1. In the insolvency of Sri Sundara Swamier, one Ramakkal was first brought on record as a creditor holding a pro-note executed in her favour by the Insolvent.
2. The appellant applied in I.A. No. 675 of 1927 to be brought on record in her place as assignee of the pro-note. Notice was issued to Ramakkal who remained ex parte. The appellant was therefore substituted for Ramakkal by the District Court in its order dated December 13, 1927.
3. Before the Official Receiver the present respondent asked to be substituted for the appellant, on the ground that the transfer. of the note by Ramakkal to the appellant was only one for collection and Ramakkal had subsequently transferred the note as well as her other property to him by a settlement deed. The Official Receiver rejected the application but on appeal the District Court allowed it, and against this decision this appeal has been filed.
4. Though none has appeared to represent the respondent we are clear that this appeal must be allowed.
5. In the first place Ramakkal, having been properly served with notice when appellant was substituted for her as the creditor of the Insolvent in the pronote, the respondent who only claims through Ramakkal can have no higher claim than she had, the matter is res judicata, against him.
6. Secondly the learned District Judge admitted and acted on an affidavit of Ramakkal filed in the appeal. She was not examined before the Official Receiver and such an affidavit by her was clearly inadmissible in evidence. If she was alive at the time of the enquiry before the Official Receiver she was not examined. If she was dead her affidavit is inadmissible. The District Judge largely bases his judgment on this affidavit. He further, admitting that the evidence that the transfer was for collection only is meagre, threw the burden on the appellant to show that the assignment was not for collection. But the onus is the other way under Section 118(a), Negotiable Instruments Act.
7. We must therefore allow this appeal and setting aside the order of the District Court, restore that of the Official Receiver. Appellant will get his costs in both Courts.