Sharma v Goundar [2012] FJMC 205; Bunkruptcy Case 23.2012 (27 August 2012)

IN THE MAGISTRATES COURT
AT NASINU

Backruptcy Case No. 23/12

BETWEEN:

HARISH CHAND SHARMA and UTTRA KUMARI
[Judgment Debtors]

AND:

ADI NARAYAN GOUNDAR and PRIYA ANJANI
[Judgment Creditors]

Mr. Siddharth Nandan (Reddy and Nandan Lawyers) for the Judgment Debtors
Mr. Raman Singh (Messrs Kohli & Singh) for the Judgment Creditors

Ruling on Objections (Locus Standi)

[1] This case emanated by filing REQUEST TO ISSUE BANKRUPTCY NOTICE by the judgment creditor’s solicitor Mr. Raman Singh. He says that;

1. I, Raman Pratap Singh, of Kohli and Singh of 77 Cunning Street, as Solicitor for the above named Judgment Creditor Adi Narayan Goundar and Priya Anjani hereby request that a Bankruptcy Notice be issued by this Court against the above named Judgment Debtors Harish Chand Sharma and Uttra Kumar both of Kanace Road, Valelevu, Nasinu.
   
2. To the best of my knowledge and belief of the Judgment Debtors Harish Chand Sharma and Uttra Kumari have greater part of the past (6) months resided at Kanace Road, Valelevu, Nasinu within the Jurisdiction of this Court.
   

100. I produce a sealed true copy of the final Judgment obtained by Adi Narayan Goundar and Priya Anjani and obtained from the First Class Magistrates Court at Nasinu on the 19th day of September, 2011.
     

4. Execution on the said Judgment has not been stayed.
   

[2] Being satisfied the court issued bankruptcy notice. Thereafter, Mr. Raman Sigh also filed the affidavit verifying debts to recover sum of $15,000 with interest at the rate of 5% per annum from the date of judgment for Judgment Creditors.

[2] In his AFFIDAVIT VERIFYING DEBT, he says;

1. That I am the Solicitor for the Judgment Creditors in the above action.
   
2. That Judgment in the sum of $15,000.00 together with 5% interest together with costs was entered against the Debtors in the Magistrates Court at Nasinu in the Civil Action Number 04 of 2010 on the 19th day of September, 2011.
   

100. That since the date of Judgment, till to date the Debtor has not paid any money.
     

4. That Bankruptcy Notice was served on the Debtor on 25th day of March, 2012 and there was no response from the Judgment Debtors.
   
5. That on the 29th day of May, 2012 a Bankruptcy Petition was served on the Debtor and the matter is coming on the 19th day of June, 2012.
   
6. That therefore I pray that receiving order be made against the Debtors.
   

[3] The Judgment Debtor had filed objections for this application though his solicitors’ clerk, he says as follows;

1. I am in the employed by the Judgment Debtor’s Solicitors and am duly authorized to swear this Affidavit on the Judgment Debtor’s behalf.
   
2. I am advised by the Judgment Debtor’s Solicitors and verily believe that the Petition filed by the Judgment Creditors herein is defective for the reasons:
   

100. Raman Pratap Singh is not the Judgment Creditor therefore cannot petition the Honorable Court.
     

4. The Petition does not comply with Section 7 (2) of the Bankruptcy Act.
   
5. For the reasons stated hereinabove, I pray to the Honorable Court to dismiss the said Petition.
   

[4] Matter was set for arguments on 31st July 2012. Mr. Nandan said that the Petition is defective and cannot be cured. He said to get receiving order the proper petitioner is the judgment creditor. Mr. Raman Singh has signed the Notice and it is fundamental error which cannot be cured. He made submissions in line with section 6 of the Bankruptcy Act. Further he said the petition has filed against two petitioners and it has to be two separate actions as the Official Receiver cannot act jointly in this case. He said that rules on Bankruptcy are stringent and the judgment creditors must observe all rules without fail. If not petition would become nullity and should be dismissed. He relies on Prasad v Lila Wati [1997] FJHC 55; HBF0009j.1996s (6 May 1997).

[4] In replying to the objections of the Judgment Debtors, Mr. Singh says that under section 7(1) of the Bankruptcy Act he can file the notice on behalf of the Judgment Creditors. He has authority to sign the petition. Regarding the objection of two petitions to be filed that is matter for the official receiver. The Magistrate court action was filed against the two debtors therefore they had joined two judgment debtors. He seeks objections should be dismissed and receiving order be granted.

[5] The crux of the objection is can the agent (solicitor) file Bankruptcy Petition? Can Mr. Raman Pratap Singh file bankruptcy notice and petition on behalf of his client?

[6] I reproduce section 6(1) for clarity. It says that;

6.-(1) A creditor shall not be entitled to present a bankruptcy petition against a debtor unless-

(a) the debt owing by the debtor to the petitioning creditor, or, if two or more creditors joint in the petition, the aggregate amount of debts owing to the several petitioning creditors, amounts to one hundred dollars; and

(b) the debt is a liquidated sum, payable either immediately or at some certain future time; and

(c) the act of bankruptcy on which the petition is grounded has occurred within three months before the presentation of the petition; and

(d) the debtor is domiciled in Fiji, or within a year before the date of the presentation of the petition has ordinarily resided, or had a dwelling-house or place of business, or has carried on business, in Fiji, personally or by means of an agent or manager, or is or within the said period has been a member of a firm or partnership of persons which has carried on business in Fiji by means of a partner or partners, or an agent or manager,

nor, where a deed of arrangement has been executed, shall a creditor be entitled to present a bankruptcy petition founded on the execution of the deed, or on any other act committed by the debtor in the course or for the purpose of the proceedings preliminary to the execution of the deed, in cases where he is prohibited from so doing by any law for the time being in force relating to deeds of arrangement.

[7] The Section 7 (1) says that;

7.-(1) A creditor's petition shall be verified by affidavit of the creditor, or of some person on his behalf having knowledge of the facts, and served in the prescribed manner.

[8] Issue to be decided here is should the creditor file the petition for himself. The objection is based on section 6 of said Act. It says “A creditor”. It does not specify a creditor himself should file the petition. The general rule is every procedure is not specifically prohibited by law is deemed to be permitted. This legal maxim is Generalis regula generaliter est intelligenda - A general rule is to be generally understood. There is no prohibition in section that the creditor only has locus standi to present the bankruptcy petition. Further, the relationship of the Judgment Creditor and Mr. Raman Singh is solicitor client basis. This relationship is subjected to law of agency. This common law principle in operation is usually represented in the Latin phrase, qui facit per alium, facit per se, i.e. the one who acts through another, acts in his or her own interests and it is a parallel concept to vicarious liability and strict liability in which one person is held liable in criminal law or tort for the acts or omissions of another. Further if the Judgment Creditor is Company, Partnership or other juristic person this hard and fast rule cannot be adhered. Thus, I hold that solicitor can file bankruptcy petition on behalf of his client. Therefore, Mr. Raman Pratap Singh has locus standi to file this petition. The first objection is thereby suppressed.

[9] The second objection is that two separate petition to be filed against judgment Debtors. This is a matter for receiver. The judgment is given against the Judgment Debtors jointly in civil suit and there cannot be two bankruptcy petitions. For procedural streamline, receiver could address this issue jointly or separately. That is matter for the receiver. I hold there is nothing in this objection.

[10] Setting aside Bankruptcy Notice is a discretionary remedy. The Court may in its discretion set aside the Bankruptcy Notice, however in order to do so the Judgment Debtors must satisfy the Court in accordance to Section 3 (1) (g) of the Bankruptcy Act Cap 48 that “he has a counter-claim, set-off or cross-demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid, and which he could not set up in the action in which the judgment was obtained, or the proceedings in which the order was obtained”.

[11] This is considered in the leading case of Hussein v Official Receiver [2010] FJHC 70; HBA0006j.2000s (26 May 2000) Her Ladyship Justice Shameem held that the Appellant's Affidavit made in response to the Bankruptcy Notice was erroneous whereby it did not allege a counter-claim, a set-off or cross demand which exceeds the amount owed and hence the application for setting aside Bankruptcy Notice was dismissed.

[12] In this application the Judgment Debtors have failed to address any of above defences. Their application is based on defectiveness of the petition namely the petition was not duly presented by the Judgment Debtors and this application cannot be tenable. I hold this petition is effective on law of Bankruptcy.

[13] I make following orders;

a) The Judgment Debtors' objections are hereby dismissed.

b) Receiving Orders are granted against the 1st and 2nd Judgment debtors.

c) There will be no cost in this application.

Orders accordingly,

On 27th August 2012, at Nasinu, Fiji Islands

Sumudu Premachandra
Resident Magistrate-Nasinu