Cancelled cheque claims and insolvency proof requirements: unsubstantiated debt claims were rejected, and adjudication was later annulled.

A claim based only on cancelled cheques, without presentation for encashment or any civil, criminal, or recovery proceedings, was treated as insufficient to prove a subsisting enforceable debt in insolvency. On that footing, the claim was not provable and was rejected because section 17 confined insolvency remedies to debts provable in insolvency. The text further states that, after the admitted creditor's claim had been substantially satisfied and the cheque-based claim was rejected, no basis remained to continue the adjudication, so the insolvency adjudication was annulled under section 21(1) with consequential directions to the Official Assignee.

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Issues: (i) Whether a claim founded only on cancelled cheques, without any adjudication or supporting recovery proceedings, was provable in insolvency and liable to be rejected; (ii) whether the adjudication of insolvency could be annulled under the Insolvency Act after satisfaction of the admitted creditor's claim and rejection of the other claim.

Issue (i): Whether a claim founded only on cancelled cheques, without any adjudication or supporting recovery proceedings, was provable in insolvency and liable to be rejected.

Analysis: The claim was based on cancelled cheques that were not presented for encashment and no civil, criminal, or other recovery proceedings had been instituted. A cancelled cheque was treated as a non-effective instrument for establishing a subsisting enforceable debt unless rebutted by cogent evidence. The claim had not been adjudicated or otherwise established as a debt provable in insolvency, and section 17 confined the insolvency estate and remedies to debts provable in insolvency.

Conclusion: The claim was held not provable in insolvency and was rejected.

Issue (ii): Whether the adjudication of insolvency could be annulled under the Insolvency Act after satisfaction of the admitted creditor's claim and rejection of the other claim.

Analysis: The admitted claim of the earlier creditor had been substantially satisfied, and once the claim based on cancelled cheques was rejected, there remained no surviving basis to keep the adjudication alive. The Court therefore applied section 21(1) and directed consequential steps by the Official Assignee.

Conclusion: The adjudication of insolvency was annulled.

Final Conclusion: The challenge to the rejection of the cancelled-cheque claim failed, while the request for annulment succeeded, resulting in rejection of one motion and allowance of the connected motion with consequential directions.

Ratio Decidendi: A claim founded only on cancelled cheques, without proof of an enforceable debt, is not provable in insolvency, and once the admitted liability is satisfied, the adjudication may be annulled under the Insolvency Act.

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