094-NLR-NLR-V-29-ATTORNEY-GENERAL-v.-PANA-ADAPPA-CHETTY.pdf
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Present: Fisher C.J. and Garvin -7.ATTORNEY-GENERAL u. PANA ADAPPA CHETTY.
486—D, G. Ncgombo, 17>125.
Crown Debtors—Tacit hypothec—Arrack renters—Ordinance No. 14 vf1843, s. 4.
The Crown has no tacit hypothec over the property of a personwho has purchased the exclusive privilege of selling arrack iri *specified area under the provisions of the Excise Ordinance. ■
Per Garvin J.—The tacit hypothec of the State over the pro-perty of those with whom it has contracted is, limited to con-tracts connected with the collection of revenue.
T
HIS was an action brought by the Attorney-General for adeclaration that certain properties bought by the appellant in
1924 were bound and executable in favour of the Crown for thepayment of Rs. 38,637.78. The properties in question weremortgaged by one Stephen de Croos to Ulugappa Chetty on- twobonds dated April 29, 1922, and June 2, 1923. In execution of $decree on the said bonds, the properties were sold and purchased bythe appellant in May, 1924. The mortgagor and two others hadpurchased the privilege ^of selling arrack by retail within certainareas from the Crown on June 28, 1921. _ On September 23, 1921 >de Croos mortgaged certain other properties to secure payment ofthe money due upon the contract* Default in payment' was madeand the properties were sold. They did not realize the amount, andthere remained due to the Crown the sum of Rs. 37,635.78. Thelearned District Judge, gave judgment for the plaintiff, declaringthe property purchased by the appellant bound and executable infavour of the Crown for the sum.
H. V. Perera (with N. K. Choksy), for the defendant, appellant.—The arrack renters were debtors under section 5 of the Ordinance.Section 5 only gives a preference of payment.
[Garvin J. inquired what then was the. effect of sequestration.Some of the properties had been sold to' the appellant after thesequestration. Would they not be subject to the sequestration ?]
' No. The sequestration does not invalidate a sale under anotherdecree. When the property is sold then questions of preference ofpayment of the proceeds will arise, but the sale under the otherdecree is good.—See, c.g., section 660.
The tacit hypothec of the Crown is over the.property of onlythose who have had dealings with the public revenue. {HerbertsTranslation of $rotius, bk. II. cli. 48, at 262.)
( «2 )
1928. The Roman-Dutch law does not apply since the Crown DebtorsJttbSji Ordinance.. Nevertheless it is in accordance with the Boman-
Generatv. Dutch law.
Pmie
gee Lee's Roman-Dutch Law, 2nd ed.t pp. 199-3; Van ZyVs
CMt^ Judicial Practice* 2nd ed., p. 581. It is only the Fisc which had thetacit hypothec in certain cases. (1858) 3 Searle's Rep., p. 78, showsthat the Fisc is not the Crown generally, but only that departmentwhich has to do 'with the revenue.
Van der KeesseVs Thesis No. 420 (Lorensz's Translation, s. 15)seems to give the tacit hypothec even against those who haveentered into contracts with the Crown.
There seems to be a coniiict between this and the other authorities.
In this state of affairs the Ordinance declares and codifies thelaw.
The Ordinance is exhaustive of all classes of debtors. Anexamination of its provisions shows that the former rights of theCrown were replaced by its provisions.
There being only a preference of payment the action mustfail as it was based on the existence of a tacit'hypothec.
Stanley Obeyesekere, Acting 8. G.(with M. W. H. de Silva, G.G.and Mervyn Fonsekat C.G.), for the Crown, respondent.—Under theRoman-Dutch law, immediately de Croos entered into the contractwith, the Crown for the rents his properties became subject to atacit hypothec. His liability to pay the rents, arose then, althoughhe was merely given a concession to pay the full amount byinstalments.
For securing payment- the Grown had two concurrent securities,an express and a tacit mortgage.
The Crown is not bound by the provisions of .the Code relating tomortgage actions.
. Further, the proviso to section 644 shows that these sectionsdp not apply to tacit hypothecs. The chapter is only concernedwith mortgages created by deeds.
Hence the case has to be looked at in the light of the Roman-Dutch law, under which it was quite competent for a mortgagee to *bring a separate action for a hypothecary decree against theowner of the land only without joining the mortgagor as a party. Thatis 'What the Crown has done in this case.
Under the Roman-Dutch law the Fisc has a general legal hypothecover all the property, movable and immovable, of every person withwhom it has entered into any contract. Voet XX. tit. 11, 8.(Berwick's Translation, 318.)
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It is allowed to the Fisc and all those with whom the Fisc198ft*
has contracted (Grottos, bk. 27. eh. 48, s. IS). This hypothec is ^.uwntsy^
unaffected by Ordinance No. 14 of 1848.^General*.
*Porto
H. 7. Perera, in reply.
Chetty
/
June 12, 1028. Fisheb C.J.—
In this case the defendant-appellant purchased certain propertiesunder the following circumstances:—The properties in questionwere mortgaged by one Stephen de Croos to Ulugappa Chetty ontwo bonds dated April 29, 1922, and June 2, 1928. UlugappaChetty put the bonds in suit and recovered judgment, and in May,1924, the properties were sold in execution of the judgment andpurchased by the appellant. The mortgagor and two others had pur-chased “ the privilege of selling arrack by retail ” within certainareas from the Crown on June 28, 1921, and had agreed to pay thepurchase money in twelve monthly instalments. On September 23,1921, de Croos mortgaged certain properties other than those withwhich we are concerned to secure payment of the purchase money.Default in payment was made and the properties; were sold. They<lid notrealize theamount charged upon them,and there remained
due tothe Crownthe sum of Bs. 37,635.78.The presentaction
was brought by the Attorney-General to have it declared that theproperties purchased by the appellant in May, 1924, are bound andexecutable for the said sum of Bs. 37,635.78. It is admitted thatde Croos became a debtor to the Crown on June 28, 1921, and theproperties, which are the subject-matter of this action, belonged toliim onthat date,and the sole question whichwe have todecide
on thisappeal is whether those properties aresubject to acharge
in favour of the. Crown.
The position of persons who purchase the privilege of sellingarrack by retail with regard to Ordinance No. 14 of 1843 waslong ago considered by this Court. In the case D. C. Galle, 28,947(1870), reported in Vanderstraaten’i Reports at page 89, the Crownclaimed a preferential right to proceeds of sale of property mortgagedto the plaintiff who had obtained judgment on the mortgage . andcaused the land to be sold. The defendant had purchased arrackrents from Government and had “ entered into a bond for securingthe purchase money dated June 26, 1867. By this bond thedefendant specially mortgaged to Government for the payment ofthe purchase money of the rent certain lands, not including thosenow in question, and gave a general mortgage^ over all his property.The first instalment of the purchase money for the rent feU due onJuly 31, 1867/ '* and . the plaintiff’s mortgage was dated July 29,1867.
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IMS. For the -Crown it was con-tended that the defendant – being aflJ. renter all- his property became bound to Government under section- —4. of Ordinance No.' Id of 1843 from the date he became a Government
Oour^v ren*®r> but the Supreme Court, approving the decision of thePana District Judge on this point, held that the defendant was 41 a debtorand not an accountant of the Crown,” and that the case came undersection 5 and not under section 4 of the Ordinance. The SupremeCourt held also that the claim of preference accrued from the dateof the contract, namely, June 26, 1867. It is to be noted thatthere is no reference in the report to any suggestion that the Crownhad a tacit hypothec by Common law over the defendant’s property,nor does the effect of his having given a 41 general mortgage overall his property ” appear to have formed the basis of any claimby the Crown.
This decision was followed by the Supreme Court in the case ofThe Queen’* Advocate v. Perera.1 In that case the Court declinedto hold that so called 44 arrack renters ” came within the class ofpersons whose property is affected by section 4, and no question ofa tacit hypothec was apparently raised. In giving judgment
Sir Richard Cayley C.J. said:—
»
44 I am disposed to agree with judgment of this Court reported inyandeTstraatenls, p. 89 that the purchaser of the privilegeof selling arrack is not a Government farmer or renter or'’other officer employed in the collection, charge, receipt, orexpenditure of the revenue, &c., or public accountant,but that if he fail in paying any part of the purchase moneyin terms of his agreement or bond, he is simply a Crowndebtor under section 5. Such a . purchaser does not collector expend any revenue, nor has he to account to theCrown for anything that he ’ receives. So far as theCrown is concerned, all the purchaser lias to do is- to payhis purchase money; and all that he receives is the priceof his own arrack, Ac. The purchasers of this monopolyare, I am aware, frequently called in popular language44 arrack renters,” but this term does not appear to meto be properly applicable to them. The point mayX>erhaps be not free from doubt; but I am not preparedto dissent from the decision of this Court in the casereported in Yanderstraaten ”;
and Clarence J., after expressing a doubt as to whether the case inVanderstraaten was rightly decided, said—
441 do not think it necessary, however, to discuss that question'anew, because I -think we are bound by that decision.The decision is now more than ten years old, and has ever1 {mi) 4 s. c. c. m. *
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since remained, so far as I am aware (and no counterauthority was cited to' us), the ruling authority on thepoint. That ruling having been ever since acquiesced inby the Crown, and the public having ever since contractedwith each other on this footing, I think it is too late forthis Court to-review the decision."
1928.
FlSfiER C.J.
Attorney-General vtPanaAdappaChetty
The position thus established was not really challenged bythe respondent, and in my opinion it is clear that an " arrack renter "is not a person who is affected by section. -44. As stated at page 91 ofVanderstraaien's Reports " He receives no money or goods for whichhe has to render account to Government * *; and in the words of SirEichard Cayley, referred to above, " so far as the Crown is concerned,all the purchaser has to do is to pay his purchase money." He istherefore an ordinary debtor so far as the Crown is concerned.
But it was contended for the respondent that the right claimed bythe Crown is based on Roman-Dutch law and was never dependentfor its existence upon and has not been affected by any of theLegislative Enactments in Ceylon regulating the security and,recovery of* debts due to the Crown. Some dicta of Judge Berwickin his judgment in D. C. Colombo, No. 2,024, were relied upon insupport of that contention. In that case there was a competitionas to the right, to the proceeds of sale of property which had beensold in execution of a decree obtained by the Crown. The judgment-debtor was a lessee of the Crown under a lease dated December. 19,.1879, and the Crown recovered judgment for the amount of threeinstalments of rent which became payable on March l and September,,1, 1883, and March 1, 1884. The intervenient had. a.decree torecover the amount of a debt dated September 21, 1883. Thelearned Judge held that the tenant- was " neither a Governmentsurveyor, nor a renter, – nor a public accountant, ■ nor an officer"*within the meaning of section 4, but that the debt due by him fallsunder section 5 of Ordinance No. 14 of -1843, and that it accruedin 1879, and that therefore the Crown was entitled to.preference."In his judgment the learned Judge referred to the 44 tacit generalhypothec " of the Crown by Common law, and to the Crown’s" legal tacit hypothec No necessity, however,, arose for givingany judgment or founding any decision on that basis, .and .theSupreme Court on an appeal from the judgment, reported'asAttorney-General v. Rajapakse,1 merely endorsed the view that theCrown had a right of preference under section. 5 of Ordinance No; 14of 1843 which accrued in 1879.
In my opinion the soundness of the contention can be tested by aconsideration of the question whether the existence, or continuedexistence, of such a right in respect of the property belonging toan ordinary debtor (if it ever existed at all and was introduced
1 (1886) 7 S. C. C. 139.
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Attorney-General v.• JPamAdappaCheUy
ins. into Ceylon) is consistent with the provisions of Ordinance No. 14FisamTcJ. °* 184^ and its predecessors. Ordinance No. 14 of 1843 Is the lost
of a series of enactments, dealing with the security and recovery ofdebts due to the Crown.
The first of these enactments' is Begulation No. 7 of 1809. Itis entitled ** For providing for a more 4 effectual course ofproceeding for the recovery of debts due to the Crown/ and afterreciting that 4 much fraud and evasion in secretly removing theirgoods hath been practised by debtors to the Crown, by reason oftheir previous notice of the intention and purpose of the collectorsof His Majesty’s revenue to proceed against them the said debtors,their goods and chattels, for the debts due and owing to HisMajesty ” gave powers to collectors ofrevenue to “ seize, take, andin safe custody to keep (but without removing the same until thetrial of the case by a competent jurisdiction and judgment obtainedfor the Crown) all and every the property of any debtor ” ordebtors to the Crown within the said collector's district to anamount sufficient to cover the said 44 debt so due and owing and thecosts attending the same The rest of the Begulation relates toprocedure,-v
It seems to me to be clear that this Begulation having regard tothe recital of the reason for, its origin and to the power to seize, &c.,44 but without remoying the same ” applied solely to movableproperty._
Begulation 7 of 1809 was repealedwhich was entitled “ For providingrecovery of debts due to the Crown ”
44 expedient to repeal the Begulation
further provision 4 in lieu thereof ’ gave power (section 2) to Govern-ment Agents to seize, take, and in safe custody to keep but without'removing the same (except in those cases only where there are noadequate means for safely and securely keeping the said propertyat the place where it is seized and no sufficient security given for thevalue thereof) all and every the property of any debtor or debtorsto the Crown to an arpount computed to be sufficient to cover thesaid debt so due and owing and the costs attending the same *Section 3 deals with proceedings subsequent to seizure. Section4 extended to immovable property, and provided that “ all landsand tenements which any Treasurer, Government Agent, AssistantGovernment Agent, Collector of Customs, Government Farmer orBenter, or other officer employed in the collection, charge, receipt orexpenditure of the revenue, public money, stores, or other propertybelonging to Government or any other public accountant now hathor at any time hereafter shall have, within the time during whichhe shall respectively remain accountable to Government, shall beliable for the payment of all aixearages or debts and all fines,
by Ordinance No. 2 of 1837for the better security andand after reciting that it wasNo. 7 of 1809 and to make
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penalties, and forfeitures due or adjudged to His Majesty, His Heirs 1^?and Successors by or from such officer or public accountant; andy^mm OJ.the said lands and tenements and all other the goods, chattels, ~yproperty, and effects of the said officer or public accountant shall be General r*seized and sold in execution for the payment of all such arrearagesor debts, fines, penalties, or forfeitures as may be adjudged due and cheSypayable to His Majesty, His Heirs, and Successors by any com-petent Court of law in like and as large and beneficial a manner,to all intents and purposes, as if the said officer or public accountanthad the day he became first an officer or accountant as aforesaidspecially mortgaged the said lands and tenements to His Majesty,
His Heirs and Successors
Ordinance No. 2 of 1887 was repealed and substantially re-enactedby Ordinance No. 1 of 1843, which was itself repealed and substan-tially re-enacted by Ordinance No. 8 of 1843, the Ordinance nowin force.
This Ordinance bears the same title as the two preceding Ordi-nances, and except for some few modifications which in no wayaffect the question under consideration all three Ordinances aresimilarly worded.
The power conferred by Regulation No. 7 of 1809 has thereforedescended unchanged through intervening legislation and is nowembodied in section 2 of Ordinance No. 14 of 1843, in which power isgiven precisely as in section 2 of Ordinance No. 2 of 1837 ** to seize,take, and in safe custody to keep, but without removing, the same(except in those cases where there are no adequate means forsafely and securely keeping the said property in the place where it isseized and no sufficient security given for the value thereof) all andevery the property of any debtor or debtors to the Crown.M
That section, therefore, is founded ultimately on the declaration inRegulation, No. 7 of 1809 that it came into being in order to preventremoval of goods for the purpose of defeating claims of the Crown,and the words in brackets in section 2 express with more emphasisthan those in the Regulation the intention that the application ofthe power conferred is confined to movable property. –
The case of Attorney-General v. Crooe et pi.1 which was cited to uswas decided on a question of locus standi. The extent of .theapplicability of section 2 was not discussed or called in question,and in my opinion, for the reasons set out in the preceding, paragraph.
Section 2 has nothing to do with immovable property, and that casethrows no light on the question we have to determine.
What then is the effect as regards immovable properly of thislegislation in its ultimate form, Ordinance No. 14 of 1843, anddoes this Ordinance embody an exhaustive statement of the lawrelating to the special position of the Crown with regard to the
1 26 N. L. n. 461.
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1928.
Fisher C.J.
Attorney-General v,PanaAdappaCheity
* ‘ security . and recovery* of the Crown debts " ? Counsel for therespondent contended that the tacit hypothec of the Crown: underRoman-Dutch law extended, not only to. the property pf .aH officersand accountants' to the Crown, but also to that of all other debtorsto the Crown, and that it was exactly similar to the charge createdby section 4, which, he said, was unnecessary, inasmueb as .it merelyconfirmed, as regards the persons to whom it applies, the; alreadyexisting law. So far, therefore, as officers and accountants to theCrown are concerned the Homan-Dutch law right has been super-seded by the statutory Tight. As regards all other debtors to theCrown, including persons in the position of Stephen de Croos, it issaid that the tacit hypothec under .the Roman-Dutch law stillobtains.
If it be true that under Roman-Dutch law as applied in Ceylonthe property of all debtors to the Crown was subject to: .a tacithypothec, and that section 4 and the corresponding sections inprevious Ordinances confirmed what was already * the law as regardspersons to whom the section applied, I think* the only inferencethat can be drawn from the language of these Ordinances is thatafter the rights of the Crown were put on a statutory basis by theenactment of section 4 of Ordinance No. 2 of 1837 such a situationno longer obtained with regard to Crown debtors who do not comeunder the section. For ordinary debtors are not only, not mentionedin section 4, but they are expressly referred to in sections f> and 8.Their deliberate exclusion, therefore, from section 4 would in myopinion indicate that thenceforward they were to be on. a differentfooting from the persons mentioned in that section.
But it is by no means clear that Roman-Dutch law did so provideas regards ordinary debtors. Professor Lee expresses a doubton the subject. In a footnote to page 182 of An Introduction toRoman-Dutch Law (2nd edition) speaking of tacit hypothecsenjoyed by the Crown he says: “ Query.Whether this hypothecextends to the * property of everyone with whom the Crown hasentered into a contract’." I think, too, that the language of theOrdinances strongly endorses the view that Roman-Dutch law (asintroduced into Ceylon at all events) did not extend as is contendedfor. For it seems inconceivable that if prior to the OrdinanceNo. 2 of 1837 the property' of ordinary ' debtors was in the sameposition as that of the persons mentioned in section 4 the sectionwould have been silent with regard to them, and stopped short ofmentioning them, with the result that as regards such debtoi*sthe Crown would be l§ft to continue to rely on its Common lawright notwithstanding that the position of all Crown debtors was thesubject-matter of the legislation, and the further result that ■ thesection would be part of a codifying scheme of legislation on thisparticular subject with probably the most far-reaching item left out.
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The very next section—section 5-—deals with debts due to the 1928.Crown by another class of debtors, • namely, “by other persons Fis“c.
than officers and public accountants mentioned in the preceding
clause ”, and gives -the Crown certain preferential rights of paymentover all debts which had been contracted by or became due from Pana” such Crown debtors to any other person or persons whatsoever ” Achefiysubsequent to the date'' upon which the debt to the Crown accrued.
Section 6 safeguards the position of persons and bodies corporatewho are the holders of duly executed mortgages of immovableproperty priorin date to the claim of the Crown and of personsand bodies corporate who under Koman-Dutch law have a legallien, mortgage, or privilege which is entitled to preference oversuch mortgages.
Section 7 relates to movable property and protects bona fidepurchasers, Ac., for good consideration who became such prior tothe execution of a judgment obtained by the Crown.
Section 8 is to my mind very significant. It provides that allalienations and dealings with their lands or goods by persons whoare “ debtors ” to the Crown, and in my opinion the word ” debtors ”means persons who at the time of such dealing sure already debtorsto the Crown, made fraudulently with the intention of delaying ordefrauding the Crown of its rights are to be deemed void and ofno effect and declares that those who are parties to such transactionsare guilty of an offence and liable to a penalty.
If the Crown had a tacit hypothec such as is contended for inthis case it would be a paramount charge, and no dealing with theproperty could be effected except subject to the paramount charge.r.rhere would thus be no need so far -as the Crown was concernedto be protected against subsequent dealings or to declare themvoid. In my opinion this section, which was I think merelyintended expressly to put the Crown in the same position as privatepersons in respect of transfers of property made to defraud creditors,is inconsistent with the existence of a* tacit hypothec.
A careful survey, therefore, of this legislation leads, in my opinion,to the conclusion that Ordinance No; 14 of 1843 is exhaustive onthe subject of special privileges enjoyed by the Crown in connectionwith the security and recovery of debts and consequently that thetacit hypothec contended for, if it ever existed, no longer exists.
For these reasons I think that the judgment of the District Courtmust be set aside and judgment entered for the defendant, withcosts here and in the Court below.
Garvin J.—
The claim of the Crown in so far as it is based on the CrownDebtors Ordinance, No. 14 of 1848, depends entirely upon whetherthe purchaser of the exclusive privilege of selling arrack in a specified
29/32( 440 )
1928.
Gabvin J.
Attorney-General v,jiPanaAdappa
Chetty
area under the provisions of the Excise Ordinance, No. 8 of 1912, is** Government renter or fanner *’ within the meaning of section 4 ofthe first-mentioned’ Ordinance. So far back as the year 1870 it washeld that a purchaser of a similar privilege under the ArrackOrdinance—since repealed—was not a “ renter M within the mean-ing of section 4 (vide D. C. Galle, 28,947 *). This ruling was followedin Queen’s Advocate v. Perera,* Clarence J. observing ** That ruling(D. C. Galle, 28,947) having been ever since acquiesced in by theCrown, and the public having ever since contracted with each otheron this footing, I think it is too late for this Court to review tnisdecision ”.
The position of a purchaser of the privilege of selling by retailunder the Excise Ordinance is in this respect indistinguishablefrom that of a purchaser of a similar privilege under the repealedArrack Ordinance.
Nearly fifty years more having elapsed since the judgment inQueen’s Advocate v. Perera (supra), it must be taken as settled lawthat such a purchaser is not a person over whose propertythe Crown is'by section 4 of the Crown Debtors Ordinance given alegal general hypothec.
The principal submissions made by the learned Solicitor-Generalwere: —
That under the Roman-Dutch law the Crown had a legal
general hypothec over all the property, movable andimmovable, of every person with whom it has entered intoany contract; and
That this Common law legal general hypothec remains wholly
unaffected by Ordinance No. 14 of 1843.
The latter of these two points has been fully considered in thejudgment of My Lord, and I am in complete agreement with liisconclusion that the Crown Debtors Ordinance is exhaustive of thespecial privileges enjoyed* by the Crown. This is decisive of tlieappeal. But in view of the importance of the first of these twopoints I am unwilling to leave it wholly unnoticed.
What has to be considered is whether the privilege of the Crownin such matters is as extensive as is claimed. The citations madein support of this claim are traceable to the Code, where it is saidthat the Fisc has the right of legal hypothec over the property ofhim “ quo cum contraxit 9 Voet 3 when dealing with the subject oflegal hypothecs states: “ For, firstly, it is allowed to the Fisc, andafter this exemplar to the Chief of the State, in the property ofadministrators (of the affairs of the Fisc and Prince); and in that ofthose with whom the Fisc has contracted; and also in the propertyof citizens for taxes and imports; …. ”
1 (1870) Vanderstraaten 89.* (1881) 4 S. 0. C. 138•
Lb. XX. tit. 11, 8 (Bewick 318).
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The tacit hypothec over the property of him with whom it hascontracted is a right conceded to the Fisc. But it is a questionwhether this can be regarded as a sufficient authority for the broadproposition that the privilege may be claimed by the Crown inconnection with any contract made by any branch of the administra-tion. The term !' Fisc ” in its strict meaning is that branch of theadministration which is charged with the collection of the revenue.There is, therefore, ground for the inference that the contractsreferred to are those entered into in connection with the collectionof the public revenue, such as contracts, by which the right tocollect is farmed out. Yoet in this chapter refers to the farming ofthe revenue, the leasing of taxes to publicans, and the transfer tothem of the tacit hypothec by the Fisc, but nowhere does he statethat this right of tacit hypothec arises in respect of every contractwhether made by the Fisc or any other branch of the administration,or give any reason to suppose that the right was more extensive orintended for any other purpose than to secure to the State thecoUection of the revenue and its due management and applicationby its administrators.
Grotius in his Introduction1 enumerates those entitled to tacithypothecs and refers to the case of the State as follows:—“ Fifthly,the State over the property of its debtor, except in -the case of finesor penalties.”
In his commentaries on Grotius’ Introduction Van der Keessel,after affirming the right of the Province of Holland to a tacithypothec over the property of those who are indebted in taxes,proceeds as follows:—
‘‘A similar right belongs to the State over the property of itsadministrators or officers, as well as over the property ofthose with whom it has entered into any contract, for wehave adopted this legal mortgage also qut of the Civillaw.*”
The passage in Grotius is too brief a contribution to be madethe basis of a decision on so important a subject. As to Vander Keessel, there is no reason to suppose that the right of tacithypothec adopted from the Civil law was enlarged so as to embracethe case of contracts made for purposes other than those connectedwith the collection of the revenue. It is interesting to note thateven at the time when Van der Keessel wrote there was a tendencyto restrict even this privilege:—
“ This law (the law of Haarlem) places debts and personal taxesdue to the State or the City under the same rule as topreference; so that, as amongst themselves, they have
1 Grotius’ Introduction, bk. 11, ch. 2CLVIII., s, IS.
’•Van der KeesseTsSelect Theses, bk. 11, A. XLVIII., s. IS.
1988.
Gabvin J.
Attorney-General v.
Pana
Adappa
Chetty
( 442 )
1928.
Gabvxk J.
Attorney-General v.
Pana
Adappa
Chctty
preference according to time, but are not preferred to theprice of immovable . property sold to the debtor, nor toreal taxes, nor to the .expenses of repairs made withinthree years, nor to special mortgages; and they are notany longer entitled, to that privilege, which was allowed themunder the general laiv of Holland.1”
Van Leeuwen 2 when commenting on tacit mortgages followingGrotius’ enunciation refers to the privilege as a preference “ for thedebts and over the property of those who have any control of publicrevenue.** It is evident that Van Leeuwen held the same view asSande,3 that the tacit hypothec of the State extended to the propertyof those who had control of the revenue and not to the property ofany other debtor.
The balance of authority seems to favour the view that the tacithypothec of the State over the property of those with whom it hascontracted must be limited to contracts connected with the collectionof the revenue—as for example the contracts of farmers or lesseesof the revenue.
It is interesting to note that a similar contention was advancedon behalf of the Crown in the South African case of Chase, N. 0. v.Du Toil's Trustees.4, It was not necessary for the determination ofthe case that the point should be decided. But Cloete J. discussedthe question and stated his conclusion as follows:—
In my opinion this right cannot be strained to apply to everycontract made on behalf of the Government, say, forcontracting to build or erect public works, or engagementsof that nature, which do not form the source of thecollection of the ordinary public revenue.’*
Watermeyer J. in a brief reference to the question expressed“ considerable doubt whether Government is entitled to a hypothecof the nature contended for."
If I may respectfully say so, the view taken by Cloete J. is thecorrect one and is in accordance with the original authorities. 'It isevidently the view held in Ceylon at the time our Ordinance No. 14‘ of 1843 was framed, which by section 4 declared the right of theCrown to a tacit hypothec over “ all lands and tenements whichany Treasurer, Government Agent, Assistant Government Agent,Collector of Customs, Government farmer or renter or other officeremployed in the collection, charge, receipt, or expenditure of the
Van der KeesseVs Select Theses, bJc. 11, ch. XLVIII., s, 45.
Van Leeuwen, bk. lif ch. XIII., s. 10.
Sande, bk. Ill,, tit. 12, s. 1..
* 3 SearU's Reports» p. 78.
( 443 )
public revenue, public money, store, or other property belonging toGovernment, or any other public accountant, now hath or at anytime hereafter shall have …
As to this appeal, it only remains to express my concurrence withthe Chief Justice in the order he proposes.
Appeal allowed.
1928.
Gabvin J.
Attorney*General v.
Pana
Adappa
Chetty