086-NLR-NLR-V-22-ABEYESINGHE-v.-RAKKAMA.pdf
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Present: Bertram C.J. and De Sampayo J.
ABEYESINGHE *. RAKKAMA.
91—D. C. (Inty.) Kandy, 22,577.
Three mortgages by shareholders—Writs issued under all mortgagedecrees—Seizure under all writs—Sale under one writ—Right ofother decree-holders to the surplus.
Several shareholders of a property granted three mortgages totwo persons. Writs were issued on the mortgage decrees, and theFiscal seized the shares under the several writs, and fixed the saleunder one writ at 12 noon and under another at 2 p.m. of the sameday. After the first sale, under the impression that the proceedsof the sale under the first writ was sufficient to satisfy all writs, hedid not sell under the other writs.
Held, that all the writ-holders were not entitled to share in theproceeds of sale.
“ It is necessary, in any case, that the debtor should be identical,and the property seized under the writs should be the same. Inthe present case the plaintiff's writ was against all the defendants,and Nallan’s writ was against the fourth and fifth defendants only,
. pnd the plaintiff’s other writ was against the fourth and sixthdefendants …. In these ciroumstances, one sale under allthe writs was not possible, and the Fiscal cannot be presumed tohave held a sale under all the writs.”
r | iHE facts are fully set out in the judgment.
W. Jayawardene (with him Bartholom&usz), for plaintiff,appellant.
A. St. V. Jayawardene, for applicant, respondent.
Gw. adv. vult.
September 17, 1920. De Sampayo J.—
The question in this appeal concerns the proper distribution ofthe surplus proceeds of an execution sale. The facts out of whichthe question arises may be briefly stated as follows. The firstdefendant was entitled to one-fourth share of a certain land; and thesecond defendant (wife of the third defendant), the sixth defendant,and the seventh defendant were each entitled to one-eighth share.The fourth defendant mortgaged her one-eighth share primarily toNallan Ghetty, the respondent to the appeal. The plaintiff had aprimary mortgage of the shares of the first, second, sixth, andseventh defendants, and a secondary mortgage of the share of thefourth defendant and another mortgage of the shares of the fourthand sixth defendants, which may, for the sake of convenience, becalled tertiary mortgage. Nallan Ghetty sued the fourth defendanton the primary mortgage and obtained a decree, and the plaintiff
1920.
1920.
Da SampayoJ.
Abeyesinghev, Rokkoma
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also sued the first, second, fourth, sixth, and seventh defendantshi this action on their mortgage in his favour and obtained a decree.
Nallan Chetty and the plaintiff issued writs in execution of theirdecrees and seized the shares of their respective debtors in the land,the sale under these writs were fixed by the Fiscal for the samedate as the sale under the plaintiff’s writ at 12 noon* and the saleunder Nallan Chetty’s writ at 2 p.m. The sale under the plaintiff’swrit took place and realized a sum of Bs. 28,731, but the sale underNallan Chetty’s writ waB not held, apparently because there wouldbe sufficient money to satisfy both the writs. The proceeds of salewere brought into Court, and the plaintiff drew Bs. 17,484*70,being the full amount of his writ. The surplus of Bs. 11,246*21was drawn as follows : Nallan Chetty Bs. 2,779*83, being the fullamount of his writ; the plaintiff another sum of Bs. 3*066 * 63, beingthe amount of a decree in his favour on tertiary mortgage of theshares of the fourth and sixth defendants; the first defendantBs. 2,249*24; and the second defendant Bs. 1,686. It appears,however, that the first defendant was, in fact, entitled to draw morethan the Bs. 2,249*24 which she had drawn, and so an applicationwas made to Court for the payment of the balance Bb. 1,734*93still due to her, and as the fund left in Court was not sufficient to payher this sum, and as the plaintiff had drawn in respect of the tertiarymortgage the sum of Bs. 3,066* 63, though the amount to the creditof the tertiary mortgagors was only Bs. 1,494*06, her proctorsfurther moved that the plaintiff be ordered to bring back into Courtthe amount overdrawn by him. Both the plaintiff and NallanChetty appeared in connection with this motion, and a contest arosebetween them, each saying that the other should bring back themoney drawn by him. After discussion the District Judge orderedthe plaintiff to bring into Court the sum drawn by him in respect ofthe tertiary mortgage, and to pay the costs of the contention. Theappeal is from that order.
In addition to the plaintiff’s and Nallan Chetty’s writs, the Fiscalhad in his hands a writ issued by the plaintiff in execution of thetertiary mortgage, and he seized under all the three writs therespective interests of the execution-debtors in the land, thoughhe sold under the plaintiff’s writ in the present action only. Inreporting the sale, however, he informed the Court that he had madeseizures under the other writs also.
The District Judge held that in these circumstances the sale mustbe presumed to have been under all three writs in the absence of anyspecific declaration at the sale to the contrary, and that the rightsof the contestants to the surplus proceeds must be regulated by thepriority of their respective mortgages. He relied on the authorityof Silva v. Perera.1 That case decided that when a Fiscal had in hishands several writs against a debtor, and had seized the debtor’s
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property under the writs, he ought to sell the property under all thewrits, and the several writ-holders were entitled to share in theproceeds. It seems to me doubtful whether this principle can beextended to sales in execution of mortgage decrees. Even withregard to unsecured creditors’ writs there is some difficulty in theapplication of the principle to the fullest extent, in view of the factthat under the Civil Procedure Code it is only creditors holdingdecrees of the same Court that can share in the proceeds of the salein execution.
Moreover, it is necessary, in any case, that the debtor should beidentical,, and the property seized under the writs should be thesame. In the present case the plaintiff’s writ was against all thedefendants, and Nallan Chetty’s writ was against the fourth and thefifth defendants only, and the plaintiff’s other writ was against thefourth, fifth, and sixth defendants, while the property seized in onecase was the shares belonging to all the defendants; in the secondcase it was the one-eighth share belonging to the fourth defendant;and in the last case it was the two-eighths share belonging to thefourth and sixth defendants. In-thesecircumstances, onesale underall the writs was not possible, and the Fiscal cannot be presumed,as the District Judge considered he should be presumed, to have helda sale under all the writs. As a matter of fact, the Fiscal purportedto sell, and did sell, the three-fourths share of all the defendants underthe writ issued by the plaintiff only; that is to say, he sold the sharesof the first, second, sixth, and seventh defendants as primarymortgagors, and the share of the fourth defendant as secondarymortgagor. This must be taken to be the only sale which took place.
Further, the sale under Nallan Chetty was advertised for 2 p.m.of the same day, and when the sale under the plaintiff’s writ tookplace at 12 noon, the result in law was that that* sale, so far as theshare of the fourth defendant was concerned, was subject to theprimary mortgage in favour of Nallan Chetty. A further conse-. quence was that Nallan Chetty had no right to share in the proceedsof the sale which took place, but must have recourse to the fourthdefendant’s share in the land, which*was still subject to his primarymortgage, and which he might sell again over the head of the pur-chaser. Section 352 of the Civil Procedure Code expressly providesthat “ when any property is sold which is subjeot to a mortgage orcharge, or for any other reason remains subject to a mortgage orcharge notwithstanding the sale, the mortgagee or incumbrancershall not as such be entitled to share in any proceeds arising fromsuch sale.” This is only declaratory of the common law, and arisesout of the nature of mortgages and the order of preference in respectthereof. Jt seems, therefore, that Nallan Chetty irregularly drewa portion of the proceeds saleT It was, however, contended byMr. A. St. Y. Jayawardene that the distribution of the fund inCourt was acquiesced in by all the parties, and should not now be
1920.
Db SampavoJ.
Abeyesinghev. Bakkama
( 310 )1920.
Da SahpayoJ.
Abeyesinghe«. Rakkama
disturbed. I do not think that the circumstances amount to suchacquiescence. Neither the first defendant, who is the party chieflyconcerned in this matter, nor the other defendants appear to havehad any notice of the payments on September 7,1917, of Rs. 3,066 63to the plaintiff and Rs. 2,779‘83 to Nallan Ghetty. The factappears to be that ho proper account was at that time taken of theamounts lying to the credit of the various parties or of th'e claimsof the respective creditors, and the surplus proceeds in Court weredistributed under the wrong impression that there was enoughmoney to pay every one in full.
The first defendant is entitled to have her full share of the surplusproceeds, and, as indicated above, she should get the deficiency fromthe money irregularly paid to Nallan Chetty, who should be rele-gated to his remedy on his mortgage security. Mr. Jayawardenewas apprehensive that he would now be prejudiced in the pursuitof that remedy by reason of his having already drawn the moneydue to him on the mortgage, but I do not think this anxiety is wellfounded, seeing that by his refunding the money under compulsionof Court the status quo will be restored.
In my opinion this appeal should be allowed with costs, andNallan Chetty, the respondent, should be ordered to bring intoCourt the sum of Rs. 2,779 ■ 83 drawn by him.
Bertram C.J.—I agree.
Appeal Mowed.
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