066-NLR-NLR-V-33-WILSON-v.-VIJAYALAKSHAMI,-et-al.pdf
AKBAR J.—Wilson 9. Vijayalakshami
1981Present: Akbar J. and Ma&itonsz A.J.WILSON v. VIJAYALAKSHAMI, et al.
1$—D. 0. (Inty.) Colombo, 3tS07.
Insolvency—Firmcarrying on business in India andCeylon—Adjudication
of insolvency mHighCourtofMadras—District Courtof Colombo
appointed auxiliary—Pooling of assets—Distribution of Ceylon assets.
A &nn carryingon businessinIndia and Ceylonwasadjudicated
insolvent in theHigh Courtof Madrasand the District Court of Colombo
• was appointed an auxiliaryCourt forthe purpose. of distributing the
assets in Ceylon.
On application of the official assignee an order was made in Indiapooling the assetsof theinsolvent,wherever situate.
Held, that theDistrictCourtofColombo had powertoorder that,
when assets inCeylon become liablefor distribution such assets should
be distributedrateably inCeylonbetween the Ceylon and Indian
creditors, in order to enable the official assignee in Madras to pay adividend to Ceylon creditors put of the Indian assets.
A
PPEAL from an order of the District Judge of Colombo. The factsappear from the judgment.
F. A. Hayley, K.C. (with him Nadarajak)t for appellants*.
Hs V. Perera, for third, fourth, and fifth respondents.
J. H. V. Ferdinands, for sixth, seventh, and eighth respondents.September 10, 1931. Akbar J.—
The insolvents in this case were a firm carrying on business under theVilasam of " A. R. A. R. S. M.” They were adjudicated insolvents bythe High Court of Madras on June 22, 1925, and in these proceedingson August 25, 1925, on the ground that they carried on business inColombo too. Under section 122 of the English Bankruptcy Act of1914, on November 13, 1925, the District Judge of Colombo made orderthat the District Court of Colombo should act in aid of and as auxiliarvto the High Court of Judicature* Madras, and that the provisional assigneein Ceylon should be appointed as an attorney of the Madras officialassignee and he ordered him to file a power of attorney for that purpose,which was done. On December 19, 1929, on the application of theofficial assignee, the High Court of Madras made order directing theofficial assignee to pool all the assets of the insolvents whenever situateand distribute dividends to all the creditors whether in British Indiaor outside.. This order was made, as a matter, of fact, on the applicationof the official assignee, because the order recites this application andfurther recites that no order was made on the application of the Ceyloncreditors. A copy of this order was filed in the District Court of Colomboand on April 1, 1930, the District Judge endorsed this order of the Madras
261
AKBAR J.—Wilson 0. Vijayolakshattu.
High Court, but he added that any dividend meeting was to be advertisedin Ceylon and also such dividend will be open to question in Ceylon" and only any surplus assets will be allowed to leave the Court '* (what'ever that may mean). On May 9, 1930, the official assignee of Madrasand the provisional assignee in Ceylon, who held the power of attorneyof the official assignee moved the District Court of Colombo (after refer-ring to the orders of Court regarding the pooling of the assets and statingthat according to the orders of the Madras High Court, the official assigneein Madras was unable to pay a dividend to the Ceylon creditors outof the Indian assets unless the Colombo District Court ordered that, whenassets in Ceylon become liable for distribution, such assets would likewisebe distributed rateably in Ceylon between the Ceylon and the Indiancreditors) that the Court may make order accordingly. This applicationwas resisted by the first to the fifth respondents, and the District Judgeby his order dated September 30, 1930, refused the application of theofficial assignee but he made no order as to the costs of the inquiry.The District Judge incidentally found fault with the provisional assigneein Ceylon for neglect of duty, in that he had failed to recover the assetsin Ceylon with due diligence.Mr. Hayley quite naturally complains
that these strictures were unjustified, because the provisional assigneewas not heard in his defence and that the application made to Court'on May 9, 193Q, was merely preliminary to the distribution of assets,and .that the provisional assignee was quite prepared to render a trueaccount of his stewardship. Mr. Hayley offered to read certain affidavitsin support of his contention that the provisional assignee had not beenremiss in his duties. In view of the opinion that we had formed that theDistrict Judge ‘was wrong in passing these strictures without givingthe provisional assignee a chance of being heard, we refused to allowthis affidavit to be read. It is not necessary to refer to this aspect ofthe case any further. With regard to the immediate application beforethe District Judge, I am of opinion that the District Judge should haveallowed the application. It is quite clear to me from the trend of the«judgment of the District Judge and the arguments of the respondents’counsel in the District Court, as recorded by the District Judge, thatthe main objection against the application was based on the groundthat the first to the fifth respondents wished to preserve the Ceylonassets for the Ceylon creditors only. It may be that counsel for theabove respondents did also object on the mistaken ground that theIndian assets would only be distributed among the Ceylon creditorswho had proved their debts in Madras and would not be available forthe Ceylon creditors (including the first to the fifth respondents) whohad not proved their claims in Madras. As regards the first objection,in my opinion, the District Judge had jurisdiction to allow the applicationand he should have so allowed it. Not only is section 122 of the EnglishBankruptcy Act of 1914 applicable to this matter, but all the authoritiesquoted show .that such an order would ordinarily be made in the circum-stances of this case. For instance, in the local cases reported in Rama-nathan’a Reports, 1872-1876, page 277, and Atkinson.-v. Boustead 1 and
1 V. S. G. G. 13.
262AKBAB J.—Wilton o. Vijayalakshami.
in the English cases Ex parte Wilson—In re,Douglas,1 and In re Hooperand another,2 it was held that where a person carries on business in twocountries and that person is adjudged bankrupt in both these countries,the bankrupt's estate would be regarded as one estate. For instance,in the last case the Lord Chancellor stated as follows:—44 This is simplythe "case of one bankrupt firm. It happens to be two persons tradingtogether in Portugal and in England, but it is just the same case as ifit were one person trading in Portugal, and the same person trading inEngland; the two persons do not constitute different firms becausethey were in Portugal and also in England. " Lord Selbome stated41 The Portuguese assets were, by the law of England, which we have toadminister (and, I may add, in accordance with the general principlesof private International law as to movable property), subject to and, bound by the English liquidation, except so far as the local law of Portugalmight have intercepted any portion of them while within its jurisdiction.Every creditor coming in to prove under, and to take the benefit of,the English liquidation, must do so on the terms of the English law ofbankruptcy; he cannot be permitted to approbate and reprobate, toclaim the benefit of that law, and at the same time insist on retaining,as against it, any preferential right .inconsistent with the equality ofdistribution intended by that law, which he may have obtained eitherby the use of legal process in a foreign country, or otherwise. " In thiscase, too, the two firms are really one and the official assignee in Madraswas vested* with all ■ the movable property belonging to the insolventfirm, and also the administration of the immovable property in accordancewith the law of Ceylon. That was why the Madras High Court askedthe District Court of Colombo to help the Madras- Court in the collectionof the Ceylon assets. ' As Mr. Justice Lyall Grant points out in caseNo. 89, D. C. (Interlocutory) Colombo No. 3,507—S. C. Minutes ofNovember 19, 1929, 44 questions may arise as to the principles of lawby which a Court is to be guided in the collection of the Ceylon assetsand this question too can very conveniently be decided by the DistrictCourt of Colombo.'' In the case of In re Marquis of Huntly 2 the Courtof Appeal pointed out- that section 122 was passed to, enable oneCourt to assist another in dealing with matters which were within thejurisdiction of the Court; -asked to act. In order that the arrangementshould be as equitable as possible .to ,»all the Ceylon and Indian creditorsthe order to pool all the Indian and Ceylon assets between the Indianand Ceylon creditors was made by the Madras High Court and approvedby .the District Court of Colombo. There is authority for such an orderin the case of In re P. Macfadyen & Co.4 In that case Mr. JusticeBingham stated 14 I consider it -is clearly a proper and common-sensebusiness arrangement to make, and one manifestly for the benefit of allparties interested". In that case too the approval of all the creditorswas not obtained and the order was made in the discretion of the Court.In this case, however, according to. the'document XI put in by .therespondents' counsel, there was a meeting in Colombo on September21, 1929, of which the Chairman was the official assignee of Madras,
*{1871-1872) VII., Chancery A. C., p. 490.
(1879-80) 8 L. It., A. C., p. 101.
(1917) $ L. R., K. B. D., p. 729.(1908) lf L. R., K. B. D., p. 075.
AKBAR J.—Wilson v. Vijayalakshami.
203
and notice of this meeting was sent to all the creditors in Ceylon, of whom39 were present. At this meeting the official assignee explained thewhole position and pointed out that u dividend had already been declaredin India for the Indian creditors, and that there w&6 a large sum in handout of which the Ceylon creditors could receive a first dividend of oneanna per rupee. The remaining Indian assets were estimated at 8lukhg and the Indian liabilities at 37 lakhs. In Colombo the anticipatedassets were 1$ lakhs and .the liabilities 17 lakhs. 23 creditors aggregating8J lakhs agreed to the pooling and 15 creditors aggregating 6 lakhswanted time to consider, and only one creditor was against the pooling.Two of the respondents to this appeal seem to be amongst those whowanted time to consider. This was the only document put in duringthe argument, and one must presume-that when the “Madras High Courtmade the pooling order on December 19, 1929, and when it was endorsedby the District Court of Colombo on April 1, 1930, such order and endorse-ment were made by the two Courts with a full realization of the benefitto all the creditors.
In my opinion the application of the appellants made as a preliminaryto the enforcement of these two orders (namely, for an order to makethe Ceylon assets available for distribution) was a reasonable one andshould have been allowed. Mr. Perera then pressed the second objec-tion, namely, that it should be made clear fchsit all Ceylon creditors,who had proved their claims in the District- Court of Colombo should beallowed to participate irrespective of the fact that they may not haveproved their claims in Madras. I cannot see why they need have anyapprehension* on this ^-subject, because the proceedings show, especiallythe application of the official assignee in 1929, for the pooling * of theassets, that the official assignee was to distribute all the assets whetherin India or outside for the benefit of all creditors whether in India oroutside. Further, the fact that the provisional assignee in Ceylon becamethe attorney * of the official assignee in Madras and represented him inthese proceedings shows that the official assignee was bounded by the proofof debts in the District Court of Colombo. Any apprehension on thispoint can be set at rest, because Mr. Hayley on behalf of the appellantshas assured us that this was the intention of the official assignee whois one of the appellants in this case. As a matter of fact .the .claim ofthe fourth respondent to thi6 appeal when it was proved in the DistrictCourt of Colombo on December 20, 1927, was communicated to theofficial assignee in Madras.So that the feare of Mr. Perera seem to
have no foundation in fact.He then contended that it should be made
clear that the Ceylon assets were to be subject tc>, and distributed onlyon, the orders of the 'District Court of Colombo. On this point too theposition is clear because the application which gave rise to this appealwas to the effect that the assets in Ceylon were to be distributed rateablyin Ceylon. Further, the fact that the official assignee made any applica-tion at all shows that he so recognized the jurisdiction of the DistrictCourt of Colombo. Any doubt which may be on the point was dissipatedby the decision of the Supreme Court in 89 D. C. (Inly.) Colombo No. 3,507of November 19, 1929, when the Supreme Court held in unmistakable
A KB Aft J,—Wilton v. Vijayalakthami.
"264
terms that the District Court oi Colombo -had jurisdiction to allocatetiie Ceylon assets in accordance with the arrangement come to betweenthe Madras Sigh Court and the District Court of Colombo undersection 122 of the English Act of 1014. The appeal should, therefore, beallowed with costs against the first to the fifth respondents. The costshowever, of the 6ixth, seventh, and eighth respondents will be borneby them both in this Court and in the lower Court.
Appeal allowed.