Ajay Kalidas Jain v. Mr . Sureshbhai Ranchhodbhai Patel

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION INSOLVENCY PETITION NO. 3 OF 2024 Ajay Kalidas Jain ... Judgment Creditor V/s.

Mr. Sureshbhai Ranchhodbhai Patel ... Debtor ------------- Mr. Ramesh Jain, Advocate for the Petitioning Creditor. Ms. M. R. Parkar, Insolvency Registrar present. -------------

CORAM

: ABHAY AHUJA, J.

DATE : 21st JANUARY 2025.

P.C. :

1.

This Insolvency Petition seeks an order of adjudication against one Mr. Sureshbhai Ranchhodbhai Patel.

2.

Mr. Ramesh Jain, learned Advocate appears for the Petitioning Creditor and submits that earlier pursuant to an ex-parte decree dated 14th November 2022 passed by the City Civil Court at Mumbai in Commercial Suit No. 429 of 2022, the Suit came to be decreed in favour of the Petitioning Creditor in the sum of Rs. 9,03,879.23 with further interest at the rate of 12% per annum of Rs. 5,03,880/- from Gitalaxmi 1/8

20th March 2023 till payment and/or realisation against Mr. Sureshbhai Ranchhodbhai Patel. Mr. Ramesh Jain would submit that since no payment was made by the Judgment Debtor, an Insolvency Notice No. 5 of 2023 dated 15th April 2023 came to be issued at the instance of the Petitioning Creditor. It is submitted that the notice was served on the Debtor on 11th May 2023 and requested the Judgment Debtor to pay to the Petitioning Creditor the amount claimed therein or to take out proceedings for setting aside Insolvency Notice within a period of 35 days after the service of Insolvency Notice upon the Debtor excluding the date of such service. Mr. Ramesh Jain has drawn the attention of this Court to Affidavit of Service dated 24th August 2023, which records in paragraphs no. 1 and 2 as under :- "1.

I say that on 11th May 2023 at 1.50 p.m. I visited place of business of the Judg. Debtor at Canberry Enterprises 117, Kenorita, 1st Floor, Caves Road, Jogeshwari East, Mumbai for the purpose of service of duplicate copy of the Insolvency dated 15th April 2023 in the above matter upon the Judg. Debtor. However the Judg. Debtor was not found there. One Mr. Baldev, the employee of the Judg. Debtor was present there. I informed the Judg. Debtor about the purpose of my visit and enquired about Judg. Debtor on Cell No. 892079984 of the Judg. Debtor and the Judg. Debtor informed me the Judg. Debtor is not able to come to the above mentioned address immediately and requested me to give the same to Mr. Baldev as the Judg. Debtor will collect from Mr. Baldev and therefore I immediately handed over another duplicate copy of the Insolvency Notice dated 15th April 2023 and requested Mr. Baldev to accept the Duplicate Insolvency Notice on behalf of Judg. Debtor by subscribing Gitalaxmi 2/8

signature on another Duplicate Insolvency Notice dated 15th April 2023. The said Mr. Baldev accordingly accepted the same by subscribing his signature and dated on another copy of Insolvency Notice dated 15th April 2023. Hereto annexed and marked as Exhibit "A" is the copy of the said Insolvency Notice dated 15th April 2023.

2.

I say that I know the Judgment Debtor personally. I say that thus the Judgment Debtor had personally served with the above Insolvency Notice dated 11th May 2023. I say that my Advocate also forwarded a letter dated 13th May 2023 recording the above facts to Judg. Debtor and also forwarded Xerox Duplicate Copy of the Insolvency Notice dated 15th April 2023. The Judg. Debtor has duly received the said letter dated 13th May 2023. The said letter along with the postal records is annexed herewith and marked "B" Colly."

3.

Mr. Ramesh Jain accordingly submits that the Insolvency Notice has been served on the Judgment Debtor on 11th May 2023. 4.

The Insolvency Registrar has however drawn the attention of this Court to a service report dated 16th December 2023 in the file of the Insolvency Department with respect to the Insolvency Notice No. 5 of 2023, which remarks that "the notice is not duly served as the notice has been accepted by the employee of the Judgment Debtor". At the bottom of the said report, it is noted that "service of INOT 05/2023 is not made as per Insolvency Rule 52E read with Rule 61". 5.

A perusal of Rule 52E of the Bombay Insolvency Rules, 1910 Gitalaxmi 3/8

(the "Insolvency Rules") indicates the said Rule is in respect of the mode of service of an Insolvency Notice. The said rule is usefully quoted as under :- "52E.

An insolvency notice shall be served and service thereof shall be proved in the like manner as is by these Rules prescribed for the service of a creditor's petition." 6.

A Creditor's Petition is to be served in accordance with Rule 61 of the Insolvency Rules. The said rule is usefully quoted as under :- "61.

Service of a creditor's petition shall be effected by an Officer of the Court or by the Creditor or his Attorney, or by some person in their employ, by delivering to the debtor or to the person upon whom it is to be served, a sealed copy of the filed petition; provided that if personal service cannot be effected, the Court may extend the time for hearing the petition, or if the Court is satisfied by affidavit or other evidence that the debtor or such person is keeping out of the way to avoid such service, or service of any other legal process, or that for any other cause prompt personal service cannot be effected, it may order substituted service to be made by delivery of the petition to some adult inmate at his usual or last known residence or place of business, or by registered letter or in such other manner as the Court may direct, and that such petition shall then be deemed to have been duly served on the debtor or such person." 7.

From the above, it is clear that an Insolvency Notice is to be served just as a Creditor's Petition. The said Rule 61 of the Insolvency Rules clearly records that the service has to be by 'delivery to the Debtor'. It appears that the objection or the remark of 'not duly served' Gitalaxmi 4/8

is because the service has to be on the person of the Judgment Debtor. I am in complete agreement with the said interpretation. However, a perusal of the Affidavit of Service dated 24th August 2023, as noted above, clearly records that when the Judgment Creditor visited the premises of the Judgment Debtor on 11th May 2023, the Judgment Debtor was not found there. One Mr. Baldev, the employee of the Judgment Debtor was however present there. Thereafter the Judgment Creditor called the Judgment Debtor on his cell phone and the Judgment Creditor was informed telephonically that the Judgment Debtor was not able to come to the address immediately and requested the Judgment Creditor to give the notice to Mr. Baldev as the Judgment Debtor would collect the same from Mr. Baldev.

It is only after the said telephone conversation that the Judgment Creditor handed over another duplicate copy of the Insolvency Notice dated 15th April 2023 to Mr. Baldev to accept the duplicate Insolvency Notice on behalf of the Judgment Debtor by subscribing his signature on it and which was accordingly accepted by Mr. Baldev by subscribing his signature.

Debtor on 13th May 2023. The Affidavit dated 24th August 2023 contains an acknowledgement due card suggesting the same. There is no material that has been brought to my notice to demonstrate that the aforesaid facts are incorrect. In the facts and circumstances, I am therefore inclined to accept that the service of the Insolvency Notice dated 15th April 2023 has been effected upon the Judgment Debtor on 11th May 2023. The concern raised by the Insolvency Registrar to stand and addressed accordingly.

8.

That being the case, coming back to the facts at hand, after the service of the Insolvency Notice No. 5 of 2023, on 11th May 2023 since the Judgment Debtor has neither complied with the requisitions made therein, nor paid the amount claimed, to the Petitioning Creditor and also failed to take out any proceedings to set aside the Insolvency Notice dated 15th April 2023, after the expiry of 35 days from 11th May 2023, the Judgment Debtor has committed an act of Insolvency on 16th June 2023.

9.

It has been submitted that neither the Petitioning Creditor, nor does anyone else on his behalf holds any security in the estate of the Judgment Debtor in respect of the amounts due under the ex-parte Gitalaxmi 6/8

decree.

10.

Despite service it is observed that no response/reply has been filed to the Insolvency Petition, nor anyone represents the Judgment Debtor.

11.

Accordingly, I am inclined to allow this Petition in terms of prayer clause (a), which reads thus, "a) An Order of Adjudication be passed by this Hon'ble Court against the Debtor abovenamed."

12.

The Official Assignee to take necessary steps in accordance with law and procedure and to invest the amounts so realized from the estate of the Insolvent with any Nationalized Bank as per the circular issued by the office of the Prothonotary and Senior Master of this Court.

13.

This order of adjudication shall be served by the Advocate for Petitioning Creditor on the Judgment Debtor and he shall file Affidavit of Service to that effect within two weeks from today. 14.

The Petitioning Creditor to lodge copy of the adjudication Gitalaxmi 7/8

order with the office of the Official Assignee within two weeks from the date of this order.

15.

The Judgment Debtor is directed to comply with all requisitions of Section 33 under the Presidency Towns Insolvency Act, 1909.

16.

The Official Assignee is authorised to take the assistance of the local police authorities at the time of taking physical possession of the movable or immovable properties of the Judgment Debtor. 17.

The Insolvency Petition accordingly stands allowed and disposed as above.

18.

All concerned to act on an authenticated copy of this order. (ABHAY AHUJA, J.) by GITALAXMI KRISHNA KOTAWADEKAR Date:

2025.01.27 14:59:23 +0530 GITALAXMI KRISHNA KOTAWADEKAR Gitalaxmi 8/8