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Present: Mr. Justice Middleton and Mr. Justice Wood Benton.
In re the Insolvency of SilvaD. C-, Kalutara, 136.
What is frivolous and vexatious defence?—Within six months—What isto be deemed the date of the offence?—Ordinance No. 7 of 1853,s. 151 (7).
A defence which is false to the knowledge of the person puttingforward the same is a vexatious one within the meaning of section151 (7) of the Insolvency Ordinance.
The offence created by section 151(7) of the Insolvency Ordi-
nance is not the mere filing of a vaxatious and frivolous defence,but the putting of a creditor to unnecessary expense thereby.The point of time at which it is judicially determined that suchexpense has been caused to a creditor is that at which it should beheld the offence has been committed.
A. St. V. Jayewurdene, for the appellant (insolvent).—Theinsolvent filed his declaration on December 9, 1909. Judgmentwas entered against the insolvent in the Colombo District Courtcase (28,480) on October 6, 1909. There is no evidence to showthat the insolvent filed answer in D; C., Colombo, 28,480, within sixmonths next preceding the filing of the petition for sequestration.The mere fact that the defence in D. C., Colombo, 28,480, was afalse one is not enough to show that the defence was vexatious.See In re Pownall,1 Ex parte Daniel Turton Johnson,2 De Silvav. Mammadu.2
Cur. adv. vvlt.
1 Fonblan<p*'s Bankruptcy Cases 221.* 4 De Gex <fc Smale's Reports 25.
s (1897) 3 N. L. R. 3
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July 18, 1910. Middleton J.—
The insolvent in this case has been refused a certificate altogetheron the ground that he has been guilty of an offence under sub-section(7) of section 151 of the Insolvent Estates Ordinance. For him itis contended on appeal (1) that there is no evidence on the recordto show that the alleged vexatious defence occurred within sixmonths next preceding the filing of his petition; (2) that it was notshown that the defence set up was in fact vexatious or frivolous.
The reason given, i.e., “ that the creditor was a Chetty lady,” bythe District Judge for accentuating . . . the gravity of thealleged offence was also criticised as unfounded. It is not, assuggested by counsel, a reason given by the Judge for holding thatthe offence had been committed, but simply a – circumstance ofsupposed aggravation, which I shall allude to no further, andwhich may or may not be true, but which, from the caption of tb.ejudgment in question, there is some reason to believe is true.
Counsel for the appellant cited re Pownall,' Ex parte DanielTurton Johnson,1 and referred to section 197 of the CriminalProcedure Code; De Silva v. Mammadu.3
It seems more convenient to deal with the second point first. Ithink the present case is to be distinguished from Ex parte DanielTurton Johnson. There the alleged vexatious plea were offeredwith the assent of the bulk of the insolvent's creditors, who weredefending the action in the debtor’s name for the supposed benefitof the creditors. In Ex parte Pownall the pleas may have beenuntrue, but it does not appear that the debtor supported them byhis evidence.
Here, from the judgment of the Additional District Judge ofColombo, it is clear that the plea raising the defence was supportedby the debtor’s evidence, which the Judge held to be false. It isclear then to me that the debtor must have put forward a defencewhich was false to his knowledge, and in my opinion such a defencewould be clearly vexatious.
We then come to the question whether the insolvent did, withinsix months of the filing of his plaint, put any of his creditors tounnecessary expense by a vexatious defence. The act forming theoffence is the putting to an unnecessary expense by a vexatiousdefence, and it must occur within six months of the filing of thepetition. What, then, is the date of the offence? In In re Pownallthe Commissioners of Bankruptcy seem to have supposed that theoffence took place at the time of filing on the record the eightspecial pleas. The mere filing of pleas on the record here wouldnot put the the opposing party to any unnecessary expense. Theraising of the defence which they involved would cause the expense, 1
1 Fonblanque’s Bankruptcy Cases 221.* 4 De Gex Sni It's Reports 25.
(1897) 3 N. L. R. 3.
In re theInsolvencyof Silva
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July is, 1910 but it would nob be determined whether the expense was unnecessaryMiddleton or who was to bear it until the Judge bound to determine the. J- question gave his decision.
In re the In my opinion, therefore, the offence in this case under sub-sectionInsolvency (7) 0f section 151 of our Insolvency Ordinance must be deemed tooccur upon the date of the judgment deciding the fsvcts upon whichthe offence is based. In my opinion, therefore, the insolvent wasguilty of the offence in question, and the District Judge was rightin refusing his certificate.
I think the appeal should he dismissed with costs.
Wood Bentox J.—
I think that the evidence in this case is amply sufficient to supportthe finding of the learned District Judge, that the insolvent-appellanthad set up a vexatious and frivolous defence to Mrs. Annandappa’sclaim, and the only point that has given me any difficulty is as towhether his case can be brought within the provisions of section 151,sub-section (7), of Ordinance No. 7 of 1853. On the whole. I agree withmy brother Middleton that the cases of In re Powrtall 1 and Ex parteDaniel Turton Johnson 2 are distinguishable on the grounds statedby him. I would point out that the offence created by section 151.sub-section (7), of Ordinance No. 7 of 1853 is not the mere filing of avexatious and frivolous defence, but the putting of a creditor tounnecessary expense thereby. It seems to me that the poiut- of timeat which it is judicially determined that such expense has beencaused to a creditor is that at which it should be held that theoffence has been committed. I agree that the appeal should hedismissed with costs.
1 Fonhlanque's Bankruptcy Cases 221.
* 4 De Ofix <t‘ SmaWsBeports 25.
In re the Insolvency of SILVA