OFFICIAL RECEIVER, KANPUR AND ANOTHER versus ABDUL SHAKUR AND OTHERS

Citation: [1965] 1 S.C.R. 254 · Decided: 11-09-1964 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

,, 
254 
OFFICIAL RECEIVER, KANPUR AND ANOTHER 
v. 
ABDUL SHAKUR AND OTHERS 
September 11, 1964 
(P. B. GAJENDRAGADKAR, C.J., ]. c. SHAH AND N. RAJAOOPALA 
B 
. --
AYYANGAR JJ.) 
Provincial Insolvency Act (S of 1920), ss. 33, 75(1) and 8{}- Negoti-
able Instruments Act (26 ·of 1881), s. 118- Official Receiver-I/ bound 
to rely upon statutory presuinptio~High Court-Jurbdiction under s. 
75(1) of the Insolvency Act. 
, , 
The second appellant, who had executed promissory notes in favour' of 'C 
the respondents was adjudicated an insolvent on a petition by them. The 
Official Receiver in exercise of the powers under ss. 33 and 80 of the 
Provincial Insolvency Act (S of 1920), and under directions of the Insol-
vency Judge, inquired into the claims of the respondents and rejected them. 
On appeal, the Insolvency Judge directed the inclusion of their names in 
the scliedule of creditors. The appeal to the District Court against the 
order of the Insolvency Judge was allowed. In second appeal to the High 
Court, it was held, that the inference drawn by the District Court from its 
findings was a matter of law and that therefore the High Court had juris-
diction under s. 75(1), to interfere with the order of the District Court. 
Relying upon the presumption in favour of creditors ins. 118 of the Nego-
tiable Instruments Act (26 of 1881), the High Court set aside the judg-
ment of the District Court. The Official Receiver and the in.olvent 
appealed to the Supreme Court. 
HELD : The appeal should be allowed. 
Since all the findings of the District Court were findings of fact and 
the question whether a statutory presumption was rebutted by the rest of 
the evidence was also a question of fact, the High Court had nojuri•diction 
to set aside the judgment of the District Court. 
[2S9A..C). 
Wali Mohammad v. Mohammad Bakhsh, (1930) L.R. ,S7 I.A. 86. 
approved. 
' ' 
, 
Section 118 of the Negotiable Instnmients Act, enacts a special rule of 
evidence which operates only between panies to the instrument or persons 
claiming under them in a suit or proceeding relating to the negotiable 
instrument. The section does not affect s. 114 of the Evidence Act, and in 
cases not falling within s. 118 of the Negotiable Instrnments Act the Court 
may or may not presume that a promissory note was founded on good 
consideration. Therefore, in a proceeding relating to proof of debts, the 
question being not one between the insolvent and the proving creditor 
alone, and since the rights of other creditors of the insolvent have of 
· necessity to be considered, the Court has jurisdictiOn to investigate "hether 
there is a real debt. Even if for some reason the debtor himself is cstopped 
.. from denying the debt, there could be no estoppel against the Insolvency 
Court. There is thus no statutory presumption of consideration in favour 
of the creditors under promissory notes in proceedingi1 under s. 33 of the 
Provincial Insolvency ..Act for settlement of the schedule of creditors, and 
the Receiver exercising powers under s. 80 of that Act is not bound to admit 
the debts in the schedule merely because the insolvent or the creditors 
have failed to displace such a presumption. 
[261P-262C; 264E-G). 
Case law reviewed. 
D 
E 
F 
G 
H 
" 
OFFICIAL RECEIVER v. ABDUL SHAKUR (Shah/.) 
255 
A 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 257 of 
B 
c 
1962. 
Appeal from the judgment and decree dated February 19, 
1957 of the Allahabad High Court in S. A. F. No. 4 of 1952. 
S. T. Desai, and /. P. Goyal, for the appellants. 
G. S. Pathak, B. Dutta, I. B. Dadachanji, 0. C. Mathur and 
Ravinder Narain, for respondent No. '2. 
The Judgment of the Court was delivered by 
Shah J, Respondents 1 to 3 in this appeal presented a petition 
before the Insolvency Judge, Kanpur for an order adjudicating th• 
second appellant-Kotwaleshwar Prasad-insolvent. In their peti-
tion they alleged that Kolwaleshwar had In the course of business 
dealings with them borrowed Rs. 15,000 on September 28, 1935 
from respondents 1 and 3 and had executed a promissory note 
agreeing to repay the amount, and that he had borrowed Rs. 3,500 
D 
on January 9, 1936 ahd Rs. 4,000 on April 7, 1936 from 
respondent 2, and executed similar promissory notes, that 
he had failed to repay the amounts due by him and with a view 
to defeat cir delay his creditors secluded himself so as to deprive 
his creditors of the means of communicating with him, and had 
thereby committed an act of insolv

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