TATIPARTHY SATYANARAYANA Vs. PALACHERLA VIJAYALAKSHMI AND ORS.

JUDGEMENT

(1.) THE petitioner in IP No. 19 of 2001 on the file of the Court of II Additional Senior Civil Judge, Visakhapatnam (for short, 'the trial Court'), and the 1st respondent in AS No. 25 of 2009 on the file of the Court of VIII Additional District & Sessions Judge (FTC), Visakhapatnam (for short, 'the appellate Court'), preferred this appeal challenging the finding of the appellate Court, whereby the finding of the trial Court was reversed dismissing the petition in IP No. 19 of 2001. For convenience of reference, the ranks given to the parties in IP No. 19 of 2001 before the trial Court will be adopted throughout the judgment.

(2.) THE petitioner, claiming to be the creditor, filed petition under Section 9 of the Provincial Insolvency Act, 1920 (for brevity, 'the Act of 1920'), to adjudge respondent Nos. 1 and 2 as insolvents and to declare that sale deeds dated 25.7.2001 and 1.9.2001 executed by respondent Nos. 1 and 2 in favour of respondent Nos. 3 and 4 conveying item Nos. 1 and 2 of petition schedule property as void alleging that the petitioner is a dealer in wholesale business of supplying readymade silver articles and gold jewellery to retailers for the last 15 years. Respondent Nos. 1 and 2, who are permanent residents of Visakhapatnam, having immovable property, carrying on their business in the name and style of Sri Kanaka Mahalakshmi Jewellery Mart in D. No. 26 -15 -16/B, Main Road, Near Kotha Road, Visakhapatnam, which is 10' x 20' in a plinth area of 200 square feet. The petitioner supplied gold and silver articles to respondent Nos. 1 and 2 and became indebted to a tune of Rs. 2,60,000/ - altogether. Out of Rs. 2,60,000/ -, the 1st respondent has to pay Rs. 1,60,000/ - and the 2nd respondent has to pay Rs. 1,00,000/ - by June, 2001, which represents the amount borrowed in cash and value of silver articles and gold jewellery supplied to them in retail business. Despite requests made by the petitioner, respondent Nos. 1 and 2 did not repay the amount due to the petitioner. Thereafter, the 2nd respondent nominally obtained a lease agreement in respect of schedule property from the 1st respondent, treating the amount due to him as interest free, on monthly rent of Rs. 1,700/ - giving set off from the amount already lying with the 1st respondent. With the above understanding, the 1st respondent obtained lease agreement dated 28.7.2001 from the 2nd respondent in respect of ground floor of the building Bearing D. No. 26 -15 -16/B for a period of three years.

(3.) THE 3rd respondent filed counter denying material allegations inter alia contending that the petition is without any basis and filed only to harass respondent Nos. 3 and 4 having hand in glove with respondent Nos. 1 and 2. The petitioner did not approach the Court with clean hands and suppressed material facts. The lease agreement said to have entered into by the petitioner with the 1st respondent dated 1.8.2001 is subsequent to the registered sale deed by the vendor of the 3rd respondent i.e., the 2nd respondent. Therefore, the lease is not valid and it is not enforceable. On this ground alone, the petitioner is disentitled to claim any relief.