KAKUMANU VENKATASUBBAMMA Vs. KAKUMANU VENUGOPALA RAO DIED

JUDGEMENT

(1.) This civil misc. second appeal is against the judgment & decree of the Dist. J., Guntur, dated 31-7-1948, in C. M. A. No. 23 of 1948, & raises three important questions: (1) Whether the Insolvency Ct. can order dividends paid on time-barred debts, expunged from the schedule, to be put back into Ct.; (2) Whether the Official Receiver, like a full owner, can acknowledge & pay at his will & pleasure time-barred debts; & (3) whether a creditor, authorised & directed by the Official Receiver can file a petn. under Section 50, Provincial Insolvency Act, in the Insolvency Ct., to have debts incorrectly or improperly admitted expunged from the schedule & get a valid order.

(2.) C. M. A. No. 23 of 1948 was an appeal against the order of the Subordinate Judge, Guntur, dated 19-1-1948, in I. A. No. 233 of 1947, in O. P. NO. 54 of 1935, an appln. of the resp., Venugopala Rao, a creditor of the insolvent in I. P. No. 54 of 1935 on the file of the Subordinate Judge, Guntur, to expunge two 'whata' debts amounting to Rs. 9135 said to be due to the applt. Subbamma, from one Seetharamamma, from the schedule of proved debts. The learned Subordinate Judge expunged these two debts & directed the applt., Subbamma, to repay the sum of Rs. 2689-4-0, paid by the Official Receiver, Guntur, to her as dividend on these expunged debt, with interest thereon up to the date of realisation. The learned Dist. J. confirmed the order of the Subordinate Judge as he had no hesitation in agreeing that it was correct. He has given two reasons for supporting the expunging of the debts, firstly, that they are 'khata' debts which became barred on 9-4-1932, &, secondly, that there was obviously an interpolation & subsequent insertion in the accounts of the applt. in a desperate attempt to revive these debts which were given up for good by the applt. at the settlement of accounts, with Seetharamamma, on 12-2-1935 When the entire sum due by Seetharamamma to the applt. was fixed at Rs. 4426-6-0 for which a promissory note was executed, which promissory note had already been allowed for in the insolvency petn., & dividend paid therefor. In other words, the learned Dist. J. considered that this alleged debt of Rs. 9135-6-0 was not only time-barred, even if true, but it was also given up at the settlement of accounts on 12-2-1935 & was sought to be fraudulently revived & claimed by interpolations & subsequent insertions in the accounts, a conclusion which the Subordinate Judge too arrived at. I see no reason to differ from these two findings of fact by the learned Dist. J., & the question of law has to be considered with reference to these two facts.

(3.) I may add that the learned Dist. J's finding regarding the bogus nature of the debt of Rs. 9135-6-0 sought to be dishonestly revived is supported not only by the tell-tale over-writings etc. in the accounts, but also by the curious fact that the debt of Rs. 4426-6-0 due really to the applt., Subbamma, as per the settlement of accounts dated 12-2-1935, was claimed by her 'nearly three years before this alleged additional debt of Rs. 9135-6-0 was claimed by her in the insolvency proceedings'. There can be no explanation at all for this except on the basis that she too was aware that only Rs. 4426-5-0 was the debt really due to her, & that she therefore proved that debt first & drew the dividend in respect of it, & waited for a sufficiently long time before coming forward with the subsequent fraudulent claim regarding the abandoned debt of Rs. 9135-6 0. The Official Receiver could have easily seen this subsequent claim to be fraudulent if he had looked into the accounts carefully & taken note of two significant facts, namely, that the settlement of accounts on 12-2-1935 settled the liability of Seetharamamma only at Rs. 4426-6-0, regarding which a promisory note was executed, & that that amount alone was claimed in the Insolvency Petition at first, the bogus claim regarding Rs. 9135-6-0 being made three years later, namely, on 6-10-1945. But, as usually happens, the Official Receiver was not careful enough, & admitted the subsequent claim in respect of this settled or abandoned debt of Rs. 9135-6-0, & paid the dividend in respect of it too. Later on, the resp. objected to the inclusion of this bogus debt, & the Official Receiver called upon the applt. to produce her accounts or sufficient evidence to show that the debt of Rs. 9135-6 was really due to her. In spite of eight or nine adjournments given to the applt she failed to produce the accounts or other evidence before the Official Receiver & convince him that her claim in respect of this Rs. 9135-6-0 was true. That, even if it was true, it was time-barred ages ago, is obvious.