CHAKRADHARA RAO D Vs. P KOTESWARA RAO

JUDGEMENT

(1.) This revision challenges the order passed in A.S.No. 150 of 1982 by the District Judge, West Godavari at Eluru.

(2.) The petitioners before this Court are respondents 2 and 3 in the Insolvency petition which was filed by respondent No.1 in this revision. Respondent No. 2 in this revision was originally the respondent No. 1 in the original petition. Parties shall be referred to as per their status shown in the original petition.

(3.) The petitioner Koteswara Rao had filed Insolvency Petition in the Court of Subordinate Judge, Eluru against respondent No. 1 Satyanarayana. The said petition was under Section 9 of the provincial Insolvency Act hereafter referred to as 'Insolvency Act'. In the said petition it was contended that Respondent No.1 borrowed a sum of Rs. 6,000/- by executing a prohote on 26-03-1974 for expenses of the marriage of his daughter. He agreed to repay the amount with interest at 12% p.a. It is alleged that on 5-3-1977 a part payment of Rs. 1,000/- was made by respondent No. 1 to the Petitioner on demand. The balance remained unpaid. It was contended that respondent No. 1 had no property except one which he sold to respondents 2 and 3 by a sale deed dated 19-9-1977 for consideration of Rs. 18,000/-. It was also alleged that the said property was worth more than Rs. 40,000/-. However, the petitioner contended that the said sale deed was sham, nominal and collusive and no consideration passed under it. It was brought into existence only to defraud and delay the genuine creditors like the petitioner. It was alleged that the purchasers and attestors to the said sale deed were relatives and close associates of the first respondent. It was therefore contended that the said sale deed may be annulled under Sections 53 and 54 of the Provincial Insolvency Act. The real prayer was that the 1st respondent committed an act of insolvency and be adjudicated as an insolvent for the benefit of general body of creditors.