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Present; Bertram C.J. and Jayewardene A.J.
WALKER v. MOHIDEEN.
121—D. C. (lnty.)9 Colombo, 7,608.
Mortgage decree—Directions, for sale—Authority of Court—•Permission:granted to mortgagee to hid—Civil Procedure Code, s$. 201, 722.
In an action to realize a mortgage under section 201 of the CivilProcedure Code, the Court has no authority to give special direc-tions for the execution of the decree, except in the decree itself.
In such a case, the terms under which the mortgagee is allowed1to bid for and purchase the* property must, be embodied in the-decree.
Section 272 of the Code, under which permission may be granted*to the holder of a simple money decree to purchase at a sale inexecution of his decree, has no application to a sale under an orderto sell entered under section 201.
PPEAL from an order made by the District Judge of Colombo..
'The plaintiff obtained judgment by default on a mortgage
bond granted by the defendant for Rs. 75,000. On August 16, 1923,a mortgage decree wag entered requiring the defendant to pay this*sum within one month of the decree, and in default of paymentthe mortgaged property was ordered to be sold by the Fiscal andthe proceeds applied in payment of the amount due. The decreecontained no express directions as to the conduct and conditionof sale as provided by section 201 of the Civil Procedure Code.On- September 15 the plaintiff's proctors filed conditions for sale
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lor approval, which were the printed conditions under which thefiscal. usually sells property seized in execution of money decrees,and an application for an order to sell was made under section 224•of the Civil Procedure Code. The conditions of sale were approved,and the application for an order to sell allowed. On October 1the plaintiff's proctors moved, in terms of section 272 of the CivilProcedure Code, that the plaintiff be permitted to bid for andpurchase at the sale, and that the Fiscal be directed to give theplaintiff credit to the extent of his claim. The application wasallowed, and the property was accordingly sold on January 21,1924, and purchased by the plaintiff for Rs. 10(1. On February 19,before the sale could be confirmed, the defendant moved toRave the sale set aside, on the ground that the requirements ofaection 201 of the Civil Procedure Code were not complied with,in that the conditions of sale were not embodied in the decreenor the permission given to the judgment-creditor to purchase.The learned District Judge held that the words of section 201were not imperative, and that the section did not prevent theCourt from giving such directions and permission otherwise thanin the decree, and dismissed the defendant's application.
E. W. Jayeivurdene, K.C. (with him Canjamanadan), fordefendant, appellant.
Drieberg, K.C. (with him Keuneman), for plaintiff, respondent.
November 17, 1924.- Jayewardenb A.J.—
This case raises an important point of practice regarding theexecution of mortgage decrees under the Civil Procedure Code.
The plaintiff obtained judgment by default on a mortgage bondgranted by the defendant for Rs. 75,000. On August 16, 1923,a mortgage decree was entered requiring the defendant to pay thissum within one month of the decree, and declaring the mortgagedproperty bound and executable, and, in default of payment of theprincipal, interest, and costs within one month, the mortgagedproperty was ordered to be sold by the Fiscal, and the proceedsapplied in payment of the amount due. The decree containedno express directions as to the conduct and conditions of sale asprovided for by section 201 of the Civil Procedure Code. It merelydirected that the mortgaged premises be sold by the Fiscal. OnSeptember 15 the plaintiff's proctors filed conditions of sale forapproval and applied for execution of the decree by the issue of anorder to sell the mortgaged property. The conditions submittedfor approval were the printed conditions under which the. Fiscalusually sells property seized in execution of money decrees, and theapplication for an order to sell was made in terms of section 224of the Civil Procedure Code and in the form prescribed under thataection. Section 224 indicates the procedure to be followed where a
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1984. party is seeking to execute a decree to pay money. The conditionsJaybwab- were approved, and the application lor an order to sell allowed. ThenSbiB A. j. order to sell issued by the Court, which: is at page 135 of the record, *Walker directed the Fiscal, Western Province, or his officers, ** to sell byMohuken public auction after giving ten days' previous notice by affixing thesame to the Court-house and after making due publication. ” OnOctober 1 the plaintiff's proctors moved, in terms of section 272of the Civil Procedure Code, that the plaintiff, the decree holder,be permitted to bid for and purchase* at the sale, and that the Fiscalbe directed to give to the plaintiff credit to the extent of his claim.In the same motion they asked for a direction to the Fiscal to put upthe property for sale; first, at the amount of his valuation, and ifthere were no bidders, then at the amount of the plaintiff's claim,and if there be no bidders then, immediately thereafter to put upthe property for sale to the highest bidder. These applicationswere also allowed by the Court. The property was accordinglysold on January 21, 1924, and purchased by the plaintiff for Rs. 100.On February 19, before the sale could be confirmed, the defendantmoved to have the sale set aside. The application was based onsection 344 of the Civil Procedure Code, and the main objectiontaken was that the requirements of section 201 had not been com-plied with, in that the conditions of sale under which the propertywas sold were not referred to in the decree, and the permission to thejudgment-creditor to purchase was not embodied in the decree.The learned District Judge held that the words of section 201,providing for the giving of directions as to the conduct and conditionsof the sale, were not imperative but permissive, and that the sectiondid not prevent the Court from giving such directions and per-mission to the plaintiff to bid for or purchase otherwise than in thedecree, and dismissed the defendant's application. The defendantappeals, and the same objections have been pressed before us. Thequestion whether that part of section 201 which empowers theCourt to give directions in the decree is imperative is not free fromdifficulty. Section 201 runs as follows: —
** When the action is to enforce a right of. sale under a mortgage,and ' the Court finds for the plaintiff, the decree shallspecify a date on or before which the money decreed to bedue on the mortgage with interest thereon from date ofaction to date of payment and costs of action shall bepaid, and shall direct that in default of such paymentwithin the period so prescribed the mortgaged propertyshall be sold, and the Court may in such decree for salegive such directions as to the conduct and conditions of thesale (including terms on which the plaintiff shall be allowedto purchase), and the person who shall conduct it, and asto the terms of the instrument of conveyance and the partyor parties by whom it shall be executed, it may think fit. "
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Prima facie, the use of the word *' may " would indicate that 1984.the provision is not imperative, but merely permissive, but, in many .JxvKwAfc-cases, it has been held that “ may, " when it is used in statutes mw» A* J.imposing a duty or conferring power, has a compulsory or obliga- Whiter t.tory force, and is equivalent to “ must. " There is no doubt that MvhMunif a plaintiff asks in his prayer for directions as to the conduct andconditions of sale, the Court is bound to give such directionsin the decree. In that sense “ may ” is equivalent to “ must ”in the section. Maxwell on the Interpretation of Statutes, p. 880,ed, 4. But the question here is whether that is the only stageat which such directions can be given, or whether the Court cangive them after decree has been entered.
It would serve no useful purpose to examine all the authoritiescited to us, for in my judgment the principle applicable to the deter-mination of the question whether the word “ may " is used* in anobligatory and exclusive sense in section 201 is to be found in apassage in the judgment of Lord Selbourne in the well-known case ofJulius v. The Bishop of Oxford,1 where the noble Lord said:—
“ The language (certainly found in authorities entitled to veryhigh respect) which speaks of the words * * it shah belawful, " and the like, when used in public statutes asambiguous, and susceptible (according to certain rules ofconstruction) of a discretionary or an obligatory sense, isin my opinion inaccurate. I agree with my noble andlearned friends who have preceded me that the meaningof such words is the same, whether there is or is not aduty or obligation to use the power which they confer.
They are potential, and never (in themselves) significantof any obligations The question whether a Judge, or apublic officer, to whom a power is given by such words,is bound to use it upon any particular manner, must besolved aliunde, and, in general, it is to be solved from thecontext, from the particular provisions, or from the scopeand objects of the enactment conferring the power. "
The words discussed in that judgment were “ it shall be lawful, >rbut, as Lord Blackburn remarked in the same case, words conferringa power are equivalent to “may. " The question, therefore,whether the word " may " is used in an imperative, or, I should say.exclusive sense, must be solved by a consideration of “ thecontext, the particular provisions, and the general scope and objectsof the enactment conferring tbe power. "
Now section 201 forms part of a Code. The essence of a Code isto be exhaustive on the matters in respect of which it declares thelaw, and the law on any point specifically dealt with it musthe ascertained by reference to its provisions. If it prescribes a1 [1879) Z. B. 5 A, C. 214 at p, 286.
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particular course or procedure in a particular case, that courseor procedure must be adopted and no other. Gopal Mandat v*Pudmanund (Privy Council)1; 11 Codification in British India ** byAcharyiya, p. 5. This section is one of a group of sections dealing*with judgments and decrees, and provides for the contents of adecree passed in an action to realize a mortgage. It requires thedecree to specify a day on or before which the money decreedto be due shall be paid, and to direct that in default of paymentwithin the period prescribed the mortgaged property shall be sold,and the Court may in such decree for sale give directions as to theconduct and conditions of the sale, &o. Now, counsel has not been,able to point out to us any provision in the Code which enables-the Court to give directions as to the conduct and conditions of thesale of mortgaged property at any other stage of the mortgageaction. The plaintiff might desire to have specific instructionsgiven for the execution of a decree, or he might prefer to execute hisdecree in the same way as a simple money decree:If he desires-
to have the sale carried out under special directions given by theCourt, he must see that those directions are given in the decree forsale. I cannot find any section of the Civil Procedure Code or anyother Ordinance under which the Court can give these directions oncethe decree has been entered without reference to them. The use ofthe word “ may ” in one part of the section and “ shall " in othersceases to have any significance when we find that the Court has.no authority to give the directions in question at any other stageof the proceedings. Section 197 affords an apt illustration of the-alternative right reserved to the Court. Under that section, in thecase of mesne profits which have accrued prior to the institution of anaction for the recovery of possession of immovable property, theCourt may either determine the amount and embody it in thedecree itself, or may pass a decree for the property and reservethe inquiry into the mesne profits to be entered after the executionof the decree.
Section 201 alone gives the Court authority to give directions,for the sale of mortgaged property; the plaintiff may apply forsuch directions or he may not, but if he does apply, he must do so-before decree is entered, and the Court has no authority to givesuch directions except in the decree itself. The procedure adoptedby the plaintiff in this case cannot be justified, unless we read somesuch words as “ or at any time prior to the execution of such decreebefore the words “ give such directions, &c., ” in the section. Suchwords are not to be found in the section* and there is nothing in theCode which would justify us in reading them into it. Considering,therefore, M the general scope and objects of the enactment con-ferring the power, ” the power being conferred by.a.Code, the Courtwas bound to exercise it in the particular manner prescribed by the
1 (1909) 29 Cal 707) (715).
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Code. There is no practical difficulty in adopting such a course. 1924.The conditions of sale may be incorporated in the decree by the bwab-.reference to conditions drawn up by each proctor and sanctioned tombA.j.by the Court, or drawn up by the Court and made applicable to Walker tv.all sales under mortgage decrees. The procedure followed in this Mohideencase was, in my opinion, not justified by the Code and thereforeirregular.
The conditions of. sale approved by the Court in this case.are open to very serious objections. These conditions are theconditions under which the Fiscal sells property in execution of•ordinary money decrees. The first condition is that ” the sale shallbe subject to the provisions of the Civil Procedure Code, 1889.
This is too vague and indefinite to be of any practical use. There-was evidently safety in this vagueness, for it would have greatlypuzzled the Fiscal to say which' of the sections of the code appliedto mortgage s&les. There are 837 sections in the Civil Procedure•Code, and out of these about a hundred deal with execution sales,and it has been held that only those sections grouped under■the head “ General provisions, ” sections 336 to 384, have anyApplication to sales in execution of mortgage decrees. Thiscondition is a mysterious one, if it has any meaning. Purchasers•ought to be informed of all the conditions under which aproperty is being sold, instead of being referred to a Code whichcontains a mass of provisions which are inapplicable to the saleat which they have come to bid. In England, in the case of sales•by Court the conditions, are passed by conveyancing counsel, andin our Courts I think greater care ought to be taken in drafting•conditions for Court sales. The order to sell issued to the Fiscalis also open to much criticism. He was commanded to sell theproperty by public auction after ten days’ notice by affixing thesame to the Court-house and after making due publication. Now,in ordinary Fiscal’s sales, when the property seized exceeds the value•of Bs. 1,000, the sale cannot take place until the property has beenAdvertised in the Government Gazette ofice at least twenty days priorto the sale (section 256). Here a property mortgaged for Bs. 75,000.is ordered to be sold after ten days’ notice by affixing the noticeto the Court-house. The Fiseal was also commanded to make
due publication. ” I am unable to understand what ” due publi-cation ” means when a sale is to be carried out under an order to sell.
The Fiscal construed it as meaning advertising in the Government-Gazette, and he accordingly inserted an advertisement in thatpublication. The Fiscal ought to have been given specificdirections as to the mode of publication and advertisement of thesale.
The publication of the sale in this 'case was not a ” duepublication ” even under the Civil Procedure Code;
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1924. Now we eome to the plaintiff's application to bid for and purchaseJaybwab- the property. It is contended for the appellant that the permissionpenb A. J. for this purpose and the terms on which such permission is grantedWalker v. ought to be embodied in the decree under section 201. In theMohideen pregent case the terms on which the plaintiff was allowed to pur-chase were not embodied in the decree. Permission was obtainedUnder section 272 of the Code.
In my opinion section 272 has no application to sales under anorder to sell. It applies to sales of property seized in executionof a simple money decree. It is to be noted that section 201expressly requires that the directions should contain the terms onwhich the plaintiff is allowed to purchase the property mortgaged.It appears to have been a matter of complaint in the days before theenactment of the Civil Procedure Code that mortgagees purchasedthe mortgaged property for a nominal sum and proceeded to realizethe balance out of the other property of the mortgagor; and oneof the questions (No. 6) on which the Commissioners appointedto inquire and report on the Law of Mortgage in Ceylon invitedthe opinion of witnesses was based on this complaint. See Appen-dix ” A ,f to H. A. Jayetmrdene’8 Lam of Mortgage in Ceylon, p. v.
' As Mr. Berwick states in his answer to this question, persons aredeterred from taking the trouble to attend sales by the knowledgethat another person, generally the mortgagee, intends to bid upto a price beyond what they are prepared to bid. The same feelingstill prevails, as is shown by the evidence of the plaintiff’s proctorin this case.
Mr. Berwick suggested that a reserved price should be placedon the property, or that it should be sold at an “ upset ” or “ assess-ed ” price, the price being determined by an equitable considerationin each particular case of all interests concerned and by a practicalconsideration of the present and future and (near future) stateof the market. The Commissioners, however, made the followingsuggestion for securing a fair market value for mortgaged propertysold by public auction:—
(39) That on a primary mortgagee becoming purchaser in execu-tion on his own writ of a single security, the execution-debtor shall be entitled to have credit for the full amountof the decree, unless the execution-creditor shall, withinthirty days from the date of the Fiscal’s sale,* satisfythe Court that the security was of a less value than theamount of the decree, and that, if so satisfied, and to theextent determined by the Court after due inquiry, theexecution-debtor shall have credit only for the lessamount accordingly.
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(40) That in the event of there being more than one propertymortgaged, the mortgagee seeking to enforce his mortgageshall apportion his debt between the several mortgagedproperties, and such apportionment shall be credited tothe mortgagor, if the primary mortgagee buys the securityto which the apportioned amount relates, unless suchapportionment does not represent tire fair market valuewhich the mortgagor must prove as above; and it wasproposed that any such provision be not retrospective.—Pages iv and v.
When persons are deterred as above described, the bidding becomesconfined to a few persons, if the mortgagee does not become the solebidder. He would thus be enabled to buy the property at a pricewhioh is much below its real value, and to recover the balance fromthe other property of the debtor, who thereby suffers great loss.
It is to meet this difficulty that when the Civil Procedure Codewas enacted, the duty was imposed on the Court of prescribingthe terms on which a mortgagee should be allowed to buy theproperty.
In my opinion our Courts do not sufficiently regulate and controlsales under mortgage decrees. Conditions of "sale are approvedas a matter of course, and the mortgagee is permitted to bidunconditionally for the mere asking. This should not be so. TheCourt should, particularly in the case of decrees under whichvaluable properties are to be offered for sale, exercise its discretionjudicially, and the mortgagee should not be allowed to bid, exceptunder such conditions as would prevent the sale of the propertybelow its real value, and thus avoid the possibility of loss anddamage, not only to the mortgagor, but also to his unsecuredcreditors, which section 201 was intended to obviate. I might hererepeat what Sir Comer Petheram C.J. and Bannerjee J. said in asimilar connection in Sheonath Doss v. Janki Prosal Singh 1:—
11 Whilst we attach much importance to the leave of the Courtto the decree holder to bid, and consider that it removesall disability in him to bid, we deem it our duty to observethat such leave should be very cautiously given. Itshould, in our opinion, be given only when it is found,after proceeding with the sale, that no purchaser at anadequate price can be found, and even then it should begiven only after some inquiry that the sale proclamationhas been duly published. ”
The question remains whether the sale now under considerationshould be set aside owing to these irregularities. The defendantwas fully aware of the fact that the property was to be sold, and
1 (18SS) 16 Cal, 132.
DSNS A. «T.
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it may fairly be presumed that he informed himself of the terms andconditions under which the sale was to take place. He raisedno objection then, but had the sale stayed when it was first adver-tized and obtained time to settle his debt. This he failed to do, andthe property was then put for sale and purchased by the plaintiff.The plaintiff is prepared to give the defendant credit for full amountdue on the decree and to have satisfaction of the decree entered up,he is also prepared to cancel another bond for a sum of Bs. 3,000advanced by the plaintiff on the security of certain propertybelonging to the defendant’s sister for the purpose of paying therates due to the Municipality on the property sold. The totalamount due to the plaintiff would now amount to about Bs. 95,000.The defendant would thus be obtaining about Bs. 95,000 for hisproperty. This I think is a fair price in the present state of themarket. In these circumstances the defendant will not sufferany loss, and .his substantial rights will in no way be prejudicedby the confirmation of this sale. On the plaintiff certifying satis-faction of the decree in this case and cancelling the bond for Bs. 3,000referred to above within fourteen days of the receipt of the recordof the case in the lower Court, this appeal will stand dismissed andthe sale will be confirmed. There will be no costs of this appeal.If the plaintiff fails to certify satisfaction of the decree and cancelthe bond as directed above, the appeal will be allowed, with costs,in both Courts.
Bbktram C.J.—I agree.
WALKER v. MOHIDEEN