Walter Salis Schwabe, K.C., C.J.
1. The Chief Justice: By an agreement in writing dated the 2nd August, 1921 the insolvent purported to give to the garnishee his motor car as security for an advance by her to him of Rs. 3,000. It was a term of the agreement that the insolvent should have the right to use the car and should keep it in good order, and deliver it up on demand. He also agreed that, if he exercised any acts of ownership over the car, he should be criminally liable, a stipulation which can have no effect in law.
2. The other relevant facts arc that the loan was also secured by a joint promissory note of the insolvent and another renewed on November 9, 1921 to the end of January, 1922, and that by a letter dated February 10, 1922 from her Vakil, she demanded from the insolvent under threat of criminal proceedings that the car should be returned to her. The commencement of the insolvency was in May, 1922.
3. On these facts it is contended by the Official Assignee that he is entitled to the car free from any charge in favour of the garnishee as, being at the commencement of the insolvency with the consent of the true owner in the possession, order and disposition of the insolvent in his trade or business, and therefore under Section 52 of the Presidency Towns Insolvency Act, the property of the insolvent, divisible amongst his creditors; and it has been so held by Coutts-Trotter, J.
4. Now the legal owner of the property throughout was the insolvent, but the garnishee was the owner of an equitable interest in the property. It has been held on the true interpretation of Section 52 and of the same words in the English Bankruptcy Acts that the words 'true owner' include the owner of an equitable interest, and that there can also be a reputed owner of that interest and that reputed owner can be the insolvent himself, that is, the legal owner of the property, see The Mercantile Rank of India, Ltd., Madras v. The Official Assignee of Madras I.L.R. 39 M. 250 following the judgment of Bhashyam Aiyangar, J. in Punithavelu Mudaliar v. Bhashyam Aiyangar I.L.R. 25 M. 406 ; and see the English cases set out in Williams on Bankruptcy, 12th Edition, at p. 217. In Colonial Bank v. Whinney L.R. 11 A.C. 426 it was held that where there was an equitable mortgage of shares by the deposit of the share certificate and a bank transfer, the registered shareholder remaining the legal owner, the depositee got an equitable interest and that another person could be the reputed owner of that equitable interest. The result is that, in this ease the garnishee must be taken to be the true owner of the equitable interest in this car conferred by the agreement of August 2, referred to above but the car being left in the possession of the insolvent with power to use it to all appearance as though it were his own he had become the reputed owner. But it is essential for the section, to apply that he should at the commencement of the insolvency be the reputed owner with the consent of the true owner. Now the question is whether the true owner was at that time consenting or not to the reputation of ownership to the reputed owner and that is a question of fact. In this case the letter of February 10, 1922 is in very plain language: 'Under instructions from Mrs. Aburubammal I call upon you to forthwith return the car which has been given as security for the amount you have borrowed from her and which you have taken promising to return when demanded. You have not returned the car when demanded by her. Please take notice that, if the car is not sent at once, criminal proceedings will at once be instituted against you.' I should infer from the terms of that letter that there had been a previous demand made verbally by the garnishee herself. But, however that may be, there is in this letter a very definite demand for the return of the car. The evidence is that that letter was posted, and it is quite clear that it was so posted because a certificate from the post office to that effect is produced before the Court. It is suggested by the learned Judge that it is possible that that letter was not delivered to the insolvent and that it is possible that, although not delivered, it did not come back to the Dead Letter Office through what the learned judge speaks of, as the vagaries of the Madras Post but the insolvent was called as a witness and he did not deny the receipt of that letter, though it is true he was not asked whether he had received it or not and I fail to see how the learned Judge was justified in coming to the conclusion on that evidence that it has not been received, because the presumption is that a letter which is proved to be posted and posted to the right address is in fact received by the recipient. Speaking entirely for myself, I have always looked upon, and shall always look upon with the gravest suspicion the evidence of a man who conies to Court and says that he has not received the really important letters in the case, because although it is possible. I should require something more before I should be ready to find that the ordinary course of events has been departed from in so convenient a way. I must therefore find that that letter was in fact received. If it was received there can be no doubt in my mind that there was a determination of the consent of the true owner at that date. I. should add that in my view even if that letter was not received I should incline to the view that the consent was proved to have been determined by the instructions to the Vakil to send that letter and the sending of that letter by him. It is possible that after that date the consent was in some way renewed and I confess that I should like to have a very much more clear explanation than I have got why nothing was done in the matter between February 10, and May. The garnishee gives evidence, and a considerable body of evidence, that she took most active steps thereafter to take possession of the motor car and to deal with it as her own, but that evidence is not believed and we are not in a position to do anything else than to accept that learned Judge's view, that it vas not acceptable evidence. But he does not hold that after February 10, there was any act by her showing consent to further possession by the insolvent, nor do I think we ought so to find. If the insolvent had come into Court and stated, 'I got that letter but after that date the lady came to see me and she said ' very well, go on using the car while I find a purchaser' or something of that kind, that would be sufficient to say that this letter was not a final and conclusive withdrawal of consent. But I can find nothing at all in the evidence to amount to anything of that kind. That being so, I think, we must take that letter demanding the return of the car under threat of criminal proceedings, if not complied with, as a sufficient determination of the garnishee's consent.
5. In these circumstances this appeal must be allowed. In the ordinary course an order would be made directing the return of the car by the Official Assignee to the garnishee, he of course, if so advised, being entitled to redeem it as representing the insolvent on payment of Rs. 3,000 and interest thereon at the promissory note rate and costs. We are, however, informed that the Official Assignee has spent money on the car during the time in which it has been in his possession on repairs or improvements and that it is still worth less than Rs. 3,000. He is, therefore entitled to a first charge for which he has spent: on the car. Probably the best course to adopt would be that he sells the car and deducts from the sale price the amount spent by him on repairs and hands over the balance to the garnishee who will be entitled to prove as an unsecured creditor for any balance due to her. If the garnishee desires the car it is open to her to pay the amount spent by the Official Assignee on repairs and improvements of the car and have the car. She must have her costs here and below. She must elect which course, she will adopt within 14 days of the Official Assignee informing her of the amount of his expenditure. There will be liberty to apply.
6. It is clear from the authorities that have been noticed in the judgment of the learned Chief Justice that in Section 52(2)(c) the words 'true owner' include the owner of an equitable charge like the one which the garnishee has over the motor car in this case. It is also clear that the person who is really the owner of the car can be a reputed owner of the equitable charge, and that Section 52(2)(c) will apply to such a case as that. But there is another term in the section which has to be considered before we can apply it to the facts of this case, and that is that the car should have been in the possession of the reputed owner, in this case the insolvent, with the consent and permission of the true owner, viz., the garnishee, at the date of the insolvency. By the letter of February to, 1922 that has been refrred to by the learned Chief Justice it was clearly intended to put an end to the consent which the garnishee had originally given to the insolvent keeping possession of his car and that that letter was posted to the right address there can be no doubt because there is the certificate of posting produced, and the presumption in law is that the letter reached the hands of the addressee, who is the insolvent in this case. The insolvent, when called as a witness did not deny the receipt of the letter, neither side having put the point to him, thus the presumption remains, and we must take it, that the letter reached the hands of the insolvent before the date of the insolvency. That of course determines the original consent that had been given by the garnishee, the true owner, I do not propose to express any opinion on the question whether, when such a withdrawal of consent is not communicated to the person from 'whom the consent is withdrawn, such withdrawal will be effective or not, for that is a more difficult question to deckle and it does not require decision in this case. I am in agreement with the learned Chief Justice that the letter was actually received by the insolvent, and that being so, the one essential condition of the section that the reputed owner must at the commencement of the insolvency have had possession or disposition of the article in question with the consent and permission of the true owner fails. If Section 52(2)(c) does not apply, then it is quite clear that there is no other ground on which the Official Assignee can be allowed to take this car free from the charge created by the insolvent. I therefore agree to the order proposed by the learned Chief Justice in this case.