Re Insolvency of Benedict de Croos

Re Insolvency of Benedict de Croos.

D. C, Negombo, 61.

Insolvency-Certificate of conformity-Offence under s. 151, sub s. 3 of Ordinance No. 7 of 1853-False statement by insolvent in his examination as to his trade-Carelessness and misfortune-Report, of assignee.

A person who commenced a business without being brought up to it and upon borrowed capital; who acted carelessly, rashly, and imprudently in several respects; who did not keep proper accounts, and whose insolvency was not brought about by misfortune, should not be refused a certificate altogether, if he was not guilty of actual fraud.

The Judge is not bound to act merely on the report of the assignee, but must satisfy himself whether an insolvent is entitled to a certificate of conformity or not.

The case of Presslie (1 N. L. R. 321) explained.

The case of a trader is very different from the case of a clerk or superintendent of an estate drawing a small monthly salary, and a Court in the former case should act with greater caution and circumspection before issuing a certificate of conformity which would enable a trader to at once re-commence his trade, should he desire to do so.

THE following judgment of the District Judge (Mr. E. F. Hopkins) sets out the facts of the case and the reasons why he refused to grant a certificate of conformity to the insolvent: -

" Benedict de Croos, the insolvent in this case, married a rich man's daughter and is the father of five children. He and his family live with his father-in-law, who supports them all and allows the insolvent Rs. 50 a month as pocket money.

" In April, 1889, the insolvent opened a cloth boutique at Kochchikada, a village near Negombo, where there is a large bazaar and many boutiques.

" He commenced business by borrowing Rs. 1,000 from Manikan Chetty (the first creditor in the list) at 15 per cent. He had no capital of his own, and admits that he did not apply to his relatives for funds to start on.

" With the borrowed Rs. 1,000 and goods to the value of another Rs. 1,000 procured on credit he opened his boutique.

" According to his own account he lost from the beginning, and continued borrowing. On 11th March, 1902, he declared himself insolvent, and his balance sheet shows liabilities amounting to Rs. 7,915.11, against assets valued at Rs. 2,800, viz., the stock in the boutique. This valuation is however far above the sum actually realized, for the gross proceeds sale were only Rs. 1,531.96, reduced by expenses to the net amount of Rs. 1,398.39. Detailed accounts of the steps leading to this position are not forthcoming, doubtless because the insolvent kept no proper books, and I am

asked by the insolvent on these materials to grant him a certificate of conformity, the position being this. In April, 1889, he opened a boutique with stock and cash (both borrowed) amounting to Rs. 2,000. At the end of three years he has stock which realizes Rs. 1,398.39, and he owes Rs. 7,915.11. The only excuse is the passage marked A in the assignee's report to the effect that the insolvent, who traded on credit, could not compete with other shopkeepers who traded on cash! I should think it was quite unnecessary to make experiment in order to arrive at such an obvious conclusion!

" In my opinion the facts recorded are of themselves amply sufficient to justify the Court in refusing the insolvent the privileges of the Ordinance.

" The effect of a certificate of conformity is to wipe out all debts contracted by the insolvent, and to enable him to start afresh absolutely unhampered.

" What does the insolvent offer in return? He surrenders his shop goods-all purchased with the money of his creditors, for he did not put a single cent of his own into the business.

" Has he been ' unfortunate ' in the meaning of the preamble of the Ordinance? Certainly not. He is provided with board and lodging for self and family and Rs. 50 a month as pocket money for himself. To var

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