JIVANLAL CHIMANLAL MEHTA Vs. PRAMODCHANDRA CHIMANLAL MODY

JUDGEMENT

(1.) This appeal arises two questions, one which is very simple to decide and the other of some importance. The Appellant was adjudicated insolvent on a petition presented on the 28th of November, 1957 by the Respondent basing the Petition on a debt of Rs. 3251.75 up and urging as the ground of insolvency that the property of the Appellant had been sold in execution of a decree; and the first question that was considered by the learned Judge below was whether there was a subsisting debt on which the Petition could be founded and the question that arose for consideration was whether a certation that arose for consideration was whether a certain document constituted an acknowledgment within the meaning of the Limitation Act or an acknowledgment within the meaning of Art. 1 of Schedule 1 of the Stamp Act. On the decision of this question depended whether there was a subsisting debt or not. Now, the document is a statement of account and it sets out the balance due to one Pramodchandra Chimanlal Mody, the Respondent, from the firm of C. Jivanlal and Co. in which the Appellant was a partner. There was an account of the Respondent in the books of the firm and the statement corresponds to the balance that appeared to the credit of the Respondent in the books of the firm. What is urged by the Appellant is that inasmuch as this document was not stamped, it is inadmissible in evidence and if the document is ruled out, the debt due by the firm of C. Jivanlal and Co. in which the Appellant was a partner, is barred by limitation. Now, the question as to whether the document falls within Art. 1 of Sch. 1 of the Stamp Act depends, as the article itself says, on the decision whether the document was given in order to supply evidence of a debt, and numerous authorities, which, it is not necessary to review, have clearly laid down that that must be the paramount intention of the person giving the document and the question that the Court has to ask looking at the document and looking at the surrounding circumstances is whether the document is given in order to supply a statement of account or whether the document is given in order to supply evidence of a debt. The learned Judge has held on consideration of all the facts that this particular document does not fall within Art. 1 of Sch. 1. No authority can help to construe this particular document. Each decision must turn on the facts of its own case; and that circumstance is that accounts of the firm of C. Jivanlal and Co., as admitted by the appellant himself, were made up every year after Diwali and the Appellant says:

(2.) The second question is whether the debtor committed an act of insolvency and the act of insolvency relied upon is the one set out in Section 9 (1) (e) of the Presidency Towns Insolvency Act:

(3.) Now, before turning to the authorities, looking at the language used by the Legislature, what the Legislature has stated is: "if any of his property has been sold." Now, the sale of a property and the sale being confirmed or becoming absolute are two different concept which are well recognised under the Indian law. The Civil Procedure Code, Order 21, Rule 89 uses language identical with Section 9 (e) of the Insolvency Act. Rule 89 says: "Where immoveable property has been sold in execution of a decree", any person, either owning such property or holding an interest therein, may apply to have the sale set aside. Therefore, the Legislature clearly recognises that there is a sale of property which is antecedent to its confirmation or its becoming absolute under Rule 92. The same is the language used in Rs. 90 where an application can be made to set aside a sale on the ground of irregularity or fraud. Here also, the language used is: "Where any property has been sold in execution of a decree" and the concept of the sale becoming absolute arises when you come to Order21, Rule 92. Therefore, as we have just said, these are two entirely separate legal concepts, - the sale of an immoveable property and the sale becoming absolute. Now, if the Legislature intended that the act of insolvency should only occur when the sale became absolute, there was no reason why the Legislature should not have used appropriate language to convey that intention. The Legislature has advisedly used the expression that the property has been sold and not when the sale has become absolute or has been confirmed. The reason behind this language is that, for the purpose of insolvency, the Legislature is concerned more with the position of the debtor rather than the rights of the purchaser under the sale. Mr. Desai says that till the sale becomes absolute, the property does not vest in the purchaser. That idea is to be found in Section 65 of the Civil Procedure Code: