City Painters v. Guisepee Licalsi t/a Italian Builder Contractor, Bankruptcy Cause 1-DSM-71, 6/672, Biron, J.

City Painters v. Guisepee Licalsi t/a Italian Builder Contractor, Bankruptcy Cause 1-DSM-71, 6/672, Biron, J.

On 16 November 1971, the respondent debtor was, on his own petition, adjudged bankrupt and a receiver was appointed. On 10 February 1972, the applicant creditor filed an application that the receiving order be rescinded on the grounds that the respondent had failed to comply with certain formalities or the Bankruptcy Ordinance, Cap. 25, Spp. 58. Advocate for the respondent submitted that the application was time barred, arguing that, since s. 103 of the Bankruptcy Ordinance prescribed no time limit for the Court rescinding orders made by it, Art. 21 of the Third Part of the first Schedule to the Law of Limitation Act, 1971 and s. 43 of the Act would apply, prescribing a time limit of 60 days. The following cases were also cited in support Re John Zavellas, the debtor, 1 T.L.R. 495; Re Cohen (A Bankrupt)  Ex parte the Bankrupt v. Inland Revenue Commissioners and Another (1952) 2 All E.R. 36. The relevant law, s. 103 (1), Bankruptcy Ordinance, reads: “The court may at any time review, rescind or vary any order made by it.”

            Held: (1) “I do not consider either case to the point, or even of any assistance in resolving this present issue. To take the local case first, that of John Zavellas, the debtor, that case was decided under section 100 of the Bankruptcy Ordinance, 1930, the date 1931 incidentally given in the report of the case, being no doubt a mistake. Section 100 of the Ordinance read: “100. (1) The court may review, rescind or vary any order made by it ……” This section was amended by the Bankruptcy (Amendment) Ordinance, 1958, section 17, which reads: “17. Section 100 of the principal Ordinance is hereby amended by inserting immediately after the words “The court may’ in subsection (1) thereof the words ‘at any time’.” Likewise, the English case is of no assistance, as it was decided under section 100 of the Bankruptcy Act 1914 …… As noted, neither section 100 of the Bankruptcy Ordinance, 1930 nor the English Bankruptcy Act, 1914 contain the words ‘at any time’, which were added to the section b the Bankruptcy (Amendment) Ordinance, 1958. Pausing there, if it were held that section 103 of the Bankruptcy Ordinance does not provide any time for the bringing of an application to review, rescind or vary an order made by it, the words ‘at any time’ would not only be superfluous but meaningless. And it is not irrelevant, in fact extremely material, to point out that the legislature went out of its way and expressly amended the old section by the addition of the words ‘at any time’. I must confess I have consulted the Bill of the Amendment Act to ascertain whether any reason was given in the Bill for the amendment, but although reasons are given for the various other amendments, no reason at all has been given for the amendment provided for in section 17, adding the words “at any time’ probably because the reason is self-evident …… I therefore have not the slightest hesitation in holding that section 103 prescribes a period for the review, rescission or variation by the court of an order made by it, and the period provided is unlimited in time ……. I hold that the application is not time-barred and now propose to deal with it on its merits.” (2) “Mr. Lakha bases his application for the rescission of the receiving order on two grounds. The first is that the statement of Affairs was filed on the 8^th November, 1971 and this offends section 16(2) of the Ordinance ….. The second is that the Petition when filed was neither signed nor attested by the debtor and this is not disputed, he was apparently away at the time. Moreover, the Petition has not as yet been attested, and this offends Rule 109 of the Bankruptcy Rules ………. Mr. Lakha sumits that these formalities are mandatory and because of the debtor’s failure to observe them, the receiving order should be rescinded. Even accepting that these provisions are mandatory, by section 104(3) of the Ordinance: “The court may at any time amend any written process or

Proceeding under this Ordinance upon such terms, if any as it may think fit to impose.” And by section 132 (1): “No proceeding in bankruptcy shall be invalidated by any formal defect or by any irregularity, unless the court before which an objection is made to the proceeding is of opinion that substantial injustice has been caused by the defect or irregularity, and that the injustice cannot be remedied by an order of the court.” This section is mandatory, that the Court shall not invalidate any proceeding on account of any formal defect irregularity, unless the court is of the opinion that substantial injustice has been caused by the defect or irregularity ….  It is submitted by Mr. Lakha that if the application for rescission is rejected the applicant creditor would suffer, for if the receiving order is upheld, it would have he effect of releasing the surety entered into by the debtor’s wife and so cause injustice to the applicant ……That loss however is only a side effect of the receiving order made. I cannot, therefore, be said that the loss has been or would be, occasioned by any defect or irregularity set up in the application.” (3) Application rejected.