CHATRAM PUTTAPPA SONS Vs. KAMARCHAND

JUDGEMENT

(1.) Though the facts of this appeal are simple, a few interesting questions of law are raised. Chatram Puttappa Sons is a joint Hindu family firm doing business as nut and Mandy merchants at Bangarpet., Kolar District. They are the appellants before this Court. The respondents are some of their creditors. The latter filed an application under the provisions of sections 7 and 9 of the Mysore Insolvency Act to adjudge the appellants as insolvents on the ground that the respondent's are unable to pay their debts and have committed acts of insolvency. Though in the petition filed by the respondents several acts of insolvency are alleged, they confine their attention to only one both before the District Judge, Bangalore, as well as before this Court, viz. that they are unable to pay their debts and have given notice of suspension of payment.

(2.) The appellants sent a registered notice to several of their creditors as per Exhibit P. 4 dated 24-6-1955 that they are unable to meet their liabilities immediately and that they would like to make arrangements for the purpose of realising all their assets and discharge their liabilities. For that purpose, they called for a meeting of the creditors to be held on the 4th of July 1955. This notice is signed by C. P. Shivappa, one of the members of the joint Hindu family firm. Close on the heels of this notice comes Exhibit P. 5 which is a copy of the agreement between Chatram Puttappa Sons (appellants) and some of the creditors in pursuance of the registered notice as per Exhibit P.4 referred to above. At this meeting, the debtors viz. Chatram Puttappa Sons pleaded their inability to pay the full amount due to the creditors owing to loss in business, and proposed to pay six annas in the rupee as full and final settlement towards their dues to the creditors. The creditors who were present at the meeting agreed to take six annas in a rupee in full and final settlement. For this purpose, there was a further stipulation in the said agreement that if the settled amount is not paid to the creditors before the 4th of August 1955, the agreement will automatically be cancelled. Two creditors were appointed as trustees for the purpose of distribution of the amount so paid to the several creditors. This agreement is dated 24th July 1955. For some reason or the other, this agreement became a dead letter and the creditors-respondents, four in number, filed an application as stated above to declare Chatram Puttappa Sons represented by its Manager and Karta C. P. Kalappa (the correct name being C. P. Kadappa) as insolvents.

(3.) The learned District Judges held that the appellants had committed an act of insolvency and therefore adjudicated the firm of Chatram Puttappa Sons insolvents. Against this decision, the said firm have preferred an appeal. It is strenuously argued by Sri Raja Iyengar, the learned Advocate appearing for the appellants that the latter have not committed any act of insolvency much less the one pressed before this Court. His next contention is that a joint Hindu family firm cannot be adjudicated as an insolvent, as it is not a 'firm' in the sense in which that term is used in the Law of Partnership.