1934 Present; Drieberg, Akbar, and Poyser J J.

KANAGARATNE v. YAPA

84-C. R. Galle, 13,151

    Insolvency-Right of assignee to sue-No leave of Court necessary-Ordinance No. 7 of 1853, s. 82.

The right of an assignee in insolvency to sue does not depend on leave of Court previously obtained for the purpose.

CASE referred by Maartensz J. to a Bench of three Judges. The facts are stated in the reference as follows: -

This was an action by the assignee of the insolvent estate of S. D. Siyadoris and K. D. Sedris to recover from the defendants a sum of Rs. 134.07 with further interest on a sum of Rs. 120 at 18 per cent, per annum.

The defendant did not deny the claim in his answer, but took the objection that the plaintiff had not obtained the leave of Court to bring the action as required by section 82 of Ordinance. No. 7 of 1853. The action was tried on the following issues : -

1. Did the assignee obtain permission of the District Court to bring this case?

2. If not, can the action be maintained ?

3. Can the action be maintained without a special averment that leave was obtained?

The learned Commissioner answered all the issues in the affirmative and entered judgment for plaintiff as prayed for with costs.
It was contended in appeal by the defendant that the Commissioner was wrong in holding that P 1 was a compliance with the provisions of section 82 of the Insolvency Ordinance.

P 1 is a motion by the assignee in paragraph 2 of which he moves "that he be permitted to take steps for the recovery of the debts due to the insolvent", on which the District Judge made the following order: " His appointment as assignee is sufficient authority ".
The contention must be upheld. The object of section 82 is to prevent an assignee bringing an action in which he has no hope of succeeding and rendering the insolvent estate liable in costs. That object will not be obtained by a general application that the assignee may be permitted to take steps to recover the debts due to the estate, nor is the order made by the District Judge the " leave of the Court" contemplated by the section.

The first issue should, in my opinion, have been answered in the negative, and if the ruling in the case of Phebus v. Fernando1[1 1 C. L. R. 26.] is followed, the plaintiff's action must fail. In that case the assignee of a legatee sued the executor of the testator's estate to recover the amount of the legacy without applying for or obtaining the leave of the Court to bring the action and succeeded in the District Court.

In appeal Burnside C.J. said, " There are, in my opinion, several objections fatal to this action, but I shall content myself with deciding the case on one alone ". He then went on to hold that the assignee was in no better position to recover the legacy than the insolvent himself, and that a legatee cannot sue an executor to recover from him the amount of a legacy unless it is shown that the executor has so dealt with the corpus of the legacy as to make him a personal debtor to the legatee, which, was neither alleged nor proved. He was of opinion that the action must fail on this ground alone, but added that "even if that defect did not defeat the action, by section 82 of the Ordinance, before an assignee can commence an action which an insolvent might have commenced, he must have first obtained the leave of Court to do so. The

assignee's title therefore to sue depends upon leave obtained for the purpose, and not upon the fact that he is the assignee, and his title must be alleged in the pleadings. The allegation that he is an assignee standing alone is therefore valueless. It was urged that the defendant should have taken the objection by plea or demurrer. No doubt it would have been better if he had, but the fact that he has not done so cannot give plaintiff a right which the statute expressly takes from him. The prohibition is a negative one: "he shall not sue w