This appeal arises out of certain insolvency proceedings taken by the Bank of Bengal against a firm of Mahomedan merchants carrying on business at Chittagong. This firm was composed of four persons whose names are set out in the petition of the 4th April 1898 filed on behalf of the Bank of Bengal. It appears that these people were indebted for a considerable amount to the Bank, and that some time in the month of January or February 1898 a suit was brought against them by the Bank for the recovery of a sum of Rs. 55,280, which with costs and interest, came up to Rs. 58,000 odd. On the 14th of March 1898 there was a decree in favour of the Bank, but previous to that date, namely, on the 18th February 1898, the Bank obtained an equitable mortgage in respect of the aggregate debts due from this firm, which came up to Rs. 1,58,000 odd. Having obtained that decree on the 14th of March 1898 the Bank proceeded under the provisions of Ch. XX of the Civil Procedure Code and applied on the 4th of April 1898 to have the members of the firm declared insolvents. The application, though it bears date the 4th of April, seems to have been actually presented on the next day, for the order upon it is of the 5th of April. By that order the Bank's petition was directed to be registered and notices were ordered to be issued to the pleaders of the judgment-debtors fixing the 7th of April for the hearing of the case. On the 7th some of the judgment-debtors were examined, and the learned Judge thereupon made the following order:—“The judgment-debtors are declared insolvents. A Receiver will be appointed. Notices to be published as directed by sec. 354. The 21st May is fixed for the filing of schedules” (meaning thereby a list of claims) “by other creditors. Notices to be published at the Court-house and in the local papers. The decree-holder to pay the costs of these notices within three days.” It is unnecessary to refer to the order of the 14th of April 1898, as no question arises upon it. On the 19th of April, upon an application of the same date by the Bank of Bengal, supported by an affidavit of Mr. Coutts asking that the debts of the Bank of Bengal may be taken as secured by the mortgage of the insolvent's property, the learned Judge declared that the debts be treated as secured. There seems to be some misapprehension regarding the amount respecting which that application was made, for the sum mentioned in the petition is Rs. 1,16,005 and not the entire amount for which the equitable mortgage was obtained on the 18th February 1898. On the 20th of April, however, the learned Judge cancelled the order of the 19th and declared that, subject to future objections, the scheduled debts of the Bank of Bengal were to be treated as not secured by any mortgage. There was a further application by the Bank, on the 25th of April 1898, and upon hearing Mr. McNair on its behalf, the District Judge, on the 26th of April 1898, revoked his order of the 20th April, and directed that, subject to future objections, the Bank's debt be declared to be secured by the mortgage. On the same day notices were directed to be issued to the creditors directing them to prove their claims by the 21st of May. On this date a number of petitions were filed by various persons alleging themselves to be the creditors of the insolvents. To the objections urged in those petitions we shall refer presently. On the 21st of May the learned Judge ordered that a schedule be prepared of the claims proved, and rejected the present Appellant's prayer for re-opening the insolvency on the technical ground that notice was not published in Court. The present appeal is from the orders of the 7th, 19th and 26th April and 21st May 1898 respectively.

The learned counsel for the Appellant has raised in this Court questions of a somewhat multifarious character which are not really covered by the appeal. The objections other than those directed against the orders from which the appeal is preferred relate to certain proceedings taken subsequent to the 21st May regarding the sale of the judgment-debtor's properties and the set off by the Bank of Bengal of its claim against the purchase-money. These will be dealt with later on.

As regards the orders appealed against it is contended in the first place that the petition of the 4th of April 1898 was not properly verified, and, secondly, that no notice was directed to be posted up in Court as provided for in sec. 347 of the Code of Civil Procedure, or was in fact so posted up, and that therefore on these two preliminary grounds alone the adjudication made on the 7th of May was void ab initio. It was also urged that the learned Judge was wrong in not examining on the 7th of April, when he made the adjudication of insolvency, all the debtors, and in not keeping in view the requirements of sec. 351 of the Civil Procedure Code, which alone, if found to be existing, would justify an Order of insolvency. It was further contended that inasmuch as it appeared, that the insolvents had incurred debts after their business had come to a stand-still, there was reason to suppose it was not a proper case in which the debtor should be declared an insolvent, and consequently the adjudication ought to be set aside. A further argument was raised upon the basis that one Anu Meah, who was the manager of the branch business of the insolvents at Akyab, was not made a party to these proceedings. There were other minor objections to which we shall refer cursorily in the course of our judgment.

We propose to dispose in the first place of the objections as to the verification and the notice not being posted up as provided for in sec. 347 of the Code of Civil Procedure. It is quite clear that the Bank of Bengal is a Corporation, and consequently the procedure laid down in sec. 435 regulating actions instituted by corporations is to be applied to suits or proceedings instituted by or on its behalf. Sec. 435 provides that “in suits by a corporation, or by a company authorised to sue and be sued in the name of an officer the plaint may be subscribed and verified on behalf of the corporation or company by any director, secretary, or other principal officer of the corporation or company, who is able to depose to the facts of the case.” In the present case the petition was verified by a gentleman of the name of Henry Gray, Officiating Inspector of Branches, Bank of Bengal, and there is nothing to show that he was not the officer of the Bank authorised to sue or verify the petition on behalf of the Bank at Chittagong, or that he was not able to depose to the facts of the case. Beyond that we are not aware of any authority in which insufficiency of verification has been regarded in the appellate stage as a ground for dismissing altogether the proceedings had in the first Court. On the contrary the two cases Rajit Ram v. Katesar Hath and Basdeo v. John Smidt lay down in express terms that although, if objection is taken to defective verification at an early stage when the case is on trial in the first Court, the plaint may be returned to the Plaintiff for the purpose of remedying the defect, yet in the appellate stage, if there is no reason to suppose that any body is prejudiced by the defective verification, it will not be taken as a ground either for returning the plaint for amendment or for refusing relief on the basis of the alleged defect in the plaint. In the present case there is nothing to show that any person has been prejudiced by any defect, if defect there is, in the verification of the petition. We accordingly overrule this objection.

We now come to the objection as regards the notice required by sec. 347 of the Civil Procedure Code. That section (leaving out the portions which are not material to the present case) runs as follows:—“The Court shall fix a day for hearing the application, and shall cause a copy thereof, with a notice in writing of the time and place at which it will be heard, to be stuck up in Court and served at the applicant's expense” …..where the applicant is the decree-holder, on the judgment-debtor or his pleader.” There is no question that the notice was served upon the judgment-debtors as required under the Act. Admittedly, however, it was not “stuck up” in the Court house, and Mr. Hill's contention is that provision is of a mandatory character, and that therefore all subsequent proceedings based upon it are void. We cannot agree in that view. In our opinion that provision, intended for the purpose of giving notice at an initial stage to persons who may possibly be interested in the adjudication, is merely of a directory character, and its non-compliance does not go to the jurisdiction of the Court to deal with the matter. There is certainly no reason, so far as the application of the decree-holder is concerned, for supposing that it is mandatory, whatever reasons there may be for regarding it to be so in the case of an application by a judgment-debtor. It is unnecessary to refer to authorities in support of the proposition we have just stated. We may refer, however, to the two cases cited at the bar, Reid v. Croft, Wright v. Maunder, as abundantly bearing out our view. Besides, having regard to the object with which the notice is required to be posted up, it seems to us that non-compliance with the provision relating to it must be taken as a mere irregularity, which, in the absence of any proof of prejudice, must be considered as cured by the provisions of sec. 578, of the Civil Procedure Code.

Before dealing with the questions, which have been raised under secs. 350 and 351 of the C.P.C, and the allegations of fraud and collusion put forward on rather an extensive scale against the Bank, we will address ourselves to the minor objections which relate to Anu Meah not being made a party and other matters of a similar kind.

The decree upon which the Bank of Bengal applied for an order under sec. 344 was a decree, so far as we can gather from these records, against the four insolvents and against the four insolvents only. Anu was not a party to the suit in which the decree was made, and the Bank of Bengal was therefore not in a position to include him in the petition for insolvency. If Anu Meah is in any way interested in the insolvency, or has any part of the assets of the insolvents in his hand the procedure is quite plain. It is not for us to indicate what course should be taken to bring those assets within the provision of these proceedings.

It was urged that it has not been shown what portion of the Bank's debt was secured and further that the bills of exchange did not carry interest. These are matters, which, in the view we take, will be dealt with when the case goes back to the Judge. It was also objected that the Bank was not entitled to claim the benefit of the equitable mortgage executed in its favour at Akyab, inasmuch as equitable mortgages are not valid in any place in which the Transfer of Property Act was in force. There appears to be no doubt that the section in question has been extended by a Government notification to the local limits of the ordinary civil jurisdiction of the Recorder of Rangoon in other words to the town of Rangoon and has not been extended to Akyab. The Bank's contention (as embodied in its petition of the 26th of April), is that “in accordance with the practice of the Burmah Courts, equitable mortgages have uniformly been held to be valid in all parts of British Burmah,” and that the extension of the Act referred to above does not affect Akyab. This is a question of fact which will be dealt with by the learned Judge upon evidence.

We now come to the objections relating to the procedure adopted by the District Judge. It has been contended that under sec. 350 of the C.P.C the Court was bound to examine the judgment-debtor in the presence of the persons on whom notices had been served or their pleaders, and that this was only partially done by the District Judge on the 7th of April. Further that under sec. 351 before the adjudication order could be made the Court must be satisfied that the judgment-debtor had not, with intent to defraud his creditors, concealed, transferred or removed any part of his property since the institution of the suit in which the decree was passed, in execution of which he was arrested or imprisoned, or the order of attachment was made, or at any subsequent time: that he had not, knowing himself to be unable to pay his debts in full, recklessly contracted debts or given an unfair preference to any of his creditors by any payment or disposition of his property: and that he had not committed any other act of bad faith regarding the matter of the application. In connection with these grounds set forth in sec. 351 it was alleged that upon the evidence of the insolvents who had been examined it appeared that they had contracted debts after the business had come to a close. Reference was made to Mahomed Yakoob's statement that Rahim Baksh had concealed a considerable portion of the assets; and it was accordingly contended in a two fold way that the learned Judge was wrong in adjudicating the Appellants as insolvents, because he did not decide whether there was an absence of the circumstances which are set out in sec. 351, and, secondly, that he did not consider the evidence of Mahomed Yakoob as to the suppression of property by Rahim Baksh. In considering how far these two objections are applicable to an application by a judgment-creditor one has to go back to the provisions of the previous Act (X of 1877) in order to discover the intention of the Legislature regarding the purport and scope of Chapter XX of the Civil P. Code. The Act of 1877 contained no provision for an application by a judgment-creditor. It merely enabled a person arrested or imprisoned in execution of a decree to apply to the District Court to be declared an insolvent, and the subsequent provisions kept in view that object alone. Sec. 350 of Act X of 1877 ran as follows:—“On the day so fixed or on any subsequent day to which the Court may adjourn the hearing, the Court shall examine the applicant in the presence of the persons on whom such notice has been served or their pleaders as to his then circumstances,” and so forth. And sec. 351 was in these terms. “If the Court is satisfied that the statements in the application are absolutely true; that the applicant has not, with intent to defraud his creditors, concealed, transferred or removed any part of his property since the institution of the suit in which was passed the decree in execution of which he was arrested or imprisoned or at any subsequent time; that he has not, knowing himself to be unable to pay his debts in full, recklessly contracted debts or given an unfair preference to any of his creditors by any payment or disposition of his property, that he has not committed any other act of bad faith regarding the matter of the application, the Court may declare him to be an insolvent, & c.” By Act XII of 1879, however, an alteration was made in the scope of Chapter XX, and by it a judgment-creditor was enabled to come in and get his judgment-debtor declared an insolvent. That alteration was subsequently embodied in the amended Statute, Act XIV of 1882, and is the law now in force. Sec. 350 of the present Code instead of using the term “applicant” uses the expression “judgment-debtor;” and similarly in sec. 351 instead of “applicant” the term “judgment-debtor” is used. It is obvious from the alterations and from the frame of the statute that the provisions of these two sections relate to an application by the judgment-debtor for relief under Ch. XX of the Civil Procedure Code, and that they cannot be interpreted so as to apply to an application by a judgment-creditor. It is not necessary to refer here to the Debtors' Act of 1869 in England, or to the provision of the Insolvency Act in Presidency-towns. We may mention, however, that under the Debtors' Act of 1869 the judgment-creditor may take out summons either for the commitment of the debtor or for his adjudication in insolvency, and discretion is vested in the Court, if the application is made for the commitment of the debtor, to proceed under the Bankruptcy Act instead of commitment. Nor under the Insolvency Act, which is in force in the Presidency-towns, is the creditor required to show all those various matters which are set forth in sec. 351, before he can get his debtor adjudicated an insolvent. The reason for the provisions in sec. 351 is obvious. The judgment-debtor comes into Court with the object of showing that he is not in a position to pay his debts and to obtain a discharge from his liabilities, and in the meantime to get protection from the Court regarding any process which may be taken out against him by the creditor and for that reason the legislature requires him to show that he comes into Court with clean hands, that he has not, with intent to defraud his creditors, concealed, transferred or removed any portion of his property, that he has not, knowing himself unable to pay his debts, recklessly contracted debts, or given an unfair preference to any of his creditors by any payment or disposition of his property, and that he has not committed any other act of bad faith. If the insolvent is found to have committed any of these acts, he is precluded from obtaining the benefit of Ch. XX of the Code. But these reasons do not, in our opinion, affect in the smallest degree the right of the judgment-creditor to come into Court and ask for the adjudication of the judgment-debtor as an insolvent. On the contrary under the English Bankruptcy law as also under the law in force in the Presidency-towns, among other matters, a fraudulent conveyance of property by a debtor is declared to be an act of bankruptcy. Probably it would have facilitated the working of Ch. XX by the mofussil Courts if the legislature had proceeded on the lines of the English law and prescribed certain acts on the part of the debtor as indicia of insolvency. But it has not chosen to do so. And under sec. 344 the judgment-creditor has merely to show that there is a judgment-debt due from the debtor which he has not paid or has not been able to pay, and that alone entitles him to obtain the order of insolvency provided for by the subsequent sections. Of course the mere fact that a judgment-debtor has not paid his debt does not show that he is in insolvent circumstances and if on the application of the creditor, such a question was raised by the debtor it would no doubt have to be considered in the light of the principles deducible from cases under the English Bankruptcy law. But it would be absurd to say that the very grounds upon which the judgment-creditor might insist upon the adjudication of the insolvent, if proved, should be taken as disentitling him to get the order of adjudication. The adjudication order is for the benefit of all the creditors of the judgment-debtor, and supposing it appears that the judgment-debtor is trying to dishonestly dispose of his property or otherwise to deal with it for the purpose of defeating his creditors, surely any one of the creditors might come in and ask that the judgment-debtor should be declared an insolvent, and the property placed in the hands of a Receiver for the benefit of the general body of creditors. If that were not so, it would reduce the provisions of Ch. XX of the Code to an absurdity. We hold, therefore, that secs. 350 and 351 do not apply to the case of an application by a judgment-creditor. Unfortunately, however, the legislature seems by some peculiar oversight not to have made any provisions regarding the procedure for dealing with the matter when once the application has been made by the judgment-creditor and the notices have been stuck up as provided for in sec. 347 of the Code. There is no doubt a hiatus in the Act; and it is difficult to conceive how the omission occurred but the intention of the legislature must be taken as perfectly clear both from the preceding section and the general scope of the chapter. We must take it that it was intended that effect should be given to the decree-holder's application in the way in which it is carried out both in England and in Presidency-towns; and we must therefore read in sec. 351 or after it, that in case an application is made under sec. 344 by the judgment-creditor and the requisites of that section and sec. 347 are complied with, the Court will make an order of adjudication in respect of the insolvent or insolvents, and then proceed with the matter as provided for by the subsequent sections. Besides, in the present case no difficulty, in our opinion, arises from the omission of the legislature referred to above or from the fact that no indicia of insolvency are prescribed in the Act, for the persons complaining are not the judgment-debtors. On the 7th of April when the debtors were examined and the receiving order made, they expressed their willingness to be declared insolvents. In England the Court has the power when making a receiving order on the application of the judgment-debtor to adjudge the debtor bankrupt if he appears and applies to that effect. Such an application may be made orally and without notice. We see no reason why the principle of that rule should not apply in this country. That being our view with reference to the principal argument, it remains for us to consider the contention that the allegations of fraud and collusion put forward by the Appellants on the 21st May were never taken into consideration by the District Judge.

On that date it appears a number of petitions were presented before the Judge on behalf of various persons who alleged themselves to be the creditors of the insolvents in this case. The petition of Krishna Kumar Ghosal is on page 12, of another creditor on page 13, of Amar Chand Mitter on page 14, and of Ram Katrial Shaha and another on page of the paper-book. None of these petitions are verified, and the allegations of unfair preference, collusion and concealment and transfer of property contained in them are of the vaguest and most general character. Nor does it appear that the District Judge was asked with reference to those allegations to take any evidence or to try those matters. The only question which seems to have been discussed before him on those petitions was the one which related to the non-posting of the notice, under the order of the 5th April; the learned Judge was quite right, in our opinion, in overruling that objection as technical and in refusing to re-open the insolvency, inasmuch as the adjudication order was in favour of all the creditors. It has been held both here and in England that an adjudication order can only be set aside on the ground that it has been obtained by a fraudulent representation of indebtedness in favour of the creditor who has obtained the order when there is no debt whatsoever, or for want of jurisdiction. But in this case, though vague allegations of collusion and undue preference are made, nothing of a tangible character is suggested in the petition of the 21st May. On both these grounds, firstly, that these allegations were not made in any specific form, and, secondly, that if they were made in a form which could be entertained, they were not pressed before the District Judge, we think the objections cannot be allowed to be taken at this stage. It has been held repeatedly that when charges of fraud and collusion are made, they must not be launched in a vague or general manner, but must be put in a sufficiently specific shape to enable the other side to combat them. We need only refer to the case of Wallingford v. The Mutual Society, and the decision of the Judicial Committee in Gunga Narain Gupta v. Tilukram Chowdhry.

Various suggestions have been made by the learned counsel for the Appellants that the Bank acted fraudulently in pushing through the sale and bidding for the property put up for sale and then purchasing it itself and also that it was improper on the part of the Judge to allow the Receiver to buy himself a piece of land belonging to the insolvents. As we have already mentioned, the matters relating to the sale are subsequent to the orders appealed against and we do not think it would be right for us to enter upon a discussion of those subsequent proceedings which do not form the subject-matter of the present appeal. If the other creditors insist upon the Bank proving its debt it will have to do so in the proceedings under sec. 353 of the Civil Procedure Code which are still pending before the District Judge; and it will then be for the Judge to decide upon the evidence before him how much of the Bank's debt is secured and how much is unsecured. It is difficult as well as inexpedient for us here at this stage to express any opinion upon that part of the case.

It will be open also to the Judge to consider whether the allegations contained in the subsequent petition, of the 23rd August 1898, which apparently is the first petition put in under sec. 353 insisting upon proof of the Bank's claim, are of a sufficiently definite and specific character, or whether they require to be much more precise in order to enable the Bank to meet them.

It was suggested by Mr. Hill for the Appellants that sec. 353 puts his clients in some difficulty as regards the onus of proof. We are afraid that argument proceeds upon some misapprehension. Under sec. 353 when any creditor requires any other creditor to prove his claim, the onus is upon the creditor who has to prove his claim to establish it in the way the Judge may consider advisable and expedient under the circumstances. No question of onus whatsoever arises. It is a matter to be dealt with by the Judge upon the evidence forthcoming in the case. The insolvents have not yet obtained their discharge, and, as we have already said, the District Judge has by an order of the 23rd of August stayed the proceedings “until the High Court have passed definite orders.” The insolvents will not obtain their discharge until after the Receiver has certified that they have placed him in possession of all their property, or done every thing in their power for that purpose. The interests therefore of any creditor in this case are perfectly secure. In our opinion this is a misconceived appeal which has only resulted in delaying the final settlement of the matters in dispute for a considerable length of time. If the matter had not been hung up by the appeal preferred in July 1898 probably the case would have been decided long ago, and the creditors would have received, if there was anything to be distributed, their dividends long ago.

With reference to the question of purchase by the Bank and the set off, we desire to express no opinion at this stage. It will be open to the learned Judge to consider it in connection with the question what portion of the Bank's debt is secured and what is not secured and other cognate matters.

If it is still alleged that the insolvents have concealed any portion of their property, the procedure is perfectly clear; the creditors making the allegation can apply for the examination of the insolvents, or place the Receiver in a position, to discover and realise the alleged concealed property. These are subjects for discussion before the Judge in the Court below.

As regards the purchase by the Receiver it was undoubtedly irregular, and we feel sure that if it had been brought to the notice of the District Judge, he would have cancelled his order permitting the Receiver to purchase the property. That purchase must be set aside.

The appeal is dismissed with costs, and the rule is discharged. We allow as pleader's fee to the Bank of Bengal, Respondent, twenty gold mohurs and to the Respondent, Rajani Kant Pal, 2 g.m

S.R.D

Appeal dismissed.