013-NLR-NLR-V-36-MUTTU-MOHAMMADO-v.-RAMASAMY-CHETTY-et-al.pdf
Delivered by LORD THANK ERTON.—Afuttu Mohammado v. Ramasumy Chetty. 69
[In the Privy Council.]
Present: Lord Atkin, Lord Tomlin, and Lord Thankerton.
MUTTU MOHAMMADO v. RAMASAMY CHETTY et al.
Insolvency—Licences to hold stalls—Assets of insolvent—Conduct as trader—Discretion of District Judge—Court of Appeal.
Licences to hold stalls in a public market, which are personal andnon-transferable, do not form assets of an insolvent in insolvencyproceedings.
The question of the insolvent’s conduct as a trader or in relation tohis estate is a matter which rests mainly within the discretion of theDistrict Judge; and where the latter accepts the explanations offeredby the insolvent, a Court of Appeal should be slow to interfere withthat discretion.
^ PPEAL from a judgment of the Supreme Court
November 7,1933. Delivered by Lord Thankerton.—
On November 21, 1927, the appellant’s estates were sequestratedand he was adjudged insolvent in the District Court of Colombo, on thepetition of a creditor and a declaration of insolvency and consent to thesequestration by the appellant himself. A provisional assignee wasappointed on that date, and an assignee was appointed on December 13, •1927. The appellant having passed his last examination on January 29,1929, the public sitting for the allowance of his certificate was held onvarious dates from September 19, 1929, to November 10, 1930, thegranting of the certificate being opposed by the present respondents.By order dated December 18, 1930, the District Judge awarded theappellant a certificate of the second class, and, on appeal by the presentrespondents, the Supreme Court of the Island of Ceylon, on June 25, 1931,set aside the order of the District Judge and refused the certificateof conformity. Hence the present appeal by the appellant. Therespondents, who are creditors, were not represented in the appeal.
1 33 N. L. R. 57.
70 Delivered by LORD THANKERTON.—Muttu Mohammado v. Ramasamy Chetty.
Of the five grounds of objection taken by the respondents, only fourneed be referred to, viz.:—
The insolvent has unduly preferred one of his creditors, Pona
Van a Nadar.
The insolvent has concealed and put away from his creditors
all his property and assets by handing over his business and
effects to his various nominees.
The insolvent has accounted for his property by fictitious loans
and expenses.
The insolvent is carrying on a large and lucrative business at this
moment through and in the name of his nominees.
From the year 1920 the appellant had carried on an extensive butcher'sbusiness at eight stalls in various public markets in Colombo underlicences from the Municipal Council, which were non-transferable andrenewable each year, and as security for which a deposit of three months’rent was required to be made. The amount of the appellant’s depositwas Rs. 945. As the result of competition between the butchers carryingon business in these markets, the prices which they had to pay for cattlewere inflated, while the price of meat remained stable, and serious losseswere incurred by them, with the result that' in 1926 the wealthiest ofthem, G. S. Mohammed Sultan, had ruined all his competitors. Inthat year three of the butchers became insolvent and the appellantsustained heavy losses. Moreover, the appellant’s bank account wasclosed because somebody, probably Sultan, informed the bank that theappellant was issuing post-dated cheques. This was followed bythe appellant’s insolvency on November 21,1927, as already
stated.
On or about March 20, 1928, the appellant filed his balance sheet, asrequired by the Ordinance, showing liabilities amounting to Rs. 180,108and assets amounting to Rs. 46,161. The second largest liability wasa sum of Rs. 48,574, shown as due on promissory notes to Pona VanaNadar, and the largest asset was a sum of Rs. 22,311, shown as due to theappellant from T. O. S. Rodrigo.
The respondents’ grounds of objection related to the debt to PonaVana Nadar and the debt due from Rodrigo, to the transfer of the appel-lant’s Municipal licences to Pona Vana Nadar, and to the allegation thatthe appellant was still carrying on a butcher’s business in the name ofnominees at a profit. There was also a small point as to a motor car,which does not seem to have been pursued in the Court of Appeal.
The allegation that the appellant was carrying on business throughnominees was supported by three witnesses, whose evidence the DistrictJudge disbelieved for reasons stated by him, and their Lordships feel.bound to accept this conclusion of the Judge who saw and heard thesewitnesses.
With regard to the debt due to Pona Vana Nadar and the debt due byRodrigo, the appellant gave a full explanation in his statement to theassignee and in his examination before the District Judge, at which hewas fully cross-examined on behalf of the creditors, who .produced no©Dim tor evidence. Further, the appellant had kept regular books,
De Costa v. Lowe.
71
which were handed over to the assignee, and their Lordships see no reasonfor doubting that these were fully examined by the assignee before hemade his statutory report.
With regard to the transfer of the licences to Pona Vana Nadar, theappellant wrote to the Municipal Treasurer on November 17, 1927—four days before his‘ adjudication—stating that he intended to go toIndia to recruit his health for a few months and asking that the licencesmight be transferred to Nadar for a few months; the application wasgranted for six months only. On June 20, 1928, the appellant appliedfor an extensibn of the transfer for another six months. In the firstapplication the appellant did not mention his financial difficulties, norwas his insolvency mentioned in* the second application, but his insolvencymust have been within the knowledge of the Municipal Treasurer by thattime. In the first place, their Lordships agree with the District Judgethat the licences, which were personal and not transferable, could notform assets in the insolvency, and secondly, in so far as the matteraffected the question of the appellant’s conduct as a trader or in relationto his estate, their Lordships see no sufficient reason to differ from theDistrict Judge, who accepted the explanations given by the appellantand in whose discretion the question mainly rests. A Court of Appealshould be slow to interfere with that discretion.
It is difficult to reconcile the reasons given in the judgment of thelearned Judges of the Supreme Court with the order pronounced bythem ; the reasons appear to call for further inquiry into circumstanceswhich the Court characterize as suspicious, while the order supersedesfurther inquiry and condemns the appellant as guilty of fraudulentconduct and refuses a certificate, which has very serious statutoryconsequences for the appellant.
As already indicated, their Lordships see no sufficient reason fordiffering from the conclusion of the learned District Judge, and they willhumbly advise His Majesty that the order of the Supreme Court datedJune 25, 1931, should be set aside, and that the order of the DistrictJudge dated December 18, 1930, should be restored, the appellant tohave his costs in the proceedings before the Supreme Court and suchcosts of this appeal as are chargeable having regard to the fact that theappellant was by His Majesty’s Order in Council of November 10, 1932,granted special leave to enter and prosecute this appeal in forma pauperis.