E.K. GOPAL Vs. C. MANOHARAN

JUDGEMENT

(1.) The creditor, E.K.Gopal / petitioner filed I.P.No.40 of 2002, seeking to adjudge the first respondent, C.Manoharan, as insolvent. That petition was allowed with costs. Challenging the judgment, CMA No.10 of 2007 was filed by respondents 2 and 3 in I.P.No.40 of 2002 and the appeal was allowed and I.P.No.40 of 2002 was dismissed. Challenging the dismissal, the petitioner in I.P.No.40 of 2002 has preferred this Civil Revision Petition.

(2.) The first respondent, Manoharan, borrowed a sum of Rs.1,50,000/- from the petitioner for his business expense on 23.05.1999 and executed a promissory note. As promised, he did not repay the amount. The first respondent, with an intention to cheat and defraud the petitioner as well as other creditors, placed his assets beyond the reach of the creditors and towards that end, executed two sale deeds, in favour of respondents 2 and 3, on 28.11.2001, with regard to his entire properties. Respondents 2 and 3 purchased the properties knowing fully well about the debts due to the petitioner from the first respondent. The act of the first respondent would amount to an "act of insolvency" as contemplated under Section 6 of The Provincial Insolvency Act, 1920 (hereinafter will be referred to as "the Act"). Therefore, for the acts of insolvency committed, the first respondent has to be adjudged as insolvent.

(3.) The trial court considered the issue as to whether the first respondent had committed an act of insolvency within the meaning of Section 6 (b) of the Act and came to the conclusion that the debt due under the promissory note, Ex.A-1, has been clearly proved and that the act of the first respondent would amount to act of insolvency. So finding, the first respondent was adjudged as insolvent.