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Present: The Hon. Sir Joseph T. Hutchinson, Chief Justice,and Mr. Justice Wood Benton.
In the Matter of the Insolvency of Pitchb Tamby.
PITCHE TAMBY v. ABDULLA.
D. C., Colombo, 2,273.
Insolvency—Last examinationofinsolvent—Dutyof Judge—Certificate
examination—Assignee'sreport, effect – of—Irregularityin proce-
dure—^Ordinance No. 1 of 1853.
At the last examinationofaninsolvent under section 89of
the Insolvency Ordinance, if no creditor wishes to question him onhis balance sheet and accounts, and if he himself doea not offerany evidence, the Judge ought to examine him, so that the evidencetaken on such examination may be available at the subsequentpublic sitting under section 124 for the allowance . of the certi-ficate.
The Ordinance does notseem tocontemplatethat the Judgeat
the last examination andattheproceedingsunder section124
should rely wholly on the balance sheet and accounts and on theassignee's report.
Where the Judge relied exclusively on the debtor’s sworn balancesheet and accounts and on the assignee’s report, and no objectionto this course was taken either by the creditor or by the insolvent—Held, that the proceedings were not void for irregularity.
PPEAL by the insolvent from an order of the District Judgeof Colombo refusing to grant him a certificate. The facts
fully appear in the judgments.
F. M. de Saram, for insolvent, appellant.
F. J. de Saram, for creditor, respondent.
Cur. adv. vuIt.
July 7, 1908. Hutchinson C.J.—
This is an appeal by an insolvent against an order refusing togrant him a certificate. On December 19 last, the date fixed aftersome adjournments for the last examination of the insolvent undersection 89 of the Ordinance No. 7 of 1853, the assignee’s report wastendered; the insolvent was present, but no creditor; and theexamination was adjourned to January 16, 1908. On that day it isrecorded that Mr. Advocate Perera—there is nothing to show forwhom he appeared—stated that he did not desire to examine theinsolvent; the Court declared the sittings closed, and fixed thecertificate meeting for February 20. The only note of the proceed-ings on February 20 is “ Case called. Insolvent present. C. A. V.”And on the 25th the Judge made the order now under appeal.
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1908. My brother Wood Benton in his judgment just delivered hasJuly 7. sufficiently stated the facts. It seems to me that at the “lastHutchinson examination of the insolvent ” under section 89, if no creditorO.J. wishes to question him on his balance sheet and accounts, and ifhe himself does not offer any evidence, the Judge ought to examinehim, so that the evidence taken on such examination should beavailable at the subsequent public sitting under section 124 for theallowance of his certificate. The Ordinance does not seem tocontemplate that the Judge at the last examination and at theproceedings under section 124 should rely wholly on the balancesheet and accounts and on the assignee’s report, as was done in thepresent case. I approve of the opinions on this point expressedby the Court in the two cases quoted by Wood Benton J. At thesame time the Ordinance does not expressly require such anexamination by the Judge; and where no creditor objected to theproceedings, and the debtor, being present, made no objection, Ishould not hold that the proceedings were necessarily invalidbecause the Judge relied exclusively on the debtor’s sworn balancesheet and accounts and on the assignee’s report, I think the appealshould be dismissed.
Wood Benton J.—
This is an appeal by an insolvent against an order made by theDistrict Judge of Colombo, under section 124 of “ The InsolventEstates Ordinance, 1853 ’’ (No. 7 of 1853), refusing to grant himany certificate of conformity. If the learned District Judge wasentitled to act on the materials before him, they justify his decision.Mr. Morgan • de Saram suggested in his argument on behalf of theappellant that the Supreme Court had laid down the rule that acertificate of conformity ought not generally to be absolutely refused;and he further cited in the same connection the case of ex parteManico,1 which does frequent duty in insolvency appeals, and inwhich Turner L.J. said that “ If the Court, in cases of this descrip-tion, where one only of the offences has been committed, is boundto inflict the extreme penalty, I know not what is to be done whereevery one of the offences has been committed.” In ex parte Manico,however, the Court found that the bankrupt, though his conducthad been highly blameworthy, had kept his books regularly, andthat in no instance had he been shown to have uttered any untruthin his business dealings a; to have been guilty of ostentatious orselfish expenditure. Under these circumstances, the Judges heldthat he ought not to be refused a certificate altogether. ButTurner L.J. did not, I think, intend, in using the language abovecited, to say or imply that a certificate could not be withheld whereone only of the statutory offences had been committed. He was
i (1853) 3 De G. M; <£• G. 502.
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dealing with section 256 of the Bankrupt Law Consolidation Act,1849 (12 and 13 Viet. c. 106), which is substantially identical withsection 151 of our own Ordinance, and his meaning is clear from thefollowing passage, which comes immediately after the words I havealready quoted, and which embodies the only general rule that anyCourt of law could with propriety lay down on the subject: “ Ithink the Legislature intended to intrust the Court with a reasonablediscretion to see which and how many of the offences have beencommitted, and what mitigatory circumstances there are to induceit to diminish the punishment which the statute has awarded.”
I have made these observations on ex parte Manico because it isoften cited (although Mr. Morgan de Saram did'not use it in thatsense in the present case) as if it tied the hands of the Court. On thecontrary, it unbinds them. It leaves the Court free, if it is satisfied,as it must be, that one or more of the statutory offences have beencommitted, to take account of all the surrounding circumstances,and to do what, in each case, justice requires. Here it is not veryeasy to analyse either the report of the assignee or the decision ofthe District Judge from the point of view of section 151 of OrdinanceNo. 7 of 1853. I venture to think that it would assist us materiallyin the determination of such cases as this, if the Judge would sayspecifically: “ I find such and such facts proved, and they consti-tute, in my opinion, the following offences,” referring us at the sametime to the clauses in section 151 on which he relies. But here, inany event, we have a finding which satisfies section 151 (3), viz.,that the insolvency is itself the result of fraud, and the surroundingcircumstances as stated in the assignee’s report and in the judgmentclearly make it desirable that an example should be made of thisparticular insolvent in the interests of the community. But Mr.Morgan de Saram has taken another and a more serious point onbehalf of his. client. The second sittings were closed on January 16,1908, without any examination of the insolvent, either on his ownbehalf, or on behalf of opposing creditors, or by the Court. Thecertificate meeting was fixed for and held on February 20, and onFebruary 24 the District Judge made the order now under appeal.With the exception of his statutory declaration to answer truthfullyall questions proposed to him and make a full disclosure of his estate(form M in Schedule to Ordinance No. 7 of 1853), the insolvent inthis case seems never to have been examined by or in the presenceof the Court. He was examined on affirmation by the assignee,and the Court at the certificate meeting had before it merely theassignee’s report and his notes of that examination. Mr. Morgande Saram contends (and although the point was not taken in thepetition of appeal, I think that we ought to consider it) (i.) thatOrdinance No. 7 of 1853 makes no provision even for a report by theassignee, still less for any examination by him of the insolvent underaffirmation; and (ii.) that no certificate of conformity should be
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ISOS. granted or refused without some form of verification by the CourtJuly 7. itself, under oath or affirmation, of the insolvent’s evidence. It is aWoodcurious andnot very satisfactory circumstance that, although
Bknton J.England haslong since departed from the scheme of insolvency
legislation embodied in the Bankrupt Law Consolidation Act, 1849,and most ofher colonies have modelled their own bankruptcy laws
after modernEnglish legislation, Ceylon is still under the primitive
regime of theAct of 1849. But we must take the law as we find it;
and my ownopinion on the points raised by Mr. de Saram is this.
It may fairly be contended that under Ordinance No. 7 of 1853(c/. sections 66, 69, and 78) the assignee is practically an officer ofthe Court and that the Court has a right to call and ought to callfor a report from him before adjudicating on the insolvent’s appli-cation for a certificate (of. In re Armitage;1 In re Pres die; 2 In rede Grooe 3). Although the Ordinance contemplates the examinationof the insolvent in Court, and the assignee has no right, so far as1 can see, to examine him on oath or affirmation, there can be noobjection to the assignee putting questions as to t.he property or asto transactions affecting it to the insolvent, who is required bysection 31 to “ assist ” the assignees “ in making out the accountsof his estate.” There can be equally little objection to the assigneeutilizing the answers to such questions for the purposes of his report.But, in my opinion, there ought to be some form of verification onoath or affirmation by the insolvent himself in Court of the truthand fulness of the disclosure that he has made of his estate andeffects before a certificate of conformity is granted or withheld.The statutory form of certificate (Q) seems to require this. The
Judge has to certify “ that the said insolvent did on the
day of- last finish his examination, and upon such examina-
tion made a full disclosure and discovery of his estate and effects,and in all things confirmed; and so far as the Court can judge theredoth not appear any reason to question the truth or fulness of suchdiscovery.” The form of this certificate imposes on the Court itselfa duty, which cannot be discharged by mere reliance on the initialstatutory declaration (form M) of the insolvent or on the assignee’sreport. The question of the procedure that should be adopted hascome twice before the Supreme Court.
In 52 D. C. (Inty.), Colombo, 2,157,* Layard C.J. and Grenier J.. stated that it had been the practice in the District Court of Colombofor nearly a quarter of a century to insist on the insolvent, if thecertificate is not opposed, presenting an affidavit to the DistrictJudge, setting out clearly and distinctly the reasons which have ledto hiB insolvency, before any certificate is granted, and they heldthat the second statutory sitting should not be closed until theinsolvent, by affidavit or examination by the Court, has established
* (1883) 5 S. C. C. 216.* (1903) 6 N. L. H. 271.
(1895) 1 N. L. B. 321.* S. C. Minutes, June, 1905.•
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that point. In the later case of In re Silva,1 Layard C.J. and Isaid that before fixing the certificate meeting the District Judge-himself should examine the insolvent, even if no creditor expresseda desire to do so. I think that this view is in accordance with thespirit of the Ordinance, which requires the insolvent to surrenderand submit himself to be examined from time to time on oath, andthe Judge to certify that he has done so. It is no doubt difficult tofind an express statutory justification for some of the practice thathas grown up under Ordinance No. 7 of 1853. .Successive genera-tions of Judges have failed to take advantage of the power givento the Supreme Court by section 2 of the Ordinance to make rulesfor its regulation. The Legislature has not stepped in where thejudiciary omitted to tread. And so the Courts, charged with theadministration of the law, have had to develop it and adapt it tomodern requirements for themselves. Thus, “ the trade assigneeof the Act of 1849 has been invested with the powers of an officialassignee, and also apparently with some of those of a BankruptcyCourt of first instance jurisdiction. I do not think that so long asthe present insolvency law is permitted to remain on the StatuteBook there can be any practical objection to the assignee beingregarded as an officer of Court, to whose assistance, by way ofreport or otherwise, the Court is entitled. But the Court cannotdelegate t-o the assignee the examination of the insolvent or itsown duty of ascertaining by his examination his claims to a certifi-cate of conformity. I do not think, however, that we needinterfere at the expense of the creditors in the present case.They are satisfied with the result, and no objection to the form ofthe proceedings was taken by the insolvent in the Court below.
I would dismiss the appeal.
1 (1905) 2 Bid. 85.
PITCHE TAMBY v. ABDULLA