SULTHAN PILLAI SALAHUDEEN Vs. MUNICIPAL COMMISSIONER KUZHITHURAI MUNICIPALITY

JUDGEMENT

(1.) This revision is filed under S.79(1) of the Insolvency Act against the order passed in I.P. 1/90. Petitioner herein was judgment debtor in O.S. 472 of 1982 of Munsiffs Court, Kuzhithurai in Kanyakumari District, Tamil Nadu. Decree holder was Kuzhithurai Municipality. When the decree was sought to be executed a petition was filed by revision petitioner herein under S.7 of the Insolvency Act before Principal Munsiffs Court, Nedumangad for declaring him as insolvent. Contention was raised before the Court below that no application is maintainable as against the Municipality under S.8 of the Act. Learned Munsiff dismissed the application stating that no insolvency proceeding be initiated against the Municipality. Matter was taken up in appeal before the District Court, Ernakulam. Appeal was dismissed. Aggrieved by the same this revision petition has been preferred. When the matter came up for hearing we heard counsel on either side.

(2.) Counsel appearing for the petitioner submitted that the court below has completely misdirected in taking the view that no petition under the Insolvency Act is maintainable for declaring the petitioner as insolvent. Counsel submitted S.8 of the Act deals with an entirely different situation which says that no insolvency petition shall be presented against any Corporation or against any association or company registered under any enactment for the time being in force. Counsel submitted that he has presented the petition only to declare himself as an insolvent. Counsel also placed reliance on the judgment of a learned Single Judge in Pierce Leslie India Ltd. v. A.Ramachandran, 1993 (1) KLJ 745 . Counsel appearing for the Municipality submitted that there is ample evidence to show that the petitioner is solvent. Consequently matter may be remitted back to the Munsiffs Court for adducing evidence.

(3.) The object of insolvency law is to make all the property of the insolvent divisible amongst all the creditors. The Act provides the machinery by which the insolvent can be given relief and also the machinery by which the creditors, who are not secured in the payment of their debts, are to be satisfied. The Insolvency Act provides for the particular protection of the insolvent and general protection of creditors and the trading public. It is an administrative or adjective law. The policy and object underlying it is to secure the distribution of a debtors estate among his creditors and to prevent the more active creditors from getting an undue advantage over those who may be less active. S.6 of the Act deals with acts of insolvency. The insolvency jurisdiction of courts can be exercised for adjudging a person as insolvent only if he is a debtor under the Act and has committed any one of the acts of insolvency as enumerated in S.6.