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Issues:
1. Interpretation of Section 46 of the Provincial Insolvency Act in the context of mutual dealings between an insolvent and a creditor. 2. Application of the rule of equity in insolvency proceedings. 3. Determination of whether the plaintiff is a holder in due course of a negotiable instrument. Analysis: 1. The petitioner challenged the trial court's decision regarding the applicability of Section 46 of the Provincial Insolvency Act, contending that it only pertains to insolvency proceedings. The petitioner argued that as a holder in due course of a negotiable instrument, he should not be subject to the defendant's claim of set off. The respondent, on the other hand, asserted that Section 46 embodies a rule of equity applicable beyond insolvency proceedings, citing English precedents. The court analyzed the historical context of the section and concluded that the legislature intended to grant Section 46 the same import as its English counterpart, allowing set off in civil courts to prevent fraudulent practices. 2. The court further examined the petitioner's status as a holder in due course of the negotiable instrument. The respondent argued that mutual dealings between the insolvent and the creditor were adjusted at the time of insolvency, nullifying any debt to be assigned. The court noted that the petitioner was aware of the instrument's limitations and the circumstances of the insolvency, thus failing to qualify as a holder in due course. Citing legal precedents, the court emphasized that the petitioner had a duty to investigate and was not shielded from notice of defects in the instrument. 3. Lastly, the court addressed the respondent's claim that mutual dealings were adjusted at the time of insolvency. While acknowledging the relevant date for assessing mutual dealings, the court found no evidence of such adjustment on the insolvency date. The court dismissed the revision petition, upholding the trial court's decision and emphasizing the importance of preventing fraudulent practices in insolvency matters. The court highlighted the need for thorough investigation by holders of negotiable instruments to qualify as holders in due course, ensuring fairness and equity in legal proceedings. This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the court's reasoning in interpreting and applying relevant legal provisions.
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