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2007 DIGILAW 379 (MAD)

Gowrim & Others v. N. Sivasankaran & Others

2007-01-31

R.BANUMATHI

body2007
Judgment :- This Revision Petition is filed by the Petitioning Creditors challenging the Order made in CMA No.24/1996, confirming the Order of dismissal of the application filed under Or.9 R.9 CPC, declining to restore I.P.No.6/1991. .2. Averments, as projected by the Petitioners, are as follows :- Petitioning Creditors have filed Petition under Section 7 of the Provincial Insolvency Act, 1920, [for short, the Act], to adjudicate the Respondents as insolvents and other reliefs. I.P.No.6/1991 was dismissed for default on 14.02.1995, for the non-appearance of the Petitioners. Petitioners have filed I.A.No.4/1995 under Or.9 R.9 CPC to restore I.P.No.6/1991. That application was dismissed by the learned Subordinate Judge on the ground that the application is belated one and reasons for non-appearance are not properly substantiated. Aggrieved by the same, the Petitioners have preferred C.M.A. No.24/1996 before the District Court, Cuddalore. Confirming the Order of dismissal of the application under Or.9 R.9 CPC, the C.M.A. was dismissed. 3. Assailing the impugned Orders, the learned Counsel for the Petitioners submitted that Petitioners being Creditors, both the Courts lost sight of the reasons stated for the nonappearance. Placing reliance upon AIR 1966 SC 918 [Yenumula Malludora Vs. Peruri Seetharathnam and others], it was submitted that acts of insolvency once committed cannot be wiped off by subsequent acts. Arguing further, the learned Counsel submitted that Insolvency Petition could be dismissed only for the reasons stated in Section 25 of the Act. 4. The learned Counsel for the Respondents further submitted that the application filed under Or.9 R.9 CPC is to be considered on the ground whether good and sufficient cause has been shown. The learned Counsel submitted that when good and sufficient cause was not shown for non-appearance, Courts below have rightly dismissed the application. .5. Section 5 of the Act, deals with general powers of the Courts. Sections 5 and 18 of the Act make it clear that the procedure laid down by CPC be followed in case of insolvency Petition, so far it is applicable. The provisions of CPC will not be applicable where the Act itself has made adequate provisions. By virtue of Sections 5 and 18 of the Act, the provisions of Or.9 R.9 CPC can be invoked to set aside the exparte Order made by the Insolvency Court. The provisions of CPC will not be applicable where the Act itself has made adequate provisions. By virtue of Sections 5 and 18 of the Act, the provisions of Or.9 R.9 CPC can be invoked to set aside the exparte Order made by the Insolvency Court. When the provisions of CPC including those contained in Or.9 R.9 CPC are made applicable to the proceedings under the Act, the Petitioning Creditors are to show sufficient cause for their non-appearance on 14.02.1995. 6. According to the Petitioners, I.P.No.6/1992 was pending and the same is connected with I.P.No.6/1991 and the Petitioning Creditors have instructed their counsel to take an adjournment so as to bring the connected matter for being tried along with I.P.No.6/1991. Petitioning Creditors have further stated that their counsel was engaged in some other Court and could not appear when the matter was called and the Petitioner had gone for calling the counsel and in the mean time, Petition was called and dismissed for default. The reasons stated for non-appearance is quite unacceptable. There are at least 12 Petitioning Creditors. If not the sixth Petitioner, other Creditors could have been present and made representation when the matter was called. In consideration of the facts of the case, the lower Court found that the reason for nonappearance is not satisfactorily explained. There is no reason to differ from the findings of the Courts below. .7. Placing reliance upon AIR 1966 SC 918 , the learned Counsel for the Petitioners submitted that any act of insolvency once committed cannot be explained or purged by subsequent events. It was submitted that adjudicating the Respondents as insolvents is a Judgment in rem and the Court can dismiss only on the grounds laid down in Section 25 of the Act. In the above said decision, it was held that under the provisions of the Act, the Court could dismiss the Petition of the Creditors on the grounds viz., (i) the absence of the right of the creditor to make the application; (ii)failure to serve debtor with the notice of the admission of the Petition; and (iii)the ability of the debtor to pay his debts. In addition, the Court has been given a discretion to dismiss the Petition if it is satisfied that there are other sufficient cause for not making the Order against the debtor. In addition, the Court has been given a discretion to dismiss the Petition if it is satisfied that there are other sufficient cause for not making the Order against the debtor. The last clause of the section need not necessarily be read ejusdem generis with the previous ones but even so there can be no sufficient cause if, after an act of insolvency is established, the debtor is unable to pay his debts. Laying stress upon the ground on which the Petition must be dismissed, the learned Counsel for the Petitioners submitted that the Insolvency Petition having been filed, the lower Court erred in dismissing the Petition for default. 8. The principle observed in the decision cited supra is applicable only in contested matters. Those grounds of dismissal could be invoked only in cases where the matter is contested and the Court proceeds to dismiss the application. In the present case, the Petitioning Creditors have not pursued the matter and because of their non-appearance, the Petition was dismissed for default. The above decision has no bearing to the case in hand, where the Petition was dismissed for default. The argument that the Courts ought to have passed the Order only on the stated grounds under Section 25, even in the absence of Petitioning Creditors, is far fetched. Both the Courts have recorded the finding that no sufficient cause is shown for non-appearance and dismissed the Petition. 9. The reasons stated bythe Petitioners for non-appearance is not convincing. The findings of the Courts below do not suffer from any serious infirmity calling for interference. 10. In the result, the order dated 210. 1997 made in CMA No.214/1996, on the file of the District Court, Cuddalore is confirmed and this Revision Petition is dismissed. No costs. Consequently, CMP is also dismissed.
Gowrim & Others v. N. Sivasankaran & Others — 2007 DIGILAW 379 (MAD) | DigiLaw