D.R Dhanuka, J.:— By this Notice of Motion, the judgment debtor is seeking to set aside the Insolvency Notice No. N/108 of 1991 dated 27th August 1991. The judgment debtors had impugned the validity of lite Insolvency Notice herein on various grounds which will all be dealt with in the later part of this order at its appropriate place.
2. The material facts having bearing on the subject matter of this notice of motion are as under:
(a) On 18th March 1987, a Common Loan Agreement was executed between Krimpex Synthetics Ltd., as “borrowers” and Industrial Credit & Investment Corporation of India Ltd., as Lead Institution and Industrial Finance Corporation of India as ‘lenders’. These two financial institutes advanced large amounts to Krimpex Synthetics Ltd. The Industrial Credit and Investment Corporation of India Ltd. and Industrial Finance Corporation of India have filed Suit No. 1595 of 1989 in this Court for a declaration that a sum of Rs. 1,11,30,538/- is due and payable by the said Krimpex Synthetics Ltd., to the plaintiffs alongwith further interest till payment and/or realisation and for various other reliefs. In this suit, the creditors-plaintiffs have admitted that Krimpex Synthetics Ltd., have created mortgage, charge and hypothecation over its various immovable and moveables assets to secure the loans advanced by the plaintiffs to the said company. By the said suit, the plaintiffs seek to enforce the securities furnished by Krimpex Synthetics Ltd. On 20th March 1987, Sarvashri Shired R. Khanna (Chairman and Managing Director of the Company) and Sumesh Khanna (Director of the said Company) executed a joint and several Deed of personal guarantee in favour of the creditors to secure the various loans advanced by the creditors under the Common Loan agreement dated 18th March 1987. On 4th August 1987, Shri Ramanlal khanna executed a document of personal guarantee in favour of the creditors herein in respect of the said loan. The Court Receiver, High Court, Bombay being the receiver appointed in Suit No. 1595 of 1989, is in charge of the assets forming part of the security of the creditors furnished by Krimpex Synthetics Ltd.
(b) During the pendency of abovereferred suit Tiled by the plaintiffs against Krimpex Synthetics Ltd. Industrial Credit and Investment Corporation of India Ltd. and Industrial Finance Corporation of India filed Summary Suit No. 1935 of 1989 (being a separate independent actions) against the three guarantors for recovery of the same amounts as the creditors were entitled to do so. By an Order dated 16th January 1990, Variava, J., decided Summons for Judgment No. 493 of 1989, taken out by the creditors in the suit against the guarantors. By his order dated 16th January 1990, Variava, J., granted conditional leave to the defendants in Suit No. 1935 of 1989, to defend the suit on the condition that the defendants shall deposit a sum of Rs. 50 lacs in Court within six months from the date of the said order. By an order dated 25th June 1990, the Hon'ble Division Bench of this Court dismissed Appeal No. 567 of 1990. Being aggrieved by the said Order, the defendants in the suit preferred the Special Leave Petition before the Hon'ble Supreme Court. The Hon'ble Supreme Court modified the order passed by Variava, J., by permitting the defendants in the said suit to furnish bank guarantee of Rs. 50 lacs instead of depositing the said amount Neither the said amount was deposited nor the bank guarantee was furnished. The Prothonotary & Senior Master issued the necessary certificate of non-deposit as well as certificate of non-furnishing of the bank guarantee. On 5th November 1990, Ashok Agarwal, J., passed a Decree in favour of the plaintiffs in Suit No. 1935 of 1989 and against three defendants therein i.e the Debtors herein. By the said decree, the defendants to the suit were directed to pay a sum of Rs. 130,78,38,138 to plaintiff No. 1 with further interest on Rs. 1,11,30,338/- at the rate of 12½% per annum from the date of the decree till payment or realisation and cost of the suit as specified therein to the plaintiffs-creditors. By the said decree, this Hon'ble Court directed the defendants jointly and severally to pay to Industrial Finance Corporation of India, the plaintiff No. 2 in the suit a sum of Rs. 86,93,667,34 with further interest on Rs. 73,98,866/- at the rate of 12½% per annum from the date of the decree till payment or realisation and the cost of the suit as specified therein. By the said decree this Hon'ble Court directed the defendants in the said suit to pay to both the plaintiffs jointly a further sum of Rs. 15,000/- ss cost of the suit. The said decree has become final. At no time the execution of this decree has been stayed by any Court Since the decretal amount was not paid, the decree holders i.e the Industrial Credit and Investent Corporation of India Ltd. and Industrial finance Corporation of India moved the Insolvency Registrar to issue the Insolvency notice as permissible under Presidency Towns Insolvency Act. On 27th August 1991, the Insolvency Registrar issued a notice (being Insolvency Notice No. N/108 of 1991) to all the three debtors (1) Shri Sharad, Shri Sumesh and Shri Ramanlal R. Khanna, calling upon the three debtros to pay the decretal amount to the two decree holders within the time stipulated therein. Particulars of claim appended to the said Insolvency notice show that the debtors were required to pay a sum of Rs. 1,39,43,549.38 with further interest as specified in the notice to the Industrial Credit & Investment Corporation of India Ltd. and a sum of Rs. 92,71,299.54 pius further interest as specified therein to Industrial Finance Corporation of India. By the said notice, the debtors were required to pay the amounts specified in the notice to the creditors or furnish security for payment of the decretal amounts to the satisfaction of the Judgment Creditors concerned or to the satisfaction of their advocates. It was also stipulated by the said notice that in the event of the debtors not making payment of the amounts specified therein or furnishing security for the amounts specified therein to the satisfaction of the creditors or their advocates, the debtors must satisfy this Court that the debtors have a counter claim or set off against the judgment creditors concerned which ??? or exceeds the sum claimed by them and which the debtors could not lawfully setup in the suit in which the said decree was obtained. It was also specified in the said notice that in case the debtors failed to comply with the requisitions of the said notice it would follow that the debtors have committed an Act of Insolvency on expiry of period of 35 days from service of the said Insolvency notice. On 7th October 1991, the judgment debtors took out the present notice of motion.
(c) It is of considerable significance that by letter dated 14th June 1989, addressed by the three judgment debtors herein to the Industrial Credit and Investment Corporation of India Ltd. and Industrial Finance Corporation of India (Exhibit 1 to the affidavit in reply) all the three guarantors admitted their liability to the creditors in full. By the said letter the debtors in their capacity as the guarantors jointly and severally and unconditionally admitted their liability to the extent of Rs. 1,11,30,338/- and Rs. 73,98,866/- as on June 12, 1989 to ICICI Ltd. and IFCI respectively together with further interest thereon at agreed rate till payment. The relevant portion of the said letter reads as under:—
“We hereby declare and confirm that we are jointly and severally liable to you, the ICICI to the extent of Rs. 1,11,30,338/- and to you, IFCI to the extent of Rs. 73,98,868/- together with further interest thereon at the agreed rates from June 13, 1989 till payment and that furnished to you forthwith as company failing to make payment.
Yours faithfully.
Sd/- Sharad Khanna”
Sd/- Sumesh Khanna
Sd/- Ramanalal Kahnna.”
3. The Debtors failed and neglected to comply with the insolvency notice. The Debtors took out two notices of motion herein seeking to set aside the abovereferred insolvency notice. Before I discuss the rival contentions urged by the teamed Counsel on both sides at the hearing of this notice of motion, it is necessary to notice the relevant provisions of the Presidency. Towns Insolvency Act, 1909 (Act 3 of 1909) and the relevant rales known as. The Bombay Insolvency Rules, 1910 and summarise some of the well settled propositions of law.
4. Section 9 of the Presidency Towns Insolvency Act, 1909 enumerate acts of Insolvency which may be committed by the debtor. Section 9(i) was inserted in the said act by bombay act xv of 1939 providing for “non-compliance with an Insolvency notice” as an additional act of insolvency which could form the basis of a judgment creditor's petition for adjudication of judgment debtor concerned as an Insolvent Simultaneously section 9-A was inserted in the said act by bombay act xv of 1939. In substance it was provided by the Bombay Amendment that the decree holder could make an application to the prescribed authority under the Act to issue an Insolvency notice requiring the debtor to pay the amount due under the deem or order or to furnish security for payment of such amount to the satisfaction of the creditor or to satisfy the Court that the debtor has a counter claim or set-off which equalled or exceeded the decretal amount or the amount ordered to be paid by him and which he could not lawfully set-off in the suit or proceeding. In case the decree holder fails to comply an Insolvency notice issued by the Insolvency Registrar, the debtor is deemed to have committed act of Insolvency. In the result the creditor is entitled to file a petition for adjudication of the debtor as an Insolvent within three months from the date of the committing of Act of Insolvency under section 12 of the Act.
5. Rule 52-A of the Bombay Insolvency Rules, 1910 prescribes that Every Insolvency notice shall require the debtor to pay the amount claimed, or to furnish security for the payment of the amount to the satisfaction of the creditor or his agent. Sub-rule (4) of Rule 52-B provides that “non-compliance by the debtor with the requirements of the notice within the specified period will be treated as an act of Insolvency on the debtor's part.” Rule 52-B (5) provide mat any person served with an insolvency notice may within the time allowed for compliance with that notice apply to the Court to set aside the insolvency notice on any of the following grounds:
“(a) On the ground that he has paid the amount claimed or furnished security for the payment of the amount to the satisfaction of the creditor or his agent;
(b) On the ground that he has a counter-claim or set-off which equally or exceeds the decretal amount or the amount ordered to be paid by him and which he could not lawfully set up in the suit or proceeding in which the decree or order was made; or
(c) On any other ground which would in law entitle him to have the notice set aside.”
6. Sometime in the month of August 1978, the Presidency-Towns Insolvency Act, 1909 and the Provincial Insolvency Act 1920 were amended by the Insolvency Amending Act (Amendment) 1978 i.e Act No. 28 of 1978. By the said amending Act section 9(2) to section 9(5) were incorporated in section 9 of the Act. By section 9(2) of the Act, a provision was made to the effect that a debtor commits an act of Insolvency if a creditor, who has obtained a decree or order against him for the payment of money (of which the execution was not stayed) has served on him a notice referred to therein as the Insolvency notice” and the debtor does not comply with such notice within the period specified therein. Section 9(2), section 9(3) and section 9(4) of the said Act are more or less identical with the provisions contained in section 9(1)(i) and 9-A of the said Act incorporated in Presidency-Town Insolvency Act, 1909 r/w Rules 52-A and Rule 52-A(1) to Rule 52-B(4) of. The Bombay Insolvency Rules, 1910. The grounds on which the Insolvency notice may be set aside are now specified in section 9(5) of the said Act. The grounds available to the debtors in support of an application for setting aside of insolvency notice as specified in section 9(5) of the Act are not identical with the grounds specified in Rule 52-B(5) of Bombay Insolvency Rules, 1910. It is obvious to me that after coming into force of Act No. 28 of 1978, an Insolvency notice can be set aside only on the grounds specified in section 9(5) of the Act and no other ground. Section 9(5) of the Act as amended reads as under.
“5) Any person served with an insolvency notice may within the period specified therein for its compliance apply to the Court to set aside the insolvency notice on any of the following grounds namely:
(a) that he has a counter-claim or set-off against the creditor which is equally to or is in excess of the amount due under the decree or order and which be could not, under any law for the time being in force, prefer in the suit or proceeding in which the decree or order was passed:
(b) that he is entitled to have the decree or order set aside under any law providing for the relief of indebtedness and that—
(i) he has made an application before the competent authority under such law for the setting aside of the decree or order, or
(ii) the time allowed for the making of such application has not expired:
(c) that the decree or order is not executable under the provisions of any law referred to in Clause (b) on the date of the applications.
7. The Insolvency Court can also set aside the insolvency notice if the debtor has complied with the insolvency notice. In my opinion Rule 52-B(5) of the said rules has no legal efficacy to the extent of inconsistency with the provisions inserted in the Presidency Towns Insolvency Act, 1909 by Act No. 28 of 1978. The debtors herein have not complied with me insolvency notice. None of the grounds urged on behalf of the debtors in support of their application for setting aside of insolvency notice fall within section 9(5) of the Act. I have no hesitation in concluding that after coming into force of Act 28 of 1978 (Note: Act 28 of 1978 is a Central Act), section 9(2) to 9(5) of the Act constitute self contained Code on the subject as an All India legislation and it is not permissible id the courts to evolve additional grounds of challenge to the insolvency notice with reference to old English cases or by anology. In the instant case, the debtors have not set up any counter claim or set off within the contemplation of section 9(5)(c) of the Act. In the instant case, the debtors are not relying on any law providing for the relief of ???. The abovereferred provisions were incorporated in Insolvency laws by Parliamentary statute in view of difficulties faced by the ??? concerning execution of the decree as recognised by the Privy Council as more particularly setout in the statement of objects and reasons concerning the abovereferred Amending Act.
8. It is well settled law that the Insolvency Court at the stage of deciding the notice of notion for setting aside the Insolvency notice cannot go behind the decree on which the Insolvency notice is based and the power of Insolvency Court at this stage is confined to determining whether any amount is doe under the decree to the judgment creditors. It was held by the Division Bench of this Court presided over the Hon'ble Chief Justice Shri M.C Chagla and the Hon'ble Mr. Justice S.T Desai in the case of (J.P Tiwari v. Bhimraj Harlalka*)1, 1960 Bom. L.R 963, that the judgment debtor cannot seek de novo trial of the suit in which the decree was passed at the stage of hearing of the Insolvency notice and the Insolvency cannot be set aside on the ground that the decree was not validly or properly passed against the debtors.
9. One more aspect shall have to be borne in the mind while considering and examining the contentions urged by the learned Counsel on either side. On this aspect also, propositions of law are well settled as indicated hereinafter. Even in a case where a composite decree is passed by the Court i.e a mortgage decree against the pricnipal debtors as well as a personal decree against the guarantor, the decree holder is entitled to execute the personal decree against the guarantors as a matter of right without first executing the mortgage decree. In other words the guarantor cannot insist on the decree holder first realising the mortgaged security before the decree holder can execute the decree against the guarantor personally. In (Bank of Bihar v. Damodar Prasad)2, A.I.R 1969 S.C 297 Bachawat, J., speaking for the Supreme Court held as under:
“It is the duty of the surety to pay the decretal amount. On such payment he will be subrogated to the rights of the creditor under section 140 of the Indian Contract Act, and he may then recover the amount from the principal. The very object of the guarantee is defeated if the creditor is asked to postpone his remedies against the surety. In the present case the creditor is a banking company. A guarantee is a collateral security usually taken by a banker. The security will become useless if his rights against the surety can be so easily cut down”.
10. The abovereferred propostion of law is laid down also in the latest judgment of the Supreme Court in the case of (State Bank of India v. Indexport Registered)3, (1992) 3 SCC 159. In this case Yogeshwar Dayal, J., speaking for the Bench of the Hon'ble Supreme Court held that the guarantor could be sued in law without the creditor being required to sue the principal debtor. It was held that the decree holder was entitled to execute the personal decree obtained against the guarantor without first resorting to mortgage securities. The present proceedings are insolvency proceedings and not execution proceedings. Nevcrthless the abovereferred principle is relevant for purpose of scrutiny of submission made by the learned Counsel for the debtors as the Courts of Construction must endeavour to avoid anamolies and conflict as far as possible.
11. The learned Counsel for the debtors has invited attention of the Court to the text of Insolvency notice and the relevant provisions of Act and contended that the Insolvency notice is liable to be treated as duly complied with in case of the judgment debtor furnishes security for payment of the debt to the reasonable satisfaction of the creditor. The learned Counsel for the debtors has submitted that this provision contained in section 9(3)(c) of the Presidency-Towns Insolvency Act, 1909 provides a clue and justification for his submission that no Insolvency notice can be taken out by the decree holder-creditor if the decree-holder creditor already holds adequate security for payment of the debt whether such security is provided by the Judgment debtor under the decree or someone else. This argument appeared to me at the first blush to be attractive. However, I have found no merit in this submission on proper scrutiny thereof. It is not the case of the judgment debtors that the judgment debtors have furnished any security for me payment of decretal debt after service of the Insolvency notice to the satisfaction of the creditors or their agent within the contemplation of section 9(3)(c) of the Act or otherwise. The question to be asked is as to whether holding of securities from Krimpex. Synthetics Ltd., precluded the judgment creditors from invoking the provisions contained in section 9(2) of the Act providing for issue of an insolvency notice as a matter of course if the execution of the decree is not stayed by the Court. The learned Counsel for the debtors has submitted that it follows by necessary implications from the provisions contained in section 9(3)(c) of the Act that the Insolvency notice could not have been issued in view of the securities already held by the decree bolder from Krimpex Synthetics Ltd., in respect of loans advanced by the two public Financial institutions to this Company which are now in charge of the Court Receiver, High Court, Bombay. The teamed Counsel for the debtors has submitted that the impugned insolvency notice is liable to be set aside if the Court is satisfied that the securities held by the creditors from Krimpex Synthetics Ltd., are adequate. I shall assume for the purpose of this submission that the securities furnished by Krimpex Synthetics Ltd., to the decree holders are adequate as the averments made on behalf of debtors in various affidavits in this behalf to the effect are not controverted by the creditors and the creditors have merely contended that the fact of holding of such securities by the creditors is irrelevant.
12. The first question which is required to be considered is as to who is a “secured creditor” within meaning of the said expression as defined under the relevant Insolvency Act.
13. Section 2(g) of the Presidency-Towns Insolvency Act, 1909 defines secured creditor as under:
“2(g)—“secured creditor” includes a landlord who under any enactment for the time being in force has a charge on land for the rent of that land;”
14. The Presidency-Towns Insolvency Act, 1909 does not provide in so many words as to who would be considered as ‘a secured creditor’ within meaning of. The Presidency-Towns Insolvency Act, 1909. Section 2(e) of The Provincial Insolvency Act, 1920 defines the expression secured creditor as under:
“Secured creditor means a person holding a mortgage, charge or lien on the property of the debtor or any pan thereof as a security for a debt doe to him from the debtor.”
15. In (Dharamchand Dhiman v. Om Prakash Mohta)4, 78 Calcutta Weekly Notes 342, the Hon'ble High Court of Calcutta held that the definition of the expression “Secured Creditor” as provided under the Provincial Insolvency Act, 1920 was liable to be treated as valid for the purpose of The Presidency-Towns Insolvency Act also. The Division Bench of the High Court of Calcutta held that the definition of Secured Creditor as provided in section 2(1)(e) of the Provincial Insolvency Act would apply also to the cases covered under the Presidency-Towns Insolvency Act and decree holder in that case could not be treated as secured creditor for the purpose of Presidency-Towns Insolvency Act. S.K Mukherjee, J., speaking for the Hon'ble Division Bench referred to and relied on the Division Bench judgment of our High Court in the case of (Krishna Chinoo & Sons v. Marubhai Kasanbahi)5, I.L.R 53 Bom. 290, wherein it was held that the definition of secured creditor in the Provincial Insolvency Act was valid also for the purpose of the Presidency Towns Insolvency Act. In this case, the decree holders do not hold any security over any property of the judgment debtors or either of them. Thus the ??? herein cannot be treated as secured creditors for purpose of proceedings under Insolvency law as the creditors do not hold any mortgage, charge or lien over any property of the debtors herein or any part thereof as a security for the debt due to creditor from the judgment debtors herein.
16. It appears to be useful to refer to the definition of the expression “secured creditor” as appearing in section 167 of the English Bankruptcy Act, 1914. The expression “secured creditor” as defined in the English Bankruptcy Act, 1914 is as under:—
“Secured Creditor means a person holding a mortgage, charge or lien on the property of the debtor, or any part thereof as a security for debt due to him from the debtor”.
17. It is obvious that the definition of the expression “secured creditor” in section 2(1)(e) of the Provincial Insolvency Act, 1920 is modelled on the corresponding provisions contained in Bankruptcy Act, 1914.
18. Shri J.I Mehta, teamed Counsel for the creditors has invited attention of the Court to the Division Bench Judgment in the case of (Bharat Chandulal Nanavati v. UCO Bank)6, reported in 94 Bombay Law Reporter p. 4. In this case, the High Court had passed a decree against a limited company to pay to the United Commercial Bank a sum of Rs. 17,94,156.68 and interest and also for sale of goods hypothecated to the bank and for appropriation of sale proceeds to be realised. Our High Court had also passed personal decree against various Directors of the company who were guarantors in respect of the debt due by limited company. The judgment debtors contended before the Court that the petitioning creditors could not maintain the Insolvency petition in view of the provisions contained in section 12(2) of the Presidency-Towns-Insolvency Act as the petitioning creditors had neither relinquished the security held by them nor valued the security held by them within the contemplation of the said section. The securities in question were furnished by the limited Company, the principal debtor and not the guarantors against whom personal decrees were passed by the Court as aforesaid. Dealing with this contention Bharucha. J., as his Lordship then was speaking for the Division Bench of this Court observed that there was no merit in the said submission as the security was provided by the limited company and not by the judgment debtors concerned and the said security if realised would ensure for the benefit of the limited company and not for the benefit of general body of creditors. Shri J.I Mehta, the learned Counsel for the creditors also invited attention of the Court to the judgment of Court of Appeal (In re Wheeler)7 1982 (1) Weekly Law Reports 175. In this case Law Justice Lawton observed as under:
“The judgment creditors in this case did not hold any security from the debtor at all. What they held was security from someone who was jointly and severally liable with the debtor for the amount set out in the interim certificate dated October 24, 1980.” (The underlining is done to supply emphasis)
19. The Court of Appeal also relied on passages from the Standard Work of Williams and Muir Hunter on bankruptcy 19th ed. (1979) p 512 summarising the law on the subject. In other words the judgment debtor cannot resist the insolvency proceedings on the ground that the creditor bolds security on the property of a third party. Who may be jointly and severally liable for the debt.
20. The learned Counsel for the debtors submitted that the adoverferred definition of ‘Secured Creditors’ and the relevant principles would be applicable only at the stage when the Court was considering and deciding the petition for adjudication of the debtor as an insolvent under section 12(2) of the Act. The learned Counsel for the debtors has contended that the abovereferred principles are not applicable at the stage when the Court is considering the notice of motion taken out by the debtors for setting aside of Insolvency Notice. I have reflected over this submission of the learned Counsel. I am not persuaded, accept this submission, issue of an insolvency notice is merely a step in aid of Insolvency proceedings for adjudication. Petition for adjudication of debtors are filed by the creditor on the debtor committing an act of insolvency. The two stages cannot be ??? altogether. The same definition of Secured Creditor shall have so be applied at both the stages. It is not possible to evolve and apply different definition of ‘Secured Creditor’ at the stage of considering the application to set aside insolvency notice. The petitioning creditor is admittedly not a secured creditor vis-a-vis the judgment debtors herein.
21. Shri Aspi Chinoy, the learned Counsel for the debtors has invited attention of the Court to the judgment of Court of Appeal in the case of (in re Smith Exparte Durban)8, 1902 K.B p. 33. With respect, this judgment has no relevance at all to the problem under consideration in this case. In that case after the Insolvency notice was served, an arrangement was arrived at between the creditor and the debtor in writing whereunder security for the debt was furnished by the debtor after service of Insolvency notice to the satisfaction of the creditor as provided in the arrangement. The shares handed over by the debtor to the creditor as security could not be realised under the arrangement until 20th January, 1903. Ignoring the said arrangement, the judgment creditor took out fresh Insolvency notice after accepting the security as aforesaid. It was held by the Court of Appeal that the creditor could not issue fresh bankruptcy notice after the security was already furnished and the arrangement was already arrived at.
22. The learned Counsel for the debtors invited attention of the Court to the judgment of High Court of Calcutta in the case of Calcutta Safe Deposit Co. Ltd. v. Ranjit Mathuradas Sampat. To my mind this judgment is also of no relevance for this case. To my mind, the relevant statutory provisions of Presidency-Towns Insolvency Act 1909 are a complete answer to some of the strong observations pointed out by the learned Counsel for the debtors from this judgment. This was not a case concerning interpretation and application of Insolvency law. The ratio of this case cannot be extended by anology to the cases covered under Presidency-Towns Insolvency Act 1909. To my mind, judgment of Division Bench of our High Court in the case of Bharat Chandulal Nanavati v. United Commercial Bank, is directly on the point. It is of considerable significance that the submissions of learned Counsel for debtors run counter to the very definition “Secured Creditor” as set out in section 2(e) of Provincial Insolvency Act 1920 which definition is duly adopted for the purpose of Presidency Town Insolvency Act, 1909 as well by judicial decision of this High Court as well as High Court of Calcutta.
23. The learned Counsel for the debtor has invited attention of the Court to the judgment of the Hon'ble Supreme Court in the case of (Harinagar Sugar Mills Company Ltd. v. Court. Receiver, High Court, Bombay)10, A.I.R 1966 S.C 1707. In this case, the Court Receiver was duly empowered to take all necessary steps and proceedings for the realisation of the property and the debts due to the joint family. In this context the Apex Court was called upon to consider as to whether the Court Receiver had a locus standi to file a petition for winding up of the debtor company. Subbarao, J., speaking for the Bench of the Hon'ble Supreme Court approved the dictum of law deduced from the various cases cited therein to the effect that a winding up order was not a ??? alternative in the case of a company to the ordinary procedure or realisation of debt due to it but nontheless it was a form of equitable execution. Relying on this passage, the learned Counsel for the debtors has contended that the tact of the company holding adequate security for the same debt though furnished by i.e Krimpex Synthetics Ltd., was liable to be treated as valid ground for setting aside of the Insolvency notice since Insolvency proceedings were a form of equitable execuuon and what was irrelevant before the executing Court could be ??? consideration before a Court of Equity. Since the grounds on which the Insolvency notice can be set aside are codified by section 9(5) of the Act, there is no scope for evolving of new grounds for setting aside of insolvency notice on equitable consideration or by analogy. In my judgment the ??? of this case is of no assistance to the learned Counsel for the debtors. In substance, the debtors are asking the Court to go behind the decree dated 5th November 1990 passed by Ashok Agarwal, J., although the said decree has become final. I find no merit in any of the grounds of challenge urged by the learned Counsel for the Debtors.
24. The learned Counsel for the debtors submitted that the said decree dated 5th November 1990 was a nullity as the Court passing the decree had awarded interest on interest which was not permissible under section 34 of the Code of Civil Procedure as intepreted by the recent Full Bench judgment of this Court. The learned Counsel for the debtors fairly pointed out order dated 27th July 1992, passed by B.N Srikrishna, J. on Chamber Summons No. 439 of 1992, whereby the same very contentions were negatived by the learned Judge. The learned Counsel for the debtors wanted the Court to record his submission so that in case the matter is carried higher he is able to urge the same very contention before the Hon'ble Division Bench of this Court or before the Hon'ble Supreme Court as the case may be.
25. The learned Counsel for the debtors then submitted that the Insolvency notice issued in this case was technically defective as no composite Insolvency notice could be issued by two decree holders in respect of two separate claims though contained in one decree. The learned Counsel for the debtors relied upon the judgment of the Court of Appeal in the case of (In Re Low Ex-pant The Argentine Gold Fields Ltd.), (1890) 1 Q.B.D p 147. The learned Counsel invited the attention of the Court to the provisions of the decree dated 5th November 1990 and submitted that the decree in question stipulated separate independent liability of the judgment debtors for different amounts payable to plaintiff No. 1 and plaintiff No. 2. The learned Counsel submitted that this was not a case of joint indivisible decree in favour of the two decreeholders. In the abovereferred judgment cited by the learned Counsel for the debtors, the decree holder had made an application to the Registrar for issue of composite Insolvency notice in respect of two judgment debts obtained by the decree-holder in two separate actions. The Insolvency Registrar had declined to issue single composite Insolvency notice in respect of two judgment debts obtained by the applicant in two separate action but offered to issue separate notice for each of the judgment debt. The action of the Registrar was upheld by the Court of Appeal. The ratio of this judgment was followed by the Court of Appeal in another judgment in the case of (In re O.C.S A Debtor)11, (1904) 2 K.B 161. Shri JJ. Mehta, the learned Counsel for the creditors has invited attention of the Court to the judgment of the Court of Appeal (In re Wheeler (A Debtor)), reported in (1982) 1, Weekly Law Reports 175 on the same subject I have carefully considered all the three decisions. In my judgment there is no merit in this ground of challenge also. This is not a case of two decrees or two judgments obtained in two separate ???. This is a case when both the decree holders were bound in law to institute one action having regard to the ??? agreement and the writings executed by the guarantors. Even in letter dated 14th June 1989. Exhibit “1” to the affidavit in reply, the three debtors had jointly and severally confirmed their liabilities to pay the amount claimed by both the creditors ???. By the said letter the ??? had requested the creditors not to take any action against the principal debtor company for the period specified therein. To my mind the learned Counsel for the creditor is right in making his submission that the Insolvency notice merely follows pattern of the decree and insolvency notice cannot be faulted with on such a hypartechnical ground. The learned Counsel for the debtors distinguished the judgment of Court of Appeal in the case of In re Wheeller and relied on the reasoning of Court of Appeal in the case of In Re Low Ex Parte. The Argentine Cold Field Ltd. This submission of the learned Counsel for Debtors is liable to be rejected on three grounds—i.e
(a) This is the case of a single decree in favour of both the creditors and not the case of judgment debts obtained in several septate action.
(b) The ground urged is hypertechnical and is therefore, without any merit.
(c) The ground urged is beyond the scope and ambit of section 9(5) of the Act.
26. In the result the notice of motion fails and is dismissed with cost. The learned Counsel for the debtor applies for stay of the operation of the order pronounced today. The operation of the order passed today is stayed for a period of four weeks from today.
27. Issue of certified copy is expedited.
28. Order accordingly.