DALT*ON A.CJ—Brooke Bond v. de Silva.
Present: Dalton A.C J. and Koch A J.
BROOKE BOND v. DE SILVA.
16—D. C. Colombo, 36,549.
Mortgage action—Sanction given to mortgagee in the decree to purchase—Noreservation of upset price—Special application not necessary—CivilProcedure Code, s. 272.
Where in a mortgage action plaintiff obtained in the decree the sanctionof Court to bid for and purchase the property mortgaged without anyreservation of the upset price,—
Held, that the order to bid was valid and that no special applicationin terms of section 272 of the Civil Procedure Code was necessary for the
There is no provision of the law that a limit as to price is required tobe placed upon the mortgagee if he is to be allowed to bid and purchase.
PPEAL from a judgment of the District Judge of Colombo.
Hayley, K. C. (with him Weerasooria), for plaintiff, appellant.
H. V. Perera, (with him Rajapakse), for first defendant, respondent.
July 25, 1933. Dalton A.C.J.—
This appeal arises from an order of the District Court setting aside asale at execution.
The plaintiff company sued the first defendant to recover the sum 'ofRs. 22,712.10 and interest due on a mortgage bond executed by the latterin favour of the former on January 9, 1929. The property • mortgagedconsists of four lots of land, about 45 acres in all. planted with tea in
DALTON A.C.J.—Brooke Bond v. de Silva.
the Ramboda district. The second and third defendants are puisneincumbrances. The first defendant filed no answer to the plaint anddid not appear to defend the action.
In the plaint, amongst other things, the plaintiff company prayed thatthe property mortgaged be put up for sale, first at the amount of theDeputy Fiscal’s valuation, then at the aggregate amount of the plaintiff’sclaim and costs, and in the event of there being no bidders at such sale,then, immediately afterwards to the highest bidder. It also prayed thatthe plaintiff company or anyone else on its behalf be allowed to bid forand purchase the property at the sale, and in the event of the companybecoming the purchaser to allow it credit in any sum not exceeding v.heaggregate amount of its claim and costs.
On October 31, 1930, none of the defendants being present, aixei anex parte trial, decree was ordered to be entered, and was entered in termsof the prayer of the plaint. An order for sale thereafter on January 21,1931, issued from the Court to the Deputy Fiscal directing inter alia thatthe property be sold, after due advertisement, in conformity with theorders and directions set out in the decree and upon the conditions ofsale, and in the event of the plaintiff company being the purchaser, toallow credit in accordance with the directions contained in the decree.The sale was held on the premises on July 4. 1931, and the plaintiffcompany became the purchaser for the sum of Rs. 100.
On August 5, 1931, within the time limited by section 282 of the CivilProcedure Code, the first defendant petitioned that the sale be set asideon the ground of irregularities in advertising and conducting the sale asa result of which, he alleged, he had suffered substantial injury. Theinquiry on this petition opened on October 9, 1931, and terminated withthe order now appealed from, dated November 9, 1932. On the openingday, counsel for petitioner raised an additional ground in support of hispetition which is entered on the record in the following terms:—
“ That inasmuch as the plaintiff has obtained directions in thedecree entitling him to bid for and purchase the property without anyconditions or reservations, which authority he should have obtainedby a specific order for this purpose on plaintiff’s application in thatbehalf, the plaintiff should hot be entitled to purchase the propertywithout a valid authority to bid.”
The learned trial Judge noted that this point was not raised in thepetitioner’s statement of objections, and the objection was not takenwithin thirty days after the receipt by him of the sale report, but statedhe would consider it with the other points raised in the case. Objectionwas taken on the other side, however, that the point was untenable, andin any event raised too late.
After hearing a considerable body of evidence led on both sides, thelearned Judge found that there had been due publication of the seizureand sale, and that all the formalities required by law were duly observedprior to the sale. He found against the petitioner on all the mattersraised in his petition or statement of objections. He then goes on toconsider the objection raised by petitioner’s counsel at the opening of theinquiry, and held that plaintiff had not obtained “an order in terms ofsection 272 of the Civil Procedure Code imposing any terms as to the
DALTON A.C.J.—Brooke Bond v. de Silva.
purchase by him of the property mortgaged”. This he held to.be anirregularity affecting the sale to the plaintiff, and “ the Court is entitledin the exercise of its equitable jurisdiction and in view of the very lowprice at which the plaintiff became the purchaser to refuse to confirmthe sale ”. He held the objection, having been taken before the confirma-tion of the sale, did not come too late and he therefore set aside the sale.
I have quoted the learned Judge’s words to some extent, as thereseems to be some ambiguity as to the reasons why he set aside the sale.At one point he holds that where a plaintiff on a mortgage decree desiresto be allowed to purchase the property mortgaged and required terms asto credit, it is not sufficient to ask for this in his plaint, but he must makea special application for this purpose. The purpose of this special appli-cation is stated to be that the mind of the Court may be specially directedto this matter. Later, however, he refers to the power of the Court tocontrol its own sales and so direct that no injustice may be done to anyparty.
In my opinion the learned Judge is wrong in holding that here theplaintiff company was required to make any further application to theCourt for leave to bid and purchase, having already obtained that leave,and the approval of the Court of the conditions on which it was to beexercised as set out in the decree. Until the passing of the Mortgage• Ordinance (No. 12 of 1927) the Court had no power to give special directionsgoverning the sale except in the decree, and the plaintiff was requiredto apply for any directions he might require before the decree was entered.(Walker v. Mohideen’) Now by section 12 of the Mortgage Ordinance,such directions may be given in the decree, or subsequently. Here theplaintiff obtained in the decree the sanction of the Court to bid andpurchase the property, terms as to credit being given are set out, and theconditions on which the Deputy Fiscal is to put up the property, first atthe amount of his valuation, then, if there is no bid, at the aggregateamount of the plaintiff’s claim and costs, and lastly if there be no biddersat that figure, without restriction to the highest bidder, are fully set out.The terms of plaintiff’s plaint were fully known to first defendant, andhe neither appeared to defend the action or to object to that portion ofthe plaint relating to the conditions on which the property should besold. The plaintiff company had the sanction of the Court to purchase,and no further application by it was necessary under the Code. Therehas therefore been no irregularity in conducting the sale as the learnedtrial Judge has held. The plaintiff in fact had a right to have his bidentertained, and a refusal on the part of the Fiscal to accept it would havefurnished the plaintiff with cause for complaint that there was a materialirregularity in the conduct of the sale. The learned trial Judge in alater decision of June 5, 1933, which has been referred to in the course ofthe argument before us, appears to have come to the same conclusion towhich I have now come on this point.
The plaintiff company having obtained the sanction of the Court undersection 272 and directions governing the sale, the additional objectionraised by petitioner’s counsel on October 9, 1930, had no substance. Imight point out, however, that could it have been sustained, it would
• 26 N. L. R. 310.
DALTON A.C.J.—Brooke Bond v. de Silva.
appear to have been, on the authority of CJieZlappa v. Selvadurai1, anirregularity in the conducting of the sale within the provisions of section282 of the Code, which must be notified to the Court within the time therelimited. Inasmuch as the objection was out of time, the Court thereforecould not set aside the sale on that ground.
There remains the further argument that the Court has a duty to seethat no injustice is done to debtors, and has a judicial discretion indeciding the terms upon which sales in execution should be held. Indeciding these terms it was urged that the Court should in every case fixthe figure below which a judgment-creditor should not be allowed to buy.I agree that the Co.urt has a discretion within limits in settling the terms,but there is nothing before us to show in this -case the Court has notexercised that discretion. There was no suggestion in the lower Court tothat effect. The learned trial Judge does state that it is likely moreoften than not the clerk in charge of decrees'will pass the decrees tenderedwithout scrutiny, but there is nothing to show that the decree in this caseis otherwise than in order.___—
There is no requirement of the Code that the Court should in every casefix the figure below which a judgment-creditor should not be allowed topurchase, nor have I been able to find any provision of the Code thatwould empower the Courtto do so. During the last two or three yearsI understand, owing to the depression and the general fall in prices, it hasbeen the practice on occasion for such a condition to be approved of bythe Court, but no such term was present in this case, nor did first defend-ant ask for it. One would assume that where such a condition has beenmade without objection, the special circumstances of the case are suchas to justify it. The Courts also have not been backward in assisting thedebtor in proper cases by granting a stay of execution. Up to two orthree years ago I have no reason to doubt that, as has been stated in theargument before us, when request was made to the Co’irt for the judgment-creditor to be allowed to bid and purchase the property, and for theterms and conditions to be fixed upon which this might be done, theorder of the Court was as a general rule in the form of the decree nowbefore us.
There is no doubt as to the Court’s power to set aside a sale for reasonsother than those specified in section 282. It is urged also, and two caseshave been specially relied upon in support of this contention, that theCourt has a general discretion to refuse- to confirm a sale in the exerciseof what the learned Judge has termed its equitable jurisdiction. Thefirst case is Ramaswamy Chetty v. Silva An examination of that caseshows that this Court was in doubt whether the mortgagee had any rightto bid since there was no such permission incorporated in the decree.That afforded ample ground for setting aside the sale. Ennis J. howevergoes on to express his opinion obiter that even if the plaintiff’s agent wasproperly authorized to purchase, there would seem to be equitablegrounds for interfering as no limit was put as to the price at which themortgagee might be'allowed to purchase, and the property fetched a summuch below the valuation' given by the auctioneer. As I have stated,no provision of the law, that a limit as to price is required to be placedi 25 N. L. R. 239.2 7 C. W. R. 163.
DALTON A.CJ.—Brooke Bond v. de Silva.
upon the mortgagee if he is to be allowed to bid and purchase, has beenbrought to our notice. On the further point as to inadequacy of price,there is ample authority that sales in execution cannot be set aside onthat ground alone.
The second case to which I refer is Pakir Tamby v. The Proprietor ofDartry Groupl. In that case there is no doubt that the sale was notpreviously advertised in the Government Gazette. The land had beenValued at Rs. 935, but it was subsequently discovered that the valuationwas improper and that it was in fact worth Rs. 1,955. The DeputyFiscal accordingly reported to the Court that the sale was irregular as ithad not been published, and he asked the Court to annul the sale and tobe allowed to hold a resale after due advertisement in the Gazette. TheCommissioner of Requests allowed this application. Fresh executionproceedings were then taken and a claim to the property was made whichwas upheld. The original purchaser then asked that the first sale beconfirmed and that the order on the Deputy Fiscal’s application be setaside. The Commissioner of Requests thereupon set aside his order andconfirmed the first sale. De Sampayo J., in holding that the Courtshould have refused to confirm the sale, points out that the judgmentdebtor, who would have been able to apply under section 282 to, setaside the sale for want of due publication, was deprived of the oppor-tunity of doing so by reason Qf the order made by the Commissioner onthe Deputy Fiscal’s application. The Deputy Fiscal was not a personwho was authorized to make any application under section 282. Thelearned Judge expresses the opinion that the spirit of the Code indicatesthat the Court generally has power to prevent injustice in the case of salesunder its own order. In addition however to the inadequacy in priceobtained, there was also the irregularity in respect of publication, andunder the circumstances he allowed the appeal and the sale was setaside.
On the facts, both these cases are clearly to be distinguished from theone before us. There was evidence in both of an irregularity in con-ducting or publishing the sale. Mr. Perera, however, relies upon themfor this purpose, as going to show that the Court should not confirm a saleif it works an injustice. Injustice, as he uses the term, means, I take it,the doing of a wrong or the violation or withholding of another’s rightsor dues, and must not be confused with hardship. In the case of irregu-larities in respect of publishing or conducting a sale, if no applicationis made under section 282 and allowed, this Court has held that the con-firmation of a sale can only be refused for the reason set out in section 283.Chelappa v. Selvadurai (supra).) Wood Renton J. pointed out that thismay involve hardship in particular cases, but that this interpretation ofthe law was sound in principle. The only ground upon which the learnedtrial Judge set aside the sale that has been substantiated is the very lowprice that has been obtained. Can the Court for that reason alone refuseto confirm the sale? In my opinion it. cannot do so. What is a plaintiffpurchaser to do if no one will bid more than the first bid made by him?. Counsel answers that the law steps in and says it must not be accepted,that he must be limited by terms as to the amount at which he may buy.
i 7 C. II'. R. 50.
DALTON S.P.J.—van Cuylenbery v. Sellamnttu.
There is however no law to that effect. No doubt a considerable hardshipis suffered here by the judgment-debtor, for which to some extent as Ihave denoted he must take the blame, whilst I think the value he putupon the property at the time of the sale was probably much too high.The fact that the secondary mortgagees were present at the sale andmade no attempt to bid or to protect their claim would go to confirmthis. The judgment-debtor also seems to have made no effort to preventthe property being knocked down at the first bid when it was put upwithout restriction. In the result his property has been sold, and afterthe sale the judgment debt remained unsatisfied except for the sum ofRs. 100. The purchasers however have now agreed to give the judgment-debtor credit for the sum of Rs. 8,000 in addition-to the small sum fetchedat the sale, towards the amount due on the decree. That is the figure atwhich their witness valued the property at the time of the sale. Thehardship suffered is thereby very considerably diminished.
For the above reasons the petition of the judgment-debtor to set asidethe sale should have been dismissed. The appeal is allowed, and theappellants are entitled to costs in both Courts.
Koch A.J.—I agree.
BROOKE BOND v. DE SILVA