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Present: Bertram C. J. and Garvin A.J.
SEDRIS v. RAMANATHAN.
103—D. C. Gfdtte, 466.
Insolvency — Power of Court to annul adjudication — Application byopposing creditor for an adjournment with a mow to making anapplication for the annulment of adjudication
The power of the Court to annul an adjudication in bankruptcyis not limited to cases for which special provision is made in theInsolvency Ordinance. The Court has a general power to annulan adjudication in appropriate circumstances.
PPELLANT was, on an application made by him under section20 of Ordinance No. 7 of 1853 on December 21, 1220, to
have his estate adjudged insolvent and placed under sequestration,adjudged insolvent under the provisions of section 26 of the saidOrdinance.
Two sittings were appointed under section 30 and estate adjudgedinsolvent, and all other incidental steps having been gone through,and his last examination having been proceeded with, the secondsitting was declared closed, and a public sitting was appointed forthe allowance of his certificate, under the provisions of section 124of the Ordinance, for July 12,1921.
On July 8, 1921, the assignee gave notice of his intention tooppose the granting of the certificate on four grounds.
On July 12, 1921, on an oral application made by counsel foropposing creditor asking for an adjournment of the certificatemeeting to enable him to prove that the assets are not enough topay five shillings in the pound, and to take the necessary steps tohave the adjudication of insolvency annulled, the District Judge,over-ruling the objections raised by counsel for appellant to anadjournment, adjourned the meeting.
The insolvent appealed.
Soertsz, for the appellant—An order of adjudication once pub-lished in the Gazette is a judgment inrem, and cannot be annulledthereafter (see sections 30,41, and 143).
The whole of our insolvency laws is to be found within the fourcomers of the Ordinance, and in the Ordinance there is no provisionfor annulment of the adjudication in the circumstances of this case.
The Ordinance provides for the Court satisfying itself of thesufficiency of the estate before the adjudication, and once the Courthas satisfied itself and adjudged the estate insolvent, the Courtcannot reconsider its decision. In this case the mere fact that theestate later realized less than five shillings in the pound cannot
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prejudice the appellant. That may be due to various censes, andthe estate may well have been worth five shillings in the pound atthe date of the petition.
Keuneman, for respondent.—The Court has a general power toannul an adjudication. Ex parte Spicer;1 Ex parte Charles Louis.2The material before the Court was not sufficient for the Court toadjudicate upon the sufficiency of the estate, and it is now open tothe Court to annul the adjudication. 5 Bal. Notes of Cases 1.
December 2, 1921. Bbbtbam C.J.—
This is an appeal by an insolvent against the order of the DistrictJudge of Galle granting an adjournment with a view to enablingan opposing creditor to make an application for the annulment ofthe adjudication. The learned Judge has seen fit to grant anadjournment. There is no substantial justice in the applicationwhioh the opposing creditor desires to make. The petition waspresented by the insolvent himself at a time when he was under-going imprisonment as a civil debtor. He presented the petitiona day after the commencement of his imprisonment, and the ground.of his petition was that he would not be able to satisfy the Courtthat his assets would realize five shillings in the poundL Had hewaited for three weeks, he would, under the final sentence of section20 of the Insolvents Estate Ordinance, No. 7 of 1863, have beenable to apply for an adjudication without satisfying the Court as tothe amount of. his assets. The sole object of this application is tosubject the insolvent to three weeks’ imprisonment before he canre-institute proceedings. One, therefore, has no moral sympathywith the creditor now opposing the grant of a certificate. Neverthe-less, certain interesting points have been raised, and it is necessaryto give a decision upon these points as points of law.
Mr. Soertsz, who appears for the appellant, takes the objectionthat it was not competent to the learned judge in any case toannul the adjudication. He argues that the grounds upon whichan adjudication may be annulled are specified in the Ordinance,that there is no general power in the Court to annul an adjudicationwhere it is thought that adjudication should not be made, and that,moreover, the order of adjudication, being in effect a judgmentin rem, is under section 41 of the Evidence Act conclusive. ' I donot agree with these contentions. The power of the Court to aimulan adjudication is not limited to cases for which special provisionhas been made. That is the principle of the English law. It willbe found laid down in the case of ex parte Ashworth2 where Sir JamesBacon C.J. says : “ I do not entertain the lightest doubt that theCourt of Bankruptcy has power at any time, for good reasons, to annulany bankruptcy in which an adjudication may have, been made.”
1 Jtf. D. dt De CPs. Rep. 888.' 1M. D. do De 0*8. Rep. 366.
M1874) 18 Eg. Oases 706.
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Mr. Keuneman has sited to os interesting examples of the applica-tion of that prinoiple from ex parte Spicer,1 where a flat was setaside on the ground that it was concerted merely to serve thepurposes of the bankrupt, and not with any view benefiting thecreditors; and ex parte Charles Louis* where again the Courtconsidered the question whether the fiat was sued out bona fide bythe petitioning creditor for the benefit of himself and the othercreditors of the bankrupt.
An interesting discussion of the history of the subject in Englishlaw may be seen in the judgment, of Vaughan Williams L.J. inex parte Painter? These principles have been adopted into ourown legal system by the judgment of Cayley C. J. In the Matter ofthe Insolvency of Cl B. Rowlands? and I think that in view of thedate of that case, we must take it as settled law and part of ourlegal system that a District Court has a general power to annul anadjudication in bankruptcy in appropriate circumstances.
Mr. Keuneman also takes another legal point. In the applicationof his client for an adjournment, the only ground stated was that atthe date of the petition the assets of the insolvent were not anythinglike five shillings in the pound. He now wishes to show that theproceedings are irregular, on the ground that no evidence, other thanan affidavit of the insolvent, was tendered to prove the amount ofhis assets, and he relies upon the case of Majeed v. Chetty? I donot think in any oase that, even if an adjournment were granted,the appellant ought to be allowed to raise this point. He asked foran adjournment on one speoific ground, and if the adjournmentwere allowed, I think he should be tied down to that ground. ButI think that the decision to which he refers is liable to misapprehen-sion. It is based—the judgment of the Chief Justice at any rate—upon an old English decision, an anonymous case inFonblangue, p. 6.In that case the Commissioner said that he must be satisfied of thefacts contained in the petition by other evidence than the petitioner’sown affidavit. The onlyaffidavit in that case appears to have beenin the form required by section 89 of the Bankrupt Law Consolida-tion Act, 1849. We have referred to that Act and to the prescribedform which is given in ArchboWs Bankruptcy Practice, Book IIonpage 13. The form of petition there prescribed merely states thatthe petitioner verily believes that he can make it appear to thesatisfaction of the Court that his available assets were sufficient toproduce the sum of one hundred and fifty pounds at the least. Itwill be noted that the requirement is slightly different from that ofour own law, which requires it to be shown that the estate wouldrealize five shillings in the pound. But that was in consequence ofan amendment of the law passed shortly after, the enactment
'2M.D.&De CPs. Rep. 888.* (1895) 1 Q. B. 86.
* 1 M. D. '& De CPs. Rep. 866>4 (1880) 4 8. O. C. 2.
8 (2016) 6 Bat. Notes of Oases 1.
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of the Aet of 1860. The form of affidavit required for theverification, of the allegations in the petition is simply in thesewords: “ The petitioner named in the petition hereunto annexedmaketh oath and saith that the several allegations in the saidpetition are true.*’ Now, in the present case, there is somethingmore than this bare affidavit. There is a schedule of assets andliabilities. I think it is clear that in Majeed v. Chelty 1 what theCourt must have meant was not that in no case would the petitioner’saffidavit be sufficient evidence of the facts alleged, but that theaffidavit in the particular case was not sufficient.
There is no reason why the necessary evidence should not begiven by affidavit, or why a Court should not act upon the affidavitif the affidavit is sufficient.
This being the law we now come to the facts of the particularcase.- Is this a case in which, when considering the application for•the certificate, the Court should suspend proceedings"in order toallow an opposing creditor to make application for the annulmentof the adjudication ? It is no doubt the fact that, if it appearedthat there was a misstatement of the assets in the petition, andthat this misstatement was made recklessly or frauduently, the.Court would have power to annul an adjudication. But nothing ofbids sort is suggested in the present case. No primd facie case ismade out for suggesting that there is any ground for the extra-ordinary proceedings asked for. On the contrary, we are told, andthe statement is not contradicted, that one of the principal assetsin the case—certain jewels which were pledged, and which werevalued at Rs. 600—had been pawned to a Chetty, and that Rs. 235had actually been advanced upon them. This is very good •primdfade Evidence that they were worth the amount, and the reasonwhy the assets have in fact not realized five shillings in the poundappears to be that for some accident the jewels have not realizedthe value of the amount advanced upon them.
There is another reason, too, why the Judge ought not to havegranted an-adjournment in this case (though the reason ! havegiven is quite sufficient), and that is, that although this point wasin the mind of the creditor so early as January 24, and althoughhe had every opportunity of making formal application, and ifnecessary of obtaining information on the subject, he never tookany aotion until the Judge was considering the question of thegrant of the certificate, and it appears that, even at that time, hehad not the full information which he required for the purpose ofthe application. Delay in such cases is a point that will be takeninto account, as is shown by the case of ex parte Movie? though inthat case the application was made long after the issue of thecertificate.
111928) 6 Bal. Notes of Oases I.
914 Vesey Jr. 602.
For these reasons I am of opinion that this is not a case in whichthe learned Judge should have granted ah adjournment for thespeoial purpose specified in the application, and I think that thecase should go back to him for the purpose of determining thequestion of the grant of a certificate.
The appeal, in my opinion, should be allowed, with costs.
Gabvut A.J.—I agree.
SEDRIS v. RAMANATHAN