Gany and Hay.
-1944Present. Howard C. J. and de Kretser J.GANY, Appellant, and HAY, Respondent.
23—D. G., Kandy, 170.
Insolvency—Certificateofconformity—Application to reviseorder allowing-
certificate—Delayonpart of creditor—Withholding offacts—Insolvency
Ordinance (Cap. 82) ss. 183 arid 137.
An applicationby acreditor tinder section 133 of the Insolvency
Ordinanceto revisean orderallowingacertificate toan insolvent may
be refused where the application has been, unduly delayed and where'the applicant has – been guilty of a conspiracy of silence regarding factswithin his knowledge.
Semblewhere an insolventopposesaclaim madeagainst him, the*-
certificate granted to him would be of no avail to him upon proof of the-facts stated in section 127.
DE KEETSEB J.—Gany and Hay.
PPEAL from an order of the District Judge of Kandy.
H. V. Perera, K.C. (with him A. Seyed Ahamed), for the proved creditor,appellant.
No appearance for the insolvent, respondent.
Cur. adv. vult.
October 25, 1944. de Kretser J.—
After the insolvent had been granted a certificate of the third classon May 15, 1942, and after his assets had been distributed, the appellant,who was one of the earliest creditors to prove a claim and had activelyinterested himself in attempts at composition of the debts, moved the■Court under section 133 alleging that the insolvent, had not disclosedproperty worth Us. 25,000 which he had inherited from his father. Onthe insolvent filing a counter-affidavit disclosing the fact that he hadtransferred this property to his sister in January, 1939, i.e., 16 monthsbefore the adjudication, the petitioner filed an amended petitionpraying for action under either section 127 or section 133, alleging thata contemporaneous agreement existed on which the insolvent had certainrights.
Even now his affidavit was not at all what it should have been and manyimportant facts were not disclosed or accounted for. He actuallystated that because the insolvent induced him to refrain from opposingthe certificate by promising to abide by the “ deed of composition ”(which provided for the appellant being paid -in FULL) he was therefore“ not in a position to bring to the notice of the Court the facts referred toin paragraphs 9 and 10 ”. He was thus admittedly a party to a fraudpractised by the insolvent anddeliberatelyrefrainedfromavailing
■himself of the remedy then open. But he made no move even after thecomposition had been refused and a fresh certificate meeting ordered.and he delayed a year therefrom. The affidavit is silent as to the amountdue at its date and the reason for the delay in taking action. None ofthe many creditors took steps to be associated with the move made by theappellant. If the insolvent hadassets theyvested in theassignee
who could receive them for the benefit of all the creditors. The appellantby proving his claim had elected to take relief in the insolvency case.
What then could be gained bythis move?He couldexertpressure
on the insolvent and so get unduepreference orhe mightcommit him to
The learned Judge in the Court below stated in his order that theapplication under section 127 was not pressed, but the petition of appeal•says it was not abandoned, and Counsel has devoted most of his attentionto this application. The Judge refused the application under section133 on the ground that it was contrary to public policy to allow theappellant, who had known all the facts and refrained from disclosingthem for his own benefit, to re-open proceedings.
It is necessary to consider both sections 127 and 133. No case decided•under section 127 was found by the Judge or has been brought to ournotice nor have I been able to discover one. As a matter of first impres-sion it strikes me that no provision is made in section 127 to move the
DE k kRTRBR J.—Gang and Hay.
Court to have the certificate declared void. An order allowing a certi-ficate is final and conclusive until revised under section 133. Provisionis made in sections 129 and 133 to have the certificate annulled andcancelled. AH that section 127 declares is that the certificate is in factvoid, if the facts mentioned therein are proved. This would mean thaton the insolvent opposing his certificate to any claim made against himthese facts may be proved and the certificate would be of no avail to theinsolvent. Section 127 is drawn from 12 and 13 Viet. C 106 s. 201.This was similar to 6 Geo. 4 C. 16 s. 130, and exactly like 5 and 6 Viet. C.122 s. 38. Under the statute of Geo. 4, it was held that in an actionagainst .the bankrupt, where he pleads his certificate, there was no needto specially plead the facts but it was sufficient to join issue on the pleaand give evidence, for by the statute his certificate, in such a case,was a nullity. (Hughes v. Morley1.) The words in that statute were“ no bankrupt shall derive any benefit from his certificate ”. It seemsto me that the application to Court was misconceived.
Besides the concealment must be after an act of insolvency or incontemplation of insolvency or with intent to defeat the object of theOrdinance. Under the statute 5 and 6 Viet. C. 122 s. 38 it was heldthat concealment of property rendered a*, certificate void, notwithstandingthe bankrupt made a full disclosure befnfe his last examination. (Court-ivron and Another v. Meunier 2). In that case the insolvent concealedboxes containing clothes, jewellery, &c. Pollock C. B. held that section 38had reference to section 32 (our section 147) and must be read with thewords “ remove or embezzel ”. Alderson B., Parke B. and Platt B. wereof the same opinion and Parke B. remarked “ It is unnecessary to decidewhether the word ‘ concealment ’ would be satisfied by the bankruptnot disclosing a full account of his estate and effects ”.“ Concealment
seems to me to refer to tangible assets. Section 127 seems to be concernedwith an offence committed before the adjudication. Section 151(5)
which refers to property of any kind and to a subsequent period uses thewords “ cancel or make away with ”. “ Make away with ” might beapplied to intangible assets. Section 151 (5) does not render a certificatevoid or prohibit its issue. It seems, therefore, to contemplate somethingless serious than section 127.
Now, there is no proof that there was any concealment of propertyand the deeds referred to seem to have been executed by a Notary Publicin pursuance.of some agreement, between the heirs of the late Dr. G. P.Hay and a creditor or creditors of his. There is nothing to indicate,and it is pot alleged, that the agreement was fraudulent or made incontemplation of insolvency or to defeat the object of the Ordinance.What is alleged is that the insolvent did not disclose to the Court hisrights under the contemporaneous deed, but even if he did disclose them,the question would still remain whether he had concealed his rightsin the way indicated in the section.
Besides there is no clear indication as to what his rights were. Thedeed itself was not annexed to the petition, and the alleged summaryof its relevant provisions is quite unsatisfactory. The point would be
1 1 B. «*> A. 22.
17—J. 17. A 93349 (11/49)
* 6 Exch. 74.
DE 3LRRETSEB. J.—Gany and Hay.
whether the insolvent had assets at the time of his adjudication and up tothe date of his certificate. The summary states that the insolvent’ssister was empowered to sell all the 5 lands transferred to her and to payRs. 35,000. Meanwhile, presumably, the insolvent was to receiveJ of the rents “ less various deductions ”. But there is no evidencethere were any rents or what the deductions were or whether any balanceremained. After the sale the insolvent was to have a life-interest in a■J- share of the properties remaining unsold and a life-interest in anyinvestment made of a third of the balance remaining after payment ofthe debt specified. It would seem, therefore, that the insolvent merelyhad some contingent interests, which, if they are realizable, might ormight not be available to the assignee.c
In my opinion section 127 has no application to the present proceedings.Under it the Court does not cancel or recall the certificate, as it must doif it declares it to be void. The Supreme Court may do so under section129, and under section 133 the Insolvency Court may re-open proceedings.The scheme of the Ordinance seems to provide for three safeguards,viz. : firstly, an application to the Insolvency Court to revise; secondly,an application to the Supreme Court; and thirdly, when neither is madethe certificate might be nullified. –
The provisions of the Ordinance render it extremely perilous to theinsolvent to be other than frank in his dealings with his creditors, and theCourt. Equally, the Court which is acting in the interests of the creditors,expects a high standard of conduct from them.
Turning to section 133, it says that the order of the District Court shallbe final and conclusive and shall not be revised ordinarily. Finalityis of the utmostimportance once when an order has beenmaderegarding
the certificate.The Court is empowered torevise itsorderbut only
if it has good and sufficient cause to believe that its order has been obtainedon false evidence or by the improper suppression of evidence, or hasotherwise beenfraudulently obtained. Theapplicationmaybe made
by a creditor. It is the duty of the applicant to establish his right to havethe proceedings re-opened by adducing good and sufficient cause. In myopinion the Court is not confined to considering only the suppression ofevidence improperly made, but also whether in the circumstances itshould re-openthe proceedings. In thecase of Mouleex parte1
the Court refused to interfere to grant relief where there had beendelay and where the petitioner was aware of all the circumstances.That case related to an application to annul an adjudication.This Court followed that principle in Sedris v. Ramanathan2 and refusedrelief where the petitioner had not been diligent in procuringinformation.
As a matter of fact, the examination of the insolvent was not satis-factorily done. The creditors abstained from taking part. But evenso the insolvent might have been questioned closely on the matters madeimportant by the Ordinance. The Court was not misled by suchevidence as it had in the insolvent’s affidavit and there is nothing to
show any evidence was improperly suppressed.
1 14 Vesey's Reports, p. 602.
2 23 N. L. R. 315.
W1J IfiYEWABDENE J.—Ramalingam and Nair.
I think the Court was within its rights in refusing an application by acreditor, who had not only delayed one year, but had. also been guilty ofconspiratorial silence regarding matters within his knowledge.
The appeal is dismissed.
Howard C.J.—I agree.
GANY, Appellant, and HAY, Respondent