Present : Fisher C.J. and Drieberg J. 1929.

PERERA v. VALIAPPA CHETTY

43-D. C. Kalutara, 239.

Insolvency-Protection-Insolvent in custody-Notice . to creditor Adjudication-Necessity to surrender and conform.

A debtor who is in custody is not entitled to be discharged on being adjudged an insolvent without notice to the detaining creditor.

Protection is not a necessary consequence of adjudication. It can be granted to an insolvent only after he has surrendered and conformed.

APPEAL from an order of the District Judge of Kalutara.

Rajapakse, for insolvent, appellant.

N. E. Weerasooria, for creditor, respondent.

June 28, 1929. DRIEBERG J.-

On November 27, 1928, at 9 A.M., the appellant was arrested at Kalutara on a warrant in execution of a money decree obtained against him by the respondent in D. C. Colombo, No. 21,610; after his arrest and while he was in custody these proceedings were initiated on the petition of a creditor, L. James Perera, for the adjudication of the appellant as an insolvent. These facts appear in the. affidavit of the respondent and are not challenged. The act of insolvency relied on was a declaration of insolvency made by the appellant and attested by his Proctor. The declaration was submitted with the motion by the petitioning creditor for adjudication. This appears from the Secretary's note on the motion paper of the petitioning creditor's Proctor. On the declaration of insolvency is a note by the Secretary that it was filed at 12.10 on November 27. The declaration is imperfect in not stating the hour and day on which it was signed by the appellant, and, further, it was not filed by the appellant but submitted by the petitioning creditor.

On the motion paper of the petitioning creditor's Proctor there appears the following note : "Allowed. Protection till 21/12/28. Notice served 29/1/29. " The formal order signed by the Judge, in a printed form, fixed two sittings, on December 21, 1928, and January 28, 1929, for the insolvent to surrender and conform; a special order of protection as provided for by section 36 of the Insolvency Ordinance and limited to December 21, 1928, was also made.

Later in the day the appellant was produced before the District  Court of Colombo by the Fiscal, when the appellant resisted his  commitment on the warrant on the ground that he had obtained Protection in these proceedings. The respondent desired to question the regularity of the grant of protection, and the appellant was allowed to stand out on bail pending steps for this purpose being taken by the respondent.

The respondent then moved in these proceedings to have the appellant's protection withdrawn on the ground that it was granted while the appellant was in custody on a warrant and that the appellant could obtain protection on his application only after notice to the respondent. On this application the Judge made order withdrawing protection. He said that if he had known that the appellant was in custody at the time he would not have allowed protection, by which I understand from the argument before him that he would not have allowed protection without notice to the respondent, on whose warrant he was then under arrest.

Allowing that the order for protection was otherwise regular, the Judge was quite right in withdrawing it for this reason. A debtor who is in custody is not entitled as of right to a discharge upon adjudication, and the detaining creditor, being interested, is entitled to be heard, Ex parte Preston [1 (1861) V. L. T. 89.] and In the Insolvency of Hadjiar Abdul Caffoor. [2 (1903) 11 N. L. R. 353.] There is good reason for this, for the Insolvency Court can refuse protection, among other grounds, if the arrest of the insolvent is on a judgment passed against him for a debt contracted by fraud or breach of trust. The only person who ordinarily will have knowledge, and would be interested in informing the Court, of