National and Grindlays Bank, Ltd. v.Mohamedali Shariff, Bankruptcy Cause 6-D-67, -/8/68, Hamlyn J.

National and Grindlays Bank, Ltd. v.Mohamedali Shariff, Bankruptcy Cause 6-D-67, -/8/68, Hamlyn J.

Petitioner creditor brought an action to have the debtor adjudge bankrupt. The petition was accepted by the court and a receiving order made. Section 20 (1) of the Bankruptcy Ordinance, Cap. 25, provides that after the creditors Ordinance, Cap. 25, provides that after the creditors have met, if they do not agree to a composition or other scheme as provided in the Ordinance, the debtor

Shall be adjuged bankrupt. The proper procedures under section 20(1) were complied with, whereupon the creditor now seeks an adjudication of bankruptcy. The debtor at this point alleges that because of certain “irregularities” in the creditor’s claim, the question of whether there was an ct of bankruptcy at all should be reopened. The creditor argued that once the petition of bankruptcy was accepted by the court, which under section 7 of the Ordinance is empowered to dismiss such petition if it is not satisfied with the proof of the petitioning creditor or of the act of bankruptcy, the issue of whether there has been an act of bankruptcy is closed.

            Ruled: Section 104(2) of the Ordinance provides: “The courts may at any time adjourn any proceedings before it upon such terms, if any, as it may think to impose.” The Court noted that “in the present case, the debtor has set out in his affidavit a number of allegations, one of which raises the question of the correctness of the creditor’s claim, and states that the figure given therein is incorrect … The allegation of the debtor … is a serious one, nor has any counter-affidavit been filed putting the matter into issue. It would .. be a strong thing for this Court to rule in the face  such allegation of the debtor, that without any inquiry into the truth or otherwise of the affidavit, adjudication should be made forthwith. It may be that the debtor’s contention has no real basis in either fact or law, but it is clearly impossible at this stage for this Court to say. There is nothing sacrosanct about the decree annexed to the Bankruptcy Notice as would warrant this Court to disregard the contentions contained in the debtor’s affidavit …” (Citing Boaler v. Power (1910) 2 K.B.229, where “even after adjudication the court inquired into the validity of the petitioning creditor’s judgment.”) The Court found that the debtor’s affidavit contained “good reason” or granting an adjournment of the proceedings to enable him to produce his objections to an adjudication of bankruptcy. It was so ordered.