Bankruptcy Act · 1985 Revised Edition · Part I · Proceedings from Act of Bankruptcy to Discharge
21. Penalty for collusive preference
Feedback & supportEvery person who signs or on whose behalf is signed a deed of arrangement to which section 20 applies, who within two months before or at any period after signing the same, receives any secret or collusive preference, gratuity, security, payment or other consideration, all hereinafter included in the word “gratuity”, for concurring in or signing the deed of arrangement shall be guilty of an offence punishable as hereinafter mentioned.
deed of arrangement
“deed of arrangement” includes any of the following instruments, whether under seal or not, made by, for, or in respect of the affairs of a debtor for the benefit of his creditors generally:(a)an assignment of property;(b)a deed or agreement for a composition,and in cases where creditors of a debtor obtain any control over the property or business —(c)a deed of inspectorship entered into for the purpose of winding up or carrying on a business;(d)a letter of licence authorising the debtor or any other person to manage, carry on, realise or dispose of a business with a view to the payment of debts; and(e)any agreement or instrument entered into for the purpose of carrying on or winding up the debtor’s business, or authorising the debtor or any other person to manage, carry on, realise or dispose of the debtor’s business with a view to the payment of his debts;
Every gratuity for concurring in or signing, or having concurred in or signed a deed of arrangement, shall be deemed to be secret and collusive if the same or any promise for the same is not disclosed on the face of the deed of arrangement or in a memorandum annexed to the deed at the time when the person who has received or is to receive such gratuity signs the deed of arrangement, which memorandum shall also be signed in acknowledgment of having seen the same by all the parties to the deed of arrangement before the registration thereof. A gratuity shall not be deemed to be secret or collusive if it is disclosed as before mentioned.
Every person committing an offence under this section shall be liable to a fine not exceeding 5 times the amount or value of the gratuity received by or promised to him, and the court before which the person is tried may award a part of the fine, not exceeding one-half thereof, to the informer through whom the conviction has been obtained, provided that the informer is not the debtor.