PRAVINSAGUR Vs. SUGESAN FINANCE INVESTMENT

JUDGEMENT

(1.) The 1st and 2nd petitioning-Creditors are husband and wife respectively. They filed this petition under Ss.9(g), 10, 11, 12 and 13 of the Presidency Towns Insolvency Act against the eight respondents for adjudging them as insolvents and for directing their properties to vest with the Official assignee, Madras under the following circumstances.

(2.) The 1st respondent is a firm of partnership, of which respondents 2 to 8 are partners. The 1st respondent is a Financing Firm and it used to receive deposits from the public. In the usual course of its business, the petitioning creditors deposited Rs. 50,000/- as Term Deposit on 15-11-1983. The maturity date for the deposit was 18-11-1986. The deposit carried interest at 13 per cent per annum. Interest was payable every month. The respondents paid interest up to 31-8-1985 and failed to pay interest thereafter. Hence a letter was written by the petitioning-creditors stating that there is a breach of contract. In their reply to the said letter, the respondents requested to deposit the entire money with their sister concern Messrs. C.J. Sheth Construction Company, for which course of action, the petitioning creditors did not agree. However, the petitioning creditors requested the respondents to pay the interest forthwith. On 10-3-1986 the 1st respondent sent a communication stating that from March, 1986 onwards part repayment against the Term Deposit will be made and interest will be paid after full deposit amount is repaid. The petitioning-creditors did not agree for such a course and demanded payment in lumpsum. On maturity of the Deposit, they demanded payment of the deposit in lumpsum with accumulated interest. After the date of maturity, the 1st petitioning-creditor (P.W. 1) went to the 1st respondent-firm and met the 5th respondent Mukesh K. Seth. When the 1st petitioning-creditor demanded payment, he received an answer that the respondents would pay 35% of the amounts due as full and final settlement, for which course the 1st petitioning-creditor did not agree. Thereafter another proposal was made that the respondents will pay the amount due to the petitioning-creditors at the rate of Rs. 1300/- per month for which course of action also, the petitioning-creditors did not agree. Then there was a discussion between the 1st petitioning creditor and the 5th respondent. In the course of that discussion, the 5th respondent conveyed that he has suspended payment. On that ground, this petition has been filed.

(3.) A common counter has been filed on behalf of the respondents. Their case is one of denial of the allegations made by the petitioning-creditors. According to the respondents, they wrote a letter on 10-3-1986 and offered a practical solution by which the liability of the 1st respondent could be wiped out in easy instalments in view of the unforeseen liquidity problems faced by them. The further case of the respondents is that since the petitioning-creditors urged for repayment before maturity, the respondents, in order to convince the petitioning-creditors, promised to pay Rs.1300/- every month from the 2nd week of August, 1986. Since the petitioning-creditors returned back all the drafts and cheques, the 1st respondent wrote back to the petitioning creditors by their letter dated 12-1-1986 that they were cancelling all cheques and drafts amounting to Rs. 5,000/-. In the said letter, the 1st respondent has also acknowledged the entire liability towards the principal and interest due and has admitted the delay that had occurred due to unforeseen circumstances. The respondents denied the meeting of P.W.1 with the 5th respondent, as also the alleged suspension of payment made by the 1st respondent. According to the respondents, neither the 5th respondent nor any other respondents pressurised the 1st petitioning-creditor (P.W.1) to accept 35% of the principal amount in full and final settlement of the amounts due to the petitioning-creditors. The 1st respondent, by its letters dated 26-11-1986 and 3-12-1986, had conveyed their offer for repaying the amount due to them in instalments, since repayment of the full amount was not possible in view of the unforeseen circumstances faced by the 1st respondent. There was no deliberate intention on the part of the respondents to defraud, defeat or delay any one of the creditors as alleged in paragraph 10 of the petition. The respondents have not committed any act of insolvency, and the requirements of Ss. 9 and 9(g) of the Presidency Town Insolvency Act have not been satisfied. As such, the petition is liable to be dismissed.