VEMURI NAGIAH Vs. VASI REDDI VENKATA SATYANARAYANA PRASAD

JUDGEMENT

(1.) This is an appeal from an order passed by Chandrasekhara Ayyar, J., dismissing a petition asking for the adjudication under the Presidency Towns Insolvency Act of the respondents. The learned Judge considered that the petition had been presented mala fide and that it amounted to an abuse of the process of the Court. We share in full this opinion.

(2.) On the 19 June, 1942, one A. Suryanarayana filed an application for the adjudication of the respondents. This is not the application which has given rise to this appeal, but in order to appreciate the situation it is necessary to examine in some detail what preceded the present application. The third respondent is the mother of the first and second respondents. They live at Bezwada where they own a cinema theatre. Suryanarayana was a creditor of theirs. They owed him the sum of Rs. 1,045. In his petition Suryanarayana alleged that they had a dwelling house and office at No. 2/355, Mint Street, Madras. This they denied and the affidavit which was filed by the first respondent in answer stated that they were never residents of Madras. The first respondent had visited Madras in November, 1940, but had not been here since. His brother used to visit Madras but his mother never . : came here, and in no sense were they residents of this city. We see no reason to doubt the truth of these statements. The acts of insolvency alleged against the respondents were that they had with intent to defeat and delay their creditors departed from their dwelling house in Madras, that they had mortgaged their properties for Rs. 24,000 with like intent, and that they had disposed of other properties in order to place them beyond the reach of their creditors. In reply to the affidavit which was filed by A. Suryanarayana in support of the petition, the respondents set out a statement of their assets and liabilities. According to this statement, the assets amount to Rs. 2,31,040 and their debts to only Rs. 25,743, secured and unsecured. It was stated that the respondents were able to pay all their debts and that no act of insolvency had been committed.

(3.) On the 19 August, 1942, the respondents applied under the provisions of Section 13 (4) (b) for an order permitting them to deposit in Court sufficient to pay their unsecured creditors. After the filing of the application for adjudication, the petitioner obtained an interim order asking the Official Assignee to take possession of the assets. The Official Assignee took possession of the cinema theatre at Bezwada and by the time the application under Section 13 was made he had collected the sum of Rs. 4,740. The learned Judge sitting in Insolvency, after an investigation into the position, came to the conclusion that if the respondents furnished security in the sum of Rs. 9,000 they would be entitled to the dismissal of the petition. They were given time until the 39 September, in which to furnish the security. Security was tendered, but the Court considered it insufficient. Thereupon the respondents deposited in Court in cash the sum of Rs. 9,000 which with the Rs. 4,740 collected by the Official Assignee, was more than sufficient to pay off the unsecured creditors. When this deposit was made the petition was dismissed.