Judgment :- Mishra, J. Seven petitioning creditors have moved the insolvency petition under Secs.9(l)(d)(ii) and (iii) and 9(g) of the Presidency Towns Insolvency Act, 1909 against M/s.P.B.Lakshmanan Sah & Bros., a partnership firm and the 8 partners of the firm, and learned single Judge of this Court has accepted their case of the alleged act of insolvency of the respondents under Sec.9(g) of the Act and has adjudged the firm and its two partners, viz. P.B.Kasi Sah and P.T.Hiru Sah, who are the appellants before us as insolvents. 2. Petitioning creditors, it is not in dispute, had dealings with the firm Messrs.P.B. Lakshmana Sah & Bros. It occurred as alleged by them that the firm and its partners were transferring their rights with intent to defeat or delay the creditors and in the beginning of 1982, they had almost closed their business and there were talks in trade circle that there were little good left in the shop and less business. By the end of 1982, when the respondents 3 and 4 were pressed for payment by some of the creditors at Kancheepuram, they expressed their inability to pay the debts and passed on a letter Ex.P-7, dated 29. 1982 agreeing to pay 25% of the arrears before 30.9.1982. They, however, were not able to fulfil the terms of Ex.P-7. Subsequently, however, respondents 3 and 4/appellants 1 and 2 herein, who alone were specifically mentioned as persons dealing in the business and who gave the letter dated 30.9.1982, gave another Ex.P-8, dated 211. 1982 to another group creditors at Kancheepuram stating that they would pay 25% of the balance on or before 20.12.1982 and in default agreed to hand over the title deeds of the property bearing door No.Mettu Street, Kancheepuram. The said letter addressed to 13 creditors also mentioned that four documents of title were handed over to first petitioning creditors that is to say J.N.Sivaraj Chettiar. 3. The said letter addressed to 13 creditors also mentioned that four documents of title were handed over to first petitioning creditors that is to say J.N.Sivaraj Chettiar. 3. It is then alleged that the other creditors from all over the State of Tamil Nadu, Andhra Pradesh and Karnataka tried to get at the respondents 3 and 4 (Appellants and 2 and 3) at their shop when they used to do business, but they were not avail-able in the shop and with great difficulties, some of the creditors managed to contact them when they clearly notified that they were not in a position to pay their debts and they were making arrangements for composition with the creditors by giving them of their properties for the benefit of the general body of creditors. The debts of the firm including trade debts and debts due to the bank were about Rs.70 lakhs, it is alleged and the properties of the appellants and the other partners of the firm were worth only about Rs.50 lakhs. It is said, in March, 1983, some of the creditors, after great difficulty, could obtain a letter of appoint-ment of trustees (Ex.P-10) under which the appellants 2 and 3 agreed to execute a regular trust deed, power of attorney and to give a schedule of title deeds of all the properties belonging to them and also to give the list of creditors. The creditors, who had assembled, believed the representation and many of them attempted to get at the appellants 2 and 3 for completion and execution of documents for sale of the properties and for distribution of the proceeds among the creditors. But this was not complied with and a meeting of the creditors was arranged at the business place-of the appellants again. The appellants, however, gave a telegram requesting that the meeting be postponed till 30th August, 1983. The creditors then convened a meeting at Hotel Swagath, Royapettah, Madras on 9. 1983, only appellant No.3 appeared at the meeting, but he represented other partners as well. He told the creditors at the meeting of the creditors that the other partners were not available and they would consult their advocate and give a document duly signed by all the partners and execute necessary truste deed and power of attorney. 1983, only appellant No.3 appeared at the meeting, but he represented other partners as well. He told the creditors at the meeting of the creditors that the other partners were not available and they would consult their advocate and give a document duly signed by all the partners and execute necessary truste deed and power of attorney. It is then alleged that the creditors refused to heed his request and wanted to him to do all then and there. The respondents then gave a list of creditors with regard to the debts due as on 30.6.1985 subject to verification and audit. The appellants promised at the initial stage, according to the petitioning creditors that they would get the documents signed, but later on made an unacceptable request that the properties should not be sold for one year and that the creditors should supply further goods without payment and that they would make profit and discharge the debts. They thus wanted the properties to be soly only after one year. None of the creditors, however, was willing for this course and they wanted either payment immediately or documents executed forthwith. The second and third appellants, according to the petitioning creditors, notified that they could not make any payment, but insisted that the property should not be sold for one year. The creditors, then issued a notice, which returned unserved. They followed it by another set of notice, which also could not be served. The appellants, however, gave a lawyer’s notice Ex.P-30, dated 110. 1983. 4. The allegations made against the firm and the appellants 2 and 3 are contested by a counter affidavit filed on behalf of the appellants and others and in their counter affidavit, they have maintained that on 23. 1983, the appellants2 and 3 deposited with petitioning creditors title deeds of their immovable properties at the value of Rs.50 lakhs and the petitioning creditors have issued receipts dated 23. 1983, which is marked as Ex.P-16. According to them, they have been carrying on business without any discontinuation and they also paid the creditors to the extent of Rs.6 lakhs from 9. 1983 till the date of the petition. According to them 23. 1983, which is marked as Ex.P-16. According to them, they have been carrying on business without any discontinuation and they also paid the creditors to the extent of Rs.6 lakhs from 9. 1983 till the date of the petition. According to them 23. 1983, the creditors obtained from the second and third appellants a letter of appointment or trustees and on the next day, they received as evidence the document of title of immovable properties at the value of Rs,50 lakhs. Earlier, they received Rs.40,000 for distribution among themselves. They have also maintained that the assets of the partnership exceeded their liability and that certain properties worth Rs.40 lakhs were mortgaged to the State Bank of Mysore for Rs.25 lakhs. According to them, they possessed assets much more than the claim of any creditors and thus they are in no way insolvents. 5. We have not given any details of the alleged acts of insolvency of the appellants herein tailing under Sec.9(l)(d)(ii) of the Presidency Towns Insolvency Act, 1909 and/or other allegations of the petitioning creditors as the only ground to adjudge the appellants accepted by the trial court is that the appellants have given notice to the creditors that they have suspended payment of their debts. 6. The trial court has dealt with the evidence on this aspect of the case in some details and has found that all the events clearly indicate that the appellants 2 and 3 intended to suspend payment of the debts by themselves. When, however, it was urged before the trial court that the partners of the firm have got assets more than the debis and they can discharge the entire debts, the trial court has said, “But, the fact that the respodnents are in a position to pay the entire debts is not the criterion and the only question to be decided is whether their conduct will amount to suspending payment to the creditors.” 7. Learned counsel for the appellants has contended before us that the trial court’s order in adjudging the firm and its two partners as insolvents is erroneous for the reason of the express provisions in this behalf in Scc.34 of the Partnership Act read with Secs.97 and 99 of the Presidency Towns Insolvency Act. Learned counsel for the appellants has contended before us that the trial court’s order in adjudging the firm and its two partners as insolvents is erroneous for the reason of the express provisions in this behalf in Scc.34 of the Partnership Act read with Secs.97 and 99 of the Presidency Towns Insolvency Act. He has submitted that Sec.99 of the Presidency Towns Insolvency Act has contemplated insolvency proceeding against a firm and such a proceeding can be taken against the firm represented by one or more than one partner. The acts of insolvency of a partner acting on behalf of the firm, will not attach to the partner committing an act of insolvency on behalf of the firm alone, who shall in the event of the firm being adjudged as insolvents, be an insolvent to the any other partner except any infant or minor admitted to the benefits of the partneship, it is imperative, according to the learned counsel for the appellants, that on a debtor satisfying the court that he is able to pay his debts or for other sufficient cause, no order ought to have been made, merely because or or the other act of insolvency is proved. According to him, thus there is an apparent error of law in the approach of the trial court that the only question to be decided in the proceeding is whether the debtor is conduct will amount to suspending payment to the creditors as that is an act of giving notice to any of the creditors by the debtor that he is suspending or that he is about to suspend payment of his debts. The most relevant consideration in the instant case, according to the learned counsel for the appellants, is that the partners capacity to pay the debts has been ignored altogether. To support this contention, learned counsel has drawn our attention to Sec. 13(4) of the Presidency Towns Insolvency Act, which says, “The Court shall dismiss the petition — .(a) if it is not satisfied with the proof of the facts referred to in Sub-sec.(2); or .(b) if the debtor appears and satisfied the court that he is able to pay his debts, or that he has not committed an act of insolvency or that for other sufficient cause no order ought to be made”. 8. 8. Learned counsel for the respondents, on the other hand, has contended that the finding as to the act of insolvency in terms of Sec.9(l)(g) is based on cogent and reliable evidenceand thus the appellants have made themselves liable to be declared as insolvents. True, it has been found that the appellants 2 and 3 respondents 3 and 4 in the court below) acted for and on behalf of the firm and their acts of insolvency accordingly got attached to the firm and consequently to all the partners of the firm, but there is no error of law if the case of the two individual partners that is appellants 2 and 3 is separately viewed in such a proceeding and they are adjudged as insolvents in a situation like this. He has contended that the debtor firm and its partners were/are required to establish that they have the capacity to pay, nave not let cogent or reliable evidence in this behalf. 9. The Supreme Court in the case of Mandalsa Devi v. M.Ramnarain P. Limited, A.I. R. 1965 S.C. 1718: (1965)2 S.C.J. 853: (1965)2 S.C.A. 854: (1966)1 S. C. W.R. 55:68 Bom.L.R. 31, has said what should be obvious to all connected with the affairs of a partnership that a suit against the firm is a suit against the partners and with reference to O.30 of the Code of Civil Procedure, said that in a normal case where all the partners of a firm are capable of being sued and being adjudged judgment debtors, a suit amy be filed and a decree may be obtained against a firm, and with reference to O.21,Rule50 of the Code of Civil Procedure said that such a decree may be executed against the property of the partner and against all the partners. The Supreme Court has in this judgment also said that there may be abnormal cases where a suit is filed against a firm under the provisions of O.30 of the Code of Civil Procedure and it is found that one of its partners cannot be sued or cannot be adjudged a judgment debtor and that in such a suit, a decree enforceable against the other partners and the partnership assets may be passed. 10. 10. In another judgment in the case of Shivagowda v. Chandrakant,A.L.R. 1965 S.C. 212, the Supreme Court has considered a case of a minor who was admitted to the benefits of partnership, which was later adjudged as insolvent under the provisions of the Provincial Insolvency Act, 1920 and it was contended that the minor, who had attained majority was equally liable with other partnes for the acts of insolvency of the firm. The Supreme Court has said upon this, “the question turns upon the relevant provisions of the Provincial Insolvency Act, 1920 (5 of 1920) and the Indian Partnership Act. Under the provisions of the Provincial Insolvency Act,a person can only be adjudicated insolvent if he is a debtor and has committed an act of insolvency as defined in the Act; See: Secs.6 and 9. In the instant case, respondents 2 and 3 were partners of the firm and they became indebted to the appellants and they committed an act of insolvency by declaring their inability to pay the debts and they were, therefore, rightly adjudicated insolvents. But the question is whether the first respondent could also be adjudicated insolvent on the basts of the said acts of insolvency committed by respondents 2 and 3. He could be, if he had become a partner of the firm....” 11. Firm Mukund Lal v. Purushottam Singh, A.I.R. 1968 S.C. 1182: (1968)2S.C.J. 639: (1968)2S.C.A. 461, is a case which has dealt with the question as to when act of insolvency by one or some partners be attributable to other partners in a case arising under the Provincial Insolvency Act. In this judgment, it is said clearly that an order of adjudication under the Act can made against the firm in the firm’s name if the proper conditions are satisfied and further that according to the English Law, the act of bank ruptey must be a personal act and no act of bankruptcy could be committed by a firm as such, and no adjudication could be made against a firm in the firm’s name, but under Sec.99 of the Presidency Towns Insolvency Act, an adjudication order may be made against a firm in the firm’s name and such an order operates as if it were an order made against each of the persons who at the date of the order was partner in the firm. It is however, pointed out that there is no provision in the Provincial Insolvency Act corresponding to Sec.99 of the Presidency Towns Insolvency Act. But Sec.79(2)(c) of the Act provides for rules to be made by the High Court as to the procedure to be followed when the debtor is a firm. This section therefore assumes that an adjudication order can be made under the Act against the firm in the firm’s name what is relevant however, is as to what are the proper conditions to adjudge a firm insolvent and answer to this is available in this judgment of the Supreme Court in these words. “We think that in order to support an adjudication against a firm there must be proof that.... each of the partners has committed some act of insolvency. If, however, a joint act of insolvency is relied upon it must be shown to be the act of all the partners. An order for adjudication can also be made against a firm if there was an act of insolvency by an agent of the firm which was such as must necessarily be imputed to the firm... Sec.2(a) of the Indian Partnership Act (IX of 1932) defines” an act of a firm to mean “ any act or omission by all the partners. Or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm,” the effect of this section read with the Explanation to Sec.6 of the Act appears to be that the question whether an act of insolvency of one or more partners can be regarded as an act of all the partners is a question of fact to be determined on the facts and circum-stances of each particular case. For instance,/n re. Mahomed Hashan and Company, A.I.R. 1923 Bom. 107:24 Bom.L.R. 107: 751.C. 203, one of the partners in a firm consisting of two partners departed from the usual place of business with intent to delay and defeat the creditors of the firm. It was held by the Bombay High Court that an adjudication order could not be made against the firm in such a case unless the other partner had also departed with like intent. Similarly, in Gopal Naidu v. Mohanlal, I.L.R. 49 Mad. 189: A.I.R. 1926 Mad. It was held by the Bombay High Court that an adjudication order could not be made against the firm in such a case unless the other partner had also departed with like intent. Similarly, in Gopal Naidu v. Mohanlal, I.L.R. 49 Mad. 189: A.I.R. 1926 Mad. 206, it was held by the Madras High Court that it is a question of fact whether the act of one partner in closing the business of the firm and thus committing an act of insolvency so far as he is concerned was imputable to another partner so as to entitle the creditors of the firm to get the other also adjudicated as insolvent. In the circumstances of that particular case it was held that the mere fact of closing the firm by one partner without more evidence to show that the other either expressly or impliedly authorised the same was insufficient to lead to such imputation..." 12. The Supreme Court in the case of Firm Mukund Lal v. Purushottam Singh, A.I.R. 1968 S.C. 1182: (1968)2S.C.J. 639: (1968)2 S.C.A. 461, declined to accept the act of one of the partners as an act on behalf of the partners of the firm and thus on behalf of the firm for the reason that the property of which Mukand Lal was alleged to have made a gift to Veer Kumar was not partnership property and there was no collective act of insolvency alleged on behalf of all the partners of the firm. 13. In another case under the Provincial Insolvency Act, a Bench of this Court in Siva Reddy v. The Official Receiver of Bellary, 71 M.L.J. 730: A.I.R. 1937 Mad. 13:1936 M.W.N. 1040: 44 L.W. 651:1661.C. 80, said, "Where in insolvency a partnership was proved to have existed among three brothers of a joint family and hence the acts of one of them in exclusive control of the business as agent were sufficient to implicate the other two in insolvency." that was a case where the brother, in the control of the business, had given a notice of suspension of payment to creditors and the court held that the brother’s act should be deemed to be the act of others also. 14. 14. A study of the provisions of Indian Partnership Act gives full assurance to the conclusion that partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them for all; persons who have entered into partnership with one another are called individually partners and collectively a firm and an act of firm means any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm. Partners are bound to carry on the business of the firm to the greatest common advantage, to be first and faithful to each other and to render true accounts and full information of all things affecting the firm to any partner or his legal represntative; subject to contract between the partners, every partner has a right to take part in the conduct of the business if every partner is bound to attend diligently to his duties in the conduct of the business and subject to the provisions of the Partnership Act, a partner is the agent of the firm for the purposes of the business of the firm, but in order to bind a firm, an act or instrument done or executed by a partner or other person on behalf of the firm shall be done or executed in the firm name or in any other manner expressing or implying an intention to bind the firm; these may further be an implied authority of a partner as the agent of the firm to bind the firm and the other partners in a firm may, be contact, between the partners extend to restrict the implied authority of any partner. Any act done by a partner on behalf of the firm which falls within his implied authority binds the firm unless the person with whom he is dealing onous of the restriction or does not know or believe that partner to be a partner. Every partner of the firm shall have to share the liabilities and shall be bound by such acts of a partner who has the authority to act on behalf of the firm express or implied. Such rules of law which are found included in the provisions of the Provincial Insolvency Act are expressed in Sec.99 of the Presidency Towns Insolvency Act. Such rules of law which are found included in the provisions of the Provincial Insolvency Act are expressed in Sec.99 of the Presidency Towns Insolvency Act. Once it is found that a partner has acted under his express or implied authority on behalf of the firm, all partners except minors admitted to the benefits of the partnership shall be bound and shall accordingly be liable to be judged as insolvents even though they may not have themselves done any act of insolvency. The alleged acts of insolvency in the instant case, are attributed to the appellants 2 and 3, in particular, the alleged understanding to execute the composition deed and the trust deed and the alleged handing over of the documents to the general body of the creditors by appellants 2 and 3. These acts, it is suggested, lead to the conclusion that the appellants 2 and 3 exhibited the intention of the firm that is intended to suspend payment of debts. In the words of the trial court, "if we examine the facts of this case, the deposit of title deeds with the creditors of R.W.1 clearly indicates a temporary suspension of payment and from that act it is always possible for the creditors to infer that there is no likelihood of their getting the amounts in the near future and they will have to wait till the composition is completed. The several transactions that took place as set out above and borne out by the evidence clearly indicate the state of minds of the respondents 3 and 4, which establish a temporary suspension of payment to the creditors till an understanding is arrived at or the composition formula is settled. The creditors cannot expect any payment in view of the execution of Ex.P-10. On 23. 1983 and the handing over of the title deeds of Exs.P-12 to P-15 on 23. 1983 and also the subsequent transaction that ook place between the creditors and the respondents 3 and 4. It is contended on behalf of the respondents that in any event the handing over of the title deeds Exs.P-12 to P-15 took place on 23. 1983 and the handing over of the title deeds of Exs.P-12 to P-15 on 23. 1983 and also the subsequent transaction that ook place between the creditors and the respondents 3 and 4. It is contended on behalf of the respondents that in any event the handing over of the title deeds Exs.P-12 to P-15 took place on 23. 1983 and if that is taken as the suspension of payment of debts and construed as an act of insolvency then an insolvency petition ought to have been filed within three months from that date and in this case the insolvency petition has been filed only on 30.11.1983 long after three months and hence the insolvency petition cannot be based on the alleged act of insolvency that took place on 23. 1983. But in the evidence it is seen that subsequent meeting of the creditors was convened on 9. 1983 and the same continued on 9. 1983 also on which date the third respondent handed over the list of creditors Ex.P-22 and promised to execute a composition after consulting his advocate. Since what transpired on 9. 1983 and 9. 1983 also clearly indicate that the creditors will have to wait till the composition is over a notice of suspension of payment to the creditors can be inferred from what took place on 9. 1983 and 9. 1983. The debtors themselves placed title deeds in the hands of the Trustees of the creditors for the purpose of sale and distribution among the creditors and this will clearly lead the creditors to believe that they would accept the return of their dues not from the debtors but only from the sale of the properties." 15. As we have seen above, it is necessary, before a firm is adjudged insolvent, to examine the acts of one or some partners to know whether he or they acted as the agent and thus if they committed any act of insolvency that was attributable to the firm and accordingly to all the partners of the firm. The trial court has not been addressed by either party on this aspect of the law. The trial court has not been addressed by either party on this aspect of the law. There is an obvious contradiction in the order that has been passed in the instant case that on the one hand, the firm is adjudged as insolvent and on the other hand, only two of the partners are adjudged as insolvents and other partners are exonerated. If the trial court’s finding is correct that the acts of appellants 2 and 3 were acts binding the firm, there is no apparent reason to leave and exonerate the other partners of the firm. No partner can escape the consequence of the firm having been adjudged insolvent unless he is protected by a law or is able to show that he was not responsible for the acts of the other partners. 16. It is not possible to fathom the reasons why the trial court has said that the fact that the firm and the partners were in a position to pay the entire debts was not the criterion and the only question to be decided was whether their conduct would amount to suspending payment to the creditors. We have already noticed the provisions in Sec. 13 (4) of the Presidency Towns Insolvency Act, which say that the court shall dismiss the petition, a....... .b. if the debtor appears and satisfied the court that he is able to pay his debts, or that he has not committed an act of insolvency or that for other sufficient cause no order ought to be made." The expression "able to pay his debts" is also found in Sec.25 of the Provincial Insolvency Act. There is no difficulty in appreciating that the expression ‘debt’ in this provision of the Act refers to all the debts that the debtor is legally bound to discharge and that he has the authority to discharge his debts. But once he is able to show that he has the capacity to discharge at once, the court is duty bound to take into account this capacity of the debtor and dismiss the petition to adjudge him as insolvent. The scheme of the Act shows that the proceedings in the insolvency are really in rem. They ensure for the benefit of all the creditors of the insolvent. 17. In Kalu Ram v. Gitwar Singh, A.I.R. 1930 Lah. The scheme of the Act shows that the proceedings in the insolvency are really in rem. They ensure for the benefit of all the creditors of the insolvent. 17. In Kalu Ram v. Gitwar Singh, A.I.R. 1930 Lah. 592(2), a learned single Judge of the Labour Court held that under Sec.25 of the Provincial Insolvency Act on a petition presented by the creditor for adjudicating a debtor as insolvent, it lies on the debtor to satisfy the court that he is able to discharge his debts. 18. In Bhagwan Das v. Mohammad Nawas Shah, A.I.R. 1939 Lah. 349, A Division Bench of the Lahore Court held that because the debtor did not possess any liquid assets to pay the debts and he had not made any attempts to voluntarily pay his creditors, "it would be idle to contend that the mere fact that the debtor owned valuable properties were per se sufficient to justify a finding that he was able to pay his debts. 19. In Gadi Bhikaji Dhangar v. Govindarao Babuji Puranik, A.I.R. 1937 Nag. 127: 169 I.C. 846, a similar view isexpressed by a learned Judge of the Nagpur Court and it is said that the burden of proof lay upon the debtor to show that he was able to pay his debts within the meaning of Sec.25 of the Provincial Insolvency Act. .20. A learned single Judge of the Delhi High Court in the case of Shadi Ram v. R.C.Mangla, A.I.R. 1977 Del. 187, has said, ."The expression ‘able to pay his debts’ occurring in Sec.25 is to be used in normal commercial sense. The debtor must, therefore, satisfy the court that he has the ability to discharge his debts presently; hence, he is not insolvent. The expression ‘debts’ refers to all the debts that he is legally bound to discharge at once and which he has failed to discharge." 21. It is, indeed, necessary, in all these cases, therefore, of the allegation of indefinite or temporary suspension of payment, to examine whether the allegations are bona fide and when the debtor appears and pleads that he is able to pay his debts to see whether he had the ability to discharge his debts presently or at once. It is, indeed, necessary, in all these cases, therefore, of the allegation of indefinite or temporary suspension of payment, to examine whether the allegations are bona fide and when the debtor appears and pleads that he is able to pay his debts to see whether he had the ability to discharge his debts presently or at once. The burden of proof, however, is upon the debtor to show that he is able to pay his debts within the meaning of the expression ‘able to pay his debts’-. The trial court in the instant case, however, has felt that it is not necessary to examine whether the appellants were in a position to pay the entire debts. This evidently is an error of law. .22. Since we have found in the instant case that the trial court has not been addressed at all in respect of the liability of the firm and the partners of the firm and there is an apparent error in this regard in the trial court’s judgment and also that a plea which is available to a debtor under Sec.l3(4) of the Act has been declared not available to the debtors that is to say the appellants by the trial court, we are inclined to interfere with the trial court’s judgment. We have, however, not satisfied ourselves as to the genuineness and correctness of the allegations of the creditors and the question whether the acts of the appellants 2 and 3 were such acts, which would bind the firm and consequently, the partners of the firm and whether the appellants are able to pay their debts, we do not propose to finally decline the prayer of the petitioning creditors. It is a fit case in our opinion in which the case should be remitted to the trial court for a fresh hearing and disposal in accordance with law. It shall however be open to the petitioning creditors to move the trial court for such interim orders or directions which may be found necessary on the facts and in the circumstances of this case. 23. In the result, the appeal and the cross-objections are allowed. The impugned judgment is set aside. The case is remitted to the trial court for a rehearing and disposal in accordance with law. No costs.