SRILAL KAJARIA Vs. JIWANMAL BHUTORIA

JUDGEMENT

(1.) The point to be decided in this appeal is whether, in the facts and circumstances of the case, the order of adjudication in respect of the estate of the debtors, Srilal Kajaria, Jugalkishore Kajaria, Shyamlal Kajaria and Onkarmal Kajaria, passed by the learned trial Judge on May 13, 1960, is justified in law. The petitioner Jiwanmal Bhutoria carrying on business under the name and style of 'Chandmal Jiwanmal' set out various acts of insolvency in para 6 of his petition. At the time of hearing of the petition, the petitioning creditor did not proceed with the proof of two of the grounds, the first ground being that the appellant debtors stopped in Calcutta their business of International Traders with the sole intention of defeating or delaying payment of the dues of the numerous creditors including those of the petitioner and the second being that the debtors transferred some of their assets to defeat the claims of the creditors. The only ground on which the creditors pressed the order of adjudication may be set out as follows:

(2.) The debtors, Srilal Kajaria, Jugalkishore Kajaria, Shyamlal Kajaria and Onkarmal Kajaria, for about nine years prior to the presentation of the petition were alleged to be carrying on business in co-partnership under the name and style of 'Joharmal Jugalkishore' at No.18, Amratola St., Calcutta, and also at No.325, Kalba Debi Road, Bombay. The said four partners also were supposed to be carrying on business in co-partnership under the name and style of 'Pannalal Kishanlal' at the said places in Calcutta and Bombay. Two of the said debtors, Sri Kajaria and Jugalkishore Kajaria, also were alleged to be carrying on business in co-partnership under the name and style of International Traders at No.18, Amratola Street, Calcutta, and also at No.325, Kalba Debi Road, Bombay. Between May 2, 1958 and June 13, 1958, the petitioning creditor lent and advanced in the said business of 'Chandmal Jiwanmal' at Bombay by way of commercial loan diverse sums amounting to a total sum of Rs.2,88,000 to the two debtors Srilal Kajaria and Jugalkishore Kajaria in their business of International Traders in Bombay. Between May 7, 1958 and May 19, 1959, the same creditor lent and advanced to all the aforesaid four debtors in their said business as 'Joharmal Jugalkishore', Bombay, sums amounting to Rs.46,000. A notice dated November 7, 1959, demanding payment, was alleged to have been sent to the said debtors. The debtors, according to the creditor, within three months before the date of presentation of the petition, gave notice on November 20, 1959, to the petitioning creditor informing their inability to pay the debts. The debtors also in their said notice dated November 20, 1959, were supposed to have stated that the debtors had suspended payments of their debts to other creditors and or they were about to suspend payment of their debts. It is alleged in the petition that in spite of the repeated demands the debtors wrongfully failed and neglected to pay the said sums of Rs.3,34,000 or any portion thereof. The said sum advanced were unsecured and no person on behalf of the creditors held any security on the said debtors' estate for the payments of the said sums. The debtors have challenged the genuineness of the said two documents dated November 7, 1959 and have given evidence to the effect that the signature of S. L. Kajaria in the said letter dated November 20, 1959, is forged. According to the debtors cheques for Rs.3,34,000 were drawn by the petitioning creditor from time to time on the Bank of India Ltd., Bombay, in favour of 'International Traders' and 'Joharmal Jugalkishore', and the debtors in their business 'Joharmal Jugalkishore' and 'International Traders' Bombay, deposited the said cheques in their banks and duly encashed the same. But, according to the debtors, who completely denied their indebtedness, the said sum of Rs.3,34,000 which the debtors received belonged to the debtors themselves, and as such, there was no question of repayment of debt owed to the creditor. The creditor's definite case is that owing to the vexatious proceedings against him and the other Bhutoria by the Income Tax authorities and also the certificate proceedings pending against them, they were keeping large sums of cash money in their till. They had been depositing, in various instalments, exact sums of money on the days when the cheques for the respective amounts were being drawn by them on their bank in favour of the debtors. According to them, the debtors were in friendly terms with the Bhutorias and, as such, at their request they accommodated the debtors by lending them the same. The debtors, that is the Kajarias, on the contrary, made out an entirely different case. According to them, sometime in the last week of April, 1958, Bahadur Singh Bhutoria and Sampatlal Bhutoria, on behalf of the petitioning creditor, represented to Srilal Kajaria that the petitioning creditor wanted to show his bankers substantial transaction in their business by reviving his banking account in the Bank of India Ltd., Bombay, to enable the Bhutorias to obtain overdraft facilities for their business in Bombay. Srilal Kajaria agreed to accommodate the Bhutorias by accepting their cheques and simultaneously depositing cash moneys in the banking account of the Bhutorias to cover the said cheques issued by the later either in favour of International Trades or Joharmal Jugalkishore. Pursuant to the aforesaid arrangement, whenever cheques were issued by and on behalf of the creditors, Srilal Kajaria or Jugalkishore Kajaria caused the necessary cash money corresponding to such cheques to be deposited into the banking account of the creditor excepting on one occasion when Kajaria deposited one cheque issued by International Traders for a sum of Rs.36,000. According to Srilal Kajaria, the said deposits in cash were made by them with moneys either taken from the till of their business or from the banking account of their partnership firms. The learned trial Judge after discussing the oral and documentary evidence adduced in the case disbelieved the story of the debtors and held that the creditor's case was substantially proved and, accordingly, he directed the order of adjudication in respect of the estate of the debtors as stated above.

(3.) Mr. R. C. Deb, learned Counsel for the appellant, has strenuously contended that the entire approach of the learned trial Judge to the evidence before him was erroneous inasmuch as he first made up his mind that the disputed letters dated November 7, 1959 and November 20, 1959, were genuine and then evaluated the other evidence adduced by the debtors on the basis of such conclusion ignoring material pieces of evidence demonstratively showing the improbabilities and the absurdities of the creditor's case. He has substantiated his criticism by referring to certain outstanding fact which may now be examined. In our view, there is great force in Mr. Deb's argument. We are convinced that the oral and documentary evidence and the surrounding circumstances do not justify the answers given by the learned Judge to the issues raised in this appeal. The reasons for such conclusion may now be set out as follows: