102HOWARD C.J.—Korunaratne u. Mohideen.
1941Present: Howard C.J. and Cannon J.
KARUNARATNE et al v. MOHIDEEN et. al.
40-41—D. C. (lnty.) Colombo, 5,252.
Insolvency—Sale of property by auctioneer—Confirmation of sale—Applicationto postpone confirmation pending adjudication to title—Power of court—Civil Procedure Code, s. 839.
After the sale of property of an insolvent under the provisions ofsection 51 of the Insolvency Ordinance, the assignee moved to confirmthe sale and for authority to execute the conveyance in favour of thepurchaser. Thereupon an application was made to postpone the confirma-tion of the sale until the claim of the applicant to the property wasadjudicated upon.
Held, that the Court had no power to postpone the confirmation of thesale.
A PPEAL from an order of the District Judge of Colombo.
H. V. Perera, K.C. (with him P. Thiagarajah), for the purchasers-appellants in both appeals.
N.Nadarajah (with him D. W. Fernando), for the respondents.
Cur. adv. vult.
December 1, 1941. Howard C.J.—
The appellants in this case appeal against an order of the DistrictJudge of Colombo postponing, until after the claim of the second re-spondent had been adjudicated upon, the confirmation of a sale, orderedby the Court under the provisions of section 51 of the Insolvents Ordinance(Cap. 82), in respect of certain lots of which the appellants were thepurchasers. The third respondent is a person adjudged insolvent underthe, proceedings of the Insolvents Ordinance and the first respondent ishis assignee. The conditions of sale of the lots referred to were approvedby the Court on September 17, 1940. On October 16 and 17, 1940, thesecond respondent, by letter addressed to the auctioneer appointedby the Court to conduct the sale and to the assignee, disputed theinsolvent’s' title to the lots and duly intimated that she claimed theentirety of the said lots and further requested them not to sell them asthey belonged to her and her children and hot to the insolvent. Inspite of these protests the auctioneer and assignee proceeded with thesale which took place on October 19, 1940, when the appellants becamethe purchasers of the lots in question, deposited the full purchase moneyand fulfilled the conditions of sale. On November 5, 1940, the assigneemoved to confirm the sale and for authority to execute the conveyanceof the properties to the appellants. On November 16, 1940, the secondrespondent brought to the notice of the Court that the lots in questionare the property of herself and her children and were sold in spite of herprotests. On December 10, 1940, the learned District Judge made theorder, which is the subject of this appeal, postponing the confirmationof the sale and providing that if no action is filed within one month fromthe date of the order the sale of the lots would be confirmed.
HOWARD C.J.—Kamnaratne v. Mohideen.
The question for consideration is whether the learned District Judgehad any power to postpone the grant of a conveyance to the appellants.It has been contended by Mr. Perera on behalf of the appellants that thelatter having complied with the conditions of the sale, it became abinding contract between the appellants and the auctioneer, and theCourt had no power to intervene. Mr. Perera, moreover, maintainedthat such a sale was not governed by the provisions relating to Fiscal’ssales to be found in the Civil Procedure Code and, in particular, did notrequire confirmation. With this contention I agree. Mr. Perera main-tains that the Court was not by any other specific provision of thelaw nor by virtue of its inherent jurisdiction, empowered to prevent thegrant of a conveyance. Mr. Nadarajah on behalf of the second respondentconcedes that there is no specific provision of the law empowering theCourt to act as it did. He relies; however, on section 839 of the CivilProcedure Code, which is a provision phrased in general terms savingthe inherent powers of the Court. He also calls in aid the provisions ofsection 62 of the Courts Ordinance which confers jurisdiction on DistrictCourts and sections 3 and 4 of the Insolvents Ordinance conferringjurisdiction on these Courts in matters of insolvency. He also maintainsthat without these provisions of the law the inherent powers of the Courtentitled the District Judge to intervene and refuse the grant of a con-veyance for the purpose of doing justice between persons interested.In this connection we were referred to the case of Hokum Chand Bold v.Kamalanand Singh'. At page 931 Woodroffe J. stated as follows : —
“Further the law cannot (as pointed out by Sir Barnes PeacockC.J.) make express provisions against all inconveniences so that theirdispositions shall express all the cases that may possibly happen, andit is therefore the duty of a Judge to apply them not only to whatappears to be regulated by their express provisions, but to all thecases to which a just application of them may be made and whichappear to be comprehended, either within the express sense of thelaw or within the consequences that may be gathered from it. HurroChunder Roy Chowdhry v. .Shoorodhonee Dehia The Code does not,as I have already had occasion to hold, in Punchanon Singh v. KunuklotaBarmoniaffect the power and duty of the Court, in cases where nospecific rule exists, to act according to equity, justice, and good con-science, though in the exercise of such power it must be careful tosee that its decision is based on sound general principles and is notin conflict with them or the intentions of the Legislative. There arealso matters, and I do not now deal with them, in wh’fch a questionmay arise whether the right to make an application or the exercise of apower is derived entirely from express legislation, as in the case of theright to prefer and entertain an appeal or to award costs, it being amatter of dispute in the latter case whether a question of costs is oneof procedure or one affecting vested rights. The Court has, therefore,in many cases, where the circumstances require it acted upon theassumption of the possession of an inherent power to act ex debitojustitiae and to do that real and substantial justice for the adminis-
tration, for which it alone exists.”
> 33 Calc. 92S.1 (ISOS) 9 U'. R. 402.
3 I. L. R. 23 All. 1C7.
104HOWARD C.J.—Karunarntne v. Mohideen.
Mi. Nadarajah also invited our attention to the case of HansewarGhose v. Rakhal Das Ghose'. In this case the petitioner obtained amortgage decree against the judgment-debtor. Before the decree couldbe executed, the latter made an application in insolvency. During thependency of the application, the petitioner purchased the mortgagedproperties in execution of the decree. The judgment-debtor was subse-quently adjudged an insolvent and a receiver appointed who sent to theCourt a proclamation for sale of the insolvent’s property in which heincluded the properties purchased by the petitioner who thereuponpresented a petition of objection to the Court on the ground that thereceiver had no authority to sell the properties purchased by him. Thispetition was presented after the expiry of 21 days from the date of theorder of the Receiver and the Court dismissed it under the proviso- tosection 22. It was held (1) that under the proviso, a person aggrievedby the receiver’s order • might apply to the Court, that, upon the alle-gations of the petitioner the intended sale by the receiver could notaffect his title, because the properties in question were no longer theproperties of the insolvent and that consequently he could not be deemedto be a person aggrieved by the act of the receiver and section 22 hadno application to the case, and that the application of the petitioner tothe Court below was not subject to the period of limitation prescribed bythe proviso to the section ; (2) That the application of the petitioner tothe Court below ought to be entertained and an inquiry held into thetruth or otherwise of his allegations. In my opinion this case is notmaterial, inasmuch as in contradistinction to the present case theassistance of the Court was invoked before the sale of the propertiestook place. Mr. Nadarajah also relied on the case of Gunawardene v.DiasIn this case the Court on the motion of the assignee’s proctorissued a Commission to A to sell a property belonging to the estate of aninsolvent. The steps taken by the assignee’s proctor were such as tocreate the belief in would-be purchasers that the property was to be soldfree of encumbrances. At the sale B bought the property in the beliefit was sold free of encumbrances. Subsequently, the property wassold under mortgage decree. B applied to Court that the sale to him benot confirmed, and that the deposit be refunded to him. The DistrictJudge refused the application on the ground that (1) B should havemade the necessary inquiries before buying ; and (2) that the assigneenot being “an officer of the Court, the Court could not deal with thematter of the petition ”. It was held that both grounds were wrong.It does not lie in the mouth of the party, who by his conduct or represent-ations misleads another, to say that the latter ought not to have actedon the belief induced by himself, and should have satisfied himself as tothe truth by independent inquiries. The power of the Court to interferewith the sale and prevent injustice does, not turn on the question whetheror not the assignee is an officer of the Court. It would be disastrous,it would be shocking, if the Court were to enforce against a purchasermisled by its duly accredited agents a bargain so illusory and so uncon-scientious as this. In Gunawardene v. Dias (supra) it was the purchaser whoapplied for relief. The Court held that to hold him to his bargain would1 A. I. 71. UHt c„lc. S.S.J.*33 -v. £. Jt. 339.
Wijeyratne v. Pillai.
be unconscionable in view of the fact that he had been misled intobecoming a purchaser by the misrepresentations of the assignee. Guna-wardene v. Dias is not, therefore, applicable to the facts of the presentcase.
I think the principles laid down in Hakum Chand Boid v. KamalanandSingh' with regard to the inherent powers of the Court apply with partic-ular force to the present case. It is the power and duty of the Court,in cases where no specific rule exists, to act according to equity, justice,and good conscience, though in the exercise of such power it must becareful to see that its decision is based on sound general principles and isnot in conflict with them or the intentions of the Legislature. It maybe observed, that the passage I have cited dogs not confer on Courtsdictatorial powers, but imposes on the exercise of their inherent juris-diction certain limitations. Can it be said that the interference by aCourt to nullify a completed contract is the exercising of its inherentpowers on sound general principles ? I do not think it can. Moreoveras there is no power in the Ordinance for the suspension of a sale undersection 51 of the Insolvents Ordinance it can be argued that for theCourt to exercise its discretion by employing such a power is in conflictwith the intentions of the Legislature. I do not, therefore, think thatthe learned District Judge in making this order was empowered to callin aid the inherent jurisdiction of the Court. Nor could he call in aid thestatutory provisions referred to by Mr. Nadaraj ah.
I doubt further whether the order can be said to be made in thefurtherance of the interests of justice The appellants in conformitywith the conditions of sale made various payments by way of stamps andnotarial fees. If they are refused a conveyance, it is doubtful how theycan receive indemnification in respect of these payments. They acquireas the result of their purchase merely the rights of the insolvent in thelots which were sold. The sale is not valid as against the rights andclaim of the second respondent. It would therefore appear that an actsanctioning the grant of the conveyance is more in consonance with theprinciples of equity than an order refusing such sanction.
For the reasons I have given the appeals are allowed and the order ofthe learned Judge set aside with costs in this Court and the Court below.
Cannon J.—I agree.
KARUNARATNE et al. v. MOHIDEEN et al