1932 Present : Lyall Grant and Akbar JJ.

In re DE SARAM.

124-D. C. (Inty.) Colombo, 3920.

Insolvency-Dishonesty and fraud-Refusal of certificate-Unexplained allegations-Burden of proof-Court of Appeal disagrees with original Court-Powers of Court-Ordinance No. 7 of 1853, ss. 124 and 151.

Where an insolvent has been guilty of wilful falsehood or dishonesty he is not entitled to a certificate. Where a set of facts is shown, which unexplained would lead a reasonable man to believe the allegations of the opposing creditor, the burden is on the insolvent to relieve himself from the inference to be drawn from the facts.

Where the Court of Appeal disagrees with the conclusion of fact formed by the Court below, it is in no way fettered by the amount of the sentence which the Court below has thought fit to pass and may absolutely refuse an order of discharge, although the lower Court merely suspended the certificate.

APPEAL from an order of the District Judge of Colombo. The facts are fully stated in the judgment.

Soertsz (with B. F. de Silva), for creditor-appellant.

F. de Zoysa, K.C. (with him Nadarajah and Choksy), for insolvent-respondent.

March 14, 1932. AKBAR J.-

The appellant is the opposing creditor in this insolvency appeal and he is appealing against the order of the District Judge awarding the insolvent a certificate of discharge of the 2nd class and an absolute and unconditional discharge from all his liabilities. The opposing creditor (hereinafter referred to as the appellant) is the Acting District Judge of Colombo and is the brother of the insolvent, who is a proctor practising in Colombo for the last 26 years. The facts in this case are somewhat unusual, but it is clear from the large volume of evidence led and the many documents, that the appellant in addition to his ordinary duties of a Judge, invested his savings by lending money and that he

reposed a great deal of confidence in his brother, the insolvent, not only in the choice of the borrowers but also in the recovery of the interest and the principal sums invested. Many of the loans were guaranteed by the insolvent and were for short terms, the insolvent getting a commission of 2\ to 3 per cent, from the persons borrowing, not only for each loan but for each extension, of which there was a large number in the case of certain favoured debtors. So that, so long as the borrowers made good in the end, the transactions were profitable not only to the appellant but also to the insolvent ............................

If we turn to the career of the insolvent, he too, in addition to his main occupation as a proctor, had several side lines with a view to augmenting his income. He began practice as a proctor about 26 years ago, and according to him had a very successful career, so much so that he began buying rubber shares from 1909 to 1920. Apparently these speculations were successful, for he says he was worth in 1920 about 11/2 lakhs rupees, including the value of a house called " Alderley " which he bought for RS. 40,000. He borrowed Rs. 30,000 from the appellant and lent it to a Taxi-Cab Co., which loan was afterwards converted into shares. He repaid his brother, but he lost this Rs. 30,000 as the Company failed. The insolvent borrowed large sums from the appellant on interest and list I. 4 shows these items, totalling Rs. 155,000 excluding Rs. 42,000 still due.

Insolvent himself lent out moneys on interest and I. 485 shows the items up to October, 1925. According to the insolvent's evidence his affairs appeared to flourish till 1925 for he says "I was in funds up to 1925". The insolvent admitted that he played cards for high stakes and that he was a punter for 10 or 12 years. His evidence was as follows:-"I became a punter 10 or 12 years ago. I have placed money on Madras and Calcutta races. My brother too was a punter. I have put as much as Rs. 26,000 on one race and won as much as Rs.