1938    Present : Poyser and Koch JJ.

MOOSAJEE et al. v. PEIRIS.

 215-D.C. Colombo, 5,118.
 

Insolvency-Insolvent about to leave the Island-Arrest under certificate in form R- Payment of debt to secure release-Right of other creditors to share in payment--Ordinance No. 7 of 1853, s. 152.

Where a person, adjudged insolvent, was about to leave the Island and was arrested under a certificate in the form R obtained by a proved creditor, and where the insolvent paid the debt in order to secure his release,-

Held, that the money paid should be brought to the insolvency case for the benefit of all the creditors.

The costs incurred in procuring the arrest and in recovering the money will be a first charge on the said sum.

APPEAL from an order of the District Judge of Colombo.

 E. F. N. Gratiaen, for creditors, appellants.

C. X. Martyn, for assignee, respondent.

Cur. adv. vult

. March 31, 1938. KOCH J.-

The first respondent, John Yorke, was adjudicated an insolvent on July 19, 1937, and on August 24, the second respondent was appointed provisional assignee. The appellants who are doing business as forage merchants had on September 28, inter alios, proved a claim of Rs. 628.50 against the insolvent. Learning that the insolvent was making arrangements to leave for India, the appellants, through their proctor, Mr. Wilson, applied for and obtained on October 25, 1937, an order withdrawing further protection to the insolvent. He also obtained on the same day an order allowing a certificate in the form " R " to issue to the appellants. On this certificate, a writ of execution against the body of the insolvent was obtained and on the same day the insolvent was arrested by the Fiscal at the Jetty. The Fiscal immediately removed the insolvent in a car. The insolvent's wife accompanied him. On the way the Fiscal was told that the claim would be paid if the party was taken back to the wharf premises. The Fiscal took the party back to the wharf and the sum of Rs. 628.50 was there paid by the insolvent's wife who took the money out of a box and handed the same to the Fiscal. A receipt was immediately made out for this payment by the Fiscal and handed to the insolvent's wife and the insolvent discharged from arrest. The receipt, however, purported to state that the money was received from the insolvent.

The appellants contend that they are entitled to the entirety of this payment. The respondent objects and claims the sum for the benefit of all the creditors. The learned District Judge, on the meagre evidence led, seemed to think that the money paid was the money of the insolvent, but nevertheless, made order allowing the appellants a further opportunity of renewing their application on or before February 1, 1938, if they were in a position to prove more specifically that the amount paid was not the 39/38

money of the insolvent. He further directed that if no such application was made, the assignee would be entitled to deal with this money as belonging to all the creditors. It has transpired that no such application has been made, and therefore, the effect of the learned District Judge's order now is in favour of all the creditors. The reason for this reservation in the order is apparently due to the fact that Counsel for the assignee admitted that the appellants would be entitled to be paid the amount if it could be proved that the amount was paid not by the insolvent but by anybody else on his behalf.

In the first place, I do not think that an assignee, who is always under the control of the Court while insolvency proceedings last, can do what he pleases and be permitted to take up a position detrimental to the interests of the creditors he represents-section 78 of Ordinance No. 7 of 1853. His admission cannot therefore be viewed seriously. The learned Judge himself seems to think that the assignee has gone too far in making this admission and I am inclined t