v.DE SILVA AND OTHERS
COURT OF APPEAL
U. DE Z. GUNAWARDENA, J.
CALA 191/97DC MT. LAVANIA 13/91/M18™ OCTOBER 199910™, 13rd DECEMBER 1999
Execution of Decree – Addition of Party at that stage – Civil Procedure Code- S.18. S.217 (A), 218, Doctrine of Subrogation – Constructive Trust -property held “on behalf – Motor Traffic Act – S. 105 – 109, shall pay -Inherent powers of Court.
The District Court refused the application of the Plaintiff-Appellant toexecute the Decree. The award had been made as damages for seriousphysical injuries that the Plaintiff Appellant suffered. The lsl DefendantRespondent, operation of whose lorry had caused these injuries hadthird party insurance cover against liabilities. The Insurance Company(3^ Respondent) was not a party in the District Court. The applicationmade to add the Insurance Company at the execution Stage was refusedby Court.
At the Appeal the 3rd Respondent Insurance Company was named theadded Respondent and they contended that:
the added Respondent could not have been made a party to the actionafter Judgment had been entered.
The added Respondent not being a party to the action is not boundby the Judgment.
(1) No one can be added as a Party to the action after Judgment had beenentered, therefore the added Respondent not being a party, the Judg-ment could not be enforced or execute against it.
Held further :
(1) The 1st Defendant Respondent (insured) has no direct interest inthe safety of third parties. The loss against which he (lsl Defendant
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Respondent) seeks protection is not the injury or damage caused by theaccident, he seeks protection (under the Policy) against the consequenceof the fact that he happens to be responsible for the accident in thecircumstances in which it has happened.
The addition of the Insurance Company was not at all necessary forthe execution against the Insurance Company by the money decree thathad been entered in favour of the Plaintiff Appellant.
In terms of S.218 C.P.C.. the money to the amount awarded in thehands of the insurer cannot strictly be said to be money (property)belonging to the Judgment Debtor, more so as the 1st DefendantRespondent (insured) has insured against liability to third party arisingotherwise than from contract.
The insurer is legally bound to compensate and the 1“ Defendant-Respondents right is not a mere right to request that he be givenassistance or an indemnity – it is a legal entitlement as opposed to abenefit.
One aspect of the doctrine of Subrogation in relation to an insurer,mean the right of the insurer, who has indemnified the insured to stepinto the shoes of the insured and in the name of the insured pursue anyright of action available to the insured which may diminish the lossinsured against. The other aspect of the doctrine of subrogation is thatthe insured cannot make a profit from his loss and that for any profit hedoes make he is accountable to his insurer either as constructive trusteeor an action in quasi contract for money had and received.
Even if the money (to the amount of the Judgment) is not held by theadded Respondent in trust yet it can be said to be held on behalf of theJudgment Debtor.
The words shall' in S.105 of the Motor Traffic Act “the insurer shallpay to the person entitled to the benefit of the decree the sum payablethereunder." denotes an absolute obligation.
Civil Procedure Code is not exhaustive as to the powers of court inmatters of procedure. The Court has an inherent power to make aparticular order, where its decision is based on sound general principlesand is not in conflict with them or the intention of the legislature.
Courts are expected not to act upon the principle that everyprocedure is to be taken as prohibited unless it is expressly provided forby the Code.
Fernando v. De Silva and Others (Gunawardena. J.)
As there is no prohibition legal or otherwise, the Plaintiff-Appellanthas the power in execution of the Judgment to “seize and sell or to realisethe money by the hands of the Fiscal” all saleable property, whethermovable or immovable belonging to the added Respondent (InsuranceCompany).
11 is wh oily unnecessary to add the Union Assurance Company as a party.
APPLICATION for Leave to Appeal from the Order of the District Courtof Mt. Lavania.
Cases referred to:
King v. Victoria Insurance Company (1986) AC 250
Hukum Chand v. Kamalanand Singh 3 CLJ 67 : 33 Cal 927
Narasinghe Das v. Mongol Dubey (1883) 5 All E. 163
David Weeraratne for Plaintiff-Appellant.
Geoff Alagaratnam with M. Adamally for Respondent-Respondent.
Cur. ado. vult.
October 01, 2000.
U. DE Z. GUNAWARDENA, J.This is an appeal against an order dated 07.10.1997,made by the learned District Judge, refusing the applicationby the plaintiff-appellant, for execution of a decree, awardingthe plaintiff-appellant a sum of Rs. 735,000 with costs. Theabovementioned award had been made as damages for seriousphysical injuries that the plaintiff-appellant had suffered: oneof the legs had to be amputated from the hip. The 1st defendant-respondent, the operation of whose lony had caused theseinjuries, had third party insurance cover against liabilities tothird parties.
It would appear that the Insurance Company viz. UnionAssurance although not been made a party in the DistrictCourt, at the outset, had been made so at the stage when theexecution of the judgment was applied for – or it is moreaccurate to say that an application was made for the additionof the Insurance Company, at that stage, which application
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had been refused by the learned District Judge by the ordercomplained of.
The said Insurance Company who is named, in thisapplication made to the Court of Appeal for leave to appeal, asthe added respondent-respondent, and who will mostly bereferred to as such in this order, had raised several objections,by way of argument here and below – the two main of any worthof those (objections) being that:
the added respondent-respondent couldn’t have beenmade a party to the action after the judgment had beenentered;
in any event, there is no provision in law for executing amoney decree against the added-respondent-respondent,(Insurance Company) who, in the submission of thelearned Counsel appearing for that party, is a “thirdparty”. In other words, added-respondent-respondent,not being a party to the action is not bound by thejudgment; one cannot execute a judgment against aperson who is not bound thereby – so the learned Counselfor the added respondent-respondent, submitted.
To consider the two aspects outlined above: it goes withoutsaying that no one can be added as a party to the action afterjudgment had been entered, one way or the other. Nothingmore need be said in regard to this question as it is so wellknown. Strictly speaking section 18 of the Civil Procedurecontemplates addition of parties, on or before hearing i. e.before the trial proper commences. Of course, this rule isrelaxed if there is a compelling need for the addition of a party,for one does not in practice, give abnormally excessiveattention to the rule by making a fetish of it. If the truth be told,sanction for adding a party, at any stage, but necessarilybefore the stage of judgment, is to be found in the relevantsection itself i. e. section 18 referred to above.
Fernando v. De Silva and Others (Gunawardena, J.)
The second argument (b) enunciated above, so to speak,springs from the first and is almost a concomitant thereof,if not, a follow up or continuation – the second argument,to repeat it, being that the added-respondent-respondent(Insurance Company) not being party (as it could not be addedafter judgment) – the judgment could not be enforced orexecuted against it. In principle, one cannot find fault with thatargument on the basis on which the learned Counsel for theadded respondent-respondent chose to put it forward. Thatany judgment will have binding force only in relation to theparties is a inveterate rule.
It will be interesting to note that the addition of theInsurance Company i. e. added-respondent-respondent, wasnot at all necessary for the execution, against the InsuranceCompany, of the money decree that had been entered infavour of the plaintiff-appellant. To explain why the addition ofadded-respondent-respondent is wholly unnecessary, it wouldnecessitate an examination of the relevant section of the CivilProcedure Code i. e. 218 which gives the power or the right tothe Judgment creditor to seize or to seize and sell the judgmentdebtor’s property in satisfaction of the decree for payment ofmoney – the decree in favour of the plaintiff-appellant in thiscase, also, being one such (decree). A decree to pay money, asin the case in hand, falls under section 217(A) of the CivilProcedure Code. To cite the aforesaid section 218: “when thedecree falls under head (A) . . . the judgment creditor has thepower to seize and to sell or realise in money by the hands ofthe Fiscal … all saleable property, movable or immovable,belonging to the judgment debtor, or over which or profits ofwhich the judgment-debtor has a disposing power, which hemay exercise for his own benefit, and whether same be held byor in the name of the judgment debtor or by another person intrust for him or on his behalf.”
In terms of the above section the judgment-creditor hasthe power, in execution of the money-decree, to sell or seize;
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the property whether movable or immovable belonging tothe judgment-debtor;
any property, movable or immovable, over which or overthe profits of which the judgment-debtor has a “disposingpower” if such disposing power can be exercised for hisown benefit if such property is held by or in the name ofthe judgment-debtor or by another person in trust for him(judgment-debtor) or on his behalf.
The money, to the amount awarded by the judgment, inthe hands of the insurer i. e. added-respondent-respondentcannot strictly be said to be money (property) “belonging" tothe judgment-debtor, more so as the lsl defendant-respondent(the insured) has insured against liability to third party arisingotherwise than from contract. The 1st defendant-respondent(insured) has no direct interest in the safety of third persons.The loss against which he (the 1st defendant-respondent) seeksprotection is not the injury or damage caused by the accident.He seeks protection (under the policy) against theconsequence of the fact that he happens to be responsible forthe accident in the circumstances in which it has happened.A thing can be said to belong to a person when he owns it orwhen it appertains to him. The meaning of the word “own” isto be gathered from the context but usually it means the rightto enjoy the property and do as he pleases therewith and evendispose of it according to his pleasure. Another reason, thatdeters me from holding that money in the hands of the addedrespondent, to the amount of the sum awarded to the plaintiff-appellant by the judgment, “belongs” to the 1st defendant-respondent (insured) in the sense that he owns it, is this, i. e.under section 105 of the Motor Traffic Act the third party(plaintiff-appellant) has a direct right against the insurer inrespect of the sum awarded, as will be explained later on.
From the above section i. e. section 218 of the CivilProcedure Code, one thing can be gathered for certain, that is,that any property whether movable or immovable, can be
Fernando v. De Silva and Others (Gunawardena, J.)
seized by the judgment-creditor in execution of the judgment,if the property belonged to the judgment-debtor. Anyparticular property, which includes money, can be said to“belong” to the judgment-creditor if it appertains to him or ifhe is entitled to the same. But strictly speaking, in the exactsense, money held by or in the hands, of added-respondent-respondent (insurer) cannot be said to “belong” to thejudgment-debtor in the .sense that he owns it, although thejudgment-debtor, (1st defendant-respondent) undoubtedly, hassome kind of limited interest in it, short of ownership in thathe has every legal right to expect, if not make a demand fromthe added-respondent-respondent, as the insurer, to utilizethe money in its hands i. e. in the hands of the insurancecompany, to liquidate or meet the 1st defendant-respondent’sliability to the plaintiff-appellant which is one of liabilityinsurance – the type of insurance protection which indemnifiesone from liability to third persons as contrasted withinsurance coverage for losses sustained by the insuredhimself. One has to remember that in terms of the. relevantcontract of insurance, between the 1st defendant andthe added-respondent-respondent – the latter (insurer) hasadmittedly, undertaken to pay damages or compensation onthe occurrence of damage or injury to a third party arising outof the use of the lorry belonging to the 1st defendant-respond-ent. The insurance policy in favour of the 1st defendant-respondent protects him i.e. the 1st defendant-respondent(owner of the lorry) from liability to third persons as a result ofthe operation of the relevant lorry. The insurer is legally boundto compensate and the 1st defendant-respondent’s right is nota mere right to request that he be given assistance or anindemnity. – the 1st defendant-respondent’s right as againstthe added respondent-respondent (the insurer) being a verymuch stronger right than that, for it is a legal entitlement asopposed to a benefit which is truly only discretionaryor granted at the discretion. The only real purpose of theinsurance policy is to indemnify against the risk of injury, orloss and as the 1st defendant-respondent has a policy withadded-respondent-respondent (who are the insurers) the law
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requires and binds the latter to indemnify the former againstthe former’s liability to pay damages that had been awarded bythe Court to the plaintiff-appellant. Inasmuch as the addedrespondent-respondent as the insurer is under a legalobligation (under the policy) to protect and relieve the Is1defendant-respondent of his liability to the plaintiff-appellant- there is scope for saying that the amount decreed by Courtis held by the added-respondent-respondent, who are theinsurers; at least, on a constructive trust if not. on behalf of the1st defendant-respondent. It is worth pausing to note thatsection 218 of the Civil Procedure Code confers power on thejudgment-creditor to seize or to seize and sell property (ofwhatever kind) held by another person if that property is heldby that person in the name of judgment-debtor in trust or onbehalf of judgment-debtor. The 1st defendant-respondenthad paid the premia to the added-respondent-respondent(insurers) because of the solemn assurance given by them asinsurers (be it noted that the name of the Insurance Companyitself, ironically enough, is also Assurance . . .) to compensateor protect the insured, in this case, the 1st defendant-respondent, against liability to third parties when suchliability arose. It is obvious that the 1st defendant-respondent(the insured) who is the owner of the lorry, will suffer prejudiceby the happening of the accident for which he is responsible toa third party viz. the plaintiff-appellant for if the addedrespondent-respondent (insurer) does not pay, the 1stdefendant-respondent will have to pay the amount decreed. Itwas never the intention of the parties to the contract ofinsurance, that the premia paid by the 1st defendant-respondent should remain with the added-respondent-respondent (insurer) but that it should be applied, if the injuryor the damage contemplated occurred, to indemnify the Is*defendant-respondent, who is the owner of the vehicle, againstsuits by third parties. The object of the law must be deemed tobe that the insurer holds the money, at least, after the stagethat the judgment is entered against the insured, i. e. the lsldefendant-respondent, for the ultimate benefit of the insured,if not, that of the person injured. Particularly in the case of
Fernando v. De Silva and Others (Gunawardena, J.)
Motor Insurance which is a form of liability insurance-thepurpose of such insurance being to insure against risks of thepersons insured incurring liabilities to third persons arisingout of the use of a motor vehicle etc. Liability insurance, thatbeing the nature or sort of policy that the 1st defendant-respondent has with the added respondent-respondent,indemnifies against liability on account of injuries to theperson or property of another.
I think it is unconscionable conduct on the part ofthe added-respondent-respondent (insurer) to resort toquestionable defences such as that it (the InsuranceCompany) had invoked and seek to avoid payment of thedamages which the District Court has by its j udgment awarded.The insurer in good conscience cannot refuse to pay. It is incircumstances such as this that a constructive trust can besaid to arise. They arise by operation of law, so far as I know,to put it bluntly, to avoid an injustice. The man injured, thatis, the plaintiff-appellant, it is to be recalled, has lost one of hislegs from the hip downwards.
In this context, it is apt to refer to the doctrine ofsubrogation, in particular, to the principle on which it rests.One aspect of the doctrine of subrogation in relation to aninsurer, means the right of the insurer, who has, be it noted,indemnified the insured (i. e. person insured) to step into theshoes of the insured and in the name of the insured pursue anyright of action available to the insured which may diminish theloss insured against. In the generality of cases, the insurer’sright will be to sue a third party liable to pay damages in tortor for breach of contract, which the insured had alreadyrecovered from his insurer. The other aspect of the doctrine ofsubrogation is that the “insured cannot make a profit from hisloss and that for any profit he does make he is accountable tohis insurer either as constructive trustee or in action in quasicontract for money had and received”. Vide Modem InsuranceLaw – John Birds (Reader in Law, University of Sheffield – lesthe be mistaken for a rara avis) (2nd edition) page 238. In the
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case of King v. Victoria Insurance Company11’ Lord Hobhouseexpressed the opinion that if after the insurers had paid theinsured – the insured recovers or is paid by the tort – feasor(wrong doer) as well, a Court of Equity would treat the insuredas trustee, for the insurers, i. e. the insured would have beentreated as a trustee to the extent of the payment that theinsured had received from the tort-feasor. Likewise, if not,conversely, the insurer (added-respondent-respondent) mustbe treated as one who holds the amount of judgment asa constructive trustee, for the 1st defendant-respondent,because he (the insurer) is under a duty to use that money forthe protection of the lsl defendant-respondent from liability tothe plaintiff-appellant who had suffered serious physicalinjuries as a result of the operation of the Is' defendant-respondent’s lorry. It is obvious that the 1st defendant-respondent (the insured), who is the owner of the relevant lorrywill undoubtedly suffer prejudice as a result of the happeningof this accident which has resulted in grave physical injuryto the third party viz the plaintiff-appellant, if the addedrespondent-respondent (insurer) successfully evades thepayment for then the 1st defendant-respondent will have tomake the payment. When there is no direct precedent in point,in cases on more or less the same subject, the Courts haverecourse to cases on a different or allied subject-matter, butgoverned by the same general principle, which is known asreasoning by analogy. One cannot lose sight of the fact thatthe 1st defendant-respondent had paid premia to the addedrespondent-respondent (insurer) on the latter’s solemn under-taking to the former to indemnify against liability on accountof injuries to another (third person) – a form of insurance thatcovers suits against the Is' defendant-respondent for suchdamages as injury, death etc. to third parties. The added-respondent-respondent should not in equity and goodconscience seek to retain the money (to the extent of thejudgment) or refuse to withhold payment as he had under-taken to do by the contract of insurance. We know that aconstructive trust arises in circumstances such as this whenretention of property by one party is wrongful and would leadto his unjust enrichment if that party were permitted to do so.
Fernando u. De Silva and Others lCunawardena, J.)
One knows that constructive trust is that which isestablished by the mind of law in its act of interpreting factsand circumstances. Constructive trust in its own essentialnature has not the character assigned to it, but acquires suchcharacter in consequence of the way in which it is regarded bythe policy of law. In fact, the word legal is sometimes usedinstead of constructive. In other words, constructive trustarises by operation of law whenever it becomes necessary toprevent a failure of justice. Law intervenes and creates thetrust. Such trusts do not arise by agreement, as such. Mostcommon instance in which the law or the Courts will raise aconstructive trust is when the circumstances under whichproperty (includes money) was acquired made it inequitablethat it should be retained by him who holds the legal title. Ina way, a constructive trust can be said to arise not only infavour of the Is' defendant-respondent who has takenthe policy under a contract of insurance with the addedrespondent-respondent, but also in favour of the plaintiff-appellant as well, for, in practice, third party insurance, suchas the one in question, involves or is intended to benefit thethird party (who in this case happens to be the plaintiff-appellant) as much as the insured person who, in this case, isthe 1st defendant-respondent. Of course, one need not go tothat extreme of holding that the money in the hands of theadded respondent-respondent to the extent of the sum ofRs. 735,000/ = with costs awarded in the judgment, is held bythe added-respondent-respondent (insurer) subject to aconstructive trust in favour of the plaintiff-appellant as well,for it is unnecessary to do so for the decision of this matter; foras pointed out above, section 218 of the Civil Procedure Codeauthorizes the judgment-creditor to seize or seize and sellproperty of the judgment-debtor (defendant-respondent) ifsuch property is held by another person in trust or on behalfof the judgment-debtor. As the added respondent-respondent(insurers) is held to be a constructive trustee for the Is*defendant-respondent who is the insured – (inasmuch as theadded respondent-respondent (insurer) is clearly under a dutyto utilize the money to the extent of the sum awarded as
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damages to indemnify the 1st defendant-respondent againstthe claim of the plaintiff-appellant) it must necessarily be heldthat the added respondent-respondent holds the money (to theextent of the sum decreed) “on behalf" of the Is' defendant-respondent because a person who “holds property in trust"always or necessarily holds it “on behalf" of another, that is. forthe benefit of another. It is to be observed that in terms ofsection 218 of the Civil Procedure any property belonging tothe judgment-debtor can be seized in execution of thejudgment-debtor even if that property is held by anotherperson not only “in trust” but also if it is held on “his behalf"i. e. in trust or on behalf of the judgment-debtor. What 1 amseeking to explain is this, that is, even if the money (to theamount of judgment) is not held by the added respondent-respondent in trust, yet, it can be said to be held “on behalf"of the 1st defendant-respondent (judgment-debtor) inasmuchas the added respondent-respondent must be consideredto be holding the money for the benefit of the lsl defendant-respondent, since that money has to be made use of, by theadded respondent-respondent, in terms of the contract ofinsurance, to protect the 1st defendant-respondent against theclaim made by the plaintiff-appellant in this action (in theDistrict Court) against him i. e. the 1st defendant-respondent(insured).
What does the expression or phrase “property held … onbehalf” of the judgment-debtor mean in section 218 of the CivilProcedure Code? Something can be said to be held “on behalf"of judgment-debtor if it is held for his (judgment-debtor’s)“benefit support, defence or advantage.” That is the way theexpression “on behalf" has been explained in standard legaldictionaries. For instance, financial assistance received intime of sickness, disability or unemployment and so on eitherfrom insurance or public programs such as social security canbe described as a benefit. One hears of benefit societies.Corporations exist under this name to receive periodicalpayments from members and hold them as a fund to be loanedor given to members needing pecuniary relief in adversity. So
Fernando v. De Silva and Others (Gunawardena, J.)
that when the insurers hold the money in trust, the moneymust be taken to be held “on behalF of the judgment debtorwithin the meaning of section 218 of the Civil Procedurebecause the insurer is bound to succour or go to the defenceof the insured (policy holder) by indemnifying the insured -making use of the money in the insurer’s hands, againstliability on account of injuries to third party.
This matter can be viewed in another light and froma ditferent stand-point. If, in fact, the added respondent-respondent (insurer) does not hold the amount of thejudgment as constructive trustee for the 1st defendant-respondent who is the insured, or on his behalf, then it wouldbe even more accurate for one to say that added-respondent-respondent (the insurer) holds the amount of the judgmenton behalf of the plaintiff-appellant himself – he being thejudgment-creditor – inasmuch as the sum ascertained by theDistrict Court as damages to which the plaintiff-appellant isentitled in terms of the judgment must be held to be property“belonging" to the plain tiff-appellant for three overwhelminglystrong reasons; if not the cumulative effect of those threecircumstances is to impress upon the money in the hands ofthe added respondent-respondent (insurers) the character ofmoney “belonging” to the plaintiff-appellant upon a sumof Rs. 735,000/= – presently in the hands of the addedrespondent-respondent, that being the award in the judgmentin favour of the plaintiff-appellant. The three reasons orcircumstances aforesaid are: (i) The District Court has enteredjudgment in favour of the plaintiff-appellant in the sum abovementioned; (ii) the 1st defendant-respondent against whom thesaid judgment has been entered has an insurance policy withthe added-respondent-respondent (insurers) whereby thelatter has undertaken to protect the former from liability tothird persons arising in consequence of the operation of thelorry of which the 1st defendant-respondent (insured) is theowner; (iii) Section 105 of the Motor Traffic Act imposesan absolute legal obligation – an obligation which gives noalternative to the added-respondent-respondent (insurer) –
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but requires fulfilment, i. e. according to the contract(of insurance). The said section 105 of the Motor Traffic Act isself-explanatory and is in the following imperative terms.To quote: “If after a certificate of insurance has been issued… a decree in respect of any such liability … is obtainedagainst any person insured by the policy.. . the insurer shall,subject to the provisions of sections 106 to 109, pay to thepersons entitled to the benefit of the decree any sum payablethereunder in respect of that liability …”
(It is to be observed that in the circumstancescontemplated in sections 106 – 109 the insurer is relieved ofliability to pay, but those circumstances had not been invokedin the submissions of the learned Counsel for the added-respondent-respondent either in this or in the Court below andthose circumstances exempting liability do not demandconsideration inasmuch as those circumstances have notbeen raised byway of defence, – the submissions on behalf ofthe added respondent-respondent (insurers) must be taken totacitly recognise the fact that those exempting circumstancesare non – existent).
The word “shall”, in the expression in section 105 ofthe Motor Traffic Act i. e. “the insurer shall pay to the personentitled to the benefit of the decree the sum payablethereunder” in the context, must be given a compulsorymeaning denoting an absolute obligation. Even in common orordinary parlance it (the term “shall”) is a word of command.The word shall, ordinarily, has the invariable significance ofexcluding the idea of discretion and has the significance ofoperating to impose a duty or obligation which has to beenforced, particularly if the public policy is in favour of thismeaning. The added-respondent-respondent (the insurer)would do well to remember the wisdom enshrined in the oldmaxim: “prudenter agit qui praecepto legis obtemperat ” (Heacts prudently who obeys the command of the law). The Stateis concerned to ensure that Insurance Companies will bereasonable and show utmost good faith in their dealings with
Fernando u. De Silva and Others (Cunawardena. J.)
the public. The business of insurance is clothed or impressedwith a public interest because it is something in which publicor community or a part thereof has some pecuniary interest orsome interest by which their legal rights or liabilities areaffected.
It is worth noting that under a contract of insurance theinsurer is legally bound to compensate the other party. In thiscase there is the added feature for the law (section 105 of theMotor Traffic Act) itself commands the insurer to pay, be itnoted, directly to the injured third party – which makes, so tosay, the insurer . . . bound, legally to make the paymentdirectly to the injured third party i. e. the plaintiff-appellant.Because the law compels or commands the insurer to paydirectly to the injured third party – the injured third party(plaintiff-appellant) acquires a legal entitlement to such anamount or sum, in the hands of the added respondent-respondent (insurer), as is equivalent to the sum awardedby the judgment to the plaintiff-appellant. By virtue of theoperation section 105 of the Motor Traffic, set out above, theplaintiff-appellant has a legal entitlement, as opposed to amere right to be considered for a benefit which is truly onlydiscretionary. It is true that the insurer is withholdingpayment. But such refusal to pay is wrongful and is in directviolation of section 105 of the Motor Traffic Act. Yet, the money,although wrongfully in the hands of the insurer, “belongs" tothe plaintiff-appellant in terms of the law.
It is to be observed that in terms of section 218 of the CivilProcedure Code, the plaintiff-appellant (judgment-creditor)has the right in execution of the judgment to seize property, (touse the very words used in the said section 218) “belonging tothe judgment-debtor”. (The word “belong” has beeninterpreted in legal dictionaries to mean: to appertain to, to bethe property of, to own). But there is no like express provisionof law which enables the judgment-creditor to seize, (inexecution of the judgment in his favour) property that belongsor appertains to himself rightfully, that is in accordance with
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what is right, just and legal. It is said: Jus constitui oportet inhis quae ut plurimum accidunt non quae ex inopinate (lawsought to be made with a view to those cases which happenmost frequently and not to those which are of rare or accidentalassurance). Perhaps, a case, such as this in which thejudgment-creditor has to seize what appertains or belongs tohimself, being in a way, a rare case, law has not yet providedfor it. But, law, although it does not defme exactly trusts in thejudgment of a good man (Lex non exacte defmit sed arbitrio boniviri permitit). It is said, that which never happens but once ortwice, legislators pass by. But this situation, that has arisenin this case perhaps, will go on happening, in the future, timeswithout number, and is not going to be a rare occurrencealthough it had not occurred to anyone to view this matter fromthis stand-point, perhaps, for no other reason than thatnecessity had never arisen before to do so. One cannot act afterthe fashion of the Roman judge who dismissed the plaintiff saction for recovery of damages for cutting down his vines,because form of the action spoke in general terms, of trees(actio de arboribus succicis). The judge took the odiouslytechnical view that there was no provision for the award ofdamages for cutting vines which are creepers and that actionlay or provided for cutting down trees only. Perhaps, thatRoman Judge made a fetish of literalism – rigid insistence onliteral interpretation. The Roman Judge failed to appreciatethat trees and creepers derive nutrient from the soil and fallunder broad head or genus of plants – the only difference, ifany, as I had, in another judgment, explained, being thatformer (trees) grew vertically to the ground and the latter (vinesor creepers) grew along the ground.
I think for the, following reasons the plaintiff-appellantought to be allowed, although the money or the amountawarded by the judgment, already “belongs” to him (in termsof the law) to seize the same for any one or both of the followingreasons:
Fernando u. De Silva and Others (Gunawardena. J.)
In the absence of a specific provision governing a givensituation the Court has an inherent power to make anorder which is essential in the interests of justice;
A judgment ought not to be illusory; it ought to have itsproper effect. (Judicium non debet esse iUitsorium; suumejfectum habere debet).
To deal with two reasons enunciated, above in order: AsSarkar on Civil Procedure, 7th edition, has pointed out, theCivil Procedure Code is not exhaustive as to the powers ofCourt in matters of procedure. The Court has an inherentpower to make a particular order, even when no section of theCode can be pointed to as direct authority for it, where itsdecision is based on sound general principles and is not inconflict with them or the intention of the legislature. It is oneof the three basic precepts of the law to give every man his due- the other two being, if they be mentioned, for the sake ofcompleteness, to live honestly and not to harm or to hurtanother. It is to be observed that the amount payable under thedecree has to be paid in terms of the mandate of the law itselfto the plaintiff-appellant for, as stated above, section 105 ofthe Motor Traffic ordains that the “insurer shall pay to thepersons entitled to the benefit of the decree any sum payablethereunder.” So that what is awarded as damages by thejudgment of the District Court, is the plaintiff-appellant’s dueor legal entitlement. I cannot bring myself to believe thatParliament would have ever intended that a man should notget his due in execution of a judgment in his own favour, forno other or better reason than that there is no express legalprovision enabling a judgment-creditor to seize what, in truth,is his own money or property, (or what the law has declared tobe so, as section 105 of the Motor Traffic Act had done) in thehands of a person wrongfully retaining or withholding thesame as the added respondent-respondent (insurer) is doing.I, for one, cannot think that the plaintiff-appellant should bedenied his due, that is, the amount decreed by the judgment,when both law and justice require that it should be paid to him.
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In the case of Hukum Chand u. Kamalanand Singh!21 (referredto at page 443 Civil Procedure – Wickramasinghe) Woodroffe J.explained how the Court ought to act in a situation not coveredby any express provision of law. Where no specific provision orrule exists, the Court should not refuse to act; on the contraryit should act according to equity, justice and good conscience.To quote “from Woodroffe, J. “further, law cannot (as pointedout by Barnes Peacock C. J.) make express provisions againstall inconveniences so that their dispositions shall express allthe cases that may possibly happen, and it is therefore theduty of a good judge to apply them not only to what appears tobe regulated by express provisions, but to all cases to which ajust application of them may be made and which appear to becomprehended either with the express sense of the law orwithin consequences that may be gathered from it."
In the case of NarasinghDas u. MangalDubey1315 MahmoodJ. laid down a very helpful guideline to be followed whenexpress provision was wanting.
In the above-mentioned case it was observed that theCourts are expected not to act upon the principle that everyprocedure is to be taken as prohibited unless it is expresslyprovided for by the Code, but on the converse principle thatevery procedure is to be understood as permissible till it isshown to be prohibited by the law. It is a general principle thatprohibitions are not to be presumed. They say “bonijudicis estampliare jurisdictonem,” which means that it is the part (orduty) of a good judge to enlarge or use liberally his remedialauthority or jurisdiction. We have leamt as students, andrecall with nostalgia, that justice is a steady and unceasingdisposition to render to every man his due. Of what earthly useis what we have leamt unless we make a conscious effort tomake of use what we have leamt. One knows what ought to bedone, that is, to give the plaintiff-appellant his due. There isonly one way of doing it and that is by making the benefit of theaward of damages available to him and not by withholding itfrom him. But it profits little to know what ought to be done,
Fernando u. De Silva and Others (Gunawardena. J.)
if you do not do it or if you do not know how it is to be done.When laws imposed by the state or enacted by the Parliamentfail or are silent we must act by the law of nature. I suppose,law of nature means the principles for guidance of human,conduct, which independently of enacted law, might bediscovered by the rational intelligence of man, undefaced bydishonesty and legerdemain – legerdemain and sophistrybeing a distinctive flavour of the submissions on behalf of theadded respondent-respondent in this case. This is anotherway of saying what I have said above, that is, that one mustmake orders to accord with justice and good conscience.
To de£il with the second reason referred to above as to whythe plaintiff-appellant should be permitted to seize an amountin the hands of the added respondent-respondent equivalentto the sum awarded by the judgment; a judgment should be ofsome practical value to the party concerned, particularly,when it awards damages and not turn out to be, what, one maycall, phoney, without substance or practical value. Just asmuch as the effect of law consists in execution – the value ofa judgment, too, depends on execution. An order, such as theone that the learned District Judge had made, does notconform to reason nor to law and is subversive of both – thepractical effect of his order being to deprive the plaintiff-appellant of what is due to him, and due to him, be it noted,not upon a mere moral view of the matter, but according to law.It is well to remember that section 105 of the Motor TrafficAct commands the insurer who in this case is the addedrespondent-respondent to pay the amount decreed directly tothe person who is entitled to the benefit of the decree, who inthis case, is the plaintiff-appellant. The learned District Judgehas, with a consequential air, also expressed the view that theplaintiff-appellant has to file another action against therespondent-respondent (insurance Company) to recover thesum or damages that has been awarded to him in this action.To quote “dss-efi a®oco®c) Sd^QO <°i§> ScozS® (ggzadDo cn» zo^zstezsld2§ es®o©@0 Sd^QO SScrfSsi «5>ca 8®cso SBzr? eOznzjf zngOzsfOj®Se®st a®-&.” This view in a way runs flagrantly counter to
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the inveterate policy of the law, that suit shall not grow out ofsuit and which principle is tersely spelt out in the dictum: bonijudicis est lites dirimere ne lis ex lite oritur, et interest reipublicae ut sintfines litium – which means that it is the duty ofa good judge to prevent litigations, that suit may not grow outof suit and it concerns the welfare of the State that an end beput to litigation. One is painfully aware that one District Courtaction will give a man enough of litigation to last him a life-time. What is more the learned District Judge had beenun-feeling enough to dismiss by his order dated 07.10.1997,what is virtually, the application for execution against theinsurance company, with costs. In any event no costs shouldhave been ordered against the plaintiff-appellant in thecircumstances. A Judge should have “the salt of consciencelest he be devilish”. Ordering costs against the plaintiff-appellant, as the learned District Judge had done, issomewhat reminiscent of the incident where the man whofell from the tree was gored by a bull.
Although I have explored the possibility of holding that theadded respondent-respondent (insurer) holds the amountpayable under the judgment as a constructive trustee for the1st defendant-respondent. I have not rested this order on thatbasis, but rather on the firmer ground that the said amount“belongs” to the plaintiff-appellant or that it is his (plaintiff-appellant’s) legal entitlement. I have explained that althoughthere is no specific legal provision enabling the plaintiff-appellant to seize, in execution of the judgment, what legallyand rightly “belongs" to him – yet there is no legal prohibitioneither for prohibitions are not to be presumed. And, inasmuchas there is no prohibition, legal or otherwise, the plaintiff-appellant has the power in execution of the judgment (in hisfavour) to “seize and sell or to realize in money by the handsof the fiscal” all saleable property, whether movable orimmovable, belonging to the added-respondent-respondent(Union Assurance Company). It is wholly un-necessary to addthe Union Assurance as a party just as much as it isun-necessary for the purpose of seizing property in execution
Fernando v. De Silva and Others
of a judgment, to add as a party, a person who “holds theproperty on behalf of the judgment-debtor or in trust for thejudgment debtor" within the meaning of section 218 of the CivilProcedure Code. As a final note, I must add that I have liberallymade use of traditional legal concepts and basic principles toarrive at this decision which I trust is rooted not only injusticeand good-sense, but also in law as well. These conceptscontinue to form the foundation for much of ourjurisprudence, if not a key to the substance and terminologynot only of our system of law, but also to those of any modemor advanced system anywhere in the world, because they aredesigned to promote the ends of justice by taking a sensibleview un-trammeled by detestable technicalities. Submissionsof the learned Counsel in this case are “incomparable or arebeyond compare,” in that they cannot be compared even to theproverbial "two grains of wheat hidden in two bushels of chaff.You shall seek all day ere (before) you find them, and when youhave them they are not worth the search”.
The order of the learned District Judge dated 07.10.1997is hereby set aside. The added respondent-respondent viz.the Union Assurance Company, will also pay the plaintiff-appellant a sum of Rs. 10,500/= as costs of this appeal.The plaintiff-appellant is entitled to execute the judgment anddecree against the Union Assurance – the added-respondent-respondent – without adding the added respondent-respondent.
JAYAWICKREMA, J. – I agree.
Appeal allowed. The Plaintiff – Appellant is entitled toexecute the Judgment and Decree against Union Assurance -the added Respondent – Appellant without adding the addedRespondent Respondent.
FERNANDO v. DE SILVA AND OTHERS