant and for the benefit of the general body of creditors. According to the applicant, at the meeting dated 14th August, 1990, Mr. Bijlani was allowed to attend the same. It is his grievance that in the subsequent meeting dated 5th September, 1990, after the Advocates for the insolvent objected to the presence of any. creditors or their Advocates in the private examination of the insolvent, he was not allowed to attend the meeting. The question as to whether the applicant should be permitted to remain present at the private examination of the insolvent was considered as a preliminary point and the Deputy Official Assignee, holding that he was not so entitled, disallowed the applicant for attending the meeting in the private examination. That finding was made on 14th November, 1990. In view of that finding, the present notice of motion was taken out by the applicant.
8. To the affidavit in support of the notice of motion, inter alia, it is contended by the applicant that the finding recorded by the Deputy Official Assignee and his consequent refusal to allow the applicant to remain present at the private examination of the insolvent is erroneous in law and contrary to the provisions of Ss. 36 and 37 of the Presidency Towns Insolvency Act, 1909 (hereinafter referred to as 'the Act'). According to him, the records of the Official Assignee will bear out that creditors have been allowed to remain present in the private examination of the insolvents. It is submitted by him that the cardinal principle underlying the taw of insolvency is to protect the interest of the general body of creditors of the insolvent and in the facts and circumstances of the case, this is a fit case in which the applicant should be allowed to remain present at the private examination of the insolvent. In order to justify this contention, the following reasons are given by the applicant :
(a) The conduct of the insolvent shows that she is interested in delaying her examination and that is to the detriment of the general body of the creditors. In this connection, it is submitted by him that she has not been remaining present on bogus and false excuses of ill-health.
(b) Despite reminders by Official Assignee, the insolvent and/or her Advocates have not supplied the correct address of the insolvent and, therefore, the Official Assignee has not been able to serve any papers directly on the insolvent and this is being done by the insolvent to delay the proceedings.
(c) Although the insolvent was directed as far back as on 10th October, 1990 to file the schedule of her assets and liabilities, etc., she has failed and neglected to do so and that this was one more instance of her intention of delaying the proceedings.
(d) The borrowings by the insolvent are running in crores of rupees and the applicant, who is the president of the federation of the creditors of the insolvent, owes a duty to protect the interests of all the creditors by remaining present at the meetings held in connection with her private examination, so that the Official Assignee will get assistance from him and his Advocate and that is necessary in the interest and for the benefit of the general body of the creditors.
(e) No harm will be done to the insolvent if permission is granted.
9. Thus, in the initial affidavit in support of the notice of motion, the applicant sought leave on the ground that the conduct of the insolvent was such that it was likely to result in prejudice being caused to the interest of the general body of creditors from whom substantial amounts were borrowed by the insolvent and she was trying to delay and defeat their claims. It was claimed that since there was nothing to prevent or prohibit the applicant as a person representing the general body of creditors from remaining present at the private examination of the insolvent, permission may be granted to him to remain present.
10. However, after the order of the Division Bench dated 18th June, 1991, the applicant filed further affidavit dated 2nd September, 1991. Certain additional grounds have been raised in that affidavit. Firstly, it is contended that the insolvent having incurred liabilities running into cores of rupees by taking deposits and loans in her concern's name had immediately thereafter transferred the said amounts to her personal accounts and purchased with that money shares of several companies and floated new companies. Her majority of creditors are from Bangalore and Karnataka. Having decided to dupe the creditors and swallow their money by going into managed insolvency, the insolvent by taking into confidence and acting in collusion with the petitioning creditors who are insolvent's cousins, got herself dragged into insolvency by manouvring to bring the proceedings in this High Court. In that connection, it is sought to be pointed out by the applicant that both the insolvent and the petitioning creditors have given bogus and fictitious addresses of Bombay in order to confer jurisdiction upon this Court. Next it is contended that the petitioning creditors and the insolvent have colluded with each other to place on record that the insolvent has committed an act of insolvency by suspending the payment and this was done by them in furtherance of their plan of managed insolvency. Next it is contended that although the petitioning creditors knew many details about the assets of the insolvent, the insolvent in collusion with them has managed to give particulars of assets as mentioned in Exhibit F to the insolvency petition without disclosing all the assets, with a view that the enquiry and investigation by the Official Assignee would be consequently restricted only to those items. According to the applicant, in doing so, the insolvent has suppressed her other assets which are not mentioned in Exhibit F as can be seen from Exhibits 2 and 3 annexed to the said affidavit. It may be mentioned that Exhibit 2 apparently shows that the insolvent holds 6090 equity shares of the value of Rs. 1000/- each in Surajmal Diamonds Private Limited, Bangalore, and Exhibit 3 shows that she owns 1,39,265 shares of the value of Rs. 10/- each in Surajmal Credit and Investment Limited of Bangalore. It is contended by the applicant that this being an example of suppression of valuable assets by the insolvent in collusion with the petitioning creditors, it is necessary that the applicant is present at the private examination of the insolvent, so that assistance could be rendered to the Official Assignee to discover the hidden assets of the insolvent. That according to the applicant is necessary to be done in the interest of the general body of the creditors. The applicant has gone to the extent of alleging that the insolvent and the petitioning creditors have snatched the adjudication order from this High Court. A grievance is also made that the petitioning creditors have not been caring to attend meetings and pursue the proceedings and that shows collusion between them and the insolvent. It is pointed out that in six continuous meetings held from March, 1990 to November, 1990, the petitioning creditors were absent.
11. Mr. Gursahani, the learned Counsel for the applicant, after reiterating the various contentions raised by the applicant in the aforesaid two affidavits, firstly submitted that having regard to the provisions of Ss. 36 and 37 of the Act, the applicant cannot be said to be prevented or prohibited from appearing at the private examination of the insolvent and, therefore, in the facts and circumstances of this case, it is just and proper to permit the applicant to remain present to assist the Official Assignee in the interest of the general body of the creditors represented by the applicant who is the president of the said body of creditors. He submited that the applicant is an unsecured creditor for an amount of Rs. 2,00,000/- and his interest is very much involved. The learned Counsel further submitted that no harm or prejudice is likely to be caused to the insolvent by allowing the applicant to remain present at the private examination of the insolvent. He submitted that all that the applicant is at this stage seeking is permission to remain present and not to participate in the proceedings. He further submitted that presence of the applicant would enable the official assignee to discover all the properties of the insolvent particularly when the insolvent has shown a tendency to suppress her assets as demonstrated in the further affidavit in support and from the annexures, Exhibits 2 and 3 to the said affidavit. The learned Counsel further submitted that the conduct of the insolvent as well as the petitioning creditors makes it clear that they are in collusion with each other and the present insolvency is the product of their collusion and that they are interested in delaying the proceedings with a view to defeat the claims of several creditors including the applicant. The learned Counsel urged that the failure on the part of the insolvent to file a schedule of her assets and liabilities despite directions of the Court being given speaks volumes of her dishonest intention. The learned counsel also urged that the contention of the applicant that the insolvent and the petitioning creditors have avoided to give correct addresses is a pointer to they having manoeuvred to make a show that the act of insolvency was committed within the jurisdiction of this Court, so that the petition could be filed in this Court.
12. Mr. Madon, the learned Counsel for the insolvent on the other hand, vehemently urged that the allegation of collusion between the insolvent and the petitioning creditors made by the applicant is baseless. He pointed out that this was not the ground taken in the initial affidavit filed in support of the notice of motion and this ground was added under the guise of giving particulars of further properties of the insolvent for which liberty was granted by the Division Bench by its order dated 18th June, 1991. The learned Counsel argued that the ground of collusion is based on the alleged close relationship between the insolvent and the petitioning creditors. Mr. Madan submitted that in the affidavit in reply, the insolvent has categorically denied any relationship between her and the petitioning creditors and she has denied that they are cousins of her and that this denial has not been controverted by the applicant in his rejoinder and, therefore, this ground falls to the ground and renders the allegation of collusion to be a baseless and untenable ground. As far as the addresses are concerned, the learned Counsel referred to the fact that in his own affidavit filed by the applicant in support of Notice of Motion No. 128 of 1989, he had stated that he and others had deposited amounts in Swarna Finance & Investment situated at 607, Dalainal Towers, Nariman Point, Bombay, and the deposits were also shown to have been made in the branch of the said business at Bombay in case of 15 depositors, although the deposit by the present applicant was said to have been made in the Bangalore Branch of the said business. According to the learned Counsel, in the insolvency petition the same address has been mentioned and, therefore, there is no substance in the contention of the applicant that the insolvent has been avoiding to give her correct address so that she could not be available and the proceedings would get delayed. Mr. Madon further submitted that the insolvent has always been available and, in fact, the Official Assignee has visited her residence. Besides, she is also being represented by a firm of Solicitors.
13. As far as the failure of the insolvent to file schedule of her properties and assets is concerned, the learned Counsel submitted that the business of the insolvent was carried on at 22 branches and the representative of the Official Assignee has visited 17 branches and that goes to show that there was no attempt on the part of the insolvent to hide her properties. It is also submitted that the books of accounts of the insolvent were lying at different places and the creditors were obstructing in taking their possession because of which a Receiver was got appointed. That shows, according to him, that the insolvent is not making any attempts to conceal the records.
14. Apart from the above factual aspects, Mr. Madon has submitted that the applicant has no right available to him either under S. 36 or under S. 37 of the Act to remain present at the private examination of the insolvent. He further urged that even there is no scope for the Court to exercise discretion to allow a creditor like the applicant to remain present at the private examination. He submitted that there is a definite scheme where-under the Act provides for private examination and public examination of the insolvent. Under that scheme, the private examination is intended to enable the Official Assignee to discover the properties of the insolvent at which stage there is no right available to the creditor other than the petitioning creditor to remain present or participate in the proceedings. Mr. Madon does not dispute the proposition that under S. 36 of the Act, it may be open to the applicant to offer himself for examination but that according to him is a different thing than remaining present at the private examination of the insolvent which is the limited prayer made al this stage. Thus, according to the learned Counsel, since the applicant has no legal right to remain present at the private examination, no amount of prejudice alleged by him as likely to be caused to him or other creditors can enable him to remain present. Moreover, according to the learned Counsel, the presence of the applicant if allowed at the private examination of the insolvent may result in delay in the private examination of the insolvent and will lay a bad precedent, inasmuch as since about 3000 creditors are purported to be represented by the applicant, any number of them may seek lo remain present at the private examination of the insolvent. That exactly is not to be permitted having regard to the difference between the scope of private examination and public examination of the insolvent. Mr. Madon further submitted that the purpose for which the applicant desires to remain present at the private examination of the insolvent being to see that full estate and property of the insolvent is discovered, that can be achieved by him without remaining present at the private examination. Firstly, S. 36 itself provides a complete machinery in that respect Secondly, the applicant could furnish information to the Official Assignee and in pursuance of the liberty granted by the Division Bench, the applicant has already done so by filing a further affidavit. Lastly, the applicant has a right to appear and participate in the public examination of the insolvent. Thus, there is nothing which would require the applicant's presence at the private examination of the insolvent in order to protect the interest of the general body of the creditors as claimed by the applicant. The interest of such creditors is sufficiently safeguarded by the opportunity which they can have at the public examination. In any event, the insolvent against whom an order of adjudication has already been passed, cannot escape her liability under the Insolvency Act and there is thus no ground on which the applicant can be permitted to remain present at the private examination of the insolvent.
15. I shall first deal with the question as to whether the applicant can, as a matter of right, claim that he should be allowed to remain present at the private examination. For that purpose, section 36 of the Act is the relevant provision. Sub-section (1) of section 36 reads as follows :--
36(1) "The Court may, on the application of the official assignee or of any creditor who has proved his debt, at any time after an order of adjudication has been made, summon before it in such manner as may be prescribed the insolvent or any person known or suspected to have in his possession any property belonging to the insolvent, or supposed. to be indebted to the insolvent, or any person whom the Court may deem capable of giving information respecting the insolvent, his dealings or property; and the Court may require any such person to produce any documents in his custody or power relating to the insolvent, his dealings or property."
If a right was conferred by this provision, then the applicant could have claimed to enforce that right and there was no question of any permission being required to be applied for. Mr. Gursahani submitted that the words any creditor who has proved his debt' include a creditor who has lodged his claim, and since in this case the applicant has lodged his claim, he is entitled to make an application under section 36. To that extent, the submission of the learned counsel must be accepted. How-
ever, the question is as to whether the applicant, who is not the petitioning creditor, has a right to attend the private examination without leave of the Court since according to me, section 36 does not confer any right upon the applicant to remain present. Mr. Gursahani referred to the commentary in paragraph 291 from Mulla on the Law of Insolvency in India, 3rd Edition, page 234, and submitted that there is nothing in section 36 of the Act either to prevent or prohibit the applicant from remaining present at the private examination in the interest of the general body of creditors. It would appear from the commentary (in paragraph 291) that for the purpose of section 36 of the Act, a creditor who shows a prima facie probability that some benefit will result to the estate or to the general body of creditors, is entitled to apply for examination. Thus, according to the learned counsel, it is a matter clearly within the discretion of the Court and in the facts and circumstances of the case, inasmuch as, great injury and harm is likely to he caused to the general body of the creditors if the applicant is not allowed to remain present, this is a fit case in which permission should be granted to the applicant to remain present.
16. I have already narrated the submission Mr. Madon in this respect earlier. The commentary in paragraph 293 (of Mulla's treatise) goes to show that a creditor has no right to attend the examination. Reference has been made to (1884) 27 Chancery Division page 515. That was a case which arose under the English Companies Act, 1862. It was slated by Bacon V. C. thus :
"The law enabled the assignee in bankruptcy to seek for evidence wherever he could find it, for the purpose of proving his case. The statute gave him most inquisitorial powers to endeavour to find out evidence to support the case which he had to advance against the person accused. ..... the liquidator's hands are not to be tied in pursuing his investigation....." and Cotton L.J.). observed :
".....It is not necessary, in my opinion, to decide whether this is a proceeding within the meaning of the order giving leave to attend, though I am disposed to agree with the view that it is not..... The liquidator learns what the witness will say, but the deposition is not evidence against the party whose claim the liquidator is opposing, because that party has not had an opportunity of attending. If the depositions were evidence there would be a right to cross-examine; but the Appellants do not ask to cross-examine, they arc only seeking to get the benefit of the information which the Act intended to enable the liquidator to get for his own purposes. They wish to be present in order to obtain information, not for the purpose of assisting the company, but of establishing a claim against it, and to allow them to do so would be going against the spirit and object of the 115th section."
Although this decision could have no direct application but in similar situation, the principle evolved was that where an investigation is to be carried out by the liquidator, a third party is not, as a matter of rule, entitled to remain present. The substance of the submission of Mr. Madan is to the same effect. Having regard to the provisions of section 36 read with section 37 of the Act, I am not inclined to hold that the applicant can seek to remain present at the private examination of the insolvent as a matter of right.
17. The next question to be considered is whether in the interest of justice, it is open to the Court to permit him to do so by exercising its discretion and whether such a discretion can be exercised within the four corners of section 36 of the Act. It is true that exercise of the power of the Court under section 36 of the. Insolvency Act is discretionary. However, the discretion can only be used within the ambit of section 36 and for the purposes of that section and not for any other purpose. Section 6 of the Act empowers the Court to summon any person for the purpose of examination under section 36 of the Act. Proviso to section 7 however, is relevant and important to be noted. It provides that unless all the parties otherwise agree, the power given to the Court to decide all questions arising under the provisions of the Act shall, for the purpose of deciding any matter arising under section 36, be exercised only in the manner and to the extent provided in that section. That means that the provisions of section 36 have to be very strictly construed and applied. Rules 33 and 33A of the Bombay Insolvency Rules, 1910, also are relevant to be noted in this connection. Rule 33 requires that any application made under section 36 shall state shortly the grounds upon which the application is made. Thereupon, under Rule 33A, summons under section 36 is issued in the prescribed form. Section 36 is intended to call the insolvent in order to examine him regarding his dealings and property. No other person may be summoned for that purpose. The object of the examination is to obtain information as regards the affairs and dealings of the insolvent and to see if any steps are required to be taken thereafter in the interest of the creditors as a whole. That examination, however, is held in private unlike the public examination under section 27, in order to achieve the aforesaid object. The examination is in the nature of a secret proceeding between the Court and the insolvent and the person who is summoned under section 36. It is not a proceeding in the nature of litigious proceeding between the two parties, in the sense that the insolvent on the one side and the applicant creditor on the other side, are parties to such a litigation. The witness summoned under section 36 is not in the ordinary position of a witness in a litigated matter between two parties. The Court exercises the power to examine a person who is supposed to be indebted to the insolvent or is suspected to be in possession of his property. That is clear from sub-sections (4) and (5) of section 36 which speak about the consequence that follows on the examination of the witness summoned under that section. Thus, essentially it is an enquiry which the Court makes either by itself or through the Official Assignee in order to gather information about the property and dealings and the assets of the insolvent. The creditors do not come into the picture. The heading of the subject covered from section 33 indicates that section 36 is a section concerning control over person and properly of insolvent. The marginal note of section 36 shows that it is intended for discovery of insolvent's property and a creditor may be entitled to apply to the Court for requiring any person to be summoned including the insolvent for the purpose of discovery of the insolvent's properties.' On such application being made, it is the Court which in its discretion may summon such person. The Court acts in order to enable it to ascertain the insolvent's properties. That does not imply that the person moving the Court for summoning a witness to furnish to the Court all the particulars about the property and dealings of the insolvent is required to prove or establish facts which are likely to be revealed by the witness on his examination and the say of the insolvent in that respect. His job is over as soon as he moves the Court and puts the Court on guard that there is suspected suppression of his property and dealings by the insolvent and it would be necessary in the interest of the creditors in general to examine either the insolvent or any witness. Having regard to that nature of the provision, I find it difficult to find any scope in the section making it necessary for any purpose the presence of the person, who may have moved the Court for issuance of summons, at the examination of the insolvent which the Court may carry either by itself or through the Official Assignee. It, therefore, follows that the discretion which the Court can exercise is limited in its extent viz., that it can be used only for the purpose of summoning a witness if desired by a creditor for the purpose of ascertaining the property and dealings of the insolvent and nothing more. If that be the limited scope of section 36, permitting a creditor to remain present at the private examination of the insolvent and who apparently would not be able to participate in the proceedings, may cause only embarrassment to the insolvent. The power under section 36 is a power exercised by the Court and it is not the business of the creditor to exercise that power. The Official Assignee has to act on his own and not at the behest of the creditor who in a way may be interested against the insolvent in a given case. The applicant moving the Court under section 36 is not expected to go beyond asking to summon a witness. I, therefore, find no scope to permit the applicant to remain present at the private examination of the insolvent as prayed and for exercising my discretion for that purpose.
18. Assuming (hat the above view of mine is not right and assuming further that the Court has discretion to grant permission to remain present, such discretion can be exercised only where the applicant creditor shows a prima facie probability that some benefit will result to the estate or general body of creditors from his presence at the proposed examination. In the instant case, it is claimed by the applicant that he is acting for the benefit and in the interest of the general body of creditors although he may be one of the persons to be benefited and that the proposed examination of the insolvent, therefore, is very crucial for the general body of creditors. In my opinion, for that purpose, the presence of the applicant at the private examination of the insolvent would not be necessary because necessary steps have already been taken by the applicant by placing on record information about the alleged suppression of some property by the insolvent particularly after pointing out that the insolvent has failed to submit a schedule of all her assets, properties and liabilities that was expected of her to be filed. The applicant has done so by filing the additional affidavit dated 2nd September 1991 and the relevant material is annexed as Exhibits 2 and 3. It is true that the applicant has not served a copy of this affidavit on the Official Assignee and ordinarily, therefore, the Official Assignee would not be expected to take notice of Exhibits 2 and 3 while holding the examination of the insolvent. However, that difficulty can be removed by directing the Official Assignee to take notice of the affidavit dated 2nd September 1991 and the annexures thereto and proceed with the examination of the insolvent bearing in mind that additional material and facts disclosed therefrom. It would necessarily follow that once it is pointed out that the insolvent has shown a tendency to suppress some property belonging to her, the Official Assignee would take care and be mindful to examine the insolvent in depth to find out whether any other properly or assets have also not been disclosed by her. The matter would not end there because despite the Official Assignee not being fully successful in getting at the truth, the creditors will have a right to participate and cross-examine the insolvent at the public examination. It must be assumed that after the Division Bench has given liberty to the applicant to file further affidavit, the applicant chose to file the affidavit dated 2nd September 1991. If he had any other information, it was expected of him to have placed the same on record by giving those details in the affidavit dated 2nd September 1991 or by a separate affidavit. Therefore, at this stage only the affidavit dated 2nd September 1991 is required to be taken into account. The applicant having taken the step which is in the nature of assisting the Official assignee to achieve the purpose of section 36, his presence at the private examination of the insolvent, therefore, will not be of any further consequence or advantage to the creditors unless the applicant expects the Official Assignee to act at his behest. Such an interference in the functioning of the Official Assignee cannot be permitted. For no other purpose, the presence of the applicant appears to be called for. Thus, there is no scope for exercising the discretion in favour of the applicant.
19. Lastly, briefly, the grounds raised by the applicant may be dealt with. I have already enumerated the grounds taken. In so far as the allegation that the proceedings are being delayed by the insolvent by constantly remaining absent can be taken care of by asking the Official Assignee to be strict hereafter and refuse unwarranted adjournments. That, however, does not mean that the applicant's presence would in any manner remove that difficulty if such a direction was not given to the Official Assignee.
20. The ground based on the allegation that the insolvent had not supplied her correct address also bears no scrutiny for the reason already discussed viz., that even according to the applicant, the insolvent had been carrying on business at Bombay through her branch office and various deposits by the creditors now represented by the applicant were made at that branch office at Bombay. Moreover, Mr. Madan, the learned counsel for the insolvent, stated that the insolvent is very much available in Bombay and since she cannot remain present before the Official Assignee owing to ill-health, she may be examined on commission. It does not, therefore, appear that on the ground that incorrect address was supplied, delay in the proceedings has been occasioned or that false address was given in order to confer jurisdiction upon this Court to entertain the insolvency petition.
21. The question of failure on the part of the insolvent to file the schedule of her assets and liabilities has also been discussed above. I must make it clear that I have dealt with that question only for the limited purpose of deciding the notice of motion. I refrain from expressing any opinion as to the consequence of the failure on the part of the insolvent to file the schedule as required by law and the rules. That question is left open.
22. The other ground pleaded in support of the motion that the applicant is seeking to protect the interest of the general body of the creditors and is seeking the permission for the benefit of the general body of creditors as the Official Assignee will get assistance from his presence, has already been dealt with extensively above and on that ground, it is not possible to grant the permission.
23. By the additional affidavit, the further ground taken by the applicant is that there is manifest collusion Between the insolvent and the petitioning creditors who are acting hand in glove and are delaying the examination of the insolvent with a view to defeat the interest of the general body of creditors. The ground of collusion is propped up on two legs. One is that the petitioning creditors are the insolvent's cousins and, therefore, they have readily obliged her and thus there is collusion between them. The allegation that the petitioning creditors are the cousins of the insolvent has been stoutly denied by the insolvent in her affidavit in reply. There has been no denial of that denial in the rejoinder filed by the applicant and, therefore, in the absence of any other material being produced by the applicant, it must follow that the ground of relationship does not exist and consequently, the charge of collusion ought to fail. The second leg of the proposition is that the petitioning creditors and the insolvent have furnished bogus and fictitious addresses and that also points to the collusion between the insolvent and the petitioning creditors. As already discussed above, since the insolvent appears to be. available for examination at Bombay, nothing turns on this allegation. It is pointed out in this connection that the petitioning creditors, who knew much about the assets of the insolvent, would normally have also shown the assets mentioned in Exhibits 2 and 3 to the affidavit dated 2nd September 1991 and they not having done so, there is collusion between them and the insolvent. The force of this contention is taken out because Exhibits 2 and 3 are now being taken into consideration and the Official Assignee will conduct the private examination bearing in mind that there has been apparently non-disclosure of these assets either by the insolvent or by the petitioning creditors so far. It would not, however, be possible to rush to the conclusion that either the order of adjudication was snatched from this Court or that simply because the petitioning creditors have not cared to pursue the proceedings, the applicant would get a right to remain present at the examination of the insolvent. The grievance made in the affidavit dated 2nd September 1991 based on the allegation of collusion need not be scrutinised further to determine its truth or otherwise. If a public examination of the insolvent would take place, this question still would survive and 1 am not at this stage making any finding whether the allegation made about the alleged collusion is true or false, that not being necessary for deciding the present notice of motion.
24. Thus, in my opinion, the applicant has no right under the law to remain present at the private examination of the insolvent.
Secondly, there is no scope for exercising the discretion for that purpose which would travel beyond the scope of section 36 and allied provisions as discussed above. Assuming that discretion could be exercised, yet, in the facts and circumstances of the case, since the main purpose of assisting the Official Assignee has been achieved by filing the affidavit dated 2nd September 1991, there is no occasion for exercising the discretion in favour of the applicant. Lastly, in so far as the various grounds raised by the applicant are concerned, I do not find them such as would call upon me to exercise discretion to permit the applicant or any other creditor represented by him from amongst the general body of creditors to remain present at the private examination of the insolvent. It is needless to say that the Official Assignee, while conducting the private examination of the insolvent, will bear in mind the observations made hereinabove. It is, however, necessary to clarify that the present notice of motion is confined only to the question of the applicant's desire to remain present at the private examination and not for any other purpose even under section 36 of the Act.
25. In the result, the notice of motion is dismissed and the permission as sought by the applicant to remain present at the private examination of the insolvent is refused. However, having regard to the nature of the grounds urged by the applicant, there will be no order as to costs.
P. C. : The applicant shall file a copy of his affidavit dated 2nd September 1991 upon the Official Assignee.
P.C. : At the request of Mr. Gursahani, the Official Assignee is directed that further private examination of the insolvent may not be held for a period of two weeks from today.
P. C. : Certified copy of this order to be expeditiously issued to the applicant, the Official Assignee and the insolvent.
26. Order accordingly.