The High Court of Andhra Pradesh dismissed an appeal against an order declaring the petitioner an insolvent under the Insolvency Act. The court rejected the contention that the suppression of assets hindered the proceedings, holding no interference was warranted.
Appeal dismissed; insolvency petition allowed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD
THE HON'BLE SRI JUSTICE G. KRISHNA MOHAN REDDY
C.M.A. No.4353 of 2004
Date:11.04.2011
Between:
Illuru Narasimha Murthy and another
.....Appellants
AND K.V. Satyanarayana and others.
....RESPONDENTS
The Court made the following:
THE HON'BLE SRI JUSTICE G. KRISHNA MOHAN REDDY
C.M.A. No.4353 of 2004
JUDGMENT:
This is an appeal directed against order dated 28.04.2004 passed in I.P.No.10 of 2002 by the Principal District Judge, Kurnool.
The appellants are the 1st and 27th respondents and the 1st respondent is the petitioner in the I.P.
The parties are referred to as arrayed in the petition in the lower court from now onwards for convenience sake.
The brief averments made in the petition are as follows:
The petitioner was doing commission business. For the purpose
of his trade the petitioner had borrowed huge amounts from the
creditors. Due to heavy losses in his business on account of payment of heavy interest on the outstanding debts incurred by him for the purpose of his business and due to non-realisation of the dues payable to him due to slackness in the business the petitioner was unable to carry on the business and as such he had to close his business and could not pay his debts or eake out his livelihood. His liabilities are far more than his assets as shown in the petition schedules. Hence he filed the IP for declaring him as insolvent.
The respondents 2,4,6 to 8, 10, 11, 13, 15, 16, 18 to 38 and 40 to 46 did not choose to contest the matter and they were set exparte. The petition as against the respondents 3, 14, and 39 was dismissed on 4.7.2003.
The 12th respondent did not file any counter.
The 1st respondent filed counter denying all the pleas and contending that the petitioner filed the petition with a dishonest intention to evade, defeat and defraud genuine creditors like himself and few others. There is no loss as averred in the petition and the petitioner is carrying on the same business in the same place. The petitioner has not come to the court with clean hands. Most of the debts are collusive and included only with a malafide intention of acquiring the jurisdiction of the lower court.
The 5th , 9th and 17th respondents also filed separates counters denying the averments made in the petition and contending that no bonafide grounds were shown in filing the petition and it should be dismissed with costs.
In order to establish his case, the 1st petitioner got examined himself as P.W.1 and no documents were marked. The 1st respondent got examined himself as R.W.1 and no documents were marked.
Taking into consideration both oral and documentary evidence adduced, the learned District Judge allowed the petition declaring the petitioner as insolvent.
Aggrieved by the order, the present appeal is filed.
The learned counsel for the petitioners/respondents 1 and 17 has pleaded that as per the evidence adduced, the petitioner got commission agency business under the name and style of Anil Traders and in that context he issued Exs.B.1 and B.2 bills, in the name of his wife and mother and the trail court failed to appreciate Exs.B.1 and B.2 bills properly and arrived at incorrect conclusions and the circumstances of the case prove that the petitioner suppressed such big asset and by virtue of Section 13 of the Insolvency Act, the petition should not have been allowed by the enquiry court on the ground of suppressing the same.
Exs.B.1 and B.2 bills were issued on behalf of Anil Traders, but it is significant that even according to the learned counsel for the respondents 1 and 17, the commission agency has been running in the name of the wife and mother of the 1st respondent herein. But, no record has been placed before the court by the petitioner/respondents 1 and 17 in order to uphold the claim of the contesting respondents. It is also significant to note that it is not the claim of the respondents 1 and 17 that the said agency got any property, as such it is to be deemed that it got no property. Under the circumstances of the case, it is not safe to rely upon the contention of the respondents 1 and 17 that the respondents herein suppressed their commission agency business.
Having regard to the facts and circumstances of the case and having gone through the order passed by the trial court, I do not see any reasons to interfere with the order and the appeal fails.
In the result, the appeal is dismissed. No order as to costs.
________________________________ G. KRISHNA MOHAN REDDY,J.
11th April, 2011 GK.
THE HON'BLE SRI JUSTICE G. KRISHNA MOHAN REDDY
C.M.A. No.4353 of 2004
Date:11.04.2011
Gk.
2 issues framed by the court
Whether the District Judge erred in allowing the insolvency petition despite allegations of dishonest intent by the petitioner.
Whether suppression of the commission agency business conducted in the name of the petitioner's wife and mother constituted grounds for quashing the insolvency petition under Section 13 of the Insolve
1 provisions across 1 enactments
Illuru Narasimha Murthy and another
K.V. Satyanarayana and others
G. KRISHNA MOHAN REDDY
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
