KHIARAM KHUSHIRAM Vs. KAMADHENU DRINKS

JUDGEMENT

(1.) THESE two insolvency petitions have been filed by two sets of creditors for adjudicating the first respondent-firm and its alleged partners, respondents 2 to 9 as insolvents. The first respondent is known as Kamadhenu Drinks. The creditors in I. P, No. 41 of 1976 had advanced different amounts on hundies or promissory notes. The first respondent agreed to repay the amounts borrowed within a period of 90 days from the said date of the hundies, The said promissory notes or hundies were executed at No. 10, Kasturi Ranga Iyengar road, Madras-18, by one V. P. Muthukumaraswamy Gounder who is admittedly a partner in the said firm. According to the petitioning creditors in I. P. No. 41 of 1976 the first of them went to No. 10, Kasturi Ranga Iyengar road, on 1st, 2nd and 4th March, 1976 and did not find the board of Kamadhenu Drinks previously found in the said premises. He was not able to contact anyone of the partners at the aforesaid premises and it is, therefore, stated in the petition that the debtors had departed from the usual place of business at No. 10 kasutri Ranga Iyengar Road and had thus committed an act of insolvency within the meaning of Section 9 (d) (ii) of the Presidency Towns Insolvency Act. Notices were given to the debtors in March, 1976 and they were acknowledged by the debtors by their letter dated 20-3-1976, wherein it was stated that Kamadenu drinks was at No. 26, Agraharam Street, Erode. It is therefore, alleged that the debtors had changed their place of business from No. 10, Kasturi Ranga iyengar Road, Alwarpet, Madras-18, to No 26, Agraharam Street Erode, and had thereby committed an act of insolvency described in Section 9 (d) (ii) of the presidency Towns Insolvency Act, It is further alleged in the petition that after the receipt of notices some of the debtors came over to Madras and stayed in hotel Ashoka and called for a meeting of the creditors in a room in the said hotel on 7-4-1976 and also on 8-4-1976, On 7-4-1976 two of the creditors viz. , seth Biharilal Prakashlal and Seth Motirarn Newendram attended the meeting and on that day it was represented by two of the debtors viz. , S. V. Balasubramaniam and V. K. Swaminathan respondents 5 and 6 respectively, and that they would call for the other debtors also and have full discussions with the creditors on the next day. At the meeting on the next day, a number of other creditors were also present and at that meeting it is alleged that the debtors expressed their inability to pay the amounts due immediately and stated that everything was in a state of confusion due to the sudden death of a partner v. M. Kailasa Gounder, that the accounts had not been kept properly and that it was not possible to discharge the huge liability incurred, as no partner was coming forward to give his share of debts and to co-operate in the discharge of the debts. It is alleged also that they stated that they could not make payment and they would not be in a position to pay the amount in the near future and that thus they suspended the payment. It is further alleged that the debtors told them that they could do whatever they wanted to do. It is stated in the petition that the debtors had suspended payment and thus committed an act of insolvency described in Section 9 (g) of the Act. The prayer is, therefore, that the debtors should be adjudged as insolvents and that consequential orders should be passed.

(2.) A common counter-affidavit has been filed by respondents 1 and 3. They have denied the allegations that they had committed any act of insolvency contemplated either by Section 9 (d) (ii) or by Section 9 (g) of the Act. According to them, there were several discussions and ultimately a settlement was reached by which Multani Bankers, to which class the petitioning creditors belonged, would be paid certain amounts by sale of No. 10, Kasturi Ranga Iyengar Road, for which purpose a special power of attorney was executed in favour of Sri R. Krishnaswami, Advocate. It is also stated that they paid a sum of Rs. 2,00,000/- and the petitioning creditors were estopped from prosecuting this petition and that their only remedy was to take suitable steps to enforce the arrangement dated 10-5-1976 as a result of which the power of attorney mentioned above had been given and the property bearing Door No. 10, Kasturi ranga Iyengar Road was to be sold. It is stated in the counter affidavit that assets of the first respondent firm exceeded 1. 5 crores of rupees and that the assets were more than sufficient to discharge all the liabilities of the firm and that with a view to evade payment of court-fee, the petitioning creditors had chosen to fill the petitions for insolvency for adjudicating the respondents as insolvents as a short cut for recovery, which was not permissible under the law.

(3.) THE second respondent and the fourth respondent have filed counter affidavits which run more or less on the same lines as of the first and the third respondents. In the counter affidavit filed by the fifth respondent it is stated that he was no longer a partner in the firm of Kamadhenu Drinks and that the acts of insolvency said to have been committed would not in any manner justify his adjudication. Respondent No. 6 and respondent No. 8 (for himself and on behalf of respondents 7 and 9) have filed counter affidavits denying the allegations of their having committed any act of insolvency.