1 (1940) 41 N. L. E. 193 ; 16 C'. L. if. 119.
Aiya.du.rai v. Chittambalam.
to auctioneer’s sales in mortgage actions was fully argued, and thereasoning in that judgment would cover the questions involved in thepresent case. The principle underlying the decision in that case has to befollowed.
N. Nadarajah (with him V. F. Gooneratne,, N. L. Jansz and DharmakirtiPieris), for respondents.—Section 337 of the Civil Porcedure Code providesfor the limitation of execution of decrees. The corresponding enactmentin India is section 48 of the Indian Code the scope of which is discussed inSttbbarayan v. Natarajan et al.1 In England the matter is governed bysection 8 of the Real Property Limitation Act of 1874 (37 and 38 Viet.Cap. 57)—Hebblethwaite et al. v. Peever.'
[Wijeyewardene J.—Is there no time limit for the first applicationunder section 337 ?]
No, that defect in our law is discussed in Peries v. Cooray '.
Proceedings for sale of mortgaged premises are execution proceedings,and the procedure is governed by the Civil Procedure Code. In a mort-gage action, whether it be for the recovery of the money lent or for thesale of the mortgaged property, the one object is the realisation of thedebt. The decree in this case says so, and every hypothecary decreesays so, i.e.. the purpose of the sale is the satisfaction of <the mortgagedebt. The hypothecary decree is essentially a decree for the payment ofmoney and is not any the less so because a particular property is directedto be sold. See, for example, 14 Madras Law Journal 31, 15 Madras LawJournal 126, Don Jacovis v. Perera ', Silva et al. v. Singho et al MuttuRaman Chetty et al. v. Mohammadu‘ According to section 12 of theMortgage Ordinance itself the position would seem to be clear, namely,that the mortgaged property is to be sold for the purpose of satisfying themoney debt.
Proceedings for sale under a final decree are proceedings in execution.In that sense a mortgage sale is a sale in execution and the requirementsof section 337 of the Civil Procedure Code had to be complied with. Itis respectfully submitted that the ruling in Perera v. Jones et al. is onewhich should be considered or else be restricted to the inapplicabilityof section 347. Sections 255-288 and 290-297 of the Code were expresslymentioned in section 12 of the Mortgage Ordinance solely as a result ofthe ruling in Walker v. Mohideen.’ It does not, however, follow that theother sections of the Code are rendered inapplicable. It has been held,for example, that sections 343 and 344 are applicable in mortgage actions—Annamalay Chetty v. Sidambaram Chatty Peries et al. v. SomasunderamChetty ° (where the sale .was by a commissioner) , Arunachalam Chettiar v.Paulus Appuhamy Creasy v. Jayawardene ", Perera v. Abeyratne et aZ.’-In South Africa, too, a sale of mortgaged property is regarded as a sale inexecution—Wille on Mortgage and Pledge in S. Africa (1920) p. 369. Seealso Chitaley and Rao’s Commentary on the Indian Civil Procedure Code,Vol. 3, p. 2429.
1 A. I. R. 1922 Mad. 209.7 [1921) 26 X. L. R. 310.
3 11909) 12 X. L. R. 302.■ (1906) 9 X. I,. R. 160.
{1910) 13 X. L. R. 113.
{1919) 21 X. L. R. 97.
* (1392) 1 Q. D. 124.
“ (1931) 33 N. L. R. 271.* (1924) 2 Times 1S9.
>• (1930) 39 X. L. R. 43.11 (1936) 1 C. L. .1. 33.
11 (1912) 15 X. L. R. 414.
WIJEYEWARDENE J.—Aiyadurai v. Chittambalam.
The decree entered in this case is not governed by Ordinance No. 21 of1927. Decree nisi was entered in September, 1927, and later madeabsolute under section 86 of the Civil Procedure Code.
V. Perera, K.C., in reply.—This case falls under the MortgageOrdinance.
[Wijeyewardene J.—We would, like to hear you only on the pointwhether this was not a sale in execution.]
The hypothecary action is an action to enforce a real right. Thedistinction between the personal action and the hypothecary part in amortgage action is dealt with in Ramanathan v. Perera et al.’ There is acombination of two actions in the usual mortgage action. The hypothe-cary part of the decree should be considered separately and as somethingapart from the personal action—Kandappa Chettiar v. Ramanayake et al.~The hypothecary part is governed by the Mortgage Ordinance.
In the cases cited on behalf of the respondent, the word “ execution ”was used in a loose sense. And sections 343 and 344 of the Civil ProcedureCode would be applicable by virtue only of the inherent powers possessed byCourt in respect of hypothecary sales. Section 218 of the Civil ProcedureCode is the basic section for the execution of a decree for money, and thesale of any property seized is essentially at the instance of the judgment-creditor although under the control of Court. Whereas in a judicial saleunder section 12 of the Mortgage Ordinance, the sale is directly by theCourt. The distinction between execution sales and judicial sales isdiscussed in Freeman’s Void Judicial Sales (4th ed.), Chapter I.
Cur. adv. vult.
October 30, 1940. Wijeyewardene J.—
The present appeal arises out of certain proceedings in an action on amortgage bond executed in June, 1922. The action was filed in January,1927, and decree nisi was entered in September, 1927, in accordance withthe procedure which obtained in our Courts prior to the Mortgage Ordi-nance No. 21 of 1927 (Legislative Enactments, Vol. 2, Chapter 74) whichcame into operation on January 1, 1928. A decree absolute was enteredon June 11, 1928.
The decree did not give any directions as to the conduct and conditionsof the sale. In December, 1928, a writ was issued to the Fiscal to executethe decree. The writ was returned unexecuted as, according to thepetitions filed by the second and third defendants, the plaintiffs apparentlyagreed to stay execution at the request of the defendants who paid themthe full costs of the action.
The first defendant died in 1931 and her children, the original second,fourth, fifth and sixth defendants and another had to be substituted inher place. The journal entries show that there has been considerabledifficulty in serving most of the notices issued in the course of theproceedings in this action;
In 1933, the plaintiffs assigned the decree to one S. J. Thamboo who inturn conveyed his interest in the decree in August, 1936, to one P. S.Aiyadurai. In March, 1938, P. S. Aiyadurai was substituted as plaintiffin place of the original plaintiffs after due notice to all the judgment
' (1929) 31 X. L. li. 304 at SOS.
(1936) 38 X. L. R. 33.
WIJEYEWARDENE J.—Aiyadurai v. Chittcmbalam.
On June 2, 1938, the substituted plaintiff applied for the issue of acommission to one N. Kandiah for the sale of the two mortgaged landswhich may, for convenience of reference, be called the Kankesanturaiproperty and the Tellippalai property. The Court granted the applicationand fixed February 9, 1939, as the returnable date of .the commission.The Commissioner of sales duly carried out the sale in terms of theconditions of sale approved by Court and declared the two properties soldfor Rs. 3,000 and Rs. 550, on January 11, 1939. The purchaser of theKankesanturai property made only a deposit of Rs 750 and failed topay the balance three-fourths of the purchase price. On March 9, 1939,the Court confirmed the sale of the Tellipallai property for Rs. 550. OnJuly 20, 1939, after due notice to the judgment-debtors and the defaultingpurchaser of the Kankesanturai property, the substituted plaintiff wasissued an order of payment for Rs. 1,300 or thereabouts—the moneyrealised by the sale of the Tellippalai property and the deposit forfeitedin respect of the Kankesanturai property.
On May 10, 1939, the substituted plaintiff applied for a re-issue of thecommission to Mr. Kandiah for the sale of the Kankesanturai propertyand the Judge allowed the re-issue of the Commission. At the sale heldunder the authority of the commission in October, 1939, the Kank^san-turai property was sold for Rs. 3,270 and the commissioner made hisreturn to Court on October 25, 1939. The second defendant and thethird defendant (husband of the fourth defendant) thereupon filedpapers on November 18, 1939, to have the sale of the Kankesanturaiproperty set aside.
The present appeal is from the order of the Additional District Judgegranting the application of the second and third defendants. The groundsfor the decision of the learned Judge are : —
(i.) Notice of the application made to Court on June 2, 1938, fifor theissue of the commission has not been served on the seconddefendant.
(•ii.) Notice of the application made to Court on May 19, 1939, has notbeen served on the second defendant.
(iii.) The application for the re-issue of the commission made on May 19,1939, was barred by section 337 of the Civil Procedure Code as itwas made 10 years after the decree.
On an examination of the journal sheet I find an entry which reads—27.10.38.
Mr V. Manikvasagar for petr. Notice served on 1, 2 and 3 substd.' defts. Absent. Application allowed.
C. C.
It is not disputed that C. C. are the initials of the chief District Judgeof Jaffna. It is true that this entry is not supported by the Fiscal’sreturn) to the notice as no such return is to be found in the record thoughthe earlier journal entry made on October 20, 1938, reads : “ Return tonotice reed, duly served ”. The second defendant who gave evidenceat the inquiry denied that he received the notice in question. Headmitted in cross-examination that he knew a few days before the salethat the sale was going to take place but he refrained from taking anyaction to stay the sale. There is another fact which militates strongly
WIJEYEWARDENE J.—Aiyadurai v. Chittambalam.
against the second defendant’s statement that the notice was not servedon him. Even when he received a notice of the later application of thesubstituted plaintiff to draw the sum of Rs. 1,300 realised as a result of thesale of January 11, 1939, he did not take any steps to inform the Courtabout the alleged failure to serve notice of sale on him.
It is moreover not easy to understand why the second defendantthought it necessary to allege a failure to serve the notice on him withregard to the first issue of the commission while making no allegationwhatever either in the petition or in his evidence regarding the notice «ofthe application for the re-issue of the commission, when it is rememberedthat the sale which the second defendant attacks, is, at least ostensibly,the sale of the Kankesanturai property held on-the re-issue of the com-mission. There is, of course, the suggestion made by Mr. Advocate Nilesin his cross-examination of the second defendant that, in making thepresent application, he is acting at the request or in the interest of thedefaulting purchaser, S. Ratnasingam, who now finds that he has lostKs. 750 in consequence of his default in paying to the Court the balancepurchase money of the Kankesanturai property in respect of the earliersale. It is difficult however to give any consideration to that suggestionin .the absence of more definite evidence on that aspect of the matter.But, in all the circumstances of the case I think that the bare statementof the second defendant is insufficient to displace the strong presumptionraised in favour of the substituted plaintiff by the journal entry ofOctober 27, 1938, and the conduct of the second defendant.
I think the additional District Judge has erred in basing his decision onthe second ground. It is not stated either in the affidavit filed in supportof the present application or in the evidence given at the inquiry thatthere has been a failure to give the second defendant notice of the appli-cation made in May, 1939. The parties were, therefore, not at issue onthis point and I think it would be distinctly unfair especially to thepurchaser who bought the property at a sale held under the orders ofCourt that the sale should be set aside on a ground of which he had nonotice.
The third reason given by the District Judge involves a considerationof the sections of the Civil Procedure Code dealing with sales in executionand especially of section 337. Now section ‘337 reads : —
“ When an application to execute a decree for the payment of moneyor delivery of other property has been made under this chapter ar,dgranted, no subsequent application to execute the same decree shall begranted unless.. also no such subsequent application shall
be granted after the expiration of ten years from any of the followingdates, namely the date of the decree sought to be enforced or •…”.
That section, it will be observed, does not make any provision regardingsubsequent applications when the first application has been refused. Thereason for it, no doubt, lies in the fact, that in cases where the firstapplication is refused the principles of res judicata may come into operationto bar a subsequent application. But the section also does not limit thetime within which the first application should’ be made—vide Peries v.Cooray'—differing therein from the provisions of the corresponding42/71 (1909) 12 X. /.. R: 3G2.
30WIJEYEWARDENE J.—Aiyadurai v. Chittambalam.
section 48 of the Indian Code of Civil Procedure, 1908, which makesspecific reference to Article 180 of the second schedule to the IndianLimitation Act, 1877. There is also no other enactment in our law, so faras I am aware, fixing the time of limitation in respect of a decree of a CivilCourt, as a result of the repeal of section 5 of Ordinance No. 22 of 1871by the Civil Procedure Code, 1889. The position, therefore, is that underour law it is only a second or subsequent application “ to execute adecree for the payment of money or delivery of other property ” that isbarred by limitation The question that has to be considered thereforeon the present appeal is whether the application for a re-issue of a com-mission made on May 19, 1939, falls within the category of applicationsreferred to by me in the preceding paragraph. In deciding this questionit has to be borne in mind that it is not possible to deduce from section 337of the Code any general principle in favour of the limitation of decrees bylapse of time and that the section is more or less of the nature of a highlypenal provision preventing a judgment-creditor altogether, in certaincircumstances, from recovering a sum of money that a competent Courthas decided to be due to him—vide P. L. K. N. M. K. Chetty v. Perera' ;and Muttukarupen Cliettiar v. PathiranaJ
By his application of May 19, 1939, the substituted plaintiff asked fora re-issue of a commission to the commissioner of sales appointed by Courton the application of June, 1938, to sell one of the mortgaged propertieswhich the Court had decreed specifically to be sold in the event of thedefendants making default in the payment of the amount due by them.Is the sale asked for a sale in execution within the meaning of section 337of the code or is it a judicial sale?
The following paissage from Freeman’s Void Judicial Sales (4tli ed.)Chapter 1, section 1, appears to me to bring out in relief the essentialdifferences between the two kinds of sales : —
“Precisely what sales can accurately be denominated '‘ judicial’ isnot very well settled. Of course they must be the result of judicial'proceedings, and the order, decree or judgment on which they arebased, must direct the sale of the property sold. There can be nojudicial sale except on a pre-existing order of sale. And probably theorder of sale is not alone sufficient to entitle the sale to be called judicial.In a State where an Administrator’s sale though made by virtue of anorder of Court, was not required to be reported to the Court nor to beconfirmed, Judge Story held it not to be a judicial sale. If, however,a sale ordered by the Court is conducted by an officer appointed by, orsubject to, the control of the Court, and requires the approval of theCourt before it can be treated as final, then it is clearly a judicial sale… Execution sales are not judicial. They must it is true be
supported by a judgment, decree, or order. But the judgment is not forthe sale of any specific property. It is only for the recovery of adesignated sum of money. The Court gives no directions, and cangive none concerning what property shall be levied upon. It usuallyhas no control over the sale beyond setting it aside for non-compliancewith the direction of the statutes of the State. The chief differencesbetween execution and judicial sales are these: the former are based'» (1916) 19 N. L. R. 140.= (1940) 16 C. L. TV. 55.
WIJEYEWARDENE J.—Aiyadurai v. Chittambalam.
on a general judgment for so much money, the latter on an order to sellspecific property ; the former are conducted by an officer of the law inpursuance of the directions of a statute, the latter are made by theagent of a Court in pursuance of the directions of the Court; in theformer the sheriff is the vendor, in the latter the Court; in the formerthe sale is usually complete when the property is struck off to thehighest bidder, in the latter is must be reported to and approved bythe Court.”
In the light of the above passage the sale of the particular mortgagedproperty seems to me to be a judicial sale and not a sale in execution. Inthis connection it is not without interest to find that the MortgageOrdinance, 1927, refers to hypothecary actions as actions “ to enforcepayment of a mortgage by a judicial sale of the mortgaged properly "—vide Legislative Enactment, Vol. 2, Chap. 74, s. 2).
The Counsel for the respondents contended, however, that the words“ application to execute a decree ” had a wider connotation -than couldbe gathered from the words “ execution sales ” as used in the aboveextract. Now the right to execute decrees for payment of money givesthe power to the judgment-creditor to seize and sell only such saleableproperty as is mentioned in section 218 of the Code. Then section 223requires the judgment-creditor who wishes to effect such seizure and saleto put the Fiscal in motion by a written “ application for execution ofdecree ” made to Court and containing the various particulars set out insection 224. On receipt of the writ the Fiscal is required by section 225within a time regulated by the distance of the judgment-debtor’s residencefrom the office of the Fiscal to make a demand from the judgment-debtor.If the debtor fails to comply with such demand or if he is absent, then theFiscal is authorized to “ proceed to seize and sell ” property. The propertyto be seized and sold should in the first instance be such unclaimed propertyof the judgment-debtor as may be pointed out and surrendered to himfor the purpose by the judgment-debtor. Section 237 sets out the modeof seizing immovable property and provides for the publication of suchseizures in a certain specified way, while section 256 requires the sale tobe advertised in the Government Gazette if its value exceeds Its. 1,000.It is not necessary to examine the sections of the Code further. Now, onan order to sell mortgaged property the Commissioner has an unfettered 'power to sell the mortgaged property. He need not make any demandfor the payment of money nor is it necessary for him to observe therequirements of sections 237 and 256. He is bound only to conduct thesale according to the conditions of sale approved by Court. The sectionswhich I have mentioned—and there are others—are against the contentionof the respondent’s Counsel that the legislature intended to give a verywide significance to the words “ applicauon to execute a decree ”.
I shall now consider the further argument urged on behalf of therespondents that the application of May 19, 1939, cannov. be regarded asan application under the Mortgage Ordinance as a decree nisi was enteredin this case in September, 1927, and section 12 of the Ordinance is appli- .cable “ only where the decree is made after ” January 1, 1928. Now ,section 4 shows that Chapter 2 which includes section 12 applies, in the -absence of express provision to the contrary, “ to mortgages created or
32WIJEYEWARDENE J.—Aiyadurai v. Chittambalam.
arising and to hypothecary actions instituted before or after thecommencement of the Ordinance Such express provision is found,for instance, in section 6 (5), section 10 (3) and section 12 (6). Theintention of the legislature, therefore, was to make the provisions ofChapter 2 of the Ordinance generally applicable to all hypothecaryactions except when the legislature has in express terms laid down thatthey should not be made so applicable. It is I think relevant to note inthis connection that the Mortgage Ordinance, 1927, section 12, was speciallyenacted in order to meet the somewhat difficult situation created by thedecision in Walker v. Mohideen1 and to give the necessary relief byempowering the Courts to give directions in the mortgage decree orsubsequently in regard to the enforcement of the decree. In thesecircumstances the express provisions of section 12, sub-section 6, limitingthe application of section 12 should not be given an extensive interpre-tation so as to restrict artificially the scope of the section. The Mortgage.Ordinance made a substantial change in the nature of decrees entered inmortgage actions. Under the old procedure as laid down in the code, theCourt had to enter a decree nisi on non-appearance of the defendant(vide section 85 of the code) and later enter the decree absolute undersection 86 if the defendant failed to show cause against the decree nisi.The Mortgage Ordinance altered this procedure by enacting in section 14'that where a hypothecary action instituted after the commencement ofthe Ordinance is heard ex-parte under section 85 of the Civil ProcedureCode the decree shall be decree absolute and not a decree nisi ”. Theposition therefore is that in the case of hypothecary actions filed beforethe commencement of the Ordinance and heard ex-parte under section 85of the Code there would always be a decree nisi followed by a decreeabsolute whether the day on which the decrees had to be entered fellbefore or after the commencement of the Ordinance, while in the case ofhypothecary actions filed after the commencement of the Ordinancethere would be only a decree absolute in similar circumstances.
I hold that the words “ the decree ” in section 12 (6) means the finaldecree or the decree absolute whether made under section 86 of the Codeor section 14 of the Ordinance.
The Counsel for the appellant urged in support of his appeal that amortgage decree should not be regarded as a decree for the payment ofmoney when the judgment-creditor seeks to enforce the hypothecarypart of it and for that reason also, the present application was notgoverned by section 337 of the Code. This is a question which has beendiscussed a great deal in the various 'High Courts in India under section230 of the Indian Code of Procedure (1882) which contained, as section 337of our Code, the. words : “ Where an application to execute a decree forthe payment of money or delivery of other property .has been made ”.When the new Indian Code was framed, the Indian Legislature set atrest the conflict of judicial opinion by making the corresponding sectionof the new Code (section 48), refer to cases “ where an application toexecute a decree not being a decree granting an injunction has beenmade ”. There are local decisions in which it has been held that amortgage decree is a decree for payment of money within the meaning of
1 20 N. L. R. 310.
HOWARD CJ.—Police Sergeant Kulatunga v. Mudalihamy.33
section 337 (vide Muthu Ramen Chetty v. Mohamadu ’) I do not think itnecessary to express an opinion on this point in view of the decision Ihave reached that the present application is not an application forexecution within the meaning of section 337 of the Code.
Several authorities were cited to us in the course of the argument ashaving a bearing on the word “ to execute a decree It is sufficient torefer to the latest decision Perera v. Jones and another *, where this Courtconsidered the scope of section 347 of the Code. The ratio decidendi inthat case supports the view I have expressed with regard to the scope ofsection 337.
I would allow the appeal with costs here and in the Court below.
Cannon J.—I agree.
Appeal allowed.