Under Section 55 of the Provincial Insolvency Act, 1909, "good faith" in a property transfer excludes colourable or sham transactions. The burden is on the official assignee to prove a lack of good faith, which requires evidence that the purchaser knew the transferor was insolvent.

Judgement

Appeal (No. 84 of 1932) from a decree of the High Court in its appellate jurisdiction (March 8, 1932) reversing an order of the Court in its original jurisdiction (December 14, 1931).

The respondent, as receiver appointed in an insolvency under the Provincial Insolvency Act, 1909, applied to the High Court to set aside under s. 55 of the Act a transfer of property made by the insolvent to the appellant within two years of the insolvency. The question for determination was whether it was established that the appellant was not a purchaser in good faith and for valuable consideration within the meaning of the above section.

The facts and the terms of the section appear from the judgment of the Judicial Committee.

The application was heard by Sen J. and was dismissed. The learned judge found on the evidence that the transaction was not brought within the terms of the section.

60 Law Rep. 60 Ind. App. 362 ( 1932- 1933)

Pope V. Official Assignee, Rangoon 161

An appeal to the High Court was allowed by a judgment delivered by Page C.J. and concurred in by Mya Bu J., and the transfer declared to be void. The learned Chief Justice said that the case was concluded against the present appellant by the judgment of Lord Blackburn in Tomkins v. Saffery (( 1881) 3 App. Cas. 213, 237.) and by that of Cotton L.J. in Ex parte Chaplin . (( 1884) 26 Ch. D. 319, 331, 332.) The only reasonable inference from the evidence was that when the transfer was made to the present appellant he knew that Mrs. Young had no available assets except those transferred and was in insolvent circumstances, and that nothing would be left out of which any other creditors could receive a rateable distribution. The appeal is reported at 1. L. R. 10 Ran. 219.

1933. July 25, 27. T. F. R. McDonnell and Hubert Hull for the appellant. The onus admittedly was upon the Official Assignee to prove that the purchase, which was for valuable consideration, was not made bona fide. The evidence did not justify the inference that the appellant knew that the transferor was insolvent ; there was no affirmative evidence that he knew. The learned Chief Justice based his conclusion that the purchase was not bona fide upon Tomkins v. Saffery (( 1881) 3 App. Cas. 213, 237.) and Ex parte Chaplin (( 1884) 26 Ch. D. 319, 331, 332.), but the question in those cases was whether there had been a fraudulent preference and an act of bankruptcy, and both proceeded upon the basis that the transferee knew that the transferor was insolvent. The words " in good faith " in s. 55 merely exclude a transaction which is not real but colourable. That appears to have been the view of the Board in Official Receiver v. P. L. K. M. R. M. Chettyar Firm (( 1930) L. R. 58 I. A. 115, 121.) ; and has been held to be the effect of the same words in s. 47 of the (English) Bankruptcy Act, 1883 In re Pope. Ex parte Dicksee . ([ 1908] 2 K. B. 169, 174.)

The respondent did not appear.

Oct. 16. The judgment of their Lordships was delivered by

LORD THANKERTON. This is an appeal from a judgment and decree of the High Court of Judicature at Rangoon dated March 8, 1932, whereby the Court, in exercise of its appellate jurisdiction, set aside an order dated December 14, 1931, made in exercise of its original jurisdiction, and declared that the deed of sale hereinafter referred to was void as against the respondent. The respondent did not appear in the appeal.

The deed of sale in question was dated February 27, 1931, and was made between Mrs. Edith Young, who carried on business as a milliner and dressmaker at 15 Phayre Street, Rangoon, and the appellant; Mrs. Young thereby assigned to the appellant the stock in trade then lying in her shop and all her book debts then due and owing, in consideration of the payment by the appellant to her bank of the sum of Rs. 20,229, being the amount of her overdraft with the bank. The appellant had guaranteed Mrs. Youngs overdraft with her bank up to the sum of Rs. 25,000, and the bank was