084-NLR-NLR-V-33-WIJEYESEKERE-v.-PERERA.pdf
GARVIN S.P.-J.—W'ijeyesckere p. Perera.
341
Present: Garvin S.P.J. and Maartensz A.J.
WI.JEYESEKERE v. PERERA137—D. C. (Inly.) Colombo, 2,952.
Iiifoltcncy—Expungingofdebt—Inquiryupon propermaterial—Ordinance
No. 7 of 1853, s. UO.*
In insolvency proceedings an orderexpungingadebt can be made
only after an inquiry such a-s iscontemplatedinsection 110 ofthe
Insolvent Estates Ordinance and uponproper material placed beforethe*
Court.
^^PPEAXi from an order of the District Judge of Colombo.
Appellant in person.
II. V. Perera (with him Nadarajah), for respondent.
February 2, 1932. Garvin S.P.J.—
The appellant claims to be a creditor of the insolvent estate of the lateT. H. A. de Soyss. Some considerable time after these insolvencyproceedings commenced, namely, onSeptember3,1930, he filedan
affidavit jn support of his claim and moved the Court to appoint a specialsitting for the proof of his debt. Such a special sitting was appointed,and fixed for October 17, 1930. On that date there is a journal entrywhich rtiads as follows:—" Case called. Insolvent said to be dead-Gazette notice filed. Mr. 0. B. Wijesekera’s claim proved. ”
Now the order appealed from is one by which the learned DistrictJudge directed that this creditor’s debt be expunged and also dismissedhis application asking that the first respondent be directed to bring acertain sum of money into Court. The proceedings which resulted in'this order commenced with a motion by this creditor, dated October 11,1930, referring to a certain order made by the Court on the first respondentdirecting him to bring> into Court a sum of Rs. 20,000 with interest ofwhich it was said that only Rs. 12,000 had been so deposited in Court andasking for a notice upon him " requiring him to deposit the balance interms of the said order". The Court allowed the notice. Thereuponthe first respondent by his prodtor filed a statement of grounds upon whichhe objected .to the motion, and the main grounds of objection were these: —That this creditor had no claim or interest in the sum of Rs. 20,000 referredto in the order, that that money belonged to .the secondary mortgagees ofNeliunkuliya estate. The fourth and fifth grounds related to the claimof the creditor and the substance of the objection was that these sumswere not due to the creditor. In the meantime a proxy was filedauthorizing a certain firm of proctors .to represent the second to thethirteenth respondents to this appeal, and show cause against the appli-cation and to take steps- to have this creditor’s debt expunged. On-January 20, 1931, all these different matters appear to have been takenup together. The first respondent was represented;, so also were the-other respondents. The appellant was present in person. An argument
842
GARVIN S.P.J.—Wijeyesekere v. Perera.
took place in the course of which reference was made to certain records oCother proceedings in the District Court of Colombo and .thereafter the ordercomplained of was made by the learned District Judge.
There were, in fact, two matters before the learned District Judge, theappellant’s application, which had for its object an order directing thefirst respondent to bring the balance out of the Rs. 20,000 referred tointo Court and the objections urged by the respondent to such an orderbeing made upon it; next the application of the other respondents tohave the debt of this creditor expunged. So far as the first of thesematters was concerned, so long as the appellant’s debt was not expungedhe was entitled to be treated as a proved creditor. The only objections,therefore, with which the Court was concerned were those which consisted•of .the contention that he had no interest in this particular sum, inasmuch:as it belonged to the secondary mortgagees of Nellunkuliya estate.The learned District Judge appears to have taken the view that thesecond to the thirteenth respondents and certain other creditors had apreferential right to this 6um of money, but I am unable to find upon thferecord any material which would justify such a finding. No evidence has•been led upon, the point and the mortgage bond has not been produced. Ifit be the fact that the learned District Judge has come to this conclusion,after perusing one of certain records which he says he removed for thepurpose, then all I can say is that if any entry in or part of that record wasto be used as evidence it should have been properly produced in accordancewith law. There is nothing here to show that the appellant had anynotice of the material upon which the claim of the secondary mortgageesto preference in this sum* was based or ultimately admitted.
It was urged, however, in appeal that there were other grounds uponwhich .the first respondent was entitled to resist an order against him tobring any more money into Court. It may well be that there are good.and sufficient reasons for resisting it but these must be properly formu-lated and placed before the Court in a. proper proceeding upon propermaterial and in the manner in which such material should be placed beforea Court of law with an opportunity to the appellant to submit suchmaterial or such answer as he may have to the submissions or contentionsof the first respondent.
As regards the second of .the matters before the Court, namely, theapplication to expunge the debt of this creditor, here again the wholeproceeding appears to have been irregular. Beyond their proxyauthorizing the proctor to take the necessary action to have this creditor’s•debt expunged, the record contains nothing to show that they proceededin the manner in which persons must proceed if they desire such an order.The procedure is clearly laid down in section 110. It is not sufficient,as I have said previously, to base an order of this kind upon an argumentin the course of which one or two statements of facts appear to have’beenmade. The appellant has sworn that the insolvent owed him substantialsums of money, and the Court, acting upon his oath, has already admittedhis debt to proof. There must, therefore, be sufficient material regularlyplaced Before the Court and in a proceeding in which the creditor has anopportunity to place his defence before .the Court. There is no indicationthat' any 6uch proceeding took place, and without expressing any opinion
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whatever as to the merits either of the appellant’s claim on of the con-tention that his claim is not well founded, if is sufficient to say that (hereis not in this record such material as should have been placed before theCourt in a proceeding under section J10 or which would justify the makingof an order expunging his debt.
For these reasons, I would set aside the order under appeal. The casewill go back to the District Court. If within a fortnight from the date on.which the record reaches the Court, the second to the thirteenthrespondents and any other creditors whose interests may be identicalwith theirs do nojt take proper proceedings under the Ordinance for the-purpose of expunging his claim, then the Court will fix the matter forhearing and determination in so far as it relates to the motion of theappellant for an order on the first respondent to bring the money into'Court. But, if within the time prescribed, action is taken for the purposeof expunging this debt; and is duly prosecuted, then I think that thematter of the motion made by the appellant for an order against thefirst respondent should remain in abeyance until the other matter is firstdetermined.
The appellant- is, I think, entitled to the costs of this appeal.
Maartens^ A.J.—I agree.
Sent bock-