Sitaram Bajirao Bhalerao v. Amrutrao Ganpatrao Kunbi

1. This is an application to revise an order adjudging the applicant Sitaram insolvent. The applicant was adjudged insolvent on a petition presented by one of his creditors on 25th January 1934. The first point taken is that Sitaram was not examined by the insolvency Court as required by Section 24(2) of the Prov. Insol. Act, and that therefore the subsequent order of adjudication was null and void. The decisions in AIR 1927 Cal 32,1 AIR 1930 Lah 7462 and AIR 1935 Pesh 1393 have been cited in support of that view. The decision in AIR 1930 Lah 746 may be distinguished on the ground that there the insolvency petition was presented by the debtor and he was adjudged insolvent without being examined. The other cases, however, do support the view that the provisions of S. 24 are mandatory and that the failure to comply with the provisions invalidates the subsequent proceedings. Provisions of law requiring a certain procedure have been divided into two classes, mandatory and directory, and it has been frequently held that failure to follow a mandatory provision invalidates the subsequent proceedings. I have never been much impressed by the use of the word “mandatory”, and I have never been able to see why it should be easier to decide whether a provision of law is mandatory or directory than to decide whether failure to follow it invalidates the subsequent proceedings or not. The object of S. 24(2) is to obtain information at as early a stage as possible of the property and the whole conduct of the debtor in relation to the insolvency proceedings, and I entirely and respectfully agree with the decision in 10 Rang 1874 that failure to examine the debtor when the petition is presented by a creditor does not invalidate the subsequent proceedings unless it can be shown that the debtor has been prejudiced by the omission. In the present case the debtor filed a written statement and gave evidence on his behalf and he obviously was not in any way prejudiced. I therefore hold that the order adjudging him insolvent cannot be set aside on this ground.

2. The next question is whether there has been an act of insolvency as defined in Cl. (c) of Section 6 of the Prov. Insol. Act. On 10th November 1933, Sitaram sold a house to Waman and Laxman for an ostensible consideration of Rs. 3,861 due on a promissory note for Rs. 3,343, and this has been held by the lower Court to be an act of fraudulent preference. At that time Sitaram owned fields which had been previously mortgaged and have been subsequently foreclosed.

3. The only other property left to him is not worth more than about Rs. 3,000 and he has admitted debts amounting to about Rs. 10,000. The learned Additional District Judge has held that there is no satisfactory evidence to show that any pressure was brought to bear on him and that as he was so heavily involved he obtained no advantage from this sale. From that it would follow that the dominant motive was to prefer his creditors Waman and Laxman and that therefore the sale to them was an act of fraudulent preference. Lastly, it has been contended that there was other sufficient cause in the words of Section 25 of the Act, for not adjudging him insolvent. As he is hopelessly involved, there is obviously no other sufficient cause. The application for revision is therefore dismissed with costs. Counsel's fee Rs. 9.

K.B/A.L

4. Revision dismissed.