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May 26 db 31.
SUPPERAMANIAN CHETTY v. MOHAMMADU ALIAR et al.
D. C., Kegalla, 870.
Civil Procedure Code, ss. 242, 246—Claim by mortgagee to property seizedin execution—Rejection of claim and sale of property—Failure ofmortgagee to institute action for establishing his right under s. 247—Right of mortgagee to bring hypothecary action against his debtorsand purchaser under sale in question.
A land being seized in execution as the property of A and B, C. (the mortgagee) preferred a “ claim ” to the Fiscal. The DistrictJudge rejected liis “ claim to the property,”' and the land was soldby the Fiscal to D. Thereafter C (the mortgagee) raised thepresent suit against his debtors A and B and the purchaser D.
On D’s plea that C’s action was barred by section 247 of the CivilProcedure Code, in that it was not instituted within fourteen days ofthe rejection of the claim,—Held, that the “ claim ” rejected did notaffect the right of C to sue on the mortgage bond or to seize the landmortgaged, into whose possession soever it went.
Lawrie, J.—Section 246 of the Civil Procedure Code is intendedfor the benefit of those whose liens or mortgages are not registeredand whose rights would be extinguished by a sale in execution,unless their existence and validity were acknowledged by the Court.
H^HIS was an action for the- recovery of R.s. 4,350, being prin-cipal and interest alleged to lx; due upon a mortgage bondgranted by the first and second defendants to the plaintiff. Thethird defendant was the purchaser (in execution of a money decree
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pronounced in case No. 784 of the District Court of Kegalla) of 1898.one of the lands hypothecated to the plaintiff. Plaintiff prayed May 26 <b 31.that in default of payment by the first and second defendants thelands and movables hypothecated may be declared bound andexecutable for the sum claimed.
The first and second defendants did not appear, and judgmentwas entered against them. The third defendant filed answer.
He pleaded that as the plaintiff had failed to institute an actionunder section 247 of the Civil Procedure Code within fourteendays of the rejection of his “ claim ” in case No. 784 aforesaid, hewas barred from maintaining the present action against him.
The District Judge found that on 3rd May, 1896, the landcalled Harangahatennahena (being one of the lands mortgaged toplaintiff) was seized in execution on a writ issued in case No. 784against the property of the first and second defendants ; that onthe 15th May, 1896, the plaintiff preferred a claim to the Fiscalbased upon the bond now sued upon; that the District Judgerejected his “ claim to the property ” on 30th May, 1896 ; that thenature of plaintiff’s claim as mortgagee was not rightly understood ;that the effect of the order rejecting plaintiff’s “ claim ” in caseNo. 784 was not that his claim as owner should be rejected, butthat his claim as mortgagee to have the land sold subject to hismortgage should be rejected; and that the order so made wasconclusive only as regards the proceedings had in case No. 784,and did not go beyond the limits of the execution affected in thatcase. He ordered that judgment be entered as against the thirddefendant, as well as against the first and second defendants.
The third defendant appealed.
Bawa, for appellant.
Sampayo, for respondent.
31st May, 1898. Lawkee, J.—
The lands were mortgaged by the first and second defendantsto the plaintiff. The mortgage bond was registered. On a writby a third party against the first and second-defendants the landswere seized.
It is recorded that the plaintiff claimed “ the lands,” but thatprobably is a mistake in fact, for in the claim he ascribed histitle to the mortgage bond.
I think it is plain that what the plaintiff meant to do was tointimate to the Court and to any intending purchasers the fact ofthe existence of the mortgage. It may be that the plaintiff wasunder the belief that his mortgage gave him a right to prevent a
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sale in execution at the instance of an unsecured creditor. Ifthat was the ground on which his claim was made, the order ofthe District Judge rejecting the claim on the 30th May, 1896,was undoubtedly right. The rejection of the claim, the refusalto release the lands from seizure, was conclusive, for the plaintiffdid not bring action within fourteen days.
But in my opinion it was conclusive only on the claim as made :it was conclusive that the plaintiff was not the owner of the lands,and it was conclusive of the claim to have the seizure removed atthe instance of a mortgagee. It seems to me impossible to carrythe consequences of the conclusiveness of the order further, andto hold (as the appellant demands) that the question of themortgagee’s right to sue on the mortgage was, by the order of theDistrict Judge, conclusively decided in the negative.
If the claim made by the plaintiff was not intended to be foran unconditional release of the seizure, but was virtually oneunder section 246 for a continuance of the seizure subject to themortgage, the District Judge refused to make the order. It is notsuggested that the validity of the mortgage was disputed. I donot know why the Judge did not continue the seizure subject tothe mortgage ; but whatever reason he had (short of deciding thatthe mortgage was invalid), it seems to me that the refusal did nettouch the mortgagee’s rights as against his mortgagor, nor againstthe land into whosoever possession it might afterwards come.
The 246th section is, I think, intended for the benefit of thosewhose liens or mortgages are not registered, rights which wouldbe extinguished by a sale in execution, unless their existence andvalidity were acknowledged by the Court: and it was. ordered thatthe sale be subject to these unregistered rights,—that is, that thepurchaser took the property burdened by the lien or mortgagementioned in the order.
In the case of registered mortgages the sale is by law subjectto the mortgage, and no statement by a Court to the affirmative isnecessary.
I would affirm with costs.
I agree. The facts of this case are exactly, qua the order madeunder section 246, the converse of those in the case reported in2 N. L. R. 111. In my judgment the Court can, in an applicationunder that section, make only one of two orders : “ Let the seizure“ continue as it presently is,” i.e., unaffected by any considerationof whether the land is affected by the alleged mortgage or lien;or else “ Let the seizure be continued subject to the mortgage
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“ of the land affected by the bond No., datedI do
not see that the Court could order that the seizure should continue,and the land should be sold free of liability to the allegedmortgage. It is not easy -to anticipate the purposes for whichthe latter possible order might be sought or made to serve. Asthe seizure is to continue subject to the mortgage, it could notwell be that the land should be sold clear of it and the proceedsapplied to pay the mortgagee (with precedence) and the execution-creditor. But if the mortgagee were on the eve of obtaining hisdecree under section 201, or a sequestration under section 645,the Court might, after such recognition of his rights by some laterorder, stop the writ-holder from at once having the property soldby Fiscal, and might do so in the interests of the writ-holder, oreven of the debtor himself, so that there should be but one sale,at which a purchaser, with no future sale in view, would beinclined to bid the full value as for a certainty.
May 26& 31-
SUPPERAMANIAN CHETTY v. MOHAMMADU ALIAR et al