T.Honnur Sab vs P. Prabhakar Reddy
2023 Latest Caselaw 117 AP

Citation : 2023 Latest Caselaw 117 AP
Judgement Date : 5 January, 2023

Andhra Pradesh High Court - Amravati

T.Honnur Sab vs P. Prabhakar Reddy on 5 January, 2023

         THE HON'BLE DR. JUSTICE K. MANMADHA RAO

                      C.M.S.A.No.12 OF 2022

JUDGMENT:

The unsuccessful Appellant before both the Courts below

filed the present Civil Miscellaneous Second Appeal before this

Court.

2. Heard Mr. Maheswara Rao Kuncheam, learned Counsel

for the appellant and Mr. P. Durga Prasad, learned Counsel for the

respondents.

3. The appellant filed Insolvency Petition in I.P.No.1 of 2011

on the file of Court of the Senior Civil Judge, Gooty seeking relief to

adjudge him as an insolvent and appoint an Official Receiver,

Anantapuram to administer the petition 'B' scheduled property, for

the benefit of creditors and distribute the same among the

creditors. The trial court arrived at just conclusion that the

petitioner admittedly did not disclosed the earnest money deposits,

which were kept with railway authorities for his railway contracts

and also the petitioner has not shown the date and years, when he

borrowed amounts from the respondents 8 to 13. Therefore the

Trial court dismissed the Insolvency Petition on the ground that

the appellant has not shown his assets and liabilities in the

petition.

4. Assailing the said order, the petitioner in Insolvency

Petition has preferred an Appeal in A.S.No.14 of 2013 on the file of

the Court of the VI Additional District Judge, Anantapur at Gooty.

The learned first appellate Court relied on a decision of "Dasari

Srihari Rao Vs. Talluri Harinadha Babu"1 wherein the Hon'ble

Division Bench of erstwhile High Court of A.P held as follows:

"In view of the finding recorded by the trial court that the respondent had suppressed the assets and thereby failed to comply with Section 13(i) of the Act, the dismissal of the application under Section 25 is justified and the Appellate Court in our view committed an error of law in reversing the said order.

For the foregoing discussion, we are of the view that the decision in P. Dharma Rao, reported in AIR 1978 AP 197 does not lay down the correct proposition of law and we are unable to subscribe the view expressed by the learned Judge in the said decision. We therefore overrule the same and hold that the decision in S. Sivarama Rao, reported in 1977(2) An.WR 462 holds good in the case. In the instant case, it has been clearly established that the respondent had suppressed material facts with regard to his assets and therefore such a party cannot be declared as an insolvent. The order passed in Appeal Suit No. 145 of 1987, dated 19.07.1989 by the learned District Judge, Guntur is set aside and the appeal is accordingly, allowed".

In view of the proposition laid down the Hon'ble Division

Bench of erstwhile High Court of A.P, the first appellate court came

to a conclusion that the appellant deliberately suppressed his

assets and omitted to place the accounts pertaining to his contract

2002(2) LS. 89 (DB)

works with railways before the Insolvency Court for scrutiny and

holding that the Insolvency Court scrutinized both oral and

documentary evidence in proper perspective and rightly dismissed

the Insolvency Petition. Therefore the first appellate court after

perusing entire material on record dismissed the appeal suit with

costs of contesting respondents 1, 3, 4 and 14.

5. The following substantial questions of law arises for

determination would be:

i) Whether the courts below are justified in dismissing the Insolvency Petition No.1 of 2011 without appreciating Ex.A1 to A7 and evidence of PW1 is perverse?

ii) Whether the "security deposit" of uncompleted contract work can be an asset in the hands of the petitioner as per the Insolvency Act? Is it legally sustainable or not?

iii) Whether the courts below justified in dismissing the Insolvency Petition of the petitioner on the ground of not handed over the 'B' schedule property to official receiver, without there being any appointment of official receiver by court as per Provisions of Insolvency Act.

iv) Whether the courts below justified in dismissing the Insolvency Petition of the petitioner merely because some of the respondents are relatives

of the petitioner without adjudicating the lis against them.

v) Whether the lower appellate court has properly perceived to the cogent documents evidence on record produced by the appellant to substantiate their assertions as a final court of facts and without formulating the points for consideration and whether such as judgment of the lower Appellate court is not vitiated by law laid down by the Apex Court in 2002(7) SCC, 411 or not?

6. No doubt, both the courts below justified in dismissing the

Insolvency Petition of the appellant on the ground of suppression of

assets, which are not shown in the Insolvency Petition as admitted

by the appellant. In view of the catena of judgements of this Court,

which are referred in the order of the Insolvency Court mandates

that any deviation of the Section 13(1)(e) of the Insolvency Act is

disentitles the appellant/ petitioner to claim the relief to adjudge

him as an insolvent.

7. Therefore following the settled law as discussed in the

both the courts below and also referred supra, after perusal of the

material on record and close scrutiny of the order and Judgment of

both the courts below, there are no grounds to interfere with the