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2014 DIGILAW 203 (KER)

Ann Koshy v. Ramachandran Pillai

2014-03-04

P.BHAVADASAN

body2014
JUDGMENT : 1. Aggrieved by the order of the trial court as well as the appellate court adjudging the assignor of the appellants as insolvent, thereby affecting their assignments, the assignees have come up in appeal. They are counter petitioners 2 to 5 before the court below. 2. The facts necessary for the disposal of this appeal are as follows: The facts and parties are referred to as they are available before the trial court. The petitioners invoked Section 9 of the Insolvency Act to have the first counter petitioner adjudged as insolvent. According to them, the first counter petitioner was indebted to the tune of Rs.3,20,000/- to the first petitioner and Rs.1,1 5,000/- to the second petitioner. According to them, in order to defeat or delay them, the first counter petitioner assigned his properties by way of two documents bearing Nos.1400 and 1402 of 1998 in favour of respondents 2 to 4. They pointed out that that act of assignment was within the stipulated period under the statute. The consideration shown in the documents was meager and that the property was registered in a different Sub-Registry office. It is also alleged that the debtor had made himself scarce and these acts of the debtor made the petitioners to file the petition to adjudge the first counter petitioner as insolvent. 3. The debtor remained ex-parte. The assignees from him, namely, counter petitioners 2 to 4 contested the proceedings. They pointed out that they are bona fide purchasers for valuable consideration and they were unaware of the debt due to the petitioners. They also pointed out that after their purchase, they came to know about certain debts due from their assignor which they discharged, the details of which are given in the objection. The contended that they have no notice of the debts due to the petitioners and they are not liable for that. They therefore prayed for a dismissal of the petition. 4. The trial court after raising the issue whether the petition is maintainable or not, let the parties to adduce evidence. The evidence consists of the testimony of P.W.1 and 2 and documents marked as Exts. Al to A8 from the side of the petitioners. The counter petitioners had CPW1 examined and had Exts. Bl to B21 marked. 4. The trial court after raising the issue whether the petition is maintainable or not, let the parties to adduce evidence. The evidence consists of the testimony of P.W.1 and 2 and documents marked as Exts. Al to A8 from the side of the petitioners. The counter petitioners had CPW1 examined and had Exts. Bl to B21 marked. After appreciating the evidence on record, the court below came to the conclusion that the petition is maintainable and the act of insolvency has primarily been established and adjudged the first respondent as insolvent as contemplated under Section 27 of the Kerala Insolvency Act. 5. The aggrieved assignees carried the matter in appeal as A.S.177 of 2001. The lower appellate court after adverting to the various provisions of the Act came to the conclusion that no detailed enquiry is warranted or that any specific nature of enquiry is warranted at the time of adjudication under Section 27 of the Act and the enquiry comes at a later stage. Being satisfied that there were acts of insolvency committed by the first counter petitioner, the lower appellate court dismissed the appeal confirming the order of the trial court. At the time of admission of this Second Appeal, the following questions of law were raised: i. Whether the courts below are justified in adjudging the 1st CP as insolvent in the absence of specific plea that the 1st CP has no other assets to satisfy the alleged debt amount? ii. Whether the courts below are legally correct in adjudging the 1st CP as insolvent on a petition filed by respondents 1 and 2 whose alleged claim is not a liquidated sum?” 6. Shri. George Varghese Perumpallikuttiyil, learned counsel for the appellants contended that the courts below have erred both on facts and in law in entering a finding under Section 27 of the Kerala Insolvency Act. There are no pleadings in the petition to the effect that the debtor did not have assets left with him after the assignment in favour of respondents 2 to 4 which could not be made use of to pay the debts due to the petitioners in the insolvency petition. Unless such an averment is made by the petitioners, according to the learned counsel, the petition may not be maintainable at all. Unless such an averment is made by the petitioners, according to the learned counsel, the petition may not be maintainable at all. It may so happen, according to the learned counsel, that the debt due to the creditors may be much less than the total assets held by the debtor, in which case it could not be said that parting with a portion of his property, he has committed acts of insolvency. The further contention is that before adjudging a person as insolvent, the consequence of which is the civil death of the person concerned thereby resulting in drastic consequences, it is incumbent on the part of the court concerned to hold an enquiry to primarily satisfy that there are grounds to come to the conclusion that acts of insolvency have been committed by the debtor. For the above proposition, learned counsel relied on the decisions reported in Official Receiver v. Abdul Shakoor (AIR 1965 SC920), Paramjeet Siungh Patheja v. ICDS Ltd. ( (2006) 13 SCC 322 ), Parthan v. Radhakrishnan Nair (AIR 1988 Kerala 131) and Thomas T.G. v. K. Alexander Vaidyan ( 2012 (1) KHC 169 ). 7. According to the learned counsel, a reading of the various provisions will clearly indicate that at least a prima facie enquiry is necessary before a person is adjudged as insolvent or in other words, according to the learned counsel, the court has to be satisfied as far as the creditor’s petition is concerned that the debtor has infact committed an act of insolvency and that there are no materials to show that the assets left by him is capable of meeting the debts due to the creditors. Without conducting such an enquiry, the order is clearly unsustainable. 8. Learned Senior Counsel Shri. S. Sreekumar appearing for respondents on the other hand contended that the act does not contemplate a detailed or even, a preliminary enquiry at the stage of considering an application for adjudging a person as insolvent under Section 27 of the Insolvency Act. At that point of time, all that the court needs to look is whether on the allegations in the petition, an act of insolvency has been committed by the debtor. Learned Senior Counsel referred to various provisions of the Act and contended that enquiry is contemplated only at a later stage at the time of settling the schedule or considering the plea of discharge etc. Learned Senior Counsel referred to various provisions of the Act and contended that enquiry is contemplated only at a later stage at the time of settling the schedule or considering the plea of discharge etc. At the present stage the court is only concerned with the question whether the act of insolvency alleged to have been committed is prima facie true and whether there, are materials to show that any act of insolvency has been committed. Nothing more remains to be considered at the present stage. Learned counsel also drew the attention of this Court to the fact that the approach to be made in a petition by the debtor and creditor are different and distinct as could be seen from the provisions of the Act. According to the learned Senior Counsel, both the courts below had adverted to the law on the point correctly and no interference is called for with the finding of the courts below. 9. Learned counsel for the appellants also contended that in order to prefer a petition under the insolvency Act, the debt has to be a liquidated sum and as long as it is not so, the petition is not maintainable. 10. The allegation that the debtor had issued Ext.A1 series of cheques and they were returned by Ext.A5 series of memos is not a matter in dispute. So also there is not much controversy regarding the execution of Exts.B1 and B2 documents dated 19.6.1998 and 20.6.1998 which are two sale deeds alleged to have been executed by the debtor in favour of counter petitioners 2 to 4 in respect of the properties which were owned and possessed by the debtor. 11. Going by the averments in the petition, it is these assignments of properties by the debtor which has given a cause of action to the petitioners. One of the difficulties the trial court faced is that the debtor is ex-parte and he has not taken part in the proceedings. So much so that the genuineness of the claim made by the petitioners may not be capable of being probed into at this point of time. One has to prima facie take the allegations to be true. The cheques and returned memos have been produced by the petitioners and that would prima facie show that there is a debt due. So much so that the genuineness of the claim made by the petitioners may not be capable of being probed into at this point of time. One has to prima facie take the allegations to be true. The cheques and returned memos have been produced by the petitioners and that would prima facie show that there is a debt due. Both the courts below have come to the conclusion that the consideration shown in Exts. B1 and B2 is too low. Both the courts below are also of the opinion that the scope of enquiry at this stage is confined to ascertaining the right of the creditors to present the petition. According to the courts below, the issue regarding whether the assignees were aware of the debt due from the insolvent does not arise for consideration at this stage. It would appear that the courts below were of the opinion that such an enquiry is contemplated only under Section 57 of the Insolvency Act. 12. In order to appreciate the rival contentions, it would be useful to refer to the various provisions of the Act. Section 2(b) defines creditor and it is an inclusive definition. A creditor is normally a person who gives credit. It may be either goods or money. It would appear from a reading of the provisions that the creditor made mention of in the Act does not include a secured creditor. Section 6 deals with the acts of insolvency. Here we are concerned with Section 6(b) which reads as follows: “6. Acts of insolvency.- A debtor commits an actof insolvency in each of the following cases, namely;- (a) …………….. …………………… (b) if he makes a transfer of his property or of any part thereof, with intent to defeat or delay his creditors.” Section 6(d)(ii) reads as follows: “(d) if, with intent to defeat or delay his creditors- (i) …………….. …………………… (ii) he departs from his dwelling-house or usual place of business or otherwise absent himself.” Provisions of the Act would show that the jurisdiction is conferred on the Insolvency court on the happening of certain things which are termed as acts of insolvency. One such instance envisaged by the act is the transfer of the property by the debtor with the intention of defeating or delaying the creditors. The crucial aspect is the intention of the debtor concerned. One such instance envisaged by the act is the transfer of the property by the debtor with the intention of defeating or delaying the creditors. The crucial aspect is the intention of the debtor concerned. It does not appear from a reading of the Act that the debtor should transfer all his assets. It would appear from a consideration of the various provisions of the Act that even if debtor transfers only a portion of his assets, but with the intention of delaying or defeating the creditors, the provisions of the Act may apply. Section 7 enables the debtor as well as the creditor to file a petition for declaring a person as insolvent. It reads as follows: “7. Petition and adjudication. - Subject to the conditions specified in this Act, of a debtor commits an act of insolvency, an insolvency petition may be presented either by a creditor or by the debtor, and the Court may on such petition make an order (hereinafter called an order of adjudication) adjudging him an insolvent. Explanation.- The presentation of a petition by the debtor shall be deemed an act of insolvency within the meaning of this section, and on such petition the Court may make an order of adjudication.” That provision only says that on presentation of the petition, the court concerned may adjudge the person concerned as an insolvent. Section 9 stipulates the conditions on which the creditor may file a petition, it reads as follows: “9. Conditions on which creditor may petition.- (1) a creditor shall not be entitled to present an insolvency petition against a debtor unless- (a) the debt owing by the debtor to the creditor, or if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees, and (b) the debt is a liquidated sum payable either immediately or at some certain future time, and (c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition: Provided that where the said period of three months referred to in clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court reopens. (2) If the petitioning creditor is a secured creditor, he shall in his petition either state that he is willing to relinquish his security for the benefit of the creditors in the event of the debtor being adjudged insolvent, or give an estimate of the value of the security. In the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor.” Section 13 deals with the contents of a petition by the creditor, which reads as follows: “13. In the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor.” Section 13 deals with the contents of a petition by the creditor, which reads as follows: “13. Contents of petition.- (1) Every insolvency petition presented by a debtor shall contain the following particulars namely:- (a) a statement that the debtor is unable to pay his debts; (b) the place where he ordinarily resides or carries on business or personally works for gain, or if he has been arrested or imprisoned, the place where he is in custody; (c) the Court (if any) by whose order he has been arrested or imprisoned, or by which an order has been made for the attachment of his property, together with particulars of the decree in respect of which any such order has been made; (d) the amount and particulars of all pecuniary claims against him, together with the names and residences of his creditors so far as they are known to, or can by the exercise of reasonable care and diligence by ascertained by him; (e) the amount and particulars of all his property, together with- (i) a specification of the value of all such property not consisting of money; (ii) the place or places at which any such property is to be found; and (iii) a declaration of his willingness to place at the disposal of the Court all such property save in so far as it includes such particulars (not being his books of account) as are exempted by the Code of Civil Procedure, 1908, or by any other enactment for the time being in force from liability to attachment and sale in execution of the decree; (f) a statement whether the debtor has on any previous occasion filed a petition to be adjudged an insolvent, and (where such a petition has been filed)- (i) if such petition has been dismissed, the reasons for such dismissal; or (ii) if the debtor has been adjudged an insolvent, concise particulars of the insolvency, including a statement whether any previous adjudication has been annulled and, if so, the grounds therefore. (2) Every insolvency petition presented by a creditor or creditors shall set forth the particulars regarding the debtor specified in clause (b) of sub-section (1) and shall also specify- (a) the act of insolvency committed by such debtor together with the date of its commission; and (b) the amount and particulars of his or their pecuniary claim or claims against such debtor.” In this context, Rule IV of the Insolvency Rules also has some relevance. It reads as follows: “IV. Petitions:- (1) Every petition, application, affidavit or order in any proceeding under the Act or under these rules shall be headed by a Cause - Title., as in Form No. I. (2) Except in cases which are to be administered summarily the petitioner shall at the time of making the petition deposit a sum of Rs.25 to meet the expenses incidental to the adjudication. (3) Omitted (4) A debtor’s petition shall be in form No.2 and a creditor’s petition shall be in Form No. 3.” It prescribes the form in which a petition by a creditor is to be filed. It is significant to notice that both the Act as well the Rules stipulate the allegations that need to be made by the creditor in the petition. It would follow therefore that if the creditor satisfies the statutory requirements, that would be sufficient for considering a petition filed by the creditor. Section 24 of the Act deals with the procedure to be followed at the hearing of the petition. It reads as follows: “24. Procedure at hearing. It would follow therefore that if the creditor satisfies the statutory requirements, that would be sufficient for considering a petition filed by the creditor. Section 24 of the Act deals with the procedure to be followed at the hearing of the petition. It reads as follows: “24. Procedure at hearing. - (1) On the day fixed for the hearing of the petition, or on any subsequent day to which the hearing may be adjourned, the Court shall require proof of the following matters, namely:- (a) that the creditor or the debtor, as the case may be, is entitled to present the petition: Provided that, where the debtor is the petitioner, he shall for the purpose of proving his inability to pay his debts, be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing the same and the Court, if and when so satisfied, shall not be bound to hear any further evidence thereon; (b) that the debtor, if he does not appear on a petition presented by a creditor, has been served with notice of the order admitting the petition; and (c) that the debtor has committed the act of insolvency alleged against him. (2) The Court shall also examine the debtor, if he is present, as to his conduct, dealings and property in the presence of such creditors as appear at the hearing and the creditors shall have the right to question the debtor thereon. (3) The Court shall, if sufficient cause is shown, grant time to the debtor or to any creditor to produce any evidence which appears to it to be necessary for the proper disposal of the petition. . (4) A memorandum of the substance of the examination of the debtor and of any other oral evidence given shall be made by the judge, and shall form part of the record of the case.” 13. It is significant to notice that Section 24 draws a distinction between a petition by a debtor and a creditor in the matter of adjudication as insolvent initially. The procedure to be followed in the case of a debtor is more elaborate and more probing in nature than in the case of a petition filed by a creditor. It is significant to notice that Section 24 draws a distinction between a petition by a debtor and a creditor in the matter of adjudication as insolvent initially. The procedure to be followed in the case of a debtor is more elaborate and more probing in nature than in the case of a petition filed by a creditor. Going by Section 24, as far as the creditor is concerned, his duty remains confined to showing that he is entitled to present the petition. It would mean that he has only to establish that the acts of insolvency as contemplated under Section 6 have been committed by the petitioner, no more further proof seems to be necessary under the said provision. 14. This would be more clear from Section 25 of the Act. The said provision stipulates that in a case of a petition presented by the creditor, when the court is not satisfied with his proof of his right to present the petition or is satisfied that the debtor is liable to pay his debts, it shall dismiss the petition. This too would indicate that the obligation on the part of the creditor is only to show that the acts of insolvency alleged to have been committed by him does exist. One may now refer to the decisions cited by the learned counsel for the appellant. In the decision reported in Official Receiver’s case(supra), it is held as follows: “11. In the present case the High Court by majority took the view that in a proceeding under S. 33 when the promissory note is brought before the Court by the promisee, a presumption that the promissory note was made for consideration arises under S. II8 of the Negotiable Instruments Act and unless that presumption is rebutted by the promissor or by other creditors or by the Receiver the amount for which the promissory note is executed must be included in the schedule. In so holding the High Court primarily relied upon absence of any reference to the nature of the proceeding in which the presumptions are required to be raised in relation to negotiable instruments. 12. It must be noticed in the first instance that presumption under S.118 of the Negotiable Instruments Act is a presumption of consideration: it does not in all cases prove the quantum of debt due by the insolvent at the date of insolvency. 12. It must be noticed in the first instance that presumption under S.118 of the Negotiable Instruments Act is a presumption of consideration: it does not in all cases prove the quantum of debt due by the insolvent at the date of insolvency. The Insolvency Court has, it must be remembered, to ascertain whether a debt is due by the insolvent, whether the debt is provable in insolvency, and the quantum of the debt due at the material date. In making this enquiry in its three aspects even the Judgment of a Court against the debtor may not be regarded as binding upon the Court. In Ex Parte Lennox, (1885) 16 QBD 315 it was held that a Judgment which the Judgment-debtor cannot set aside, may still be subject to investigation by the Court of Bankruptcy to enquire whether the debt on which the Judgment was founded was a good debt, and if the Court be satisfied that it was not, the Court may refuse to make a receiving order in respect of the debt. The principle of that case was extended in In Re Fraser; Ex Parte Central Bank of London, (1892) 2 Q. B. 633. It was held in that case that “upon the hearing of a creditor’s petition for a receiving order against a judgment-debtor, the Court of Bankruptcy has power, at the instance of the debtor himself, to go behind the judgment and to inquire into the validity of the debt, even though the debtor as previously applied in the action to set aside the judgment, and his application has been refused, and the refusal affirmed by the Court of Appeal.” Lord Esher, M. R. observed at pp. 636-637: “The decision (Ex parte Lennox) is based upon the highest ground - viz., that in making a receiving order, the Court is not dealing simply between the petitioning creditor and the debtor, but it is interfering with the rights of his other creditors, who, if the order is made, will not be able to sue the debtor for their debts, and that the Court ought not to exercise this extraordinary power unless it is satisfied that there is a good debt due to the petitioning creditor. The existence of the judgment is no doubt prima facie evidence of a debt; but still the Court of Bankruptcy is entitled to enquire whether there really is a debt due to the petitioning creditor.” 13. A debt to be entered in the schedule must therefore be a real debt. A judgment against a debtor which is sought to be relied upon in proving a debt does not necessarily establish the existence of a real debt or the judgment may have gone by default, it may have gone by consent or it may have been procured for any other reason. In a proceeding relating to proof of debts the question which arises being not one between the insolvent and the proving creditor alone, the rights of other creditors of the insolvent have of necessity to be considered. Even if for some reason the debtor himself is estoppel from denying the debt them will be no estoppel against the Insolvency Court. 14. The Court therefore in each case has jurisdiction to investigate whether there is a real debt : whether production of a judgment or a negotiable instrument or other evidence may be regarded as sufficient to regard the debt as proved is a matter for the insolvency Court to decide. The question is not to be adjudged in the light of any estoppel which may operate against the insolvent or of any presumption. The Court in a given case may rely merely upon a judgment or a negotiable or other instrument, and admit the debt to the schedule not because there is an estoppel against the Receiver or the other creditors, or presumption of law in favour of the evidence produced, but because in its view in the light of the circumstances no further enquiry beyond proof of the judgment or negotiable instrument or other document evidencing the debt and proof of non-satisfaction of the debt since the date thereof is sufficient. The Court has power, however to insist upon proof of the debt apart from the judgment or the negotiable or other instrument. The Court has power, however to insist upon proof of the debt apart from the judgment or the negotiable or other instrument. The reason is that the Insolvency Court with a view to effectively distribute the estate of the insolvent among the creditors is entitled to go behind outward forms of transactions and to ascertain the truth of the debt sought to be proved, and the estoppel to which the insolvent may have subjected himself will not prevail against the Receiver. Whether the power should be exercised in the case of a judgment debt in a given case depends upon the discretion of the Court which has to be exercised on sound judicial principles. It is true that the Court ordinarily does not go behind a judgment against the debtor, on a bare suggestion by the debtor that the debt which is merged in the judgment did not exist or was bad. There must undoubtedly be circumstances prima facie justifying an enquiry. There must appear something that the judgment was procured by fraud or collusion, or that there has been miscarriage of justice. But a mere irregularity or error in form will not be a sufficient reason for going behind the judgment. 15. When a debt secured by a promissory note is sought to be proved, the Insolvency Court must enquire into the reality, and the quantum of consideration. What shape this enquiry may take will depend upon the circumstances of the case. In a given case the Insolvency Court may regard an affidavit setting out the particulars of the debt, and affirming execution of the promissory note by the insolvent, and asserting non-satisfaction of the debt, as sufficient. In other cases, the Court may enter upon a fuller enquiry which the circumstances of the case may demand. But in all cases of proof of debts under S.33 the burden is upon the creditor. That burden may be discharged by the affidavit of the creditor viewed in the light of a presumption which the Court may raise under S.114 of the Evidence Act, that a bill of exchange accepted or endorsed, was for good consideration. But in all cases of proof of debts under S.33 the burden is upon the creditor. That burden may be discharged by the affidavit of the creditor viewed in the light of a presumption which the Court may raise under S.114 of the Evidence Act, that a bill of exchange accepted or endorsed, was for good consideration. If that be the true effect of S.33 of the Provincial Insolvency Act, and we think both on principle and authority that is the true effect, of necessity the presumption under S.118 of the Negotiable Instruments Act that every negotiable instrument was made or drawn or consideration cannot avail against the Receiver of the estate of the insolvent. It is true that S.118 of the Negotiable Instruments Act, unlike S. 119 to S.122 which occur in Ch.XIII, does not refer to a proceeding in suit where the various presumptions directed have to be raised. The section is undoubtedly in terms general. But there is no reason to suppose that it was intended to apply to a proceeding which is not in the nature of a civil dispute between the parties to the negotiable instrument or their privies. The Negotiable Instruments Act is intended to codify the law merchant relating to dealings concerning negotiable, instruments. The presumptions which are raised under S.118 do undoubtedly set out special rules of evidence relating to negotiable instruments, but in our opinion, the nature of the presumptions from their very nature operate in favour of or against the parties to the negotiable instrument or their privies and cannot generally apply to persons who do not claim under the parties to . the instrument. In Narayan Rao v. Venkatappayya, ILR (1937) Mad 299 : (AIR 1937 Mad 182) it was observed by Varadachariar, J., that a suit on a promissory note instituted against an undivided son of a Hindu promissor governed by the Mitakshara law after the latter’s death cannot be regarded as one against the heirs or representative of the promissor, because it only seeks to enforce the Hindu law theory of pious obligation of the sons in respect of the property which the sons have taken by survivorship. The pious obligation can arise only on the assumption of the existence of a debt due by the father and in such a case the onus of proving the existence of the debt must prima facie be laid on the creditor who can call in aid the presumption permissible under the general law of evidence namely S.114 of the Indian Evidence Act and not the presumption under S.118(a) of the Negotiable Instruments Act. The learned Judge observed: “Though this section is not, like Sections 119 to 122, limited in terms to a suit upon the instrument, it seems only reasonable to hold that the special rules of evidence laid down in S.118 must have been intended to apply only as between the parties to the instrument or those claiming under them. In other cases the presumption can only be in the terms enacted in S.114 of the Evidence Act (vide illus. c) which by the use of the expression “may presume” leaves it to the Court to apply the presumption or not according to circumstances. “ 16. Section 114 of the Indian Evidence Act authorises the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Under the third illustration of S.114 of the Court may presume that a bill of exchange accepted or endorsed was accepted for good consideration. But the section provides, that the Court shall also have regard to other material facts in considering whether the maxim does or does not apply in the particular case before it, it is therefore, open to the Court to consider in its proper setting, the fact that the drawer of a bill of exchange was a man of business, and the acceptor was a young and ignorant person completely under the former’s influence. This is one illustrative fact which the Court may consider in raising the presumption. There may be other circumstances which may also justify the Court in declining to raise the presumption. Mr. This is one illustrative fact which the Court may consider in raising the presumption. There may be other circumstances which may also justify the Court in declining to raise the presumption. Mr. Pathak for the respondents urged that the Indian Evidence Act was enacted in 1872 and the Negotiable Instruments Act having been enacted in 1881, and as the two provisions conflict or overlap, S.118 of the Negotiable Instruments Act must supersede S.114 of the Evidence Act. We are unable to accept that contention. Undoubtedly S.14 of the Evidence Act is a general provision which enables the Court to presume, though not obliged to do so, that a bill of exchange or a promissory note was founded on a good consideration. Section 118 of the Negotiable Instruments Act, however, enacts a special rule of evidence which operates between parties to the instrument of persons claiming under them in a suit or proceeding relating to the bill of exchange and does not affect the rule contained in S.114 of the Evidence Act, in cases not falling within S. 118 of the Negotiable Instruments Act. 17. In our view the High Court was in error in holding that a statutory presumption of consideration arose in favour of the respondents in the proceeding under S.33 for settlement of the schedule of creditors, and the Receiver exercising power under S.80 of the Act was bound to admit the debts in the schedule if the insolvent or the other creditors failed to displace that presumption.” It may at once be noticed that there the Apex Court was considering a case where the issue was regarding the entering of a debt in the schedule to be prepared after adjudication as insolvent. Certainly at that point of time, a detailed enquiry is necessary regarding the claim made either by the debtor or by the creditor. In the present case, that stage has not reached. 15. In the decision reported in Paramjeet Singh Patheja’s case (supra) It was held as follows: “41. Issuance of a notice under the Insolvency Act is fraught with serious consequences: it is intended to bring about a drastic change in the status of the person against whom a notice is issued viz. to declare him an insolvent with all the attendant disabilities. Issuance of a notice under the Insolvency Act is fraught with serious consequences: it is intended to bring about a drastic change in the status of the person against whom a notice is issued viz. to declare him an insolvent with all the attendant disabilities. Therefore, firstly, such a notice was intended to be issued only after a regularly constituted Court, a component of judicial organ established for the dispensation of justice, has passed a decree or order for the payment of money. Secondly, a notice under the Insolvency Act is not a mode of enforcing a debt; enforcement is done by taking steps for execution available under the CPC for realizing moneys.” Of course, the consequence of adjudging a person as insolvent is drastic and severe. It is stated that it causes the civil death of the person concerned. But the decision does not deal with the question of enquiry as such. 16. In the decision reported in Thomas T.G.’s case (supra), this Court was considering a petition by the debtor. It has already been noticed that the consideration of a petition filed by a debtor and creditor are different and the enquiry as far as the petition by the debtor is concerned is more severe and harsh. That is quite evident from Section 10 itself. It could also be seen that the details to be given by a debtor in his petition is contained in Section 13 which consists of several particulars. The duty of the creditor is not so onerous as that of the debtor in the case of an insolvency petition. in the above decision this Court held as follows: “Therefore, one of the mandatory requirements to be satisfied by debtor to file an insolvency petition is that he is unable to pay his debts. S.24 of the Act reveals that at the commencement of the proceedings itself it is mandatory for the Court to require proof of the fact that that the debtor is entitled to present the petition. On the day fixed for the hearing or any subsequent day to which the hearing may be adjourned the Court shall insist for such proof from a debtor. On the day fixed for the hearing or any subsequent day to which the hearing may be adjourned the Court shall insist for such proof from a debtor. Therefore, unless a debtor proves that he is unable to pay debt at the commencement of the proceedings itself, as per S.24 of the Act, his application shall not be entertained.” But as already noticed, the decision dealt with the case of a debtor’s petition, there detailed enquiry as contemplated under Section 24 is necessary, that is conspicuously absent in the petition filed by the creditor. 17. In the decision reported in Parthan’s case (supra) it was held as follows: “The position of law is now well established and is clear from S.24 that the enquiry envisaged under that section in relation to the entitlement of the debtor to file the petition so far as this case is concerned is only his inability to pay his debt as stated in S.10. For that purpose the court can under S.24, at the stage of accepting the petition and adjudging him insolvent, require from him only such proof necessary to satisfy that there are prima facie grounds for believing his inability alleged by him.” The same decision points out that enquiry contemplated under Section 24 is a summary enquiry with reference to primary materials and it is not necessary to probe into the validity of the allegations and the genuineness of the claim made by either of the parties. In the case of a petition by a creditor, if the court is prima facie satisfied that the creditor is competent to file a petition as envisaged under Section 9, then nothing more remains to be done at that stage. 18. Section 34 may be of some relevance in this regard. That deals with settling the schedule of creditors. There proof by the creditor of the debt is necessary before they could be included in the schedule. Sections 36, 37 and 38 also may be of some relevance in this case for the reason that those provisions deal with the annulment of order of adjudication of insolvency. In these provisions, detailed enquiries are contemplated. Section 50 deals with the mode of proof of a debt. 19. The claim of the appellants that since no liquidated sum is shown as the debt, the petition cannot lie has no legs to stand. In these provisions, detailed enquiries are contemplated. Section 50 deals with the mode of proof of a debt. 19. The claim of the appellants that since no liquidated sum is shown as the debt, the petition cannot lie has no legs to stand. In this case, the creditors filed a petition to adjudge the debtor as an insolvent person. They need to show only that the act of insolvency has been committed by the debtor and debt is due to them. In the case on hand, there can be no dispute that the first respondent owes money to the petitioners and also that he had assigned his property in favour of respondents 2 to 4. 20. It is also significant to notice that the statute prescribes the form in which the application is to be made by a creditor. When there isstatutorily prescribed form, all that needs to be done is to apply under the said form. Insistence of more particulars is not necessary. It is not necessary for the creditor at this point of time to supply more materials than what is envisaged under the statute. 21. Learned counsel appearing for the appellants then pointed out that the sale was effected after publication in newspapers and therefore the creditors must be dealt with the knowledge of assignments. 22. True there was a publication. Ext.B5 is the said publication. 23. Learned counsel appearing for the respondents pointed out that it contains no details and is of no help at all. Learned counsel for the appellants relied on the statements given by P.W.1 that he was aware of the sale and he was made to believe that the sale consideration would be paid towards discharge of his debt. These admissions made by P.W.1, according to the learned counsel for the appellants, is sufficient to decline to adjudge the debtor as insolvent. 24. It is far from so. Even assuming that P.W.1, the first petitioner, was aware of the sale in the sense that he was made to believe that property would be sold and amount would be paid to him, the said act of assignment does not absolve the debtor. Apart from that, the fact remains that the sale consideration was not utilized to discharge the debt due to him. Apart from that, the fact remains that the sale consideration was not utilized to discharge the debt due to him. Therefore, even assuming that what P.W.1 asserted in his evidence is true, that could not be of any help to the appellants. 25. The courts below have rightly found that the act complained of constitute an act of insolvency and also justified in coming to the conclusion that detailed enquiry or probe is not warranted at this point of time. On going through the provisions of the Act which have been referred to above, the conclusion seems to be irresistible that at the stage of passing an order under Section 24, all that the court needs to consider, as far as the petition by a creditor is concerned, is whether he is competent to file a petition seeking to have the debtor adjudged insolvent. That is available in the case on hand. This appeal is without merits and it is liable to be dismissed confirming the orders of the courts below. However, it is made clear that the appellants would be entitled to agitate their claims of bona fide purchase for valuable consideration at the appropriate stage.