DALTON S^J.—Sangarapillai v. Devarajah Mudaliyar.
1933Present: Dalton S.P.J. and Drieberg J.
SANGARAPILLAI v. DEVARAJAH MUDALIYAR.
185—D. C. Colombo, 2,860.
Land Acquisition—Mortgage of land acquired—Person interested—Bights ofmortgagee to compensation—Ordinance No. 3 of 1876, ss. 3 and 7.
A mortgagee is a person interested in the land within the meaning ofsection 3 of the Land Acquisition Ordinance, and as such is entitled to putforward a claim to the compensation paid under section 7 of the Ordinance.
PPEAL from an order of the District Judge of Colombo. The factsare fully stated in the judgment.
H. V. Perera (with him Chelvanayagam), for first defendant, appellant.N. E. Weerasooria (with him Amerasinghe), for third defendant,respondent.
April 10, 1933. Dalton S.P.J.—
This appeal arises out of a dispute between two persons, who both claima sum of money deposited in Court under the Land Acquisition Ordinance.No evidence was led but certain facts were admitted. Those facts areas follows:—
Sangarapillai, the first claimant (appellant), was the owner of land,portion of which was acquired for public purposes.
By bond of February 27, 1929, (X 1.) he mortgaged the entire landto one Silva.
By bond of April 8, 1931, he mortgaged the entire land, under asecondary mortgage, to Devarajah Mudaliyar, the third claimant(respondent to appeal).
The date of acquisition of portion of the land so owned and mort-gaged was May 6, 1931. The sum of Rs. 3,595.78 has beenbrought into Court, but there is a dispute pending as to thesufficiency of that amount.
The bond of February 27, 1929, was put in suit in case D. C. 44,915,on July 2, 1931, to recover the sum of Rs. 25,850 and interest;hypothecary decree was entered on August 7, 1931.
The third claimant (respondent), who as secondary mortgagee hada claim for the sum of Rs. 10,251.39, became purchaser at theexecution sale for the sum of Rs. 28,000, and obtained transfer(Exhibit X 5) on December 23,1931, of the entirety of the propertymortgaged including the portion acquired for public purposes.
The first claimant (appellant) sought to have the sale set aside, buthis petition was dismissed, the dismissal being affirmed on appeal.The question' to be decided on these facts is whether appellant or re-spondent is entitled to the amount of compensation paid or to be paid forthe portion of the property acquired for public purposes. The trial Judgeanswered it in favour of the third claimant, and Sangarapillai now appeals.
For the appellant, Mr. Perera, first of all, but not very strenuously,suggested that mortgagees were in no way protected under the LandAcquisition Ordinance, 1876, and in that event a mortgage would beextinguished, if the land subject to the mortgage was acquired under theOrdinance. On that point, in the absence of the production of anyauthority to the contrary, I am satisfied that a mortgagee is a person“ interested in the land ”, within the meaning of those words as used in
DALTON S.P.J.—Sangarapillai v. Devarajah Mudaliyar.
the Ordinance. This is in fact expressly admitted in appellant’s petitionof appeal. The Ordinance provides that the land acquired vests absolutelyin His Majesty “ free from all encumbrances ”. The mortgagee certainlythen, in my opinion, has an interest, in respect of which he is entitled toput forward a claim to the compensation paid under the provisions ofsection 7 of the Ordinance.
It was then urged that although respondent by his deed of December23, 1931, purported to obtain transfer for the whole property includingthe acquired portion, and although he purported to purchase the whole,he in fact only purchased the portion that had not been acquired, inas-much as the latter portion after May 6,1931, vested in the Crown free of allencumbrances, and that, merely as purchaser of the property sold at thesale in execution, he had no claim to the compensation paid for the portionacquired, which in fact could not have and had not been purchased by him.
On the other hand, as secondary mortgagee, he was a party in the actionD. C. 44,915, and on the facts as now admitted, he had an interest in theland at the time of its acquisition. The result of this is set out, and Ithink correctly set out, in the petition of appeal. It is there urged thatthe money deposited in Court was to compensate all persons who hadinterests in the land at the time of the acquisition. The owner and themortgagee are such persons, but not one who is merely the purchaser ofthe land subsequent to the acquisition.
Unfortunately, at the trial of this matter in the lower Court the date ofacquisition was not correctly ascertained. The trial proceeded on thesupposition that the date of acquisition was February 11, 1931, a dateat which respondent was not a mortgagee, and the petition of appealwas drafted before the error was discovered. When the matter firstcame before this Court on appeal, it was ascertained that date was wrong,the correct date of acquisition being May 6, 1931, subsequent to theexecution of respondent’s second mortgage. At the time of acquisitiontherefore he was a mortgagee and a person who, as set out in the petitionof appeal (an argument intended at the time to apply only to the firstmortgage), had an interest in the compensation. In dealing with thisappeal, then, I am not prepared to deal with the respondent as being apurchaser only, subsequent to the acquisition. Oh the facts, as nowascertained and as put before this Court, he was also a mortgagee.Appellant concedes that the mortgagee’s rights to compensation wouldalways remain with him till his debt was satisfied or waived, and, thatbeing so, it seems to me sufficient to say that on the facts as now establishedthe respondent, whose debt has not-been satisfied or waived, is entitledto the compensation up to the amount of that debt. If that answerdecides this question as it arises in this case, it is not necessary to considerfurther the nature of the compensation paid, whether it is to be consi-dered immovable property as representing the land acquired, or whetheras movable property impressed with certain trusts, or as a sum of moneyin Court and nothing else.
I would therefore hold that the respondent is entitled to the amount ofcompensation to be paid for the acquisition subject to what I have stated.
The appeal must therefore be dismissed with costs.
Dbieberg J.—I agree.
SANGARAPILLAI v. DEVARAJAH MUDALIYAR