K VENKATARAMANASETTY Vs. MALALI VENKATARAMANAIYA SETTY

JUDGEMENT

(1.) This appeal by the third petitioner is directed against the judgment and order dated 14th November 1975 made by the District Judge, Chikmagalur in Insolvency Case No. 1 of 1972 on his file dismissing the petition of the creditors/petitioners for adjudging the debtors as insolvents.

(2.) The petitioners averred that the Respts. 1 (a) to 1 (d) formed a joint family firm and that they being indebted to the petitioners and some of the respondents in the petition alienated their properties mentioned in the petition in favour of some of the creditors, in preference of those creditors, and with a view to defraud or delay the payments of the other creditors including the petitioners. They further averred that substantial portion of the properties belonging to the firm was sold and there was pot much left with the respondents-dobtors. The same was deried by respondents-debtors. During heanng, P Ws. 1 to 4 were examined on behalf of petitioners. P.W. 1 seccnd petitioner, Dhanraj S. Jain, who is the elder brother of the first petitioner has stated inter alia that they have advanced a sum of Rs. 10,000 and Rs. 5.000 respectively in favour of Malali Venkataramana Serty & Sons under promissory notes They have produced the promissory notes. He has also stated that after the death of their father, the present respondents have constituted them selve into the joint family firm under the name and style of Malali Venkataramanaiah Setty & Sons and they have started running the business under the name and style of Mylaragipta. He has further deposed that the respondents creditors have sold on 23-6-1972 under Ex. P-1 some properties in favour of Respt-4. He has further stated that they have sold properties in favour of Respt-5 as per Ex. P-2 dated 23-6-1972. They have also sold their residential house in favour of Respt-6 as per the original of Ex. P-3 on 23-6-1972. They have further sold Ambassador Car No. MYC 1165 and a lorry belonging to them bearing No. MYS-3726 within a few days thereof.

(3.) He has further deposed that the Oil Mill with building and godown is mortgaged in favour of the Vijaya Bank and that the Vijaya Bank has advanced them a sum of Rs.1,50,000. He has also deposed that a suit was filed for recovery of rent against them in O.S. No. 126 of 1973 on the file of the Munsiff, Kadur. The Plaint and the written statement in the suit are produced at Exs. P-4 and P-5. Thus, he has deposed that the respondents within a short time before the filing of the petition have disposed of substantial portion of the properties obviously with intent to defraud or delay the payment in favour of the creditors. P.W. 2 B.L. Ranganna was the Shanubhogue at Kadur for 20 years or more. He knew first-respondent, late Malali Venkataramanaiah Setty, in the petition. He has spoken to the fact that in the year 1972 a shop by concerned respondents was run under the name and style Malali Venkataramanaiah Setty & Sons and subsequently the name is charged as Mylaragupta. He has also deposed that the Oil Mill is closed in about the year 1972. P.W. 3 is Gopalakrishna. He is also on the point that the name of the shop has been changed. P.W. 4 is K. V. Adinarayana Setty. He was originally the 3rd respondent in the petition and subsequently he has been transposed as petitioner. He has spoken to the petition averments. He has stated that he had to file O.S. 24 of 1972 for the recovery of his dues. He has produced the certified copies of the plaint, written statement and other documents at Exs. P-6, P-7, P-8, P-9 and P-10. He has further deposed to the sales made by the concerned respondents. He has also spoken to the mortgage in favour of Vijaya Bank. According to him, the alienations were made with a view to defraud or delay the creditors. As against this, respondents have examined R.Ws 1 to 4. R.W. 1 is Revanaiah. He speaks to the shop run by the concerned respondents. According to him one of the brothers is looking after the shop. Shop is running. R. W. 2 is Bhagyalakshmi. She has stated that she is the daughter of Malali Venkataramana Shetty who died prior to her deposition, on 5-9-1975. the has purchased a house from her brothers after the death of her father. The sale deed is at Ex. R-1. The consideration is Rs.2,000. The sale deed is dated 23-6-1972. R.W.3 is M. V. Parthasarthy. He speaks to the facts as to when the partnership was established. The firm Malali Venkataramana Setty & Sons was established in the year 1961, under the partnership Act. Ex. R-2 is the acknowledgment of registration of the partnership firm. Respts. 1 (a) to 1 (d) are the partners of the firm. He states that the assets of the partnership firm are the building in which the oil mill is housed and six sites shop and godown. Apart from the Mill there are the stocks in the shop. He has further states that item No. 8 did not belong to the partnership firm. Item No. 9 also did not belong to the joint family firm. Similarly item No. 5 did not belong either to the firm or to the joint family. He denies that the management of the shop was changed. R.W.4 K. Yalahanka Rai, is the Manager of Vijaya Bank, Birur. He has deposed that the Bank advanced to the extent of Rs. 1,75,000, Rs. 60,000 and Rs. 19,000 to the firm known as Malali Venkataramana Setty at Kadur on the Hypothecation of the mill building with the Oil Mill machinery along with the five sites. For Rs. 60,000 loan they have pledged the L.I.C. policy apart from the security referred to above. He has further deposed that pigmi deposit of Rs. 50,000 has been made over in favour of the Bank. He has also deposed that the loans are still subsisting even after the adjustments. The Bank was obliged to file suits with reference to the mortgage in O.S. No. 5 of 1974 before the Civil Judge, Chikmagalur and they obtained the decree as per Ex. R-18. Even after the decree they were unable to pay. They paid only one instalment and that that was due in March, 1975 and thereafter they did not pay anything. The execution was taken out. The learned District Judge appreciating the evidence on record came to the conclusion that the properties that were left with the concerned respondents namely Respts. 1 (a) to 1 (d) were sufficient to discharge all the debts of the debtors and as such it could not be said that the firm committed Acts of insolvency under S. 6 (1) (a) and in that view he dismissed the petition of the creditors for adjudging Respts. 1 (a) to 1 (d) as insolvents. Aggrieved by the said judgment and order, the third petitioner has instituted the present appeal.