Rex v Ilam Din (Criminal Appeal No. 579 of 1947) [1948] EACA 62 (1 January 1948)

APPELLATE CRIMINAL

Before SIR BARCLAY NIHIL, C. J.

REX, Respondent (Original Prosecutor)

v.

MOHAMED ALAN s/o ILAM DIN, Appellant (Original Accused) Criminal Appeal No. 579 of 1947

Bankruptcy offence—Trader failing to keep proper books of account, Bankruptcy Ordinance, 1930, section 138 (1)—Defence that omission was honest and excusable, section 138, proviso (b)—Onus of proof—Penalty for offences contra section 138 vide section 143 (1)—Imposition of fine inexpedient and improper though not ultra vires—Sentence of imprisonment alone substituted.

The appellant, an adjudged bankrupt, who had not kept proper books of account in connexion with his trade, relied on the defence that the omission was honest and excusable because as he was illiterate in English he left the duty of keeping the books, during the relevant period, to his partner, which the latter denied.

Held $(5-4-48)$ .—(1) That to succeed in a defence under section 138, proviso (b), of the Ordinance, the Crown having proved its case, the onus was on the appellant to establish such defence to the satisfaction of the Magistrate.

(2) The penalty laid down by the Ordinance for offences against section 138 is a term of imprisonment not exceeding two years, and whereas on account of the provisions of section 27 (3) of the Penal Code, it is not ultra vires to impose a fine, it is nevertheless improper and inexpedient to do so.

Appeal dismissed.

Sentence of imprisonment and fine quashed. Reduced term of imprisonment substituted. Woolmington v. Director of Prosecutions 25 Cr. App. R. p. 72 distinguished.

Morgan for the Appellant.

Holland, Crown Counsel, for the Crown.

JUDGMENT.—The appellant in this case was convicted by the Resident Magistrate. Nairobi, for failing to keep proper books of accounts contrary to the provisions of section 138 of the Bankruptcy Ordinance. The appellant, who is an Indian trader, illiterate in English, presented a petition in bankruptcy on 28th December, 1946, and was adjudicated a bankrupt on 28-2-1947. It is not in dispute that at no time has he produced any proper books of account to the Official Receiver regarding his trade or business during the three years immediately preceding the date of the presentation of his petition as required by section 138 of the Ordinance as amended by section 14 of Ordinance 14/1944. His defence is that during the relevant period December, 1943, to December, 1946, the only trade or business on which he was engaged, was carried out in partnership with one Mohamed Abdul Latif to whom he left the duty of keeping the books of the business because he was literate in English. Unfortunately for the appellant this has been denied by the expartner and there was no documentary evidence before the learned Magistrate to support the appellant's contention that one of the main reasons why he took Abdul Latif into partnership was because he was educated and able to keep books. Even if that may have been in the appellant's mind at the time the first partnership was formed it is evident that he

took no steps thereafter to ensure that proper books of account were in fact kept and they were not kept. It is a defence to a charge under section 138 of the Bankruptcy Ordinance if the accused person can prove that the circumstances in which he traded or carried on business were such that the omission to keep books was honest and excusable. It has been contended for the appellant that the Magistrate misdirected himself in holding that it was for the appellant to prove conclusively that his other partner had kept the books and Mr. Morgan has called in aid the principles enumerated in *Woolmington v. Director of* Public Prosecutions. I can see nothing parallel in the circumstances of this case. In Woolmington's case the accused put forward an explanation which the prosecution evidence could not rebut and it was held that therefore the onus placed on the Crown to prove that an offence had been committed had not been discharged. In the instant case the appellant's evidence was in conflict with the main prosecution witness and the Magistrate was accordingly entitled to discount it unless satisfied as to its truth. Taking the evidence as a whole I am of the opinion that the Magistrate was clearly entitled to come to the conclusion that he did. A defence was open to the appellant under the provisions of para. (b) of the proviso to section 138 but the onus was on him to establish this defence to the Magistrate's satisfaction and that he failed to do.

The appellant has also appealed against sentence and here I think he is on firmer ground, for I am not satisfied that the Magistrate in this respect sufficiently directed his mind to what he was doing. The penalty section of the Bankruptcy Ordinance applicable to section 138 makes no mention of a fine as an alternative or additional to a sentence of imprisonment. It is true that on account of the extraordinary provisions of section 27 (3) of the Penal Code the Magistrate's order with regard to a fine is not *ultra vires* but I cannot believe that it is either proper or expedient to apply that sub-section to offences in bankruptcy where the Bankruptcy Ordinance itself excludes the power to impose a fine. Furthermore the reason for such exclusion seems obvious. An adjudicated bankrupt has no estate of his own so that a fine imposed on a bankrupt if it is to have effect is a fine on his trustee in bankruptcy, and if recoverable could only be recoverable to the prejudice of the creditors. If it is not recoverable against the trustee in bankruptcy and I offer no opinion on this point the effect against the bankrupt himself can only be to send him to prison for a further term in default of payment. From the Magistrate's not very clear note on the question of sentence it would appear that had he not imposed a fine of Sh. 600 he would have sentenced the appellant to a longer term of

imprisonment than six months. I incline to the view however that the Magistrate has erred on the side of excess in the general circumstances of this case. This is the appellant's first bankruptcy and he has no previous convictions. Counsel for the Official Receiver did not call for a heavy or deterrent sentence and the Magistrate himself has accepted it as proved that the appellant is a man of little education. Furthermore from my perusal of the statement of affairs (Ex. 5 in the Bankruptcy file) it seems evident to me that at least some of his misfortunes must be due to a failure on the part of his ex-partner to give effect to the provisions of clause 2 of the agreement between them dated 29th September, 1945 (Ex. 9). The Magistrate was clearly right in regarding the offence as a serious one for which responsibility cannot be evaded merely on a plea of illiteracy but I think that in the result he has been unconsciously, but at the same time unduly harsh, on the present appellant. In dismissing this appeal therefore I quash the sentence of imprisonment and fine imposed and substitute therefor a sentence of three months' imprisonment without hard labour. The fine if already paid to be remitted.