Official Receiver v Bhurabhai (Civil Appeal No. 1 of 1939) [1939] EACA 21 (1 January 1939)

## BEFORE SIR JOSEPH SHERIDAN, C. J. (KENYA), WHITLEY, C. J. (UGANDA) AND SIR LLEWELYN DALTON, C. J. (TANGANYIKA)

## OFFICIAL RECEIVER (Trustee of the Estate of Bhurabhai Jutha, Bankrupt), Appellant (Original Applicant)

## versus

## MATHURADAS BHURABHAI, Respondent (Original Respondent) CIVIL APPEAL No. 1 OF 1939

(From original Order in Bankruptcy Cause No. 3 of 1938 of H. M. High Court of Uganda at Kampala)

Bankruptcy—Private examination—Issue of summons—Uganda Bankruptcy Ordinance, Cap. 12, sections 27, 78 (3)—Bankruptcy Rules, Rule 74.

On 20-9-38 the appellant applied under section 27 of the Uganda $\frac{1}{2}$ Bankruptcy Ordinance for an order for the private examination of the respondent and on 24-9-38 an order was made directing that a summons for his examination should issue.

Meanwhile the appellant, becoming doubtful as to whether section 27 could properly be applied, on 22-9-38 applied under section 78 (3) for directions as to whether he should apply for the private examination of the respondent and two other persons under section 27. On this application the High Court on 27-9-38 ordered that a summons issue to each of the persons named and pointed out that the examination of the respondent had already been ordered. On this order a summons duly issued against the respondent but it was subsequently set aside on the application of the respondent on the ground that the appellant had failed to apply to the Court for the issue of a summons under Rule 74 of the Bankruptcy Rules and that the summons issued did not have attached to it a copy of the application under which it should have been issued.

The appellant appealed.

Held (22-2-39).-(1)That it was not necessary that the summons should have attached to it a copy of the application under which it was issued nor that the appellant should afford to the respondent any information which might enable him to defeat the purpose for which the examination was required, In re Gold Company (1879) 12 Ch. 77.

(2) That on the application for directions the learned Judge was entitled to make an order for the issue of a summons and having done so no<br>further application under section 74 was necessary. (Appeal allowed.)

Anderson for the appellant.

Figgis, $K. C.$ , for the respondent.

SIR JOSEPH SHERIDAN, C. J.: The Official Receiver required to examine one Mathuradas in connexion with the bankrupt's property under section 27 of the Bankruptcy Ordinance. On 20th September he made an application to the Court to that effect and on the 24th September the learned Judge made an order directing that a summons for his examination should issue. Subsequent to his application the

Official Receiver had become doubtful as to whether section 27 was properly invoked and on the 22nd September under section 78 (3) of the Ordinance he applied for directions as to whether he should apply for private examination of Mathuradas and two other persons under section 27. On this application the Court on the 27th September made an order that summonses should issue for the examination of the three persons named as the Official Receiver might require and for the examination of their account books as required. A summons against Mathuradas was issued. The next stage was that Mathuradas applied to the Court to discharge the order on the grounds (1) that the Official Receiver had failed to apply to the Court for the issue of a summons under Rule 74 and (2) that the summons issued did not have attached to it a copy of the application under which it should have been issued. In regard to the second ground the Official Receiver contended that to give this information would be to defeat the purpose for which the witness was required. The learned Judge however evidently holding strong views on the subject was of the contrary opinion and discharged the order he had made for the reason that the information should have been given and was not given to the witness as also for the reason referred to in the first ground. On the second ground Mr. Figgis found himself unable to support the order of discharge agreeing with Mr. Anderson who referred to In re Gold Company (1879) 12, Ch. D. 77 in support of his contention that the decision was wrong. I agree that the decision cannot be supported. There is nothing in section 27 to suggest that the information referred to should be afforded and the passage in the judgment of Jessel, M. R. at page 83 of In re Gold Company reading "The liquidator, according to the practice of the Court, comes ex parte, and, as a general rule, he makes no affidavit, for a very good reason, that it is not desirable for him to put anything upon the files of the Court which can be inspected by the person against whom he intends to proceed, and which, if so inspected, might afford information which would enable him to defeat any proceeding to be taken against him." is directly in point. The case is under the Companies Act but the principle applicable in the case of bankruptcy is the same. Mr. Figgis has however vigorously contended that the order was rightly discharged on the first ground. I am unable to agree. The Official Receiver had already applied for and obtained an order for the examination of Mathuradas and thereafter being doubtful as to whether section 27 was rightly invoked he applied under section 78 (3) for directions with the result that his doubts were set aside. He cannot be said to have abandoned his application for the examination of Mathuradas. When he made his second application he may and should be taken to have said to the Court "I am not certain whether I was right in asking that a summons should issue against Mathuradas, please tell me" and the Court to have replied "You were right, the summons may issue as directed". Had it been necessary to decide whether summonses could have issued against the other two persons named in the application for directions of the 22nd September under the order made on the 27th September I would unhesitatingly have said yes. The application for directions set out fully the reasons why those persons were required and upon the request by the Official Receiver "whether he should apply for private examination under section 27" of those persons the order of the 27th September "Let necessary summons

issue" for the examination of those persons should be read as meaning that the Court had, as I consider it was entitled to do, treated the application for directions as including a request that the issue of a summons might be directed. Our attention was not drawn to Rule 385 which provides that "Non-compliance with any of the Bankruptcy Rules or with any rule of practice for the time being in force shall not render any proceeding void unless the Court shall so direct. . . " nor does the learned trial Judge's attention appear to have been directed to this Rule. The effect of the Rule is in my opinion to dispose of any argument that because the Official Receiver had failed to apply to the Court for the summons as prescribed by Rule 74 of the Rules, the subsequent issue of the summons under section 27 should be considered void.

I would allow the appeal with costs and as to costs in the Court below they will be on the bankruptcy scale applicable to cases where the Official Receiver appears in person. Counsel are agreed in this case that these costs will be the disbursements which the Official Receiver had to incur.

WHITLEY, C. J.: I concur. $\mathbf{r}$

SIR LLEWELYN DALTON, C. J.: I agree that this appeal must be allowed. The proceedings before the Judge in bankruptcy arose out of an application by the present respondent to discharge the summons which had been issued by the Court calling upon him, under the provisions of section 27 of the Uganda Bankruptcy Ordinance (Cap. 12) to appear for examination. No doubt that application was not made by notice of motion, but it is not now for the respondent to object to the procedure he himself adopted. It was acquiesced in by the present appellant and no objection can be raised on that ground now. The respondent's application was in fact granted, and the order granting it is now the subject of this present appeal. This is not, as Mr. Figgis urged, only a matter between the Official Receiver and the Judge in Bankruptcy. It is clear that the respondent has been properly made a party to the appeal.

In allowing the application the learned Judge held first that the summons had been issued improperly since the Official Receiver had not complied with the provisions of Rule 74 of the Bankruptcy Rules applicable (see section 162 of Chapter 12) governing the issue of such a summons. Secondly he held that the person to be summoned is entitled to be notified at the time of service of the summons as to the general purpose of the examination proposed. This second ground for granting respondent's application Mr. Figgis agrees he cannot support as there is no authority in law for such a ruling. It is not necessary then to say anything further on that point.

To deal with the first ground, it is necessary to examine the history of these proceedings in the Bankruptcy Court. It appears that on 20th September last the Official Receiver applied for a summons on the respondent to appear before the Court for examination under the provisions of section 27 of the Ordinance. This application was allowed on 24th September and the Court directed a summons to issue. Meanwhile the Official Receiver seems to have had some doubts as to whether he had adopted the right procedure to obtain the attendance and examination of the respondent, so on

22nd September he applied to the Court for directions under the provisions of section $78$ (3) of the Ordinance, as to whether under the circumstances he should apply to the Court under the provisions of section 27 for a summons on the respondent. To this application he added the names of two other persons, who are not concerned with these proceedings. Why the Official Receiver adopted this procedure I find it extremely difficult to understand, and in my opinion it in fact led to the subsequent difficulties which have arisen. It seems clear to me that his first act, namely his application under section 27, was the proper course to pursue having regard to what he required. It is conceded that the respondent is a person who could properly be examined under the provisions of that section.

When the application of 22nd September came before the Judge in Bankruptcy on 27th September, he gave no directions, as asked for, that the Official Receiver do apply for a summons for the examination of the respondent but he ordered that a summons issue on each of the persons named, pointing out in his order that the examination of the respondent had already been ordered, presumably in his order of the 24th September. No summons had in fact been issued upon the first order and it would seem probable that the Official Receiver had abandoned that application. A summons however duly issued on the second order and it is that summons which the Judge in Bankruptcy set aside in his order now under appeal. He has now in effect held, as I read his order under appeal, after directing on 27th September that the summons do issue, that he should not have made that order since the Official Receiver on obtaining the directions which he did obtain should have complied with the provisions of Rule 74 in respect of the issue of a summons. The learned Judge however did not give the Official Receiver any such directions as he had asked for, but he himself then and there directed that a summons do issue. The only construction I can reasonably put upon that order of 27th September is that the learned Judge was satisfied that the doubts of the Official Receiver which led him to make his second application were unfounded, that the matter was one which came under the provisions of section 27, and having all the necessary material before him, he made the order for the summons to issue. With his reasons in the order now appealed from, for varying the order of 27th September, I am unable to agree. The respondent was duly summoned, on a summons properly issued against him, and if a reasonable sum to enable him to attend the Court was tendered, he was compelled to come, at the risk of a warrant being issued for his apprehension. No ground has been shown by him for the discharge of the summons and the order discharging him from the summons must be set aside. The proceedings will go back to the lower Court for the examination of the respondent in due course.

On the question of costs in the lower Court, there appears to be no authority for awarding costs on the "Uganda scale". That we were informed is a local term used for the High Court scale. The appeal being allowed the Official Receiver will be entitled to his costs in the lower Court on the scale provided in the Bankruptcy Rules, and he will also be entitled to the costs of this appeal.