Madras High Court
S.Parimala vs G.Ramkumar on 12 September, 2023
OSA.No.153 of 2012
THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 12.09.2023
CORAM:
THE HONOURABLE MR JUSTICE R.SUBRAMANIAN
AND
THE HONOURABLE MRS JUSTICE R.KALAIMATHI
O.S.A.No.153 of 2012
S.Parimala ...Appellant
Vs.
G.Ramkumar ...Respondent
Prayer: Original Side Appeal filed under Order XXXVI Rule 1 of the
Original Side Rules read with Clause 15 of the Presidency Town Insolvency
Act against the order dated 15.12.2011 passed in Insolvency Petition
No.130 of 2006.
For Appellant : Mr.A.Babu
For Respondent : No appearance
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OSA.No.153 of 2012
JUDGMENT
(Judgment of the Court was made by R.SUBRAMANIAN, J.)
Challenge in the appeal is to the dismissal of a petition seeking to
adjudicate the respondent as insolvent.
2. The appellant obtained a money decree against the respondent
for payment of a sum of Rs.1,15,000/- with interest thereon. Since the
Judgment Debtor did not pay the decreetal amount, despite the notice of
insolvency having been issued in I.N.No.16 of 2006, the appellant came up
with I.P.No.130 of 2006. During the currency of insolvency petition certain
amounts were paid by the respondent. A counter was filed in the insolvency
petition to the effect that the petitioner in the insolvency petition/ the
appellant herein had undertaken to withdraw the criminal complaint and the
suit on settlement of liability at Rs.59,000/-. Despite the said undertaking,
she had proceeded to issue insolvency notice and follow it up with the
present insolvency petition. The Insolvency Judge had dismissed the
insolvency petition on the sole ground that it cannot be used as a machinery
for recovery of monies. Hence, the appeal.
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OSA.No.153 of 2012
3. Despite service of notice and the counsel having entered
appearance, there was no appearance for the respondent when the appeal
taken up yesterday. Hence, it was posted for orders today. Even today there
is no representation for the respondent.
4. We have heard Mr.A.Babu, learned counsel appearing for the
appellant.
5. Mr.A.Babu, learned counsel appearing for the appellant would
contend that in view of the judgment of this Court in M/s. Mohammed
Siddique & Co. by Partners and 7 others Vs. Ghanshamdas and another
reported in 1994 (2) LW 269, the dismissal of Insolvency petition on the
ground that the petitioning creditor has remedy through execution is wholly
unsustainable. In fact, this judgment was brought to the notice of the
Insolvency Judge, but, the Hon'ble Judge however exercised his discretion
and held that since certain monies have been paid after institution of the
suit, this will not be a proper case to allow the insolvency proceedings.
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OSA.No.153 of 2012
6. We are constrained to observe that the exercise of discretion is
not judicious. No doubt, the insolvency Judge has got discretion, but, that
discretion has to be exercised judiciously. Section 9(2) was put in the statute
book by the amending Act 28 of 1978. The Statement of Objects and
Reasons of the Act 28 of 1978 are as follows:-
“Amending Act 28 of 1978
(i) The difficulties experienced by a litigant in India
in executing even a simple money decree have been
commented upon by the Privy Council as well as by the Law
Commission and Expert Committee on Legal Aid. The Law
Commission in its Third Report on the Limitation Act, 1908
has recommended that the most effective way of instilling a
healthy fear in the mind of dishonest judgment-debtor would
be to enable the Court to adjudicate him an insolvent if he
does not pay the decretal amount after notice by the decree
holder by specifying a period within which it should be paid
on the lines of the amendment made to the Presidency Towns
Insolvency Act, 1909 in Bombay. This recommendation was
reiterated by the Law Commission in its Twenty Sixth Report
on Insolvency Laws.
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OSA.No.153 of 2012
(ii) The Expert Committee on Legal Aid was also of
the view that the above recommendation of the Law
Commission should be implemented immediately without
waiting for the enactment of a comprehensive law of
insolvency.
(iii) It is therefore proposed to amend the Presidency
Towns Insolvency Act, 1909 and the Provincial Insolvency Act
1920 to add a new act of insolvency namely that a debtor has
not complied with the insolvency notice served on him by a
creditor who has obtained a decree or order against him for
the payment of money within the period specified in the notice.
If the amount shown in the insolvency notice is not correct it
would be invalidated if the debtor gives notice to the creditor
disputing -the amount. The debtor can however apply to the
Court to have the insolvency notice set aside on the ground
among others that he is entitled to have the decree re-opened
under any law relating to relief of debted-ness or that the
decree is not executable under any such law.
(iv) The Bill seeks to achieve the above objects.
(Gazette of India dated 18.3.1978 pt.II,S. 2Ext.p.188.)”
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OSA.No.153 of 2012
7. The above being the object that is sought to be achieved by the
Amending Act, dismissal of the insolvency petition on the ground that
remedy by way of execution is available, in our opinion, cannot be
sustained. We are therefore constrained to set aside the order of the
Insolvency Judge. The appeal is allowed, the order dismissing the
Insolvency Petition is set aside. The rsepondent is adjudged insolvent. The
Insolvency Pettion is remitted to the Insolvency Court for further
proceedings in accordance with law. The Insolvency Court will proceed
further from where the proceedings stopped. No costs.
(R.S.M.,J.) (R.K.M.,J.)
12.09.2023
dsa
Index :No
Internet :Yes
Neutral Citation : No
Speaking order
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OSA.No.153 of 2012
R.SUBRAMANIAN, J.
and
R.KALAIMATHI, J.
dsa
O.S.A.No.153 of 2012
12.09.2023
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