(1.) Mrs. Kundanbai, Proprietrix, Industrial Engineering Insulation Company is the petitioning creditor. The respondent is the debtor to the petitioning creditor. The petitioner has filed this insolvency petition under Ss. 9, 12 and 13 of the Presidency Towns Insolvency Act (hereinafter referred to as the Act) to pass an order of adjudication adjudicating the respondent as insolvent and for other consequential relief.
(2.) The petitioning creditor is a proprietary concern which deals in copper cables and other allied products. They supplied copper cables, rods, ingots and other materials received from its principals to various manufacturers of transformers and other allied electrical equipments for the State of Tamil Nadu and one such suppliers of raw materials required for the manufacture of transformers namely of the respondent is that of the petitioner. The petitioner was approached by the respondent for the supply of various gauges of copper cables, wires, rods etc., for the manufacture of transformers by the respondent. Various quantities of raw materials have been supplied to the respondent which have been duly accepted by the respondent. The amounts due under the said supplies are due and payable by the respondent to the petitioner. A sum of Rs. 3,87,899.16 p. was due and payable by the respondent to the petitioner as on 27-5-1986 which was the last date of supply and the last quantity of materials ordered by the respondent to the petitioner. The respondent by his letter, dated 2 6/07/1986 has categorically admitted the whole of the outstandings for the supplies made by the petitioner to the respondent without any demur or dispute. The said letter is in unequivocal terms, is an admission of the liability of the respondent to the petitioner, which was expressed to be liquidated in a phased manner due to the unforeseen circumstances of the introduction of 'Molavat' scheme which resulted in reorganizing their formalities viz., of the respondent in connection with the submission of various statements relating to the manufacture of transformers to the concerned Central and State Government Departments.
(3.) The petitioner wrote several letters to the respondent, requesting them to make payments of the outstandings on 6-8-1986, 11-8-1986, 12-8-1986, 13-8-1986 and 14-81986 etc., which were all sent by registered post with acknowledgment due and received by the respondent, but were not replied by the respondent. The respondent was also contacted by the petitioner on various occasions over phone and also in person and the respondent made representations to the petitioner that as he has not received payment from the Tamil Nadu Electricity Board for the supplied effected to the Tamil Nadu Electricity Board and that the amount due to the petitioner on the various supplies he has effected to the Electricity Board for manufacture of transformers and supplied to the department will be paid immediately on receipt of the payment from the Electricity Board. It is further stated that the Electricity Board had retained a sum of 10 per cent of the value as retention money and a sum of Rs. 10 lakhs is due from the Electricity Board to the respondent, which has been retained by the Electricity Board for supply of transformers effected to them. The respondent has also utilised the raw materials supplied by the petitioner for the manufacture of transformers or of the allied electrical equipments in the name of the proprietary concern, owned by the respondent's wife with an intent to defeat, defraud and cheat the various creditors of the respondent. In fact the respondent has issued various cheques as specified below : S.No. Cheque No. Amount Dated No. 1. 001410 Rs. 1,10,000/- 30-8-1986 2. 001408 Rs. 1,10,000/- 30-8-1986 3. 001411 Rs. 1,10,000/- 30-8-1986 All the above three cheques were given with specific instructions that the cheques may be presented and that the respondent will make all arrangements for honouring the instruments. Accordingly, all the cheques were presented on 8/09/1986. The instrument was returned with the endorsement 'refer to drawer'. Likewise the second cheque for Rs. 1,10,000/- was also returned on 17-9-1986. The petitioner issued a notice through her counsel on 12-9-1986 which was received by the respondent on 18-9-1986. The third instrument for Rs. 1,10,000/- was also deposited by the petitioner on 22-9-1986 which was returned as 'payment having been stopped by the respondent'. The said act of the respondent will amount to an act of insolvency committed by the respondent in seeking to suspend the payments of all his debts. It is not only in the case of the petitioner, but also in the case of other creditors. The respondent has gone to the extent of issuing a cheque in the account of a bank viz., the erstwhile bank of Cochin, which as subsequently merged with the State Bank of India with the full knowledge that the prior account with the said Bank has been closed. The respondent has wilfully indebted and with an intent to defeat and defraud the claims of the respondent's creditors has now started doing business in the name of his wife and has also diversified the materials purchased by the respondent for the manufacture of transformers in the name of his wife's concern, which act will amount to an act of insolvency with an intent to defeat and defraud the creditors and has secreted or dealt with the properties by transferring the same in the name of his benami concerns.