YENUMULA MALLU DORA versus PERURI SEETHARATNAM AND OTHERS

Citation: [1966] 2 S.C.R. 209 · Decided: 14-10-1965 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Judgment (excerpt)

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YENUMULA MALLU DORA 
v. 
PERURI SEETHARATNAM AND OTHERS 
October 14, 1965 
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, 
M. HIDAYATULLAH AND V. R.AMASWAMI, JJ.J 
Provincial Insolvency Act, 1920, s. 6(e)-Act of insolvency-ft ne" 
once committed whether purged by satisfying only some of the creditors-
Therefore whether available to other creditors for the purpose of an app/i. 
cation under s. ?-Section 25-Scope of. 
On the application of two creditors (respondents in this appeal) the 
appellant was adjudged a bankrupt by the Subordinate Judge, Kakinada, 
and a receiving order was passed against him. 
This adjudication was 
based on the one act of insolvency out of three alleged in the application 
which was accepted by the sub-judge, i.e., the sale of some of his pro-
perties in execution 
of a money decree. 
Appeals 
against the 
order 
to the District Judge, and later to the High Court, were dismissed. 
It was contended on behalf of the appellant that the alleged act of 
insolvency was not established as he had deposited, within one month 
of the sale, the entire decretal amount, and the sale was set aside on a 
!>"titian by him under Order 21, rule 89 of the Code of Civil Proce-
dure; that in any event he was entitled to have the application dismissed 
under s. 25 of the Provincial Insolvency Act, 1920, which allows a 
creditor's application to be dismissed on sufficient cause. 
HELD: The adjudication of the appellant as an insolvent and the 
receiving order against him were properly made. [214 E] 
An act of insolvency once committed cannot be explained or purged 
by subsequent events. 
The insolvent cannot claim to wipe it off by 
paying some of his creditors; the same act of insolvency is available to 
all his creditors and is not erased unless all creditors are satisfied. The 
act of insolvency which the appellant had committed had remained and 
was not purged by payment of the decretal amount after the sale in 
execution of the money decree; the respondents could therefore rely on 
it even though one or more creditors might have been paid in 
fuJI. 
[212 F-HJ 
(ii) Although s. 25 of the Provincial Insolvency Act is in wide terms, 
it cannot be given effect to so as to ignore an act of insolvencv in cases 
such as the present one, where the debtor continues to be heavily indebted 
and ~here is no proof that he is able to pay his debts. [213 A-BJ 
Venkatakrishnayya v. Malakandayya, A.I.R. 1942 Mad. 306; Pratap-
mall Rameshwar v. Chunnilal Jahurl, A.I.R. 1933 Cal. 417 and Lal Chand 
Changhuri v. Bogha Ram & Ors., A.I.R. 1938 Lah. 819, referred to. 
CIVIL APPELLATE JuRISDICTION: Civil Appeal No. 474 of 
1964. 
Appeal by special leave from the judgment and order dated 
March 14, 1963 of the Andhra Pradesh High Court in C.R.P. 
No. 1725 of 1959. 
210 
SUPIU!ME COURT REPORTS 
(1966] 2 S.C.R. 
M. C. Setalvad, and T. V. R. Tatachari for the appellant. 
A 
Kirpa Narain and T. Satyanarayana, for respondent Nos. 1 
and 9. 
The Judgment of the Court was delivered by 
Hidayatullah J. 
On the application of two creditors the 
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appellant Yenumula Mallu Dora has been adjudged insolvent by 
the Subordinate Judge, Kakinada and a receiving order has been 
passed against him. 
The respondents before us are one of the 
petitioning creditors and the legal representatives of the. other 
petitioning creditor who died during these proceedings. 
The first 
petitioning creditor held a decree for money which he had obtained 
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in O.S. 67 of 1949. 
He also held another money decree in O.S. 
473 of 1948. 
The second petitioning creditor held a decree 
which she had obtained in O.S. 17 of 1955. 
The application was 
based upon three acts of insolvency which the appellant was stated 
to have committed and on the general facts that he was indebted 
to the tune of Rs. two lakhs, and was unable to pay his debts. The D 
three acts of insolvency alleged against him were (a) evasion of 
arrest in execution of the money decree in O.S. 67 of 1949; (b) 
sale of some of his properties on September 26, 1956 in execution 
arising from O.S. 73 of 1952; and (c) sale of some of his pro-
perties on September 19, 1956 in execution of money decree in 
O.S. 9 of 1950. It was also alleged that he was fraudulently 
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transferring properties in the name of his wife and brother-in-law 
and had suffered a collusive diarge decree for maintenance in 
favour of his wife, to delay and defeat his creditors. 
The Subordinate Judge, Kakinada did no

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