VINOD TRADING CO Vs. TOLA RAM

JUDGEMENT

(1.) SETH Tola Ram (Creditor No. 1), M/s. Jai Paul Weaving Factory Creditor No. 2), M/s. Jagdish Weaving Factory (Creditor No. 3), M/s. Ram Paul Shiv Kumar (Creditor No. 4 ). M/s. Singla Trading Co. (Creditor No. 5) filed a petition under S. 7 of the Provincial Insolvency Act in Aug. , 1975 against M/s. Vinod Trading Co. (Debtor No. 1), M/s. Vinod Woollens (Debtor No. 2), M/s. Rajeev India Enterprise (Debtor No. 3), Shri Anand Sarup (Debtor No. 4) Shri Ramesh Kumar (Debtor No. 5), Shri Vinod Kumar (Debtor No. 6), Smt. Usha Gupta (Debtor No. 7) and Smt. Jeet Vati (Debtor No. 8) for getting them declared insolvents. In the course of the proceedings before the Insolvency Judge, Ludhiana, the creditors filed an application containing list of the other creditors, including the Delhi Cloth and General Mills Co. Ltd. , Delhi, hereinafter referred to as the Company.

(2.) ON 27th Aug. , 1975, the Insolvency Judge passed order appointing a receiver. The debtors preferred an appeal which came up for hearing before the Second Additional District Judge Ludhiana on 3rd Feb. , 1`976. Learned counsel for the creditors said that the creditors would withdraw the insolvency petition. Hence, the appeal was dismissed as infructuous. Thereafter, on 20th Feb. , 1976, learned counsel for the creditors stated before the Insolvency Judge that the creditors did not want to prosecute the petitioner and the same be dismissed. At this stage, application dated 40th Sept. , 1975, of the Company for being impleaded as petitioner came up for consideration. In the exercise of this powers under Section 16 of the Act above--said, the Insolvency Judge on 20th March, 1976, instead of dismissing the Insolvency Petition, allowed the Company to be substituted as petitioner. The appeal filed by the debtors against this order was dismissed by the Additional District Judge, Ludhiana, on 9th Dec. , 1976,. The debtors have preferred the present revision petition.

(3.) COMING now to the merits of the case. Section 16 of the Provincial Insolvency Act provides:-" Where the petitioner does not proceed with due diligence on his petition, the Court may substitute as petitioner any other creditor to whom the debtor may be indebted in the amount required by this Act in the case of a petitioning creditor. " Section 16 of the Act clearly speaks of substitution of the petitioning creditor by another creditor. Before the two Courts below the Company has been able to satisfy its claim for substitution. None of the grounds urged against the Company has been taken up before me. Learned counsel for the debtors raised entirely a new point based on the facts stated in para 4 of the Company's application dated 30-9-1975 which reads:- "that the applicant (The Delhi Cloth & General Mills Co. Ltd.) is one of the creditors of respondent No. 1 M/s. Vinod Trading Company, Lalu Mal Street Ludhiana which is constituted and represented by respondents Nos. 4, 5, 6, & 8. " Thus the inference drawn was that debtors Nos. 2, 3 and 7 were not the debtors of the Company. On the other hand learned counsel for the Company urged that para 4 quoted above be not taken in isolation. From the particulars of the eight debtors on record, learned counsel for the Company spelt out the following relationship between them inter se. Anand Sarup (Debt. R No. 4) _____________________________|___________________________________ Ramesh Kumar Vinod Kumar (Debtor No. 5) (Debtor No. 6) Usha Gupta (Debtor No. 7) and Jeet Wati (debtor No. 8) are the wives of Ramesh and Anand Sarup respectively. My attention was then drawn to para NO. 6 of the insolvency petition wherein debtors Nos. 4, 5, 6, 7, and 8 were alleged to be the partners of the above--named three firms (debtors Nos. 1 to 3 ). Learned counsel for the Company pointed out that the composition of the three firms, the partners whereof were debtors Nos. 4 to 8, was a complicated one. If at any stage it was shown to the Insolvency Judge that debtors Nos. 2, 3 and 7 were not the debtors of the company even indirectly, their names be struck off. Support in this regard was sought from Ram Kishan v. Ilamdin, AIR 1931 Lah 384. The relevant part of the head--note reads:- - 'where a petition was presented in the Insolvency Court for the adjudication of two majors, four minors and two widows as insolvents on ground that all of them had incurred joint liability and had committed acts of insolvency. Held: that in such cases the petitioner should be allowed to amend the petition by striking out the names of the unnecessary parties and to proceed against those that are capable of adjudication. "