GOPIKABAI MAHADEV BAVDEKAR Vs. CHAPSI PURSHOTTAM LAHANA

JUDGEMENT

(1.) This appeal arises under the Provincial Insolvency Act and has been preferred by the original petitioner Gopikabai, who has applied to the Insolvency Court that the five opponents should be adjudicated insolvents. Her case was that the opponents had passed in her favour a promissory note for Rs. 45,000, that Rs. 10,000 were paid to her in part payment thereof and that the balance is still due by the opponents to her. The opponents contended, among other things, that the petitioner had no right to bring this application because under Section 9, Sub- section (1), Clause (a), of the Provincial Insolvency Act it was provided that a creditor shall not be entitled to present an insolvency petting against a debtor unless the debt owing by the debtor to the creditor amount to Rs. 500, and their contention was that the alleged debt of Rs. 35,000 has been discharged by an agreement between the parties and the petitioner has passed a receipt to them in full satisfaction of that debt, with the result that the opponents are not indebted to the petitioner for any sum on the date of the petition, and that, therefore, she has no right to present this petition.

(2.) Before any evidence could be led in this petition, the question as to whether this receipt was impeachable in the insolvency proceedings was decided by the trial Court at the request of the parties, and it framed an issue as follows: Whether the receipt can be impeached in this proceeding on the ground of fraud, etc., alleged by the petitioner? That issue became relevant because in reply to the opponents contention the petitioner alleged that although the receipt had been passed by her, it was the result of fraud and misrepresentation, etc., practised upon her and that she was entitled to prove that in the insolvency proceedings, and claimed that she was a creditor on that date. The trial Court was of opinion that under Section 9 of the Act a creditor was entitled to prove that he was a subsisting creditor on that date, and that under Section 24 of the Act the Court was to be satisfied that the creditor was entitled to present the petition. It also relied upon certain decisions of the Lahore and Rangoon High Courts for the proposition that such a question can be decided by the Insolvency Court and that the parties should not be driven to a separate suit.

(3.) Against this order directing that this question could be tried in the insolvency proceedings the opponents appealed to the District Court, and the learned District Judge framed an issue as follows: Whether the receipt passed by the respondent-petitioner can be impeached by her in the insolvency proceedings? The learned Judge was of opinion that the receipt could not be so challenged, and his principal reason was that the receipt embodied an agreement between the parties to the effect that there was a complete discharge of the debt owed by the opponents to the petitioner, that the agreement embodied in the receipt was alleged to be the result of fraud and coercion on the part of the opponents, and on that ground that receipt was at the most voidable by her, but so long as she had not elected to avoid that agreement, it stood and was binding between the parties, and the only way it could be avoided was by a regular suit, and the Insolvency Court was not bound to go into that question, but that under Section 4 of the Provincial Insolvency Act the parties may be referred to a separate suit for that purpose. The learned District Judge, therefore, set aside the order of the Court of first instance and allowed the appeal.