LINGASAMI GOUNDAR Vs. S.K. SUBRAMANIAN

JUDGEMENT

(1.) THE learned District Judge of Madurai was right when he allowed the application of the respondent under Section 10 of the Provincial Insolvency Act, by permitting him to be adjudicated insolvent on his own petition, on the ground that he was unable to pay the debts of his creditors. The petitioner before me is one of his creditors. In a summary examination which the Court has to undertake under Section 24 of the Act, the trial Court, instead of limiting its enquiry to a prima facie examination of the ability of the respondent to pay his debts, made a detailed enquiry about his assets and liabilities, and came to the conclusion that the act of insolvency as set out by him had not been established. The appellate Court rightly posed itself the question whether the respondent was in a position to pay his debts, particularly a large decree debt due to the petitioner. It noticed several decisions of this and other Courts and was of the view that the enquiry under Section 24 of the Act was limited in scope and in that context, it would not allow a full delve into the capacity of the respondent to pay his debts. It was of the view that at that stage there was on record prima facie evidence, besides the admission of the debtor himself that he was unable to pay his debts. In those circumstances, it adjudicated the respondent insolvent on his own petition. It is an against this order the present revision petition has been filed.

(2.) THE learned Counsel for the petitioner did not place before me any authority to show that the proof required to be adduced by the debtor when he presents a petition to the appropriate Court for being adjudicated insolvent on his own petition is something which is in the nature of the proof that is required in normal civil cases. The proviso to Section 24(1)(a)of the Act itself says that the debtor, for the purpose of proving his inability to pay his debts, will be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing the same and that the Court, if and when so satisfied, shall not be bound to take any further evidence thereon. When the statute uses the word prima facie grounds "for believing the statement of the debtor of his inability to pay his debts, the degree of the burden of proof that is called for by the statute is not to be equated to the degree of proof as is always necessary in an ordinary civil litigation. Obviously the statute requires such a summary satisfaction, because there are various levers provided for in the Act itself which enable the creditors to annul the adjudication on various grounds, including the ground that the debtor has suppressed his assets and that he is in a position to pay his debts fully, etc. Bearing this is mind, the appellate Court accepted the evidence of the respondent and adjudicated him insolvent. But what is urged is that there must be a stricter examination of the capacity of the respondent's ability to pay his debts, by examining the nature of his assets, his properties, etc. In ray view such a detailed examination is not warranted. If a person approaches the Court by inflicting on himself the ignominy of his inability to pay his debts and in consequence seeks for an order adjudicating him insolvent, then, unless there is strong evidence to disprove such a voluntary confession made by him, the Court need not at that stage employ itself in a deep enquiry regarding the opulence of the debtor and his ability to pay his debts. A summary enquiry is indicated; prima facie proof is called for and if that is undertaken and if a decision is rendered by the appropriate Court, then it cannot be said that such an order is without jurisdiction or suffers from any material irregularity. The High Court also, under Section 75(1) of the Act, is only expected to see whether the order of the appellate Court is in accordance with law or not. The lower Court says that prima facie it is satisfied that the respondent is unable to pay his debts. This is a finding based on appreciation of material considered by the Court below. The order otherwise cannot be said to be not in accordance with law.