Marikar v. Cader.
1941Present : Howard C.J. and Hearne J.
MARIKAR et al. v. CADER.
25—D. C. Jaffna, 15,186.
Registration of seizure—Mortgage pending seizure—Sale in execution after thelapsing of registration—Mortgage void as against sale—Renewal of oldmortgage pending seizure—Validity—Civil Procedure Code, s. 238.
Where property is seized in execution and the seizure is registered amortgage of the property, while the registration of the seizure is in force,is void as against the Fiscal’s transferee although the sale in execution
took place after the registration of the seizure had lapsed.
Section 238 of the Civil Procedure Code does not operate to give apurchaser, a title free of a mortgage executed while the registration ofthe seizure is in force, if such mortgage is merely a renewal in whole orin part and not in excess of a mortgage existing prior to registration.
^ PPEAL from a judgment of the District Judge of Jaffna.
N. Nadarujah (with him H. W. Thambiah and Nadarasa), for 3rddefendant, appellant.
S. Nadesan (with him S. Rajaratnam) for plaintiffs, respondents.
Cur. adv. vult.
1 J. L. R. 25 Madras 61.1 16 X. L. R. 252.
=■ 27 N. L. Rec. 13.
HE ARNE J.—Marikar v. Coder.
November 20, 1941. Hearne J.—
The plaintiffs sued the first and second defendants on an otty mortgage(P. 5) dated November 29, 1936. P 5 acknowledges the receipt of a sumof Rs. 350, binds the land described in the Schedule and states that“ a prior mortgage ”, referred to as bond 17,478, has been executedon the same date in order to secure a loan of Rs. 300.
The circumstances in which P 5 and the primary mortgage, wereexecuted are these. The land had previously been mortgaged to theplaintiffs on bond P 2 dated March 25, 1936, for a sum of Rs. 500. OnNovember 29, 1936, a sum of Rs. 300 was borrowed from one Muthupillaiand bond No. 17,478 was executed in his favour. Out of the sum ofRs. 300, Rs. 150 were paid to the plaintiffs who then took the secondarymortgage in respect of the balance of Rs. 350 still due to them, and areceipt was passed in discharge of P 2.
In execution of a decree for costs in another case the land, which is thesubject-matter of this case, was seized on June 20, 1936, and the seizurewas registered on June 25, 1936. For various reasons the sale of theland was delayed for some time. It was finally sold on September 7,1939, and a conveyance to third defendant was made on November 2,1939.
The point that arises for decision is whether the third defendant’s titleon the Fiscal’s conveyance is free of or subject to the mortgage createdby P 5. It was admitted for the purpose of the appeal that P 5 wasexecuted at a time when the registration of the seizure effected on June25, 1936, was in force, and it follows from this, by virtue of the provisionsof section 238 of the Civil Procedure Code, that P 5 is prima facie voidagainst the third defendant as the purchaser from the Fiscal sellingunder a writ of execution. The District Judge took the view that thisposition would result in law only if P 5 was executed and the sale by the .Fiscal took place while the registration was in force. As the lattercondition was not fulfilled, the registration having lapsed on December 24,1936, he held against the third defendant who has appealed. Theinterpretation given to section 238, Civil Procedure Code, is not, in myopinion, warranted by the language of the section and Counsel for theplaintiffs-respondents found himself unable to support the learned Judge’sreasoning.
He has, however, supported the conclusion of the Judge for anotherreason which the latter mentioned in his judgment. It was argued byCounsel that when the registration of the seizure was effected on June 25,1936, P 2 was in existence, that this instrument charged the land withthe payment of a debt of Rs. 500, that P 5 was a renewal of part of thedebt, viz., Rs. 350 and that, therefore, the provisions of section 238 do notaffect the validity of P 5 as against the third defendant.
The provisions of section 238 do not, in my opinion, operate to give apurchaser a title free of a mortgage executed while the registration of aseizure is in force, if such mortgage is merely a renewal, in whole or inpart and not in excess, of a mortgage existing prior to the registration.This view follows Indian decisions, 4 Mad. 417 and 29 Cal. 154, basedon the section of the Indian Code corresponding to section 238. Counselfor the third defendant-appellant suggested that it might be dangerous
HEARNE J.—Marikar v. Cader.
to follow Indian authority in the absence of knowledge of the law relatingto mortgages in India and, jn particular, of any special law that mayexist in regard to the renewal of mortgages. It is clear, however, fromthe judgment in 29 Cal. 154 that what was held really to matter was theintention of the parties not to extinguish earlier mortgages but to keepthem alive, and it is that test that must be applied having regard to thelaw of mortgage in Ceylon and the particular circumstances of this case.
If P 5 represented the only transaction that took place onNovember 29, 1936, if for instance the mortgagors had paid Rs. 150 outof their own pockets and, on P 2 being discharged, P 5 had come intoexistence, I would have no hesitation in holding that that transactionwas within the four corners of the Indian decisions which I respectfullyfollow, and that P .5 was not void against the third defendant.
The position, however, is complicated by the fact that onNovember 29, 1936, bond No. 17,478 was also signed, charging theproperty with a debt of Rs. 300. What is the effect of this transaction ?Does it alter the rights of the plaintiffs relative to the third defendant ?In my view it does.
Following the reasoning of the Privy Council in the Calcutta case (supra)section 238 does not render void transactions which do not prejudice apurchaser but, so far as they do prejudice him, they are void as againsthim. Bond 17,478, being part and parcel of an arrangement for liquida-ting a portion of the mortgagors’ existing obligation to the plaintiffs andbeing for a sum which was less than the existing obligation, is not avoided.But the secondary mortgage to the plaintiffs is avoided against thepurchaser by the extent to which the amount secured by that mortgage,after taking into account the amount of bond 17,478, exceeds the originaldebt, namely, Rs. 150.
The decree will require to be amended accordingly. In all thecircumstances I would order that the parties to this appeal should beartheir own costs. The appellant was not ordered to pay any costs of trial.
Howard C.J.—I agree.
MARIKAR et al. v. CADER