ORDER :- The learned Advocate on record of the creditor/petitioner, (SICOM in short) took out a Notice of Motion dated 8 July 2003 seeking the following orders against the debtors, Bajranglal Jain and Suresh Jain (debtors in short) of 9 Pretoria Street, Calcutta :- (a) That an order be passed declaring the said judgment-debtors as insolvents; (b) That an order of adjudication be passed vesting all the property of the respondents in the Official Assignee for payment of debts owed to the petitioner; (c) Costs; (d) Further order or orders and/or direction or directions be given as to this Hon'ble Court may seem fit and proper. 2. Needless to mention, the said Notice of Motion was supported by an affidavit affirmed on 24 June 2003 by one V. C. Deo, Deputy Manager (Legal) of SICOM. According to SICOM both the said Notice of Motion and the said supporting affidavit were served upon the debtors. 3. However, when the above was first moved in Court on 8 July 2003, Justice Narayan Chandra Sil (as his Lordship then was) made the following order :- "The learned Advocate for the petitioner is present. He has filed a Notice of Motion before this Court and prays that he may be given a further opportunity to cause service of notice upon the respondents/debtors. The prayer is, thus, allowed. The learned Advocate for the petitioner is directed to serve a notice afresh upon the respondents and file affidavit of service on 21 July 2003. The learned Advocate for the petitioner further prays that there is some typographical mistake in the cause title of the petition and he may be permitted to correct the same. The prayer is also allowed. The learned Advocate for the petitioner is permitted to make the necessary correction here and now. Let this matter appear in the list on 22 July 2003. All parties are to act on a signed copy of the minutes of this order on the usual undertaking." 4. Again, on 13 August 2003 Justice N. C. Sil was pleased to pass the following order :- "The Court :- The learned Advocate for the petitioner is present. The learned Advocate for the petitioner has filed affidavit of service which be kept with the record. I have perused the affidavit of service filed by the learned Advocate for the petitioner/creditor.
Again, on 13 August 2003 Justice N. C. Sil was pleased to pass the following order :- "The Court :- The learned Advocate for the petitioner is present. The learned Advocate for the petitioner has filed affidavit of service which be kept with the record. I have perused the affidavit of service filed by the learned Advocate for the petitioner/creditor. As a matter of better precaution, the learned Advocate for the petitioner is once again directed to cause service of notice upon the debtors/respondents within a period of 2 (two) weeks from date by Speed Post intimating the date fixed by this Court for hearing of the case. Let this matter appear on 29 August 2003 under the heading of "To Be Mentioned.". All parties are to act on a signed copy of the minutes of this order on the usual undertaking." 5. It appears from a letter dated 20 August 2003 of the learned Advocate on record of SICOM, annexed to the affidavit of service of one Sukumar Dhali affirmed by him on 29 August 2003, addressed to one Mr. D. K. Sarogi, authorized signatory of Appu Industries Ltd., 1/1A, Upperwood Street, Calcutta-700 071, that on 13 August 2003 the said learned Advocate Sukanta Dutta informed the said Sarogi that since the above matter would be taken up by the "Hon'ble Court", again on 29 August 2003, if the debtors chose to appear on the said date either in person or through their authorized persons then the papers that were sought for by the said Sarogi in Sarogi's letter dated 11 June 2003 which papers were also sought to be served upon the debtors, would be made available and the Counsel for the petitioner had given an undertaking to the Court to that effect as well. It was further pointed out in the said letter that the debtors had so far avoided "all processes of and proceedings before the Court". Should the debtors choose not to appear then the petitioner would pray for an ex parte hearing of the matter and would make such other prayers as it might deem fit. 6. Then, it appears from the affidavit of service jointly affirmed by one Semir Kr.
Should the debtors choose not to appear then the petitioner would pray for an ex parte hearing of the matter and would make such other prayers as it might deem fit. 6. Then, it appears from the affidavit of service jointly affirmed by one Semir Kr. Dey, a sheriff's bailee and the said Sukumar Dhali, an employee of Sukant Dutta, the learned Advocate on record of SICOM, that they both went to premises No. 1/1A, Upperwood Street, Calcutta-700 071 and completed the service upon the debtors on the basis of the orders dated 1 September 2003 and 8 September 2003 by affixing the notices along with the petition being IC No. 5 of 2003 to the address of both the debtors, Bajrangal Jain and Suresh Jain, at premises No. 1/1A, Upperwood Street, Calcutta-700 071. 7. It appears that after the said service by affixation one of the debtors, namely Bajranglal Jain appeared through his constituted attorney Sushil Kr. Sarogi who affirmed an affidavit on 4 December 2003 intending the same to use in opposition to the said petition of SICOM affirmed on 24 June 2003 which, as aforesaid, was used in support of the said Notice of Motion taken out on behalf of SICOM. 8. In sub-para (b) of Paragraph 3 of the affidavit on behalf of the said debtor Bajranglal Jain (henceforth be referred to as Bajranglal) it has been alleged that Bajranglal came to know on 11 September 2003 that the creditor, SICOM instituted the suit in question in the High Court of Bombay and the said suit was decreed ex parte without giving Bajranglal any opportunity of hearing. The other allegations or rather the stand taken by Bajranglal in his said affidavit or rather in the affidavit used for and on his behalf need not be dealt with in detail at this stage and will only be referred to if such reference need be made for adjudication of this proceeding. 9. It need, however, be mentioned that SICOM initiated the above proceeding on the basis that on 11 December 2002 SICOM had obtained a final decree against its debtors, the said Bajranglal Jain and Suresh Jain (as guarantors) "for an unrepaid loan made by SICOM to Appu Industries Ltd. for the payment of money amounting to a sum of Rs. 3,31,73,935.00/-" (Three Crore Thirty One Lakh Seventy Three Thousand Nine Hundred Thirty Five only).
3,31,73,935.00/-" (Three Crore Thirty One Lakh Seventy Three Thousand Nine Hundred Thirty Five only). SICOM also said in its said supporting affidavit which is referred to as petition that the execution of the said decree "has not been stayed either". 10. In its petition SICOM has claimed that the said debtors Bajranglal and Suresh Jain are justly and truly indebted to SICOM in a liquidated sum payable on 11 December 2002 which sum exceeds a sum of Rs. 500/-and the debt of the debtors is the said decretal amount, namely Rs. 3,31,73,935.00/-. SICOM also does not nor any other person/s on behalf of SICOM hold or holds any security on the debtors' estate or any security for payment of the said decretal amount or the said liquidated sum. 11. SICOM has claimed that the debtors, Bajranglal and Suresh Jain within three months before the date of presentation of the petition under the provisions of the Presidency Towns Insolvency Act (Act in short) have committed the acts of insolvency particulars of which are mentioned in sub-paragraphs (a) and (b) of paragraph 5 of its petition. According to SICOM, notices as contemplated under the provisions of sub-section (3) of Section 9 of the Act were served upon the debtors calling upon them to pay the specified amount of Rs. 3,31,73,935.00/- or to furnish the security for payment of such amount to the satisfaction of the SICOM Ltd. or its agent within a period of five weeks after service, in default, SICOM made it clear in its notice that SICOM would present an insolvency petition, both the said debtors Bajranglal and Suresh Jain avoided service of the said notices and failed to comply with the same within a period of five weeks from the date of service as specified in the notices. 12. The said notices under sub-section (3) of Section 9 of the Act were sent to both the debtors, Bajranglal and Suresh Jain to their correct address both by EMS Speed Post and by Registered Post. In paragraph 7 of the petition SICOM stated "the notices sent by EMS Speed Post have returned "marked" "out of station" and the notices sent by Registered Post have returned "marked" notice issued but not claimed". 13.
In paragraph 7 of the petition SICOM stated "the notices sent by EMS Speed Post have returned "marked" "out of station" and the notices sent by Registered Post have returned "marked" notice issued but not claimed". 13. Apart from the above statements in the petition of SICOM, I asked the learned Advocate appearing on behalf of SICOM to file a supplementary affidavit explaining as to how the notice or rather the notices under sub-section (3) of Section 9 of the Act were sought to be effected or served upon the debtors and on the basis of such direction, a supplementary affidavit was affirmed on behalf of SICOM on 17 March 2006 explaining as to how the said notice or the notices under sub-section (3) of Section 9 of the said Act were sent to the debtors. Since I find that the statements made in paragraphs (1) and (2) of the said supplementary affidavit regarding service of notices upon the debtors do have a very important bearing upon the question as to whether the notices under the said provisions of the Act were duly served upon the debtors, Bajranglal Jain and Suresh Jain, the said statements are set out below :- "That four notices sent by our Advocate Sri Sukant Dutta by EMS Speed Post to the two respondents, one each to their residential addresses and to their office addresses, returned with similar postal endorsements. The word "Left" was written on the front of all four envelopes. The endorsement "Out of Station hence Left" appeared on the reverse of all four envelopes, and was followed by the capital letter "N" followed by a slash or a dot and then by an illegible scribble. All endorsements on the reverse of the reverse of the envelope were dated and illegibly signed. Photocopies of the said envelopes are annexed hereto and collectively marked "A". That another notice was sent by our Advocate Sri Sukant Dutta to the two respondents at their residential address by Registered Post with Acknowledgment Due Card returned with an illegible postal endorsement on the front of the envelope sent to the first respondent, and with the word "Absent" illegibly signed, followed by three dates, and the endorsement "Notice issue" dated and illegibly signed. Photocopies of the said envelops are annexed hereto and collectively marked "B"." 14.
Photocopies of the said envelops are annexed hereto and collectively marked "B"." 14. From the Annexures (A) and (B) to the above supplementary affidavit, I have no manner of doubt that the statements made in paragraphs (1) and (2) of the said supplementary affidavit are absolutely correct statements. 15. Normally, I do not think, I should have taken so much of time in explaining as to whether the debtors were properly served with the notice or notices as provided or contemplated in sub-section (3) of Section 9 of the Act, as I was quite satisfied that SICOM being the creditor presented this petition under the provisions of the Presidency Towns Insolvency Act upon proper service of notice or notices in terms of the relevant provisions of the said Act. But since one of the debtors, namely Bajranglal Jain eventually appeared or rather engaged a learned member of the Bar to appear on his behalf at the time when the petition of SICOM was taken up for consideration who took the point that the petition was not maintainable as Bajranglal being one of the debtors was not served with the notice under sub-section (3) of Section 9 of the Act and since no notice was served upon Bajranglal it could not be held that any act of insolvency was, in fact, committed by the debtor (Bajranglal) within the meaning of sub-section (2) of Section 9 of the Act so as to entitle the creditor to present the petition under Section 12 of the Act, I think, I need to consider and deal with the factum of service of the notice or the notices under the Act on the debtors, Bajranglal and Suresh Jain in a little detail. 16. It order to appreciate whether the above contentions on behalf of Bajranglal have any merit/s, I have set out in brief the history of the case or rather the claim of events that have taken place so far from a date of initiation of the present proceeding under the Act. 17. As I have said before, that Bajranglal being one of the debtors eventually appeared and an affidavit-in-opposition was affirmed by his said constituted attorney on his behalf to the petition of SICOM which was verified in support of the said Notice of Motion.
17. As I have said before, that Bajranglal being one of the debtors eventually appeared and an affidavit-in-opposition was affirmed by his said constituted attorney on his behalf to the petition of SICOM which was verified in support of the said Notice of Motion. In the said affidavit-in-opposition affirmed on 4 December 2003, apart from making an allegation that a copy of the insolvency petition (IC No. 5 of 2003) filed by SICOM was for the first time received by Bajranglal on 11 September 2003 when the same was left "by the Sheriff of this Hon'ble Court" at the residence of Bajranglal, it has not been denied that the notices under sub-section (3) of Section 9 of the Act were correctly addressed, in other words, Bajranglal has not stated anywhere in the said affidavit that the address or addresses to which the notices under the Act were sent were not the address or addresses of the debtor Bajranglal in the first place. Needless to mention the other debtor, Suresh Jain had and/or has never contested this proceeding. 18. Indeed, there is no doubt that the said notices under sub-section (3) of Section 9 of the Act were sent to the correct address or addresses of the debtors and this is absolutely clear from the deed of guarantee, Exhibit-C to the petition. The said deed of guarantee was executed by both the debtors, Bajranglal Jain and Suresh Jain on 17 December 1997 giving the address of the said debtors as 9, Pretoria Street, Calcutta, to which address the said notices under the Act before the initiation of the present proceeding for insolvency were sent. 19.
The said deed of guarantee was executed by both the debtors, Bajranglal Jain and Suresh Jain on 17 December 1997 giving the address of the said debtors as 9, Pretoria Street, Calcutta, to which address the said notices under the Act before the initiation of the present proceeding for insolvency were sent. 19. Furthermore, the debtors also agreed in Clause-19 of the said deed of guarantee that all the communications including a notice of demand posted under the certificate of posting at the above stated or last known address of the guarantors "shall be sufficient service of such communication of notice of demand on them or any of them" and SICOM would be entitled to proceed on the basis that the said communication or notice of demand under certificate of posting "has been duly received by the creditors or any of them at the end of normal period after which such communication or notice of demand be ordinarily delivered by the postal authorities" and that such service on any of the debtors "would be deemed to be sufficient service" on both the guarantors/debtors. 20. At the hearing, apart from raising the question of non-service of notice under the provisions of the said Act no other point or points were urged on behalf of the debtor, Bajranglal by his learned Counsel, nor have I been able to find any ground far from any acceptable ground in the affidavit in opposition to the said petition of SICOM though it must be mentioned that Bajranglal has made a faint attempt in his affidavit to suggest that the Bombay High Court passed the above decree ex parte without satisfying itself whether the writ of summons was duly served upon the debtor or rather the debtors, being the defendants in the said suit. I must admit, that firstly, I cannot go behind the decree passed by the High Court of Bombay, as the same was passed by a Court of competent jurisdiction and secondly, I cannot possibly question the validity of the said decree even on the ground of alleged non-service of writ of summons upon the defendants being the debtor or debtors in this proceedings in the first place. 21.
21. I wonder what prevented Bajranglal from raising the question of non-service of writ of summons before the suit was, in fact, decreed, before the High Court at Bombay which Court, in fact, passed the decree in the suit instituted by SICOM. The fact remains that the present proceeding under the Act was initiated by SICOM as according to SICOM conditions laid down under sub-section (2) of Section 9 of the Act were in existence at the time when the present proceeding under the Act was initiated in this Court. 22. As aforesaid, under the provisions of sub-section (2) of Section 9 of the Act the act of insolvency is committed by a debtor when the conditions mentioned under the said sub-section are fulfilled. For the sake of convenience the said conditions are mentioned below :- (i) Creditor has obtained a decree or order against the debtors for the payment of money, which has become final and execution whereof has not been stayed; (ii) Creditor has served upon the debtor a notice being the insolvency notice in the manner as provided under sub-section (3) of Section 9 of the said Act; (iii) The period of complaint of the said notice shall not be less than one month after its service on the debtor; (iv) The debtor does not comply with the notice despite receipt thereof within a period specified therein. 23. Learned Advocate Mrs. Manju Agarwal, appearing on behalf of Bajranglal, the debtor, sought to argue that after the receipt of the notice under the provisions of the Act "a debtor is entitled to make an application for setting aside an insolvency notice as provided under sub-section (5) of Section 9 of the said Act". What was emphasized by the learned Advocate on behalf of Bajranglal was that prior to the initiation of insolvency proceeding the Court must be satisfied that the debtor in question committed an Act of insolvency and in this regard a creditor who has obtained a decree for payment of money in his favour must satisfy the Court that an Act of insolvency has, in fact, been committed as in spite of service of notice in the manner prescribed in the Act, the debtor has failed to comply with the "notice". 24.
24. In order to substantiate the case of Bajranglal that Bajranglal being the alleged debtor was never really served with the notice as contemplated under the Act, Mrs. Agarwal tried to show from the allegations made in the petition as well as in the supplementary affidavit of SICOM and the relevant documents relied on by SICOM to satisfy this Court that there was due service of notice upon the debtors as provided and/or contemplated under the Act, that no notice as contemplated and/or provided under the Act was, in fact, served upon the debtor, Bajranglal before initiation of the present insolvency proceeding by SICOM. 25. According to Mrs. Agarwal, the copy of the notice annexed to the petition cannot be treated to be a notice under the relevant provisions of the said Act in the first place and since no notice or notices were, in fact, served upon the debtor, Bajranglal before initiation of the present insolvency proceeding it cannot be held that the debtor committed any act of insolvency within the meaning of sub-section (2) of Section 9 of the Act so as to entitle the creditor, namely SICOM "to present the petition under Section 12 of the Act". 26. Mrs. Agarwal further argued that insolvency proceeding is quasi-penal in nature and as such it adversely affects the status and reputation of the person in the society against whom such proceeding is initiated and as such the manner or rather the procedure provided in the Act itself for service of notice upon the debtor or rather the alleged debtor before the initiation of insolvency proceedings should strictly be followed and even "if there is a slight lacuna" "in regard to the service of notice upon the debtor" as provided under the Act the Court should not entertain the petition. 27. Since in the present case no notice or notices were served upon the debtors in accordance with the provisions of the Act the present petition of SICOM should be dismissed, as SICOM had on the date of initiation of the proceeding no cause of action against the debtor to present its petition on the basis of the alleged notice dated 2 May 2003 in the first place. 28. In support of her above contentions, Mrs.
28. In support of her above contentions, Mrs. Agarwal relied on the following decisions :- (i) State Bank of India v. Sohan Lal Babulal Jain, reported in AIR 1997 Bombay 34 (Division Bench). (ii) T. T. Dhinkran v. Deputy Director, Enforcement Directorate, reported in AIR 2003 Madras 59. 29. Before I deal with the above two decisions very briefly, I must also point out that the learned Counsel Mr. Gupta appearing on behalf of SICOM had drawn my attention to each and every document used by SICOM in this proceeding in support of his contention that the present insolvency proceeding was initiated after the proper service of notice as contemplated under the relevant provisions of the Act and in support thereof he tried to show the chain of events that had and (has) taken place since the creditor instituted the suit in the High Court at Bombay till the initiation of the present insolvency proceeding in this Court. Mr. Gupta emphasized that the chain of events and the facts and the circumstances which led the creditor, SICOM to initiate the present proceeding would show that both the debtors (Bajranglal has only chosen to contest the present proceeding) tried or rather had not only tried throughout to avoid the service of notice under the Act before initiation of the present insolvency proceeding but they also tried to avoid the service of the writ of summons upon them by adopting all sorts of means or rather illegal means with the sole object to frustrate the purpose of the institution of the said suit and the purpose of initiation of the present insolvency proceeding. 30. Since I have already stated the facts in somewhat detail, I do not wish to repeat them. However, I cannot possibly disagree with the learned Counsel Mr. Gupta that all the conditions as provided in the Act were present at the time when the present insolvency proceeding was initiated in this Court and that the notices were duly sent to the address or the addresses of the debtors and the correctness of the address or addresses had and (have) not been denied at any stage by the contesting debtor, Bajranglal to any extent whatsoever. 31. Mr. Gupta, however, referred to two decisions- (1) Kanansubbu and etc.
31. Mr. Gupta, however, referred to two decisions- (1) Kanansubbu and etc. v. Suryanarayan Shastri, reported in AIR 2002 Madras 252 (Division Bench) and (2) Subhas Chandra Mitra v. Netai Chand Dey, reported in 2004 (2) CLT 126 : 2004 (2) CHN 679 . 32. Since, I have already taken the view that the notice or rather the notices under the Act should be deemed to have been duly served upon the debtors including Bajranglal, the contesting debtor, in the facts and the circumstances of the present case, the above two decisions including the other decisions on the point or points relied on by Mr. Gupta need not, therefore, be dealt with in detail. 33. Suffice it to say, having regard to the facts and the circumstances that have led to the initiation of the present proceeding, the above two decisions, in fact, support the case of the creditor, SICOM. 34. What is, however, most striking in the present case is that Bajranglal eventually appeared and sought for direction to use his affidavit in opposition to the insolvency petition only after a copy of the Notice of Motion and the petition were affixed to his residence under the order of this Court and not before. I have a feeling and my feeling is based on a reasonable ground which I have formed on the basis of the chain of events that have taken place from the date of institution of the suit till the initiation of the present proceeding or rather till the debtor, Bajranglal, in fact, appeared in Court to contest this proceeding, that the contesting debtor, Bajranglal has always tried to avoid the service of notice under the provisions of the Act before initiation of the present insolvency proceeding. It can safely be said also that the other alleged debtor Suresh Jain did not contest this proceeding as he throughout wanted to avoid or rather avoided the service of notice upon him before the initiation of the present proceeding, perhaps because, he had and has no case in his defence. 35. In the case of State Bank of India ( AIR 1997 Bom 34 ) (supra), relied on by Mrs.
35. In the case of State Bank of India ( AIR 1997 Bom 34 ) (supra), relied on by Mrs. Agarwal the Division Bench of the Bombay High Court was dealing with a case where the notice in question was wrongly addressed and issued to a wrong person by the name Sohanlal Babulal Jain when the correct name of the debtor was Sohanlal Chunilal Jain, such mistake according to the Division Bench could not be termed as a clerical error at all as the name gave the impression that it was altogether a different person to whom such notice was addressed and this defect the Court found to be a material defect in the notice and not a formal one and that is why the Court was of the view that the proceeding initiated under the insolvency Act against a wrong person other than the judgment-debtor could not be held to be sustainable and as such the notice in question, the Division Bench found, was rightly struck down by the learned single Judge. The facts of that case have, in my opinion, no connection with the present case. In the present case, I have found the debtors including Bajranglal being the contesting debtor have throughout tried to avoid the service of notice which notice or notices were repeatedly attempted to be served and served upon him and upon the other debtor by SICOM or rather by its learned Advocate in accordance with the procedure contained in the Act and the Rules framed thereunder, namely Calcutta High Court Insolvency Rules. I do not think, I should detain myself any longer with the above decision. 36. In the case of T. T. Dhinkaran ( AIR 2003 Mad 59 ) (supra), the learned single Judge of the Madras High Court held on facts that the insolvency proceeding was initiated on the basis of the penalty imposed upon the alleged debtor by the concerned authority under the Foreign Exchange Regulation Act. The Court also found that the Directorate under the said Act (FERA) had initiated the proceeding for recovery of the penalty amount under the provisions of FERA by issuing certificate to Collector for recovery of money as arrears of land revenue.
The Court also found that the Directorate under the said Act (FERA) had initiated the proceeding for recovery of the penalty amount under the provisions of FERA by issuing certificate to Collector for recovery of money as arrears of land revenue. Mere non-payment of penalty for which the insolvency proceeding was initiated under the Presidency Towns Insolvency Act was, in my opinion, rightly held to be not contemplated under Section 9(2) of the Act, as the non-payment of penalty could never be equated with non-payment of a "decree debt" nor the person not paying the penalty could be characterized as "debtor". 37. In the above case, however, the insolvency notice certified by the master was found to be perfectly in order and issued properly. However, the order of penalty which was made for contravention of a penal statute could not be, as I said above, termed as a debt and nor could the applicant therein be characterized as a debtor within the meaning of the Act as well. The Court went on to say that the "debt" contemplated under the Act "is contractual requiring mutual dealings between creditor and debtor and passing of consideration from creditor to debtor". The Court further found that the penalty imposed upon the alleged debtor could not be termed as a "debt" until a suit was instituted and a decree was passed on the basis of the penalty imposed in terms of the provisions of FERA. The insolvency proceedings under Section 9(2) could not therefore be resorted to (see paragraph 98 at page 77 of the report). 38. I am afraid, the above case has nothing to do with the case in hand, as the present proceeding was initiated on the basis of a decree passed in a civil suit by the High Court at Bombay and the said decree was obtained by the creditor, SICOM Limited against the debtors, Bajranglal Jain and Suresh Jain, for payment of money and the execution of the said decree "has not been stayed". I wonder, why the learned Advocate thought it fit to cite the above decision to support the case of Bajranglal, the debtor, in the first place. 39.
I wonder, why the learned Advocate thought it fit to cite the above decision to support the case of Bajranglal, the debtor, in the first place. 39. It is further to be pointed out that Bajranglal being the contesting debtor had and has not made any application under the provisions of the Act, namely sub-section (5) of Section 9 thereof for setting aside the insolvency notice in question and since I have found that notice or notices were duly served upon the debtors I have to entertain the petition, as I have also found that the petition was presented upon compliance of all necessary formalities as contemplated under the Act. Thus, both Bajranglal Jain and Suresh Jain are deemed to have committed the acts of insolvency under the provisions of the Act. 40. Thus, there will be an order as sought for in terms of prayer (a) of the Notice of Motion dated 8 July 2003. 41. The insolvency petition is disposed of as above. 42. There will be no order as to costs. 43. Urgent xerox certified copy of this judgment, if applied for, be given expeditiously. Order accordingly.