1. The question for our decision in this second appeal is whether the certificate of conformity, Exhibit I, granted to the defendant, who is the appellant before us, by the District Court of Colombo under Section 124 of the Ceylon Insolvency Ordinance, VII of 1853, is a valid defence to the plaintiff's suit for money.
2. The facts may be shortly stated as follows: Plaintiff and defendant were traders in Ceylon in 1914 and previously. They had dealings with each other and as the result of them the defendant became indebted to the plaintiff. In March 1914 they settled the amount due at Rs. 1,000 and entered into a contract, Exhibit A, which provided that defendant was to go to India by the 30th of May and execute and register a deed of othi of certain lands of his in India in favour of the plaintiff for Rs. 2,000 and deduct the Rs. 1,000 and interest from the amount payable to him by the plaintiff for the othi and receive the balance before the Sub-Registrar and deliver the deed to him. It also provided that, on default, defendant was to pay, besides the principal and interest due, a sum of Rs. 250 as compensation for the breach of contract and the plaintiff was to recover the whole amount from defendant personally and from the lands. The document was not registered and the charge did not take effect. The defendant never came to India and the contract was never performed.
3. In 1915 the defendant applied in insolvency in Colombo and finally obtained Exhibit I which, under Section 126 of the Ceylon Ordinance, discharged him, subject to the provisions of the Ordinance from all debts due by him when he became insolvent and from all claims and demands made provable under the insolvency.' There was a question before the District Munsif whether plaintiff had been joined as a creditor in the schedule and whether he had notice; the Munsif found the points against the plaintiff and no objection was taken to his finding in appeal. It is clear from plaintiff's own admission in his evidence that he was residing in Colombo at the time of the insolvency proceedings and it may also be stated that the contract, Exhibit A, was entered into in Colombo. Plaintiff apparently did not appear in the insolvency proceedings and did not claim or receive any dividend. Towards the latter part of 1915 both the parties came to India and plaintiff brought this suit here for the Rs. 1,000 and interest on it and for the Rs. 250 damages provided for by Exhibit A. Defendant pleaded Exhibit I in defence. The District Munsif upheld the plea and dismissed the suit; but the District Judge reversed that decree and gave plaintiff a decree for his money. The defendant has appealed to us and has urged that Exhibit I constituted a valid discharge of the plaint debt.
4. On the facts found, there can be no doubt that there was a cause of action for the plaint debt in Colombo which could have been enforced against the defendant there at the time when he filed his insolvency petition and obtained his discharge. The contract was entered into at Colombo and the parties were resident there at the time, as already stated. The District Judge, however, finds that the parties intended to pay the debt in India and he thinks that, therefore, the law in British India should be applied to the debt and the Ceylon Court had in consequence no jurisdiction to deal with it. The finding on the question of intention itself is attacked by the appellant. It is based mainly on the fact that under Exhibit A the money was payable before the Sub-Registrar when the othi was registered. That provision, however, will apply after the othi is executed and when it has to be registered; but that was not done. There is nothing in Exhibit A to show that in case of breach of contract the parties intended that they should take the trouble of going over to India for the mere purpose of paying and receiving the money due when they could have had it paid and received with case in Colombo where they were then resident. The finding of the District Judge as to the intention of parties does not, therefore, seem to be correct. It may fairly be assumed that the payment was to be made where the parties resided. In this view there can be no question that the discharge granted under Exhibit I was a valid discharge of the debt everywhere including this country. Professor Dicey states as Rule 115 in his well known book on the Conflict of Laws that 'a discharge from any debt or liability under the Bankruptcy Law of the country where the debt or liability has been contracted or has arisen (or perhaps where it is to be paid or satisfied) is a discharge therefrom in England.' This has been adopted by this Court as correct in Narayana Chettiar v. Veerappa Chettiar 35 Ind. Cas. 918 ; (1916) 2 M.W.N. 271 ; 4 L.W. 422 ; 40 M.K 581. The rule is applicable to a discharge by a Court in a foreign country and, therefore, all the more applicable to a discharge in one of the British Colonies such as Ceylon. See Gardiner v. Houghton (1862) 2 B. & S. 743 ; 121 E.R. 1247 ; 127 R.R. 544 per Cookburn, C.J.
5. But even if we assume that the parries intended that the money was to be paid in British India, will that make any difference to the validity of the discharge under Exhibit I. We do not think so. So long as the order of discharge granted by the Ceylon Court was with jurisdiction and after notice to the parties, we are bound to give effect to it in our Courts. The principle stated by the District Judge that the validity of a contract, its nature, and effect and the rights and obligations of the contracting parties thereunder should be judged with reference to the law of the place of performance has no application to the present case, as we are not concerned here with such matters. The obligation to pay under Exhibit A, whether under the Law of British India or under the Ceylon Law, was the same. We are here concerned only with the effect to be given to an order of the Ceylon Court granting a discharge of that obligation. If that was made with jurisdiction, the fact that the performance was to be in British India does not affect its validity at all.
6. It was suggested that this was a case to which Rule 116 in Dicey's book applied, and not 115. That is not so, as the contract was entered into in Ceylon. It was subject to the Bankruptcy Law of Ceylon and the parties being resident in Ceylon at the time of the order, they are clearly amenable to the jurisdiction of the Ceylon Court.
7. We must, therefore, hold that Exhibit I extinguished the defendant's debt to plaintiff and his suit is not maintainable. The decree of the District Judge is reversed and that of the Munsif restored with costs here and in the Court below.