Research › Search › Judgment

Calcutta High Court · body

2005 DIGILAW 40 (CAL)

NAVIN JHUNJHUNWALA v. VIJAY KUMAR SHARMA

2005-01-20

NARAYAN CHANDRA SIL

body2005
NARAYAN CHANDRA SIL, J. ( 1 ) THIS is to consider an application being G. A. No. 2284 of 2004 arising out of insolvency Case No. 7 of 2003 filed by the debtor-insolvent Navin jhunjhunwala. ( 2 ) IT is stated in the petition that the amount of dues was to the extent of Rs. 62,017/- payable by the petitioner/debtor to the creditor as on 31. 03. 2003 which was confirmed by the petitioner/debtor. The dues was confirmed by the petitioner on a number of occasions. In such circumstances, the Court by its order dated 10. 9. 2003 allowed the insolvency case declaring the petitioner insolvent. It is claimed that in terms of the provisions of Section 18 of the Presidency Towns Insolvency Act, 1909, the Court may at any time after making of an order of adjudication stay any suit or other proceedings against the insolvent before any Judge or Judges of the Court or any other Court subject to the superintendency of the Court. It is also mentioned that the Official Assignee in pursuance of the order of adjudication has taken all necessary steps so as to complete the necessary proceedings. It is further mentioned that a suit being C. S. No. 17 of 1995 between the Viswakarma Cement Ltd, v. Navin Jhunjhunwala is still pending before this Court (in other Bench) and it is prayed that the proceeding of that suit be stayed until the insolvency proceeding against the petitioner be finally disposed of. It is also mentioned in the application that in terms of the provisions of Section 25 of the Act the petitioner-debtor is entitled to protection against arrest or detention. ( 3 ) IT is stated in the report of the Official Assignee that on the petition of the creditor Vijay Kumar Sharma the Insolvency Case was allowed on 10th September, 2003 and debtor was declared insolvent. On 8th April, 2004 the adjudication order was published in the Calcutta Gazette. The petitioner-debtor thereafter filed his schedule of affairs to this Court on 20th april, 2004 in terms of Rules, 103 of the Calcutta Insolvency Rules, 1910. It is also stated in the said report of the Assignee that he found in Exhibit 'h' of the said schedule of affairs that the properties of the insolvent was shown as "nil". The petitioner-debtor thereafter filed his schedule of affairs to this Court on 20th april, 2004 in terms of Rules, 103 of the Calcutta Insolvency Rules, 1910. It is also stated in the said report of the Assignee that he found in Exhibit 'h' of the said schedule of affairs that the properties of the insolvent was shown as "nil". ( 4 ) THAT being the position the matter for consideration before me to determine when the proceeding will come to its finality and whether the petitioner-debtor is entitled to get all other proceedings stayed and protected from being arrested or detained. ( 5 ) IN order to substantiate his claim Mr. Bipul Kundalia, learned advocate appearing for the petitioner-debtor has contended that Section 24{3) of the Presidency Towns Insolvency Act, 1909 (hereinafter referred to as "act" only) the petitioner is entitled to get the relief as prayed for. Section 24 of the Act reads as under:-" (1) Where an order of adjudication in made against a debtor, he shall prepare and submit to the Court a schedule verified by affidavit, in such form and containing such particulars of and in relation to his affairs as may be prescribed. (2) The schedule shall be so submitted within the following times, namely : (a) if the order is made on the petition of the debtor, within 30 days from the date of the order. (b) if the order is made on the petition of a creditor, within 30 days from the date of service of the order. (3) If the insolvent fails, without reasonable excuse, to comply with requirements of this section, the Court may, on the application of the official assignee or of any creditor, make an order for his committal to the civil prison. (4) If the insolvent fails to prepare and submit any such schedule as aforesaid, the official assignee may, at the expense of the estate, cause such a schedule to be prepared in manner prescribed. "there is no doubt that the schedule of affairs has been submitted by the debtor/insolvent but showing his property as "nil". ( 6 ) MR. Kundalia has also drawn my attention to the provisions of sections 36, 79 and 80 of the Act. Section 36 of the Act deals with discovery of insolvent's property and the duty of the official assignee and/or creditor. ( 6 ) MR. Kundalia has also drawn my attention to the provisions of sections 36, 79 and 80 of the Act. Section 36 of the Act deals with discovery of insolvent's property and the duty of the official assignee and/or creditor. It is also in that section that on the application of the official assignee or of any creditor the Court will go to pass the further orders in this regard, Section 79 deals with the duties of the official assignee in relation to the conduct of the insolvent and to the administration of his estate whereas Section 80 of the Act deals with the duties of the creditors. ( 7 ) MR. Kundalia has referred to a number of case laws in order to substantiate his claim. Thus, it was held in the case of B. Meyer and Co. Ltd. v. Arnold Jacob Aaron (AIR 1936 Rangoon 329) that when the trial Judge has exercised its discretion in the matter of granting, refusing or cancelling a protection order under Section 25, according to the principles laid down for the guidance and exercise of such discretion, which it is bound to do, the Court of appeal will be slow to interfere with the exercise of such discretion which is vested under the Act in the trial Judge. From the facts and circumstances of that case the Hon'ble Division Bench of Rangoon high Court did not find any doubt that the conduct of the respondent established the misappropriation of a sum of Rs. 9,000/- to his own use for which the appellant took shelter in the Civil Courts in order to recover the said amount due to him and the defence set up by the respondent was equally false for which the Court would have refused to pass a protection order in his favour. It was further observed by the Hon'ble Division Bench as below :-"but whether or not a protection order should be granted or cancelled is a matter upon which the Court is bound to exercise its discretion having regard to all the relevant circumstances. In my opinion, Braund, J. took the correct view of the course that he ought to follow, having regard to Section 25 and the principles which have been laid down for the guidance of the Court. In my opinion, Braund, J. took the correct view of the course that he ought to follow, having regard to Section 25 and the principles which have been laid down for the guidance of the Court. The learned trial Judge took the same view that finds favour with us namely that the conduct of the respondent was flagrantly dishonest. At the same time he considered certain other material facts before forming his conclusion as to whether or not in the circumstances of the case the protection order ought to be cancelled. " ( 8 ) MR. Kundalia has further referred to the ratio decided in the case of p. M. Hamidv. P. K. Mohamed Sheriff, AIR 1935 Rangoon 415 of the same high Court and the Hon'ble Division Bench held as below :-"an order of adjudication does not operate automatically as a protection against execution upon the person of an insolvent. The insolvent must apply to the Court to grant him the privilege of protection against arrest which the Court would do only if the circumstances of the caae justified it. A protection order should not be refused or, if once granted, cancelled, save on exceptional grounds. Freedom from arrest should not however be granted to flagrant or dishonest insolvents. "the said appeal arose out of a petition by one of the creditors in the insolvency of the respondent for leave to execute two decrees against the insolvent in the High Court and the Small Causes Court of Rangoon against the person of the insolvent. The respondent was adjudicated insolvent on 16th August, 1933. The schedule disclosed unsecured liabilities amounting to Rs. 26,488/- and assets nil with the exception of an endowment policy on his life for Rs. 2,000/- which the respondent admitted that he had assigned to his wife. On 1st May, 1934, the respondent's application for his discharge was refused and in such background the appeal was filed. ( 9 ) ON perusal of the statute it appears that the Official Assignee has a prominent part to play in case the debtor is declared insolvent. Part-II of the Act starting from Section 9 and ending with Section 45 deals with proceeding from act of insolvency to discharge act of insolvency. And Section 25 which deals with protection order comes within that chapter. Part-II of the Act starting from Section 9 and ending with Section 45 deals with proceeding from act of insolvency to discharge act of insolvency. And Section 25 which deals with protection order comes within that chapter. On perusal of the said chapter it appears that with the adjudication that the debtor is an insolvent the proceeding is not all over. The said chapter also contains different sections. There are different sections including that of Section 68 as regards the duties and powers of Official Assignee in connection with realisation of the debt whereas Part IV starting with Section 77 ending with Section 87 deals only with Official Assignee. I must observe that the Official Assignee did not perform his duties in terms of the provisions contained in the Act. Besides neither the debtor appeared at the time of hearing of the petition of the creditor for adjudicating the debtor an insolvent, northe creditor appeared on notice to contest the petition of the debtor for being protected from arrest. ( 10 ) THERE prevails a common impression all along that with the adjudication of the debtor an insolvent there is a civil death of a debtor as the debtor is deprived of many rights of the citizens and as such the insolvent/ debtor is entitled to protect from being arrested. But I different from this common place impression for the reasons that if that be so then in a vest country like ours the dishonest debtor will conveniently take the course of not paying the debt. Thus, it is to be explored from the facts and circumstances of this case as to whether the present petitioner/debtor had any dishonest intention and this is what has been held in the judgments of Rangoon High Court as discussed above. ( 11 ) IN the instant case admittedly the amount of debt of Rs. 62,017i- was not paid by the petitioner/debtor to the creditor despite repeated requests and on a number of occasions and the debtor admitted the same in writing. I am citing a few examples below as regards the demeanour of the debtor :1. The debtor did not appear to contest the application of the creditor and he invited thereby the inevitable result of the proceeding and accordingly he was declared insolvent. 2. I am citing a few examples below as regards the demeanour of the debtor :1. The debtor did not appear to contest the application of the creditor and he invited thereby the inevitable result of the proceeding and accordingly he was declared insolvent. 2. The enquiry of the official assignee shows that the debtor had not left any assets nor any secured assets. These, in my considered view, are definitely due to the intention of the debtor to avoid the creditor in respect of payment of debt. Admittedly, there are suits against the debtor and though there is nothing details in respect of those suits, those are definitely in respect of the payment of debts. Thus, in the facts and circumstances of the case if the petitioner is given protection, in my considered view, this will create a bad example which may encourage the debtors in future to invite the proceeding against him and then to be declared as insolvent. ( 12 ) THE facts and circumstances of the case as discussed above come very near to the facts and circumstances in the case of P. M. Hamid (supra ). It is the established principle that the intention of a person is to be derived from his conduct and demeanour. In my view, the intention of the petitioner/debtor in the instant case was not about any doubt. The petition of the debtor for protection from being arrested is, therefore, rejected. All parties are to act on a xerox certified copy of this judgment on the usual undertaking.