VEMULA ROSAIAH Vs. P SUBRAHMANYAM

JUDGEMENT

(1.) The question of law that arises in this revision petition is whether a petition presented by a creditor under the provisions of the Provincial Insolvency Act 1920, hereinafter referred to as "the Act" can be dismissed under section 25 of the Act on the basis of the plea of the debtor's transferee that the debtor has means to discharge the debt.

(2.) To appreciate the question involved, the necessary facts may be stated. For the purpose of better appreciation and convenience, the parties are referred to as they are arrayed in the Insolvency Petition. The petitioner is the creditor and the 1st respondent is the debtor who is said to have borrowed from the petitioner Rs. 3600/- for his family necessities and did not discharge the debt. The other two respondents are the alienees. The insolvency petition was contested by the alienees, but the debtor (viz.. the 1st respondent) remained exparte. The learned Subordinate Judge dismissed the I P holding that where on the facts proved and assets established it is clear that the debtor is in a position to pay his debts, the Court is bound to dismiss the insolvency petition of the creditor under section 25(1) of the Acts.

(3.) As against the said order, the creditor filed an appeal. In the appeal also the debtor remained exparte. The a Fienees however contested and both the parties put forward the same pleas. One; of the important pleas put forward is that the debtor's ability to discharge the debts can be considered on the plea of the debtor himself and not on the basis of the plea raised by the transferees. The learned Additional District Judge, after examining the scope of section 25(1) of the Act, mainly relied on a judgment of the Labore High Court in Harmon Singh vs Gopal Das (1) AIR 1929 Lahore, 79 and held that it is not open to the transferees viz,, alienees to submit that the debtor is able to discharge his debts and ask for dismissal of the petition. The learned appellate Judge also held on other points that the lower Court was not right in holding that the debtor was in a position to pay off his debts. He also rejected the contention that there was a collusion between the creditor and the debtor. Accordingly he allowed the appeal. Hence the revision by the alienees.