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Issues Involved:
1. Whether the debt on the basis of which the petition for adjudication is presented and an adjudication order is sought should be a subsisting debt at the date of the hearing of the petition or is it enough that it subsisted at the date of the presentation of the petition. Issue-Wise Detailed Analysis: 1. Whether the debt on the basis of which the petition for adjudication is presented and an adjudication order is sought should be a subsisting debt at the date of the hearing of the petition or is it enough that it subsisted at the date of the presentation of the petition: The petitioning-creditor alleged that the debtors borrowed Rs. 5,000 on February 22, 1962, with interest, and executed a Khata writing, making the amount payable after three months or earlier if demanded. Despite repeated demands, the debtors did not pay the total amount of Rs. 5,433.33, leading to the filing of the petition. The petitioning-creditor claimed that the debtors committed acts of insolvency, including transferring their business to others, absconding from their usual place of business, and secluding themselves to avoid creditors. The debtors contested the allegations and argued that the debt was barred by the law of limitation at the date of the hearing, thus no adjudication order could be passed. The petitioning-creditor conceded that the debt had become time-barred by the date of the hearing and that no acknowledgment or part payment had been made to save the limitation period. However, the petitioning-creditor contended that it was sufficient if the debt subsisted at the date of the petition's presentation. An issue was raised: "Whether the debt on the basis of which the petition for adjudication is presented and an adjudication order is sought should be a subsisting debt at the date of the hearing of the petition or is it enough that it subsisted at the date of the presentation of the petition?" The petitioning-creditor relied on Section 12 of the Presidency-towns Insolvency Act, 1909, stating that the conditions for presenting an insolvency petition were fulfilled at the date of the petition's presentation. The petitioning-creditor cited the Madras High Court decision in Venkatarama Aiyar v. Buran Sheriff and a passage from Mulla's Insolvency, asserting that the debt need not subsist at the hearing. Conversely, the debtors relied on Section 13 of the Presidency-towns Insolvency Act, 1909, which requires proof of the petitioning creditor's debt at the hearing. The debtors argued that the debt must be subsisting and payable at the date of the hearing and until the adjudication order is passed. They cited the Calcutta High Court case Ahmad Mahomed v. Praphulla Nath, which held that the debt must exist at the time of the petition's presentation, hearing, and adjudication order. The court found substance in the debtors' contention, noting that the principle from Byramji Talati v. Official Assignee, Bombay, applied only after an adjudication order was made. The Madras High Court decision under the Provincial Insolvency Act was distinguished due to differences in statutory language. The court held that under Section 13(2) of the Presidency-towns Insolvency Act, the debt must subsist at the hearing and until the adjudication order is passed. The court rejected the petitioning-creditor's argument of hardship, stating that creditors should keep the debt alive through acknowledgment, part payment, or filing a suit within the limitation period. The court dismissed the petition, with costs awarded to the debtors, and directed the Official Assignee to return properties and refund amounts as specified. Conclusion: The court concluded that for an adjudication order to be passed, the debt must be subsisting not only at the date of the presentation of the petition but also at the date of the hearing and until the adjudication order is made. The petition was dismissed with costs, and the Official Assignee was directed to return properties and refund amounts as specified.
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