IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI WEDNESDAY ,THE TWELFTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY FIVE , ■ rT*-' f k PRESENT THE HONOURABLE MS JUSTICE B S BHANUMAm-’-irtf?'^ CIVIL MISCELLANEOUS SECOND APPEAL NO: 12 OF 2016 Between: Udumula Ramana Reddy, S/o Vengaiah, aged 46 years, Coolie, R/o. Venkatareddipalli village. Presently residing at Dornal village, Post and Mandal, Prakasam District. ...APPELLANT (1st Respondent/Petitioner) AND 1. Gogireddy Narasa Reddy, S/o Naraiah, aged 64 years, Cultivation, Venkatareddipalli village, Pullalacheruvu Mandal, Prakasam District. 2. Annapareddy Kondaiah,, S/o Konaiah, aged 54 years, Cultivation, Venkatareddipalli village, Pullalacheruvu Mandal, Prakasam District. 3. Yaparthi Chenchaiah,, S/o Papaiah, aged 64 years. Cultivation, Gangavaram village, Pullalacheruvu Mandal, Prakasam District.{Died per LRs) Respondents/ (Appellants/Respondents 1,2 & 6) 4. Yerra Lakshmi Reddy, S/o Ramachandraiah, Aged 46 Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. years, cultivation. W; y 5. Annapureddy Venkata Lakshmamma,, W/o Venkateswarlu, aged 38 years, housewife, VenkatareddipaLli,village and Post, Pullalacheruvu ' Mandal, Prakasam District. 6. Annapureddy Kona Reddy, S/o Ramachandraiah, Aged 57 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal Prakasam District. 7. Duggampudi Venkatarami Reddy, S/o Chinna Balai Reddy @ Balaiah Aged about 50 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 8. Sapakani Saidaiah, S/o. Veeraiah, Aged 52 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 9. Merugu Palankamma,, W/o Chinna Naguraiah, Aged 48 years, house wife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 10. Annapureddy Lakshmi Kantharnma, W/o Hanuma Reddy, Aged 50 years, housewife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 11. Kunduru Kondaiah, S/o Chinnaiah, aged 55 years. Cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 12. Udumula Ananthamma, W/o Yengaiah, Aged 57 years, housewife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. Udumula Chenna Reddy, S/O Yengaiah, Aged 60 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasam District. 13. Nayudu Ramachandra Rao, S/o Venkata Narasaiah, Aged 44 years, Wineshop, Pullalacheruvu village and Mandal, Prakasam District. Annapureddy Avulaiah,, Father's name not known, Aged 65 years,cultivation, R/o Veerabhandrapuram village, Y. Palem Mandal, Prakasam District. Gundareddy Sheshi Reddy,, S/o Raja Reddy, Aged 38 years. Auto driver, Bodireddypalli village and Post, Peddaraveedu Mandal, Prakasam District. 16. Polireddy Chenchi Reddy, S/o. not known. Aged 48 years Correspondent of Loyala Public School, Near Saibaba Temple, Markapur, Prakasam District. 17. Venkateswara Reddy, aged 45 years. Proprietor of Sri Sai Krishna Finance, Near Municipal Office, Markapur, Prakasam District. 18. 19. Kottamasu Venkata Subbaiah, Aged 55 years. Proprietor of Vasavi Traders, Main Bazar, Macherla Road, Yerragondapalem village and Post, Prakasam District. 20. Senaga Subba Reddy, S/o not known. Aged 47 years. Fertilizers Shop, Pullalacheruvu Road, Yerragondapalem village and Mandal, Prakasam District. 21. Kanna Reddy, aged 48 years, C/0 P.E.T. Venkateswara Reddy, Money Lender, Pokonikunta, Boreddypalli Post, Peddaraveedu Mandal Prakasam District. 22. Naredia Venkata Reddy, S/O not known. Aged 47 years. Proprietor of Bhargav Jewellers, Main Road, Yerr8gondapalem village and Mandal, Prakasam District. 23. Immadisetty Ramaiah, aged 65 years, Fertiliser Shop, Opp; Ayyappa Temple, Main Roa^i^-Yerragondapalem Post and Mandal Prakasam District. 24. Immadisetty Peresetty, S/o Chinna Pitchaiah, Aged about 50 years. Shop, Pullalacheruvu Road, Yerragondapalem Post and Mandal, Prakasam District. 25. Kancherla Satyanarayana,, S/O not known. Aged 52 years. Owner of Sreenivasa Lodged, Main Road, Yerragondapalem Post and Mandal, Prakasam District. Kilari Velugondaiah,, S/o not known. Aged 55 years. Cultivation, Masirajukunta, Maddalakatta Post, Peddaraveedu Mandal, Prakasam District. 26. Venkateswara Reddy,, S/o not known. Aged about 58 years. Proprietor of Vijayalakshmi Seeds and Pesticides, Lakshmi Narasimha Complex, 9-1-97, Station Road, Narasaraopet, Guntur District. 27. 28. Ganta Mastan Reddy, S/O Chalama Reddy, Aged 56 years. Teacher, near Ramaswamy gudi, Dornala village Post and Mandal, Prakasam District. 29. Baddigam Pedda Rajaiah,, S/O Bakkaah, Aged 55 years, cultivation, Gurijepaili village, Yerragondapalem Mandal, Prakasam District. Anjaneyulu,, S/o not known, aged 49 years. Proprietor of Fertilisers Shop, Opp. Annapurna Agencies, Main Road, Yerragondapalem village & Mandal, Prakasam District. 30. Chencha Reddy, Prop, of Subba Reddy & Co.. RTC Old Bus Stand, Behind Old Guntur Police Station, Guntur. 31. Aged 47 years, Proprietor of Vinukonda, Prakasam District. Veerabanu Singh, S/o. not known Surya Seeds, Near Sivaiah Stupem Raja Reddy, S/o not known. Aged 45 years,Proprietor of Rayalaseema Seeds, C/0 Subba Reddy & Co, RTC Bus Stand Road Behind Old Guntur Police Station, Guntur. 33. Ranga Rao, S/o not known, aged 50 years. Proprietor of Lavanya Agencies, 217, Bapuji Complex, Ongole, Prakasam District. D. Sreenivas, S/o not known, aged 50 years. Proprietor of Sreenivasa Enterprises, Lambadi Street, Behind Sreerama Theatre, Ongole, Prakasam District. P. V. Ramana Reddy, S/o not known. Aged 43 years. Proprietor of P.V.R. Farm Chemicals, D.No.18-1-3, Pattivari Street, Ongole, Subba Reddy, S/o. not known, aged 60 years. Proprietor of RamakrishnaoEnterprises, Opp.PVR Farm Chemicals, Pattivari Street, Ongole, 34. 35. 36. 37. Kesava Reddy, S/o not known. Aged 58 years. Proprietor of Sri Sai Agro Agency, 0pp.Police Quarters, Giddalur, Prakasam District. Vasu, S/o not known. Aged 55 years. Proprietor of Vishnu Farms Chemicals, D.No.23-6-141, First Floor, Patnam Bazar, Guntur. Gain Subba Reddy, S/o. not known. Aged 47 years. Milk business, Maddalakatta village, Peddaraveedu Mandal, Prakasam District. 38. 39. 40. Karra Avula Reddy, S/O Venkata Reddy, Aged 36 years. Teacher, Vivekananda Residential School, near Petrol Bunk, Dornala, Prakasam District. 41. 42. Chilakam Ramalinga Reddy, S/o not known, Aged 62 years, C/0 Mallikarjuna Enterprises, Near Manorama Hotel, Y. Palem Road, Markapur, Prakasam District. 43. Immidisetty Bulli, S/o. not known. Aged 46 years. Fertiliser Shop, Pullalacheruvu village and Mandal, Prakasam District. 44. Yaparthi Hanumamma,, W/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. 45. Yaparthi Veera Gangaiah,, S/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. 46. Mudamanchu Veera Gangamma,, D/o Late Yaparthi Chenchaiah, S/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. (RR 4 to 43 are not necessary in this CMSA) (Respondent Nos. 44 to 46 are brought on record as LRs of the deceased Respondent No.3, vide I.A.No.3 of 2024, as per Court Order dated 23.10.2024) ...RESPONDENTS Civil Miscellaneous Second Appeal under Section 75 of Provincial Insolvency Act, 1920, aggrieved by the Judgment and decree dated 5.8.2015 in A.S No. 15/2012 on the file of the VI Addl.District Judge, Markapur, Prakasam District,reversing the well considered Judgment and decree dated 12.1.2011 rendered in I.P No.17/2001 on the file of the Senior Civil Judge,Markapur,Prakasam District. This appeal coming on for hearing and upon perusing the grounds of appeal, the Order and Decree of the Trial Court and material papers in the petition and upon hearing arguments of Sri T.V. Jaggi Reddy Advocate for the Appellant and None appeared for the for Respondents This Court doth Order and decree as follows: 1. That the Civil Miscellaneous Second Appeal be and hereby is dismissed. That there shall be no order as to Costs in this Civil Miscellaneous Second Appeal. 2. SD/- E.KAMESWARA RAO JOINT REGISTRAR //TRUE COPY// SECTON OFFICER To, 1. The Senior Civil Judge, Markapur, Prakasam District The VI Addl.District Judge, Markapur, Prakasam District. THREE CD COPIES TAC 2. 3. HIGH COURT DATED:12/02/2025 V V. 5 • J DECREE CMSA.No.12 of 2016 DISMISSING THE CIVIL MISCELLANEOUS SECOND APPEAL WITHOUT COSTS IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI WEDNESDAY ;TnE TWELFTH DAY OF FEBRUARY ;fA ?! *6 TWO THOUSAND AND TWENTY FIVE t? J 'f / PRESENT > A ■' " ■ THE HONOURABLE MS JUSTICE B S BHANUMATHI CIVIL MISCELLANEOUS SECOND APPEAL NO: 12 OF 2016 Civil Miscellaneous Second Appeal under Section 75 of Provincial InscIvency^Act, 1920, aggrieved by the Judgment and decree dated 5.8.2015 in A.S No. 15/2012 on the file of the VI Addl.District Judge, Markapur, Prakasam District,reversing the well considered Judgment and decree dated 12.1.2011 rendered in I.P No.17/2001 on the file of the Senior Civil Judge,Markapur,Prakasam District. Between: Udumula Ramana Reddy, S/o Vengaiah, aged 46 years. Coolie, R/o. Venkatareddipalli village. Presently residing at Dornal village. Post and Mandal, Prakasam District. ...APPELLANT (1st Respondent/Petitioner) AND 1. Gogireddy Narasa Reddy, S/o Naraiah, aged 64 years. Cultivation Venkatareddipalli village, Pullalacheruvu Mandal, Prakasam District. 2. Annapareddy Kondaiah,, S/o Konaiah, aged 54 years. Cultivation, Venkatareddipalli village, Pullalacheruvu Mandal, Prakasam District. 3. Yaparthi Chenchaiah,, S/o Papaiah, aged 64 years. Cultivation, Gangavaram village, Pullalacheruvu Mandal, Prakasam District.{Died per LRs) RESPONDENTS/ (APPELLANTS/RESPONDENTS 1,2 & 6) 4. Yerra Lakshmi Reddy, S/o Ramachandraiah, Aged 46 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 5. Annapureddy Venkata Lakshmamma,, W/o Venkateswarlu, aged 38 years, housewife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 6. Annapureddy Kona Reddy, S/o Ramachandraiah, Aged 57 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 7. Duggampudi Venkatarami Reddy, S/o Chinna Balai Reddy @ Balaiah, Aged about 50 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 8. Sapakani Saidaiah, S/o. Veeraiah, Aged 52 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 9. Merugu Palankamma,, W/o Chinna Naguraiah, Aged 48 years, house wife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. Annapureddy Lakshmi Kantharnma, W/o Hanuma Reddy, Aged 50 years, housewife, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. Kunduru Kondaiah, S/o Chinnaiah, aged 55 years, Cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 10. 11. 12. Udumula Ananthamma, W/o Yengaiah, Aged 57 years, housewife, Venkatareddipalli village and Post, Pullalacheruvu Mandal Prakasarn District. Udumula Chenna Reddy, S/O Yengaiah, Aged 60 years, cultivation, Venkatareddipalli village and Post, Pullalacheruvu Mandal, Prakasarn District. 13. 14. Nayudu Ramachandra Rao, S/o Venkata Narasaiah, Aged 44 years, Winesbap, Pullalacheruvu village and Mandal, Prakasam Dislrict. Annapureddy Avulaiah,, Father's name not known, Aged 65 years,cultivation, R/o Veerabhandrapuram village, Y. Palem Mandal, Prakasam District. Gundareddy Sheshi Reddy,, S/o Raja Reddy, Aged 38 years. Auto driver, Bodireddypalli village and Post, Peddaraveedu Mandal, Prakasam District. Polireddy Chenchi Reddy, S/o. not known. Aged 48 years. Correspondent of Loyala Public School, Near Saibaba Temple, Markapur, Prakasam District. ‘ ' Venkateswara Reddy, aged 45 years. Proprietor of Sri Sai Krishna Finance, Near Municipal Office, Markapur, Prakasam District. Kottamasu Venkata Subbaiah, Aged 55 years. Proprietor of Vasavi Traders, Main Bazar, Macherla Road, Yerragondapalem village and Post, Prakasam District. Senaga Subba Reddy, S/o not known. Aged 47 years. Fertilizers Shop, Pullalacheruvu Road, Yerragondapalem village and Mandal, Prakasam District. Kanna Reddy, aged 48 years, C/0 P.E.T. Venkateswara Reddy, Money Lender, Pokonikunta, Boreddypalli Post, Peddaraveedu Mandal, Prakasam District. Naredia Venkata Reddy, S/O not known. Aged 47 years. Proprietor of Bhargav Jewellers, Main Road, Yerr8gondapalem village and Mandal, Prakasam District. Immadisetty Ramaiah, aged 65 years. Fertiliser Shop, Opp: Ayyappa Temple, Main Road, Yerragondapalem Post and Mandal, Prakasam District. Immadisetty Peresetty, S/o Chinna Pitchaiah, Aged about 50 years. Shop, Pullalacheruvu Road, Yerragondapalem Post and Mandal, Prakasam District. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. Kancherla Satyanarayana,, S/0 not known, Aged 52 years, Owner of Sreenivasa Lp.dged, Main Road, Yerragondapalem Post and Mandal, Prakasam District. Kilari Velugondaiah,, S/o not known. Aged 55 years. Cultivation, Masirajukunta, Maddalakatta Post, Peddaraveedu Mandal, Prakasam District. 26. 27. Venkateswara Reddy,, S/o not known. Aged about 58 years. Proprietor of Vijayalakshmi Seeds and Pesticides, Lakshmi Narasimha Complex, 9-1-97, Station Road, Narasaraopet, Guntur District. Ganta Mastan Reddy, S/O Chalama Reddy, Aged 56 years, -Teacher, near Ramaswamy gudi, Dornala village Post and Mandal, Prakasam District. Baddigam Pedda Rajaiah,, S/O Bakkaah, Aged 55 years, cultivation, Gurijepaili village, Yerragondapalem Mandal, Prakasam District. 28. 29. 30. Anjaneyulu,, S/o not known, aged 49 years. Proprietor of Fertilisers Shop, 0pp. Annapurna Agencies, Main Road, Yerragondapalem village & Mandal, Prakasam District. Chencha Reddy, Prop, of Subba Reddy & Co.. RTC Old Bus Stand, Behind Old Guntur Police Station, Guntur. Veerabanu Singh, S/o. not known. Aged 47 years. Proprietor of Surya Seeds, Near Sivaiah Stupem, Vinukonda, Prakasam District. Raja Reddy, S/o not known. Aged 45 years,Proprietor of Rayalaseema Seeds, C/0 Subba Reddy & Co, RTC Bus Stand Road, Behind Old Guntur Police Station, Guntur. Ranga Rao, S/o not known, aged 50 years. Proprietor of Lavanya Agencies, 217, Bapuji Complex, Ongole, Prakasam District. D. Sreenivas, S/o not known, aged 50 years. Proprietor of Sreenivasa Enterprises, Lambadi Street, Behind Sreerama Theatre, Ongole, Prakasam District. 31. 32. 33. 34. 35. 36. P. V. Ramana Reddy, S/o not known, Aged 43 years, Proprietor of P.V.JR. Farm Chemicals, D.No.18-1-3, Pattivari Street, Ongole, Subba Reddy, S/o. not known, aged 60 years, Proprietor of RamakrishnaoEnterprises, 0pp.PVR Farm Chemicals, Pattivari Street, Ongole, 37. 38. Kesava Reddy, S/o not known. Aged 58 years, Proprietor of Sri Sai Agro Agency, 0pp.Police Quarters, Giddalur, Prakasam District. Vasu, S/o not known. Aged 55 years, Proprietor of Vishnu Farms Chemicals, D.No.23-6-141, First Floor, Patnam Bazar, Guntur. Gain Subba Reddy, S/o. not known, Aged 47 years. Milk business, Maddalakatta village, Peddaraveedu Mandal, Prakasam District. 39. 40. 41. Karra Avula Reddy, S/O Venkata Reddy, Aged 36 years. Teacher, Vivekananda Residential School, near Petrol Bunk, Dornala Prakasam District. 42. Chilakam Ramalinga Reddy, S/o not known. Aged 62 years, C/0 Mallikarjuna Enterprises, Near Manorama Hotel, Y. Palem Road, Markapur, Prakasam District. Immidisetty Bulli, S/o. not known. Aged 46 years. Fertiliser Shop, Pullalacheruvu village and Mandal, Prakasam District. Yaparthi Hanumamma,, W/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. Yaparthi Veera Gangaiah,, S/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. Mudamanchu Veera Gangamma,, D/o Late Yaparthi Chenchaiah, S/o Late Yaparthi Chenchaiah, R/o Gangavaram Village, Pullalacheruvu Mandal, Prakasam District. (RR 4 to 43 are not necessary in this CMSA) (Respondent Nos. 44 to 46 are brought on record as LRs of the deceased Respondent No.3, vide I.A.No.3 of 2024, as per Court Order dated 23.10.2024) 43. 44. 45. 46. ...RESPONDENTS I.A. NO: 2 OF 2016(CMSAMP. NO: 91 OF 2016) Petition under Section 151 CPC Praying that in the circumstansces stated in the affidavit filed in support of the petition, the High Court may be pleased suspend the operation of the Judgment and decree dated 05.08.2015 made in AS No.15/2012 on the file of the VI Addl. District Judge, Markapur, Prakasam District. Counsel for the Appellant : SRI.TVJAGGI REDDY Counsel for the Respondents : NONE APPEARED The Court made the following JUDGMENT: .AfJHCOI 0527762016 IN THE HIGH COURT OF ANDHRA PRADESH-- AT AMARAVATI [3311] (Special Original Jurisdiction) Wednesday, the twelfth day of February two thousand and twenty five Present The Honourable Ms. Justice B.S. Bhanumathi Civil Miscellaneous Second Appeal No:12 of 2016 Between: ...Appellant Udumula Ramana Reddy and Gogireddy Narasa Reddy & 42 Others Counsel for the appellant: I.T.V. Jaggi Reddy ...Respondents Counsel for the respondents: None The Court made the following: 2 V. BSB, J • C.M.S.A.No.12 of 2016 JUDGMENT: This appeal under Section 75 of the Provincial Insolvency Act, 1920, by the appellant / 1®‘ respondent / petitioner-in I.P.No.17 of 2001 on the file of the Court of the Senior Civil Judge, Markapur, is preferred against the judgment and decree, dated 05.08.2015, passed in A.S.No.15 of 2012 on the file of the Court of VI Additional District Judge, Markapur, allowing the appeal setting aside the order, dated 12.07.2011, of the Senior Civil Judge, Markapur, in I.P.No.17 of 2001 adjudging the petitioner in the insolvency petition as an insolvent. During the pendency of this appeal, the 3"'^ respondent died and after his death, the legal representatives of the deceased 3'^'^ respondent were brought on record as respondents No.44 to 46, vide order, dated 23.10.2024, in l.A.No.3 of 2024. 2. Heard Sri T. V. Jaggi Reddy, learned counsel for the appellant. In spite of service of notice on respondents No.1 & 2, and respondents No.44 to 46, no appearance has been made. The other respondents are stated to be not necessary parties to this appeal. 3. The parties shall hereinafter be referred to as they are arrayed in the insolvency petition before the trial Court. 4. The facts, in brief, are as follows: 5. The petitioner is a permanent resident of Venkatareddipalli village of Pullalacheruvu Mandal, Prakasam district. He is engaged in the business of fertilizers and seeds in Yerragondapalem by borrowing debts from the creditors and investing in his business. The petitioner is separated from the joint family and residing separately and is unaware of the worldly affairs. He used to sell fertilizers and seeds on credit a. 3 BSB, J C.M.S.A.No.12 of 2016 basis without obtaining any promissory notes for the say-credit sales. The petitioner used to execute promissory notes at higher rate of interest for the amounts borrowed and renew the old promissory notes at the instance of his creditors. Most of the villagers who purchased fertilizers and seeds from his shop deceived him and failed to pay the Consequently, the petitioner sustained heavy loss in the business and he has no properties of his own. The petitioner is not in a position to discharge the debts due to the respondents since the persons who borrowed fertilizers and seeds on credit basis from him failed to discharge the debts cTue to him^ As such, he is not in a position to discharge the debts. Therefore, he filed the present petition to adjudge him as an insolvent. The e'*" respondent filed his counter and the same was adopted by respondents Nos.1, 2, 4, 5, 7 to 9, 11, 12, 14, 20, 23 and 25 by filing a joint memo. amount. b. The contesting respondents denied the material averments in the petition and contended that the petitioner constitutes a member of Hindu undivided joint family consisting of himself, his father and brothers and the joint family owns extensive properties. The petitioner is an educated person. The father of the petitioner is an old and illiterate person and unable to manage the affairs of the joint family. The petitioner who acted as manager of the joint family borrowed debts from the creditors and when the creditors approached the father of the petitioner, he promised to discharge the debts by selling some of the joint family properties. Thereafter, the father of the petitioner also resiled from the said agreement. Consequently, some of the creditors filed suits. The respondents Nos.1 and 6 have filed suits in O.S.Nos.23 of 2001 and 24 of 2001 before the Court of the Senior Civil Judge, Markapur, for c. 4 BSB, J C.M.S.A.No.12 of 2016 ■ ■■r' .--ji recovery of money. Thereafter, at the instigation of Village Administrative Officer, Annapureddy Hanuma Reddy, the petitioner filed this petition with an intention to cause loss to the creditors. The petitioner neither did any business in the fertilizers and seeds nor sustained any loss. He borrowed the amounts from the respondents for the benefit of joint family. There are vast extents of landed property held by the joint family and the present petition was filed only to avoid the debts due to the creditors. There are no grounds to allow the petition and the petition is liable to be dismissed. Before the trial Court, on behalf of the petitioner, PW1 himself was examined and exhibits P1 to P3 were marked and RW1 and RW2 were examined on behalf of the respondents. As per order, dated 07.08.2007 in A.S.No.17 of 2005, the matter was remanded to the trial Court. Then, the petitioner produced exhibits P4 to P16 and on behalf of the respondents, RWs 3 to 8 were examined and exhibits R1 to R5 and exhibits X1 and X2 were marked. 6. Exhibit P1 is the letter, dated 12.07.2004; exhibit P2 is the licence, dated 26.08.1995, granted by the Joint Director of Agriculture, Ongole; exhibit P3 is the renewal licence, dated 16.02.1997; exhibit P4 is the copy of No.3 adangal, dated 25.09.2007, issued by V.A.O., Rachakonda; exhibit P5 is the certificate, dated 24.09.2007, issued by V.R.O., Rachakonda; exhibit P6 is the certificate, dated 12.02.2008, issued by V.R.O., Rachakonda; exhibit P7 is the copy of No.3 adangal, dated 31.03.2008, issued by V.R.O., Rachakonda; exhibit P8 is the certificate, dated 12.02.2008, issued by Sarpanch, Rachakonda; exhibit P9 is C.C of plaint in O.S.No.207 of 2000 on the file of the Court of Additional Junior Civil Judge, Markapur; exhibit P10 is the CC of sale deed, dated 28.05.1968, in favour of Udumula Vengaiah; exhibit P11 is 7. 5 BSB, J C.M.S.A.No.12 of 2016 the CC of sale deed in favour of U.Vengaiah; exhibit P12 is the CC of agreement of sale deed, dated 27.07.1991; exhibit P13 is the CC of partition deed, dated 15.05.1967; exhibit PI4 is the adangal; exhibit PI 5 is the CC of judgment, O.S.No.207 of 2000 copy of 10(1) dated 20.08.2010, in on the file of the Court of the Additional Junior Civil IS the CC of decree, dated 20.08.2010, in on the file of the Court of the Additional Exhibit R1 Judge, Markapur; exhibit PI6 O.S.No.207 of 2000 Judge, Markapur. Junior Civil sale, dated IS the agreement of 1°' year 1999 of Raohakonda age, exhibit R3 is the entry at page No. 15 under in exhibit R2; exhibit R4 i serial No.710 to 715 of appeal in A.S. /11 on the file of Senior Civil Judge Court, Markapur condone petition in I.A.No.287 of 2011. dated 17.12.2009 ; exhibit R5 is the CC of delay Exhibit XI is the expert opinion, and exhibit X2 is the expert opinion, dated 05.07.2010. 8. The trial Court framed the following point Whether the petitioner can be adjudicated 9. After hearing both parties, the petitioner was adjudged Section 30 of the Act. Aggrieved by the judgment the unsuccessful i 2012 before the Court of VI Additional The lower appellate Court, 05.08.2015, allowed the 12.07.2011, l•P•No.17 of 2001. for consideration; as insolvent or not? the trial Court allowed the as insolvent directing the office to petition and comply 10. and decree passed by the trial Court respondents No.1, 2 and 6 preferred A.S.No.15 of District Judge, Markapur, 11. by judgment and decree, dated appeal and set aside the order, dated Judge, Markapur, in passed by the learned Senior Civil 6 BSB, J C.M.S.A.No.12 of 2016 -.o; The operative portion of the judgment impugned Tn this appeal reads as follows: 12. “On verification of the conduct of the petitioner, in view of Section 24(2) of the Act, the trial Court did not appreciate nor look into the conduct of the petitioner at any point of time during the trial and thereby allowed the petition. When once the petitioner is guilty of doubtful conduct pertaining to Ex.PI 3 and Ex.RI and inventing creditors/respondents, the allowing of the petition by the trial Court is in contravention of law and the grounds are warranting interference by this Court. Hence, the petition is liable to be dismissed for creating false creditors on this ground. Accordingly, these points are held in favour of respondents and against petitioner. In view of the foregoing discussion, this Court finds that the appeal is based on merits and deserves to be allowed.” Hence, this second appeal by the appellant / petitioner in the insolvency petition. 13. The appellant mainly raised the following grounds in the grounds 14. of appeal:- The judgment and decree passed by the lower appellate Court reversing the well considered judgment and decree of the trial Court is not according to law, weight of evidence and probabilities of the case; The lower appellate Court failed to appreciate that the evidence adduced on behalf of the appellant shows that he has no properties and the properties held in the name of his father are his father’s self acquired properties in which the 1) 2) 7 BSB, J C.M.S.A.No.12 of 2016 •--'appellant has no right and though the respondents filed documents in which the name of the father of the appellant is shown as owner of the property, they would not establish the right of the appellant over the property; The lower appellate Court failed to appreciate that the trial Court adjudged the matter in a right perspective; The lower appellate Court erred in coming to the conclusion that basing on the document obtained by force that the respondents established that the petitioner is having share in the ancestral properties which’ his father got partitioned under exhibit P13; The lower appellate Court erred in misinterpreting Sections 10 and 13 of the Provincial InsolvencyAct; The findings of the lower appellate Court are based on pure surmises and conjectures; The lower appellate Court had ignored and misinterpreted the law; 3) £ 4) 5) 6) 7) The learned counsel for the appellant submitted that the appellant satisfied the ingredients of Sections 10 and 24 of the Act, and that a reading of Section 24 of the Act itself, discloses that, what is required for a debtor to maintain an application under Section 10 of the Act, is to place prima fade material before the court, and it is not at all open for the creditors, to disprove the allegations made in the I.P., or for the Court to require him to prove the facts pleaded by him. 15. Per contra, the learned counsel for the contesting respondents submitted that the petitioner must plead true facts and suppression of material facts disentitle him to seek the relief. The petitioner stated that 16. 'A 8 BSB, J C.M.S.A.No.12 of 2016 in the year 1995, he had separated from the’jtnnt family by taking ‘ Rs.50,000/- as his share and started fertilizers and seeds business by borrowing amounts from the creditors and suffered huge losses. However, in the cross-examination, he admitted that his father has 20 acres of land, dug a bore-well and raised Batavia garden and that he has no documentary proof to show that he did business in fertilizers. Thus, it is submitted that the effort of the appellant was to evade payments to the contesting respondents and in the process, the appellant failed to disclose ancestral properties in which he is having a share and this amounts to suppression of material facts which is hit by Section 13 of the Act, and as such, the insolvency petition ought to have been rejected. The learned counsel for the contesting respondents submitted that the respondents No.4, 5, 7 to 34 remained ex parte before the trial Court and they are not genuine creditors. The petition is totally silent as regards the transactionsbetween these respondentsand the petitioner. 17. The appellant was examined as PW-1. The appellant specifically pleaded that he had no properties of his own and he is not in a position to discharge the liabilities shown in the schedule to the respondents 1 to 43 and denied having share in the joint family properties or any other properties in his name. This claim was resisted by the contesting respondents. 18. Exhibit PI3 is the certified copy of the partition deed, dated 15.05.1967, which goes to show that the father of the petitioner and his paternal uncle, by name, Udumula Chengaiah got partitioned their ancestral properties as mentioned in ‘A’ and ‘B’ schedule for their enjoyment and as per ‘B’ schedule properties, the father of the 19. 9 BSB, J C.M.S.A.No.12 of 2016 petitioner, by name, Ud'jfnula Vengaiah got share in the ancestral properties. In the ancestral property, the petitioner has a share in the said property. However, he pleaded that he separated from the joint family in 1995 by taking Rs.50,000/-, but he could not establish the with cogent evidence as except his oral evidence, there is no other reliable evidence to believe it. Thus, the petitioner failed to disclose the properties owned by him and non-disclosure of any other properties owned and possessed by him disentitles the petitioner to claim the relief. same On the other hand, exhibit R1 is the agreement of sale, dated 10.05.2007 reflects evidence contrary to the version of the petitioner. Under exhibit R1, the petitioner, along with his father and brother, entered into agreement of sale with the respondents for the amounts due by the petitioner. If he has no right in the property, there is no need for him to join as a party to it. 20. The Act provides for adjudication of an individual as an insolvent, either at the instance of himself or at the instance of his creditors. Section 9 stipulates the facts that are required to be pleaded by creditor in a petition to adjudge his debtor as an insolvent. Similarly, Section 10 of the Act incorporates the ingredients of an application that may be filed by a debtor, to adjudge him as insolvent. 21. The presentation of the petition is governed by the same procedure as applicable to suits or applications under the Civil Procedure Code. Once, a petition is admitted and notices are served on the respondents, the steps to be taken at the hearing are stipulated under Section 24 of the Act. Section 24 of the Act reads as under:- 22. 10 BSB, J C.M.S.A.No.12 of 2016 “Section 24: Procedure at hearing: -11) on the day fixed for the hearing of the petition, or on any subsequent day to which the hearing may be adjourned, the Court shall require proof of the following matters, namely:- (a) that the creditor or the debtor, as the case may be, is entitled to present the petition: Provided that, where the debtor is the petitioner, he shall, for the purpose of proving his inability to pay his debts, be required to furnish only such proof as to satisfy the Court that there are prima facie grounds for believing the same and the Court, if and when so satisfied, shall not be bound to hear any further evidence thereon; (b) that the debtor, if he does not appear on a petition presented by a creditor, has been served with notice of the order admitting the petition; and that the debtor has committed the act of insolvency alleged against him; (c) (2) The Court shall also examine the debtor, if he is present, as to his conduct, dealings and property in the presence of such creditors as appear at the hearing, and the creditors shall have the right to question the debtor thereon. The Court shall, if sufficient cause is shown, grant time to the debtor or to any creditor to produce any evidence which appears to it to be necessary for the proper disposal of the petition. (3) C 11 BSBJ C.M,S.A.No.l2 of 2016 A memorandum of the substance of the examination of the debtor and of any other oral evidence given shall be made by the Judge, and shall form part of the record of the case.” (4) A reading of the provision discloses that where a debtor is figured as a petitioner, it would be sufficient if he is able to satisfy the Court that, there are prima facie grounds for believing his version. Once the Court is satisfied that such prima facie ground(s) exist(s), the debtor cannot be required to adduce further evidence to prove his case 23. 24. The nature of enquiry to be undertaken under Section 24 of the Act, with particular reference to the proviso, was dealt with by a Full Bench of the Patna High Court in Haridayal Sah Vs. Motilal Sarawagi\ As in the present case, there also, it was pleaded that once an application is found to be in accordance with Section 10 of the Act, the Court cannot embark upon further enquiry as to the bona fides of the debtor in filing the application. In this context, it was held as under:- “ The meaning of the proviso is merely that the Court is enabled to deal summarily with the opposition by the creditor, that is to say the Court must listen to such evidence as the debtor may care to adduce and the debtor may be cross-examined, and if the judge is satisfied after such hearing, he may refuse to hear any further evidence and may grant the adjudication, but this is very far from saying that the judge, if he shall be inclined to hear any evidence presented by the creditor, is not entitled to hear such evidence. He may, if he likes, hear the evidence and AIR 19Cp Pat 522 12 BSB, J C.M.S.A.No.12 of 2016 may tiear as much evidence as he may think fit in the circumstances which will vary of course according to the difficulty of the case”. 25. This was followed by a Division Bench of that Court in Satdeo Narain and others Vs. Union of India^. The expression “prima facie grounds” occurring in the proviso, was interpreted as under:- “The expression “prima facie grounds” would indicate that if on the records of the proceedings it appears to the Court that there are properties in possession of the debtor, which would disprove his claim that he is unable to pay his debt, in that case alone, his application shall be dismissed. If, however, there is no such clear evidence on the record, the debtor must be adjudged an insolvent in terms of Section 24(1)(a)”. 26. A Division Bench of this Court in Dasari Srihari Rao Vs. Talluri Harinadha Babu^, reviewed the case law on the subject, and held that the debtor, who files an application to adjudge him as insolvent is under an obligation to satisfy the Court, by furnishing necessary information and any failure in that regard would entail in rejection of the application under Section 25(2) of the Act. 27. From a perusal of the provision and reading of the judgments referred to above, it is evident that, at the hearing of the application under Section 24 of the Act, the Court is under an obligation to consider the versions put forward by the debtor on one hand, and his creditors on the other. Court has to verify as to whether there exists a prima facie 'AIR 1964 Pat 521 h2002) 3 A.L.D 456 (DB) 13 BSB, J C.M.S.A.No.12 of 2016 ground for belteving the version of the debtor. The Section does hbi confine the consideration of this aspect to the plea put forward evidence adduced by the debtor alone. If that were to be the case, the satisfaction as to the existence of such prima facie grounds could not have been relegated to a stage at which the application is presented under Section 10 or admitted under Section 18 of the Act by the Court. The fact that a hearing is required to take place under Section 24, after service of notice on the creditors, implies that the facts pleaded and evidence adduced by the creditors are also required to be taken into account, before the Court records its satisfaction. A debtor can be required only to make out a case, as to existence of ‘prima facie grounds’. The proviso to Section 24(1) of the Act does not prohibit the consideration of the evidence adduced on behalf of the creditors, but such consideration is limited to the context of recording a finding as to the existence of a prima facie case in favour of the debtor, and not beyond that. or 28. 29. In the present case, it is evident that except his own self-serving statement as PW-1, the appellant could not substantiate his version. The trial Court is under an obligation to take further steps under the Act to adjudge the appellant as insolvent in view of the denial by the respondents as to the incapacity of the appellant to discharge the debts. 30. Declaration of a debtor as an insolvent has its own adverse effect on the creditors. A measure, which used to be taken as a last resort, resulting in stigmatization of the person declared as insolvent unfortunately turning out to be a first resort of money borrowed through one means or the other. It is not as if a person is entitled to be declared as insolvent just for the asking of it. , IS or a ruse to evade payment 14 BSB, J C.,Vl.S.A.No.l2 of 2016 31. The requirement under Section 10 of the Act that the debtor is unable to pay his debts has to be proved, at least prima facie, to the satisfaction of the Court, and this, in turn, is different from mere assertion, by the debtor himself. The appellant did not deny the plea of the contesting respondents that he holds some other items of property. He did not place any material before the trial Court to show that he indebted towards other respondents. was 32. Under these circumstances, as rightly held by the lower appellate Court, in view of the doubtful conduct of the petitioner in inventing the creditors and in view of exhibit R1, agreement of sale, dated 10.05.2007, this Court is of the view that the trial Court had erroneously allowed the petition and it cannot be said that the appellant satisfied the Court that there exists a prima facie ground to accept his plea. Therefore, this Court does not find any basis to interfere with the well- reasoned finding of the lower appellate Court. 33. Accordingly, the Civil Miscellaneous Second Appeal is dismissed. There shall be no order as to costs. Pending miscellaneous petitions, if any, shall stand closed. SDI- E.KAMESWARA RAO JOINT REGISTRAR //TRUE COPY// OFFICER SE To, 1. The Senior Civil Judge, Markapur, Prakasam District 2. The VI Addl.District Judge, Markapur, Prakasam District. 3. OneCCto SRI. T V JAGGI REDDY Advocate [OPUC] The Section Officer, VR Section, High Court of Andhra Pradesh at Amaravathi 5. THREE CD COPIES 4. SKM TAC HIGH COURT . V - ■ ■ DATED:12/02/2025 JUDGMENT+ DECREE CMSA.No.12 of 2016 DISMISSING THE CIVIL MISCELLANEOUS SECOND APPEAL WITHOUT COSTS