LAKHI PRASAD SINGHANIA Vs. UGRAH MISRA

JUDGEMENT

(1.) This is an appeal from a decision of the Additional District Judge of Bhagalpur adjudicating the appellants insolvents. Having regard to the conclusion at which we have arrived in the case the only substantial matter which we have to consider is whether the learned Judge was right in coming to the conclusion that the appellants had given a notice of suspension of payment within the meaning of Section 6(g), Provincial Insolvency Act. The respondents to this appeal were amongst other persons, petitioning creditors, against the appellants. The respondents were owed a sum of Rs. 18,500 for money deposited with the appellants in the business of the appellants as bankers. The appellants carried on business as cloth merchants and bankers, and it was in these circumstances, as I have already indicated, that the money was deposited by the respondents and that the debt of Rs. 18,500 was incurred by the appellants.

(2.) The petition alleged a number of acts of insolvency, the two main ones being first that the appellants had been guilty of executing a fraudulent conveyance with intent to defeat their creditors; and secondly, that they had on 28 October 1932 given notice of suspension of the payment of their debts. The learned Judge heard the evidence of the respondent-petitioners and part of the evidence of the appellants; but, as he states in his judgment, he found it unnecessary to allow further evidence to be given after a certain stage in the evidence of the appellants, by reason of the fact that in his opinion the admission made by the second witness Chirinji Lall on behalf of the appellants was sufficient to establish an act of insolvency inasmuch as in his opinion that admission amounted to their having given notice on 28 October of suspension of payment. In these circumstances he refrained from either hearing the evidence or considering whether the other main act of insolvency had been committed, namely whether the appellants had executed a fraudulent conveyance to defeat their creditors.

(3.) The evidence related to a mortgage which was executed in April 1932 in favour of the firm of their father in law Harnath Rai Binjraj This mortgage was executed in April, but not registered until the following July. That evidence, as I have already stated, was the basis of the respondents allegation that the appellants had committed this further action of insolvency. So far as the question of the suspension of payment was concerned the learned Judge makes this statement: In view of the admission made by Chirinji Lall, one of the partners in the firm, Baijnath Jodhraj, on the point of notice of suspension of payment on 28 October 1932, I have not thought it necessary to take further evidence on the other alleged act of insolvency.