Patel v Patel and Others (C.A. 28/1982.) [1933] EACA 1 (1 January 1933)

COURT OF APPEAL FOR EASTERN AFRICA.

Before SIR JACOB BARTH, C. J. (Kenya), SIR JOSEPH SHERIDAN, C. J. (Tanganvika), and LAW, Ag. C. J. (Uganda).

AMBALAL N. PATEL (Appellant) (Original Trustee)

1, D. C. PATEL; 2, E. S. FRANK; 3, ESSAJEE AMIJEE AND SONS (Respondents) (Original Objectors). C. A. $28/1932$ .

- Kenya Bankruptcy Ordinance, 1930, section 91-Release of Trustee. - $Held$ (31-12-32).—That the fact that a Trustee in bankruptcy did not<br>comply strictly with section 22 (8) of the Bankruptcy Ordinance,<br>by failing to summon a meeting of creditors to fill a vacancy on<br>the Committee of Inspec

Schwartze for Appellant.

Mangat for Respondents.

Schwartze.—There can be no real objection to release of trustee. He has realized the property and distributed dividend. Failure to comply with section 22 (8) did not reflect in any way on the creditors.

Mangat.—In absence of committee of inspection creditors would not be aware of a claim wrongly admitted as in this case.

Schwartze replied.

SIR $J_{ACOB}$ BARTH, P.—This is an appeal from the judgment of Thomas, J., of the Supreme Court of Kenya, in an application for the release of the trustee in the bankruptcy estate of the Pioneer Printing Press.

The respondents objected to such release on various grounds. which were dealt with by the learned Judge, who found that none of such grounds afforded a reason for refusing the trustee's release, but he refused the release on a ground raised by himself. This ground was shortly that the trustee had failed to fill the vacancies in the committee of inspection caused by one member dying and another going away, leaving one member only (cf. section 22 (8), Bankruptcy Ordinance, 1930). I entirely agree with the observations of the learned trial Judge that the trustee's failure was most irregular and improper.

But it must be considered what would be the effect of now filling the vacancies.

The estate has been administered, and final accounts have been filed.

The Official Receiver, in his evidence, said that the refusal of the trustee's release on the ground relied on by the learned trial Judge would mean the appointment of a committee of inspection which would have nothing to do.

There is no suggestion that the trustee has exercised any powers for which the permission of the committee of inspection under section 57 of the Bankruptcy Ordinance is required. If any result beneficial to the estate would accrue from reconstituting the committee of inspection, the order refusing the trusted's release would of course be easily supported. As it is, I apprehend that the position of the creditors would not have been improved by appointing new members of the committee. In view of the negatory effect of any appointment to the committee at this stage, I am of opinion that the trustee should be released and should have the costs of this appeal and of the proceedings in the Court below.

SIR JOSEPH SHERIDAN, C. J.—This appeal relates to an unsuccessful application by a trustee in bankruptcy for his release. The application was opposed by certain creditors, who particularized their objections to the release being granted. Tte application was heard and considered by the Supreme Court, and the learned Judge dismissed all the objections. He-however, refused to grant the release on the ground that the trustee had not complied with the provisions of section $22$ (8) of the Bankruptev Ordinance, which provides: "On a vacancy occurring in the office of a member of the committee, the trustee shall forthwith summon a meeting of creditors for the purpose of filling the vacancy, and the meeting may by resolution appoint another creditor, or other person eligible as above to fill the vacancy." The committee referred to is a committee of inspection which creditors qualified to vote may at their first or any subsequent meeting appoint for the purpose of superintending the administration of the bankrupt's property by the trustee. The judgment, in referring to sectoon 22 (8), proceeds: "The trustee has not complied with those requirements. In view of the objections, I cannot grant the application for a release until the trustee has strictly conformed to the requirements of the law." With regard to this passage, I am of the opinion that once the objections were disposed of in

favour of the trustee, the release should not have been withheld. The Official Receiver, in his evidence, stated that if the trustee's release were refused it would merely mean appointing a committee of inspection who would have nothing to do. It has not been suggested in this case that the trustee exercised any powers for the exercise of which the permission of a committee of inspection is required by section 57 of the Ordinance. In my view, the appointment of a committee of inspection at

this stage would effect nothing, and I would allow the appeal and grant the trustee his release, with costs of the appeal and in the Court below.

Law, Ag. C. J.—The appellant in this case has appealed against the judgment of Thomas, J., refusing his discharge from his trusteeship in re J. D. Patel, Bankruptev Cause No. 97 of 1931. The reasons for the refusal are that the appellant continued to act as trustee with only one remaining member of the committee of inspection, after one of the members had gone away and another had died. Such conduct, in the opinion of the. learned Judge, was most irregular and improper. The fact are not really in dispute. Counsel for respondents took objection to the appeal on two preliminary points, namely, that: 1, under Rule 94 (b) there had been no omission nor refusal by the Court to exercise a discretionary power; 2, under Rule 13 (2) of the Court of Appeal Rules, 1925, all the creditors had not been served with notice of appeal.

By our order of the 8th December, 1932, these objections were overruled, and the appeal was directed to be proceeded with. In my opinion, the success or otherwise of the appeal lies in the consideration, as provided by section 129 (1) of the Bankruptcy Ordinance, 1930, as to whether or not any substantial injustice had been caused by the defect or irregularity complained of. On behalf of respondents, it was urged, in the main, that the appellant had admitted a claim of the debtor's brother, who had thereafter paid him a judgment debt under threat of execution proceedings. No action, however, was taken against the appellant in respect of the admission of that claim, either under section 79 of the Ordinance or under the Rules contained in the Second Schedule thereto. The learned Judge therefore refused to consider this matter in this connexion, and I agree that he was right in this respect. This incident cannot now be brought up against the appellant as a defect or irregularity causing substantial injustice; the persons concerned had their remedy and did not pursue it at the proper time. No other act has been suggested against appellant as improper, or as having caused substantial injustice to the general body of creditors of the estate.

A committee of inspection is principally an advisory body to assist a trustee. It is true that a trustee has to obtain its permission in certain matters, such as those provided for in section 57 of the Ordinance. By omitting to have the vacancies filled, as in the present case, it has not been established nor suggested. what authority or permission the appellant failed to obtain from the committee. In the circumstances therefore, I would allow? the appeal with costs and grant the appellant his release.