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PUBLIC RECORD OFFICE

Reference :-

TELECO885/25

PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

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2nd May, 1916. Report of the Controllers of the Business of Freudenberg & Company regarding the working of the scheme sanctioned by the Court on the 12th August, 1915, in connexion with the Plumbago Pits of Mrs. Mary de Silva and Mr. Philip de Silva.

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MRS. MARY DE SILVA, being indebted to the firm of Messrs. Freudenberg & Company to the extent of approximately 8 lacs of rupees, and to several British creditors in the sum of Rs.359,911/60, a scheme was submitted by us to the District Court of Colombo for permission to work certain plumbago pits belonging to Mrs. Mary de Silva and Mr. Philip de Silva, and with the income derived there from, after payment of the working expenses, to pay off the British creditors of Mrs. Mary de Silva and Mr. Philip de Silva, and also the claim of Messrs. Freudenberg & Company.

The District Judge, by an Order dated the 12th August, 1915, made in Special Case No. 631 of the District Court of Colombo, sanctioned the scheme and authorized and empowered us :--

1. To pay to V. P. L. V. Anamalay Chetty the sum of Rs.40,000, and obtain from him the assignment of two mortgage bonds in his favour, which were secured by the mortgage of house property in Colombo of the value of Rs.81,000 and two allotments of land in the District of Galle, in extent 17 acres 3 roods 15 perches, of the value of Rs.5,000. This sum of Rs.40,000 was paid to V. P. L. V. Anamalay Chetty, and the two mortgage bonds assigned to us, as Controllers, on the 5th October, 1915. The assignments have been duly registered, and the sum of Rs.40,000 paid is therefore fully secured.

2. The District Judge further directed us to pay to the British creditors of Mrs. Mary de Silva and Mr. Philip de Silva a dividend at the rate of Rs. 1-50 in every ten rupees of their respective debts, conditionally on the creditors signing an agreement to grant Mrs. Mary de Silva and Mr. Philip de Silva two or three years' time, or until the War is over, for the payment of the balance of their claims.

There are fifty-three British creditors, whose claims amount to Rs.359,911/60. and the dividend of Rs.1/50 thereon absorbed Rs.53,986/74.

The

With one exception all the creditors have been paid their dividend. dividend outstanding is to to P. L. P. R. K. N. Palaviappa Chetty, who is absent from the island, and amounts to Rs.45. This dividend is in the hands of our lawyers, Messrs. F. J. and G. de Saram, and is available for payment on the return of the creditor.

3. The District Judge further authorized us to expend a sum not exceeding Rs. 100,000 for the working of the plumbago pits, and with the income derived from the sale of plumbago we were directed:-

(a) To pay off the moneys advanced for the payment of dividends;

(b) To pay off the moneys advanced for the working of the plumbago pits; (c) To pay off the claims of the British creditors; and

(d) To pay off the claims of Messrs. Freudenberg & Company.

4. The working of the plumbago pits has been a source of anxiety to us, and has involved on us a good deal of responsibility, but we have had the hearty co-operation of Mr. Philip de Silva, who shows considerable knowledge of plumbago mining.

5. Mr Philip de Silva has since the very commencement of the scheme devoted all his time and attention to the working of the pits, and to his valuable services

is due in great measure the present satisfactory result of the scheme.

6. There were four pits under the scheme which had to be worked, viz. :-

(a) Ridiwitte, situated in the Kalutara District.

(b) Kadirandola, situated in the Kalutara District.

(c) Mitipola, situated in the Ratnapura District.

(d) Dumbara group, situated in the Ratnapura District.

These

We found that there were pit liabilities to the extent of Rs.21,593/33. liabilities had to be paid off before working could be commenced, and to enable this to be done we sold certain plumbago belonging to Mrs. Mary de Silva, which we had in stock. and which realized Rs.20.745/23. We utilized the proceeds in pay- ment of the liabilities referred to. The difference of Rs.848/10 was paid out of the money sanctioned by the Court for working expenses. The Ridiwitte. Kadiran- dola, and Dumbara pits had not been worked since October, 1914, and Mitipola

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since March, 1915, with the result that they were full of water and the sides of the pits were considerably weakened. The expenses of baling out the water and outtressing the sides of the pits involved the outlay of a large sum of money, but it was decided to work only the Ridiwitte and Mitipola pits, in the first instance. The work of getting the pits into proper condition by pumping out the water took time, and plumbago was only obtainable from November, 1915.

7. When the working of the pits was put on a satisfactory basis we under- took the mining of the Dumbara group and the Kadirandola pit. All of these pits are now in full working order and are very productive.

8. We should state that all the pits mentioned are held by Mrs. Mary de Silva under certain mining leases. As the lease of the Mitipola pit was about to expire, a sum of Rs.30,000 had to be paid for a fresh lease. We also had to advance Rs.28,661/75 for a new agreement regarding the Dumbara pits, and Rs.8,380 for the Kadirandola agreement. These payments cannot be regarded as working expenses, although they have been treated as such; consequently the repay- ment of the advance of Rs.100,000 sanctioned by the Court for working expenses has been thereby delayed.

9. At one time we experienced great difficulty in procuring dynamite. The High Explosives Trade Association, London, instructed their local agents (Messrs. Bosanquet & Company) not to supply us with further quantities of dynamite for the working of the pits. We explained the position of affairs to Messrs. Bosanquet & Company, and, after communicating with their principals, they informed us that this restriction was withdrawn.

10. To guard against the cessation of work owing to a shortage of dynamite, a contract has been entered into with Messrs. M. L. L. Idroos Bros., of Pettah, Colombo, for the supply of all dynamite and fuse, etc., required for the working of the plumbago pits.

11. The removal of plumbago from the Dumbara pits was delayed for about fifteen days in the month of March owing to one Gabriel Fernando having obtained an injunction from the District Court of Ratnapura in D.C. Ratnapura No. 2703. The action is still pending, but in the meantime Mrs. Mary de Silva, under the advice of counsel, is removing the output, reserving the ground share.

12. In addition to paying the monthly wages of about 2,000 workmen (on the average) engaged in mining and curing plumbago, we purchased from Messrs. Walker, Sons, & Company, Limited, a boiler costing Rs.6,369/33; coal from Messrs. Delmege, Reid, & Company, to the value of Rs.12,134/07; hoop iron locally and from England, Rs.12,519/17; dynamite, Rs. 14,799/93; and cement, Rs.114. There has also been paid Rs.5,520 as brokers' commission on sales of plumbago.

13. Up to date we have sold plumbago to the value of Rs.587,125/74. This amount includes the sum of Rs. 20,745/23 realized by the sale of Mrs. Mary de Silva's plumbago, which formed part of Messrs. Freudenberg & Company's stock at the commencement of our controllership, and which was sold for the purpose of paying off the pit liabilities previously referred to..

The sums advanced for the working of the pits up to date amount in the aggregate to Rs.493,139, inclusive of the sum of Rs.64,541/75 paid for renewal of leases and the fresh plumbago agreements.

14.

15. There is, therefore, a balance of Rs.93,986/74 at credit on account of the working of the pits. Deducting the sum of Rs.53.986/74 paid on account of dividends to the British creditors, there remains Rs.40,000, which amount has been appropriated in liquidation of the Rs.40,000 paid to V. P. L. Anamalay Chetty under the scheme sanctioned by the Court.

16. A new account has now been opened, the accumulated surplus on which will be utilized from time to time in paying further dividends to the creditors under the scheme. It appears to us that, owing to the large output from the pits, and the favourable prices realized by the sale of plumbago, Mrs. Mary de Silva and Mr. Philip de Silva will be in a position to pay off the British creditors by about the 15th July, and the claim of Messrs. Freudenberg & Company before the end of the year. This is a safe margin, but every endeavour is being made to liquidate the debts by the end of September or October.

17. It is immaterial whether the prices of plumbago drop, for several con- tracts have been made with the Morgan Crucible Company. Limited, for the sale of plumbago up to the 30th September, 1916, valued at 15 lacs, for which plumbago

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