012-NLR-NLR-V-33-MUTTU-MAHAMMADU-v.-RAMASAMY-CHETTY.pdf
LYALL GRANT 7.—Muttu Mohammadu 9. Ramasamy Chetty.
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1931
Present: Lyall Grant J. and Maartensz A.J.
MUTTU MOHAMMADU v. RAMASAMY CHETTY.
35—D. C. Colombo, 3,795.
Insolvency—Opposition to certificate—Onus of proof—Duty of Court.
Id insolvency proceedings the onus does not lie entirely on the opposingcreditor to prove that the insolvent has committed an offence.
Where there are suspicious features in the case, it is the duty of theCourt to make some inquiry before discharging the insolvent.
^^PPEAL from an order of the District Judge of Colombo.
R. L. Pereira, K.C. (with him A. H. M. Ismail), for appellant.
Hayley, K.C. (with him Nadarajak), for respondent.
July 7, 1931. Lyall Grant J.—
This is an appeal by an opposing creditor against the grant of a certific-ate of conformity of the second class to a Muslim trader.
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LYALL GRANT J.—Multn. Mohammadu v. Hamasamy Clietty.
The insolvent was a butcher who had various stalls in different marketsin Colombo, where he sold beef and mutton. He filed his declaration ofinsolvency on November 21, 1927.
An assignee was appointed who reported that he examined the insolventon June 5, 1928, and the insolvent’s statement.
His balance sheet showed liabilities amounting to Rs. 180,108.10 andassets amounting to Rs. 46,161.67. The principal debtor was T. 0. S.Rodrigo in respect of several cheques for Rs. 22,311.40, a debt which hasproved irrecoverable.
The insolvent stated to the assignee that Rodrigo had left the Island.He said that the sum had been advanced to him to buy goats at Adenfor the insolvent.
There is nothing to show that any examination was made by theassignee of the insolvent's books or vouchers or that he took any stepsto check the truth of the insolvent’s statements.
One statement made by the insolvent to the assignee was that, as he• could not pay the rent of the various stalls to the Municipality, his licencewas cancelled.
That statement has been shown in these proceedings to be untrue.
On November 17, 1927, a few days before his declaration of insolvency,the insolvent requested th4e Municipality to transfer his licence temporarilyto one Poona Vana Nadar as he was going to India to recruit his health.He also requested the Municipality to transfer to him his three months'security deposited, the value of which has been given by the insolventas Rs. 945.
The Municipality agreed to transfer to P. V. Nadar for six monthsand informed the insolvent that the security would continue to be heldin his favour.
On June 20, 1928, the insolvent went again to the Municipality sayingthat his ill-health continued and asked it to extend the transfer in the samename for another six months. This request was granted.
The insolvent did not in fact go to India at the time. It is clear thatthe insolvent did not disclose to the Municipality the fact that he wasinsolvent nor did he disclose to the assignee the fact that he had a depositlodged with the Municipality. The deposit does not appear in his listof assets.
It is alleged by the opposing creditor that the insolvent (1) undulypreferred P. V. Nadar, (2) concealed and put away from his creditorsall his property and assets by handing over his business to his variousnominees, (3) accounted for his insolvency by fictitious loans and expenses,and (4) is still carrying on a large and lucrative business in the name ofhis nominees.
In support of these allegations evidence was led. S. MohamaduCassim says that at the time of the insolvency, the insolvent, in additionto the stalls entered in his name, owned a number of other stalls in'•Colombo and elsewhere in the name of nominees., and he himself held a.number of stalls in his own name but in fact these stalls belonged to the
LYALL GRANT J.—Afultu Mohammadu o. Ramasamy Chctty.
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insolvent and Cassim was only his paid servant. M. Sultan said that in1928 the insolvent was carrying on business though the licence was inthe name of Poona Vana Nadar.
Reference was made to a car belonging to the insolvent. Accordingto him the car was bought on the hire purchase system and was seizedby the agents for non-payment of instalments and was then bought byPoona Vana Nadar, who paid the balance instalments due.
Sultan, however, says that the insolvent regularly used the car tillabout August, 1930, when he exchanged it for a new one.
The insolvent admits that on November 18, 1927, he gave PoonaVana Nadar ten promissory notes for Rs. 15,000 and on November19, 1927, a promissory note for Rs. 35,456.58. He sqys that this was onaccount of previous cheques, but it is not explained how he became'indebted to Poona Vana Nadar in such a large sum.
Another witness, Seena Havana Naina Mahamadu, gave evidencein regard to stalls at Moratuwa, in which he carried on business. Hesaid that the stalls though registered in Mohamadu Cassim’s name reallybelonged to the insolvent, into whose hands he paid money taken fromthe business.
The learned District Judge has disbelieved all the witnesses who-speak to the insolvent carrying on business since the date of the insolvency.
The insolvent has however given no satisfactory explanation of severalimportant matters.
He has not explained how he came to entrust Rodrigo with overRs. 22,000 with which to buy goats at Aden a month or two beforehis insolvency. The evidence is that quite small sums were usuallyadvanced for such a purpose.
He has not explained why he obtained a transfer of his licence to PoonaVana Nadar bjT false representations to the Municipality nor why hegave Poona Vana Nadar the benefit of his deposit, nor has he explainedwhy six months later he obtained an extension of this transfer withoutdisclosing the fact of his insolvency.
Further, he has given no explanation why he concealed these trans-actions and the existence of the deposit from the assignee, to whom he-falsely represented that his licence had been cancelled.
He has given no satisfactory account of the transfer of large sums ofmoney to Poona Vana Nadar just before the insolvency, a matter whichcalls for serious investigation.
An unsatisfactory feature of this ease is the lack of evidence in regardto the insolvent’s transactions. There is nothing to show that theassignee examined the books or vouchers or demanded explanations ofvarious dubious transactions.
The assignee has not been called upon to give evidence. The materialupon which we are asked to decide whether this insolvent should be’cleared of his debts is altogether inadequate. The learned DistrictJudge seems to have treated the matter as if the entire onus lay on the*opposing creditor, to prove that the insolvent has committed an offence.I do not think that this exhausts the duty of the Court in these cases.-
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MAABTENSZ A.J.—Ambalavanar v. Wanduragala.
The Court is responsible for releasing the insolvent from his indebtedness-and allowing him to trade free of past obligations and it ought to makesome inquiry into suspicious features in the case.
To my mind, in the absence of satisfactory explanation by the insolvent,his conduct appears to be fraudulent.
I would allow the appeal with costs and direct that a certificate ofconformity be refused.
Maartensz A.J.—I agree.
Appeal allowed.