TMI Blog1952 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 as the value of the produce of the arable lands and Rs. 1,000 as damages for demolition of certain buildings. There was a written statement by the defendant company, but at the time of the hearing it did not appear and on the 26th May, 1949, a decree was passed in that suit in favour of the petitioner against the company for the sum of Rs. 18,000 and for Rs. 3,419-3-3 for costs, aggregating to Rs. 21,419-3-3. This decree of the 26th May, 1949, still remains unsatisfied. Certain steps were taken in execution of this decree. In execution the petitioner caused certain lands belonging to the company to be attached. The lands were attached and sold by the executing court by public auction and the petitioner was the highest bidder purchasing the same for Rs. 9,000. The executing court allowed the purchase money to be set off in part satisfaction of that decree. The sale was duly confirmed and a sale certificate has since been issued. It is now said that in spite of demand the company did not pay the balance of that decree which including interest calculated up to the 29th August, 1951, amounted to Rs. 11,976-9-6, for which sum the statutory notice was given on that date, i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedure Code, would have been the simplest way to get the ex parte decree set aside if the company could have proved that it could not appear because the deponent happened to be ill and there was none in the company who could come and appear in court because of the illness of a certain individual. An allegation is made that necessary legal action for setting aside the execution proceedings and sale has been taken. But Mr. Dutt has failed to furnish any particulars at all on the point and in fact has submitted before me that he is not in a position to say what steps, if any at all, had been taken in this respect. This much is quite clear that neither an application to set aside the ex parte decree nor even a suit to set aside the decree has been filed by the company against the petitioning creditor, although this decree was passed on the 26th May, 1949, and although even the presentation of this petition was on the 20th November, 1951, and although today it is August, 1952. On the question of the service of the statutory notice of demand under section 163 of the Indian Companies Act, the traverse by this deponent is most curious. What he says in affidavit-in-opposition is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st have been duly delivered because it was duly addressed at the registered office and duly returned to him through the post office. Mr. Dutt has argued that this presumption can be rebutted. That is an acceptable proposition, but his difficulty is that it has not been rebutted. On the one hand, I find a postal acknowledgment duly sent and addressed and duly returning in the usual course of business, and on the other the sworn evidence of the person who actually sent the letter and actually posted that letter and the presumption must operate until it is rebutted by some one coming from the company to deny and dispute the receipt of such letter. Here is the crux of the matter. But no one has come forward on behalf of the company to dispute the receipt of this statutory demand notice, although according to Mr. Dutt this was the very point which was to be tried on evidence. Therefore, not only the presumption must prevail, but I must come to the finding that the service was proper and effective in the absence of any proof to the contrary and having regard to the evidence already given by Mr. Palit. This explains why there has not been a direct denial by Sunil Krishna Roy Choudhury aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to quote: "It cannot be doubted that a judgment is prima facie evidence of a debt, and that judgment or order to which a debtor has consented is far stronger evidence against him of the validity of the debt for which it purports to be given than a mere judgment by default. It is very strong evidence against him." This will show that there cannot be any doubt that a judgment-debt will carry a great weight even in a bankruptcy court and it is the presumptive evidence of the highest order, and even on the passage quoted by Mr. Dutt, mere allegations and assertions of fraud or collusion will not justify upsetting and re-opening a judgment-debt. It is there said by the Master of the Rolls that a "sufficient case" must be made out. A difference is made between the case of fraud and the case of collusion to which I will make a reference. But in no view of either the insolvency law or general jurisprudence can it be suggested that the mere assertion of fraud will at once in every case entitle the judgment-debtor to an enquiry into the validity of the judgment-debt on the basis of which a petition for insolvency is presented. The reason why a judgment-debt may be enquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance and Guarantee Society, and in such well-known cases on the point as In re General Company for Promotion of Land Credit and In re National Permanent Benefit Building Society. I should like to insist here that on my reading of the cases I have come to the conclusion that the mere allegation that the judgment was obtained by fraud does not require the bankruptcy court to enquire into its foundation and validity. The allegation must be attended with such particulars as will not only amount to a proper averment in law of fraud but also show a prima facie case of fraud requiring investigation. It appears to me quite clear from the observations of Lord Esher, M.R., in the case of Lennox In re : ex parte Lennox. The latest legal position is clearly stated in Buckley's Companies Act, 12th Edition, edited in 1949, page 453. The learned editor of that great work says: "If the petitioner has already obtained a judgment in his favour, he cannot, upon an allegation that the judgment was obtained by fraud, be called upon as a preliminary to his right to an order to go into further evidence in support of his claim. But upon the respondents undertaking to bring an action to set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the same or to secure or to compound for it to the reasonable satisfaction of the creditor. There is no doubt in this case that this demand remained unsatisfied for three weeks. On this point I do not want to discuss in detail the well known case of Japan Cotton Trading Company v. Jajhodia Cotton Mills Ltd. Yet it is necessary only to observe that in that case Rankin C.J. makes it quite clear that sub-section (1) to section 163 means that the company has to be served with a demand notice as a rather special precaution so that if it makes further default for a period of three weeks "the question of its inability to pay its debts" is set at rest. That, as I read the judgment, means that the inability to pay the debt must be deemed to be there under the language of section 163 when such a demand notice duly delivered remains unsatisfied for three weeks. Secondly, under clause ( ii ) of section 163(1) the other event "when the company shall be deemed to be unable to pay its debts", is "if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part." Here the decree is there and it i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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