BOSANQUET & CO. v. RAHIMTULLA & CO

082-NLR-NLR-V-33-BOSANQUET-&-CO.-v.-RAHIMTULLA-&-CO.pdf


324
Bosanquet d Co. t>. Rahimtulla <f Co.
1931Present: Macdonell C.J. and Garvin S.P.J.BOSANQUET & CO. v. RAHIMTULLA & CO.
14-^D.C. Colombo, 34,160.
Sequestrationofproperty before judgment—Actionfor damages—Allegation
of fraudulent alienation of goods—No reasonable or probable cause forbelief-^Malice—Discharge of mandate.
Where property sequestered before judgment has been released fromseizure and the writ returned, it is not necessary that the mandate shouldformallybedischarged before anaction fordamages for wrongful
sequestration is instituted.
Where a creditor procures the issue of such a mandate by representing•to *the Court that his debtor is fraudulenty alieciating his property—when infactthe debtor wasnotdoing so—merely for. the purpose of
enforcing a speedy payment of his debt,—
Held, that the creditor was actuated by malice.
T
HE plaintiffs sued' the defendants by way of summary procedurefor the recovery of a sum of Rs. 6,846.73 and interest due on
certain promissory notes. When they filed the plaint- the plaintiffsapplied for and obtained under section 653 of the Civil Procedure Codeamandateofsequestration ontheground thatthe defendants “ are
.disposing of their stock-in-trade under their market value and appro-priating the proceeds for themselves without meeting their engagementswith their creditors and have acted fraudulently in disposing of theirstock-in-trade in the said manner with a view to avoid payment oftheir debts due to the plaintiff-company The defendants filed answer•alleging payment of the moneys due but later they abandoned this plea.They further counter-claimed damages Rs. 50,000 for injury to theircredit and reputation by reason of the issue of the mandate and of thesequestration of their goods.
On the claim in reconvention, the learned District Judge gave thedefendants judgment for Rs. 5,000 and costs. The plaintiffs appealed.
de Zoysat K.G. (with him B. F. de Silva), for plaintiffs, appellantsH. V. Perera* for defendants, respondents.
MAODONELL C.J.—Bosanquet cf Co. v. Rahimtulla <£• Co.
325
December 18, 1931. Macdoxbll C.J.—
In this case plaintiff-appellants sued defendant-respondents by wayof summary procedure for Rs. 6,846.73 and interest- due on certainpromissory notes. On the date, August 23, 1929, when they filed theirplaint, they applied for and obtained under section 653 of the CivilProcedure Code a mandate of sequestration of the goods of the defendant-respondents. The latter at first denied that any sum was due to theplaintiffs and they also counter-claimed damage^ Rs. 50,000 for injuryto their credit and reputation by reason of .the issue of the mandateand of the sequestration thereunder of their goods. At the hearing ofthis case defendants did not persist in denial of their indebtedness toplaintiffs in the sum of Rs. 6,846.73 and judgment passed for plaintiffsfor that amount with interest. On defendant's claim in reconveution,the learned District Judge gave them judgment and assessed the damagesat Ps. 5 000 and costs in that class. It is from this judgment on the•claim in reconvention that the plaintiffs now appeal.
The facts were these. The plaintiffs are importers of goods in Colomboand the defendants are and have been for many years vendors of goodsIri Colombo, selling them to customers in the several shops they havehere but also supplying goods to smaller traders at a distance. The•course of business between the plaintiffs and the defendants was thatdefendants would order goods from plaintiffs who would then importthem, whereupon defendants would take delivery of the goods importedfor them, giving promissory notes at *120 days. Firms so importinggoods are in the habit of employing a .broker who would guarantee thepurchasing firm's transactions. It is in evidence that one Segaraja-singham. the guaranteebroker ofcertain other importingfirms, had
■died in May, 1929—the events in this case occurred in August, 1.929—and that his death caused embarrassment to the defendant firm in itsbusiness dealings with those firms, since for the moment there was noone to guarantee payment for the goods they had ordered from them.The importing. firms asked them to pay for those goods as they tookdelivery. Evidently, atthistime, the defendants werenot always
able to take such delivery; .they would take a portion of the'ir orderand pay for it, and the rest which they were unable to pay for and sotake, would be sold against them and they would be debited with anyloss. But defendants also had outstanding promissory notes due tothese other firms and payable in August, and it is clear that a considerablenumber of these they were unable to meef, and of * these they had toobtain renewals. It is proved that in August, 1929, defendants were 'hard pressed for ready cash and had even—it can be put that way-suspended for the moment cash payments as far as possible,1 but it isequally clear that theywerenotinsolvent. The evidenceis that on
August 29, 1929, whentheyhadtheir stock checked and valued, it
was worth more than what they owed on it. and it seems also tp bethe fact that they had book debts more than sufficient to meet their other,mainly Chetty, liabilities. This being the state of things, defendants hadon August 19 to meet three promissory notes of Rs. 4,000, Rs. 2,622.57,and Rs. 224.16, respectively, total Rs. 6,846.73, which they had grantedto the plaintiff firm in payment for goods, and they wrote to them
326MACDOKEIjXi C.J.—Bosanquet & Co: v. Rahimtulla d Co.
enclosing a cheque for Rs. 846.73 post-dated to the 25th, asking plaintiffsto accept it in part payment- and to extend payment of the balanceEs. 6,000 for another three months. There were interviews betweenthe parties, plaintiffs' refused to accept the cheque offered and certaintwo promissory notes offered, one for Rs. 4,000 payable on November 7,and the other for Es. 2,000 payable November 17 (though it wouldappear that these documents passed into the plaintiffs’ possession andremained there for some time) and pressed for an immediate, if small,cash payment. Defendants refused and unfortunately told the plaintiffsthat they could do what they liked in the matter. Plaintiffs had heardsomething of defendants’ then financial difficulties as set out aboveand got alarmed for their money—defendants’ refusal to make evena small cash payment no doubt heightened their alarm—and on August23 they commenced summary action against defendants under chapter 53for the amount Rs. C,84G.73 due on the promissory notes which theyhad been asked and had refused to renew, lodging plaint that day without .auy letter of demand. On the same day, acting under most unfortunateadvice, they petitioned under section 653 for a mandate of sequestration.
A partner of the plaintiffs’ firm swore in the affidavit required underthe section that there was owing them the sum of Es. 6,846.73, that theyhad no adequate security and then proceeded to say “To the best.ofour knowledge and belief, the defendants have failed to meet theirengagements with several of these creditors and have been recently^ and still are disposing of their stock-in-trade under market value andappropriating the proceeds for themselves without meeting their engage-ments with their creditors, and the defendants have acted fraudulentlyin disposing of their said stock-in-trade' in the said manner with a .viewto avoiding payment of the debts due to the plaintiff-company andother creditors “. The plaintiffs also gave the security required bysection 654 against any costs or damages which they might be 'adjudgedto pay. The Court thereupon issued the same day, August 23, amandate of sequestration. This the Fiscal’s agent executed the sameday at about 4.30 p.m., but before lie had had time to do more than’make a list of the contents of two almirahs, a cheque was handed himfor the full amount. He thereupon withdrew his sequestration, paid thecheque into Court, and returned his mandate duly endorsed with whathe had done, also into Court. It has remained there ever since and oncethere plaintiffs could not have1 obtained its reissue or taken any stepsby virtue of it, without leave' of the Judge. The seizure under thesequestration cannot well have lasted more than an hour and probablynot so long.
On September 20, 1929, defendants filed their answer alleging paymentprior to the date on which the promissory notes fell due, renewal of whichhad beer, refused, but later they abandoned this plea. They pleadedfurther as follows: —
(a) That the plaintiffs wrongfully obtained a mandate ot seques-tration in the above action on or about August 23, lr>29, andcaused the Fiscal to sequester the property belonging to thedefendants.
MACDONELIj C.J.—Bosanquet d Co. v. Rahimtulla £ Co.
827
(b) That on the Fiscal proceeding to sequester property under thesaid mandate, the defendants paid to the Fiscal under protestthe sum of Rs. 6,846.73 stated to be due on the promissorynotes sued upon and a further sum of Rs. 81.05 as costs.
(#;) That by reason of the issue of the mandate of sequestration andthe sequestration of defendants' property they have beeninjured in their credit and reputation and have suffered damagesin the sum of Rs. 50,000.”
On this claim the defendants led evidence which showed conclusivelythat they did not in August, 1929, or indeed at any time, ” fraudulentlyalienate their stock-in-trade with a view to avoiding -payment of thedebts due to the plaintiff-company ”, and the-member of the plaintiffs'firm who gave evidence did not attempt to show that they had done sobut contented himself with setting out fairly and frankly the factsknowledge of which ha<L induced the plaintiffs to apply for the mandate.These facts, showing grave temporary embarrassment on the part of thedefendants, have been outlined above. At the hearing, the Courtframed a number of issues whereof No. 1 is the most material. “ Didthe plaintiff wrongfully or maliciously obtain a mandate of seques-tration ? ”
-First of all, there is a preliminary point to decide. On the appeal itwas argued for the plaintiff-appellants that the defendants’ claim inl'econvention was not maintainable until they • had obtained cancellationof the mandate of sequestration, and this argument relied on the analogyof actions for malicious prosecution. But an analogy is not an argumentunless it runs on all fours. An action for malicious prosecution pre-supposes two Courts, one criminal in which plaintiff has been prosecuted,and the other civil in which he seeks damages for the prosecution. Untilthe prosecution has terminated in his favour by acquittal or until theconviction against him has been set aside either by reversal on appeal-or bv acquittal on new 4rial, his civil action for damages for maliciousprosecution cannot well lie. If it could lie with the prosecution stillpending or the conviction still unreversed, there would be. one Court,a criminal one, which had declared him, or might eventually declarehim, guilty, and another, a civil one, which was asked" to declare himinnocent and entitled to damages. If the civil Court declared himinnocent and entitled to damages while the prosecution was still pending,the criminal Court in which that prosecution had been instituted mighthereafter declare him guilty and there would thus be the possibilityof two contradictory decisions on the same issue. If the civil Courtdeclared him innocent and entitled to damages after the prosecutionand while the conviction under it still held good. thei*e would actuallybe two contradictory decisions on the same issue-. To avoid such an *impasse5, it is an obvious and necessary rule that to enable actions formalicious prosecution to lie, plaintiff -must show that the criminalproceedings of which he complains have terminated, and in his favour.
' The present case is totally different. For one thing all the proceedingsare in the same action and in the same Court, not in two actions and intwo Courts. Consequently the possibility of contradictory decisionscan hardly arise. Moreover, the mandate although it had not been
328MACDONELL C.J.—Bosanquet & Co. ». RahimtuUa A Co.
formally set aside, yet was not in operation when defendants broughttheir claim in reoonvention. The mandate had been acted on, there wasa return endorsed on it and it had itself been sent back to the Courtissuing it and it could not have reissued thence without leave of thatCourt. It was not then a process of Court which was of any force oreffect at the time when defendants brought then- claim in reeonventi'on.On the day of trial the defendants’ advocate proposed the following issueadditional to others already framed:“ Are the defendants entitled to
have the mandate of sequestration discharged ? ” The plaintiffs donot seem to have raised any ‘ objection to this issue, still less to haveurged that until it was decided, the claim in reconvention would not lie.and I do not think they should be allowed to raised this preliminarypoint now. Besides, their contention, if sound, would tend to duplicatethe proceedings by arguing what is substantially the same point twiceever. One would be inclined to say that the payment by the defendantsof the amount claimed in the plaint does of itself discharge the mandateof sequestration and thus, is analogous to the acquittal which is thesine qua non of an action for malicious prosecution. But, if this be not so,and if it would be necessary for the defendants formally to obtain adischarge of this mandate in. a distinct proceeding or application, thenthey could only do so by showing that it was improperly obtained in thefirst ^instance. But proof of this is a very large part of their case in‘reconvention. Consequently they would have to lead the same evidencetwice, over, first to show that the mandate had been improperly obtainedand so should be discharged, and then to show that it had been improperlyobtained and thatso .theywere entitled todamages. No doubt the
secQnd.time they would have to lead evidence additional—e.g., .as regards-,malice—to that led the first time, but to a large extent it would be the6&me evidence, repeated. This consideration by itself is sufficient tothrow grave doubt on the argument that until the mandate has been-discharged the claim in reconvention will not lie.
It would almostseem, however,that thepoint has, been concluded
for us by the case,McTurk<t* Rosev. Bent,1which was an appeal from
British Guiana, a colony then under Roman-Dutch law. There theplaintiff had obtained an interdict restraining the defendants from sellingor consigning anyportionof theproceedsof their plantation. The
defendants sued for damages and the Court in the same action declaredthat the interdict had been improperly obtained and condemnedthe plaintiff to make good fo the defendants the damages they hadsuffered by reason of the same. At a later stage, the Court refusedto assess the damages sustained, and the successful defendants had to goto the Privy Council to compel the Court to assess those damages. TheJudicial Committee held that the first decree of the Court, that in thedefendants’ favour, must be taken as a simultaneous sentence dischargingthe interdict and pronouncing for damages. That, as I have pointedout. was a Court administering Roman-Dutch law,,though not, of . course,the Codes which govern our procedure, but it is at least some authoritythat a party can obtain damages for the improper use of civil processeven while that civil process remains formally uncancelled.
1 4 Moore 212, 13 E. R. 283.
MACDONEUj C.J.—Bosanquet <t Co. v. Rahimtutta <P Co.329
Eeturning now to the main issue in this matter, did the plaintiffswrongfully or maliciously obtain the mandate of sequestration? Theplaintiffs could not have obtained the mandate without swearing in theiraffidavit that the defendants were fraudulently disposing of their stock-in-trade with a view to avoiding payment of their debts, and that mandateoould properly issue only if there was reasonable evidence that thedefendants were at the time so alienating their stock-in-trade. Thedefendants showed in their evidence that they had not at any timefraudulently alienated any property, and the plaintiffs in their evidencedid not attempt to show that they had, or that at the time of swearingthe affidavit of August 23, 1929, they, the plaintiffs, knew of any fact orfacts which justified them in stating that the' defendants were or hadbeen fraudulently alienating any property. Then in swearing to theaffidavit of August 23, 1929, the plaintiffs were asserting somethingthat they had no reason to believe was true, and so something thatthey could not believe to be true; consequently they had no reasonable-or probable cause for petitioning for the mandate of sequestration.This in itself is evidnce of malice, for these reasons. What was theobject of plaintiffs in swearing to the affidavit and petitioning • for themandate of sequestration? Obviously that they might the quickerobtain the money owing to them. But the special process of seques-tration which they were asking for was grantable only if certain factsexisted, and they had no belief that those facts existed, since therewas nothing within their knowledge to warrant the belief that they did.Then they were endeavouring to gain an object, it was their intent togain it, by means which they could not justify. But intent to obtainan object by means that can not be justified is a wrong and improperintent, and what the law calls malicious. It is an actionable injuria“when a person in bad faith and with the object of occasioning an injurycauses the goods or the person of another to be arrested in accordance withthe practice of the present dayVoet, blc. XLVII, tit. 10t s. 7, quoted
in dc Villiers on Injuries, -page 75. On this passage of Voet, de Villierscomments as follows in the same work at page 222:“ An arrest- “ (sc.
of the person, but the same rule would hold good with regard to arrestof goods) “ would be justified by probable cause existing for its beingmade; for instance, the genuine belief on the part of the alleged creditorthat a certain debt is due and that the debtor is trying to evade paymentby means of flight. When, however, no such probable cause has existedand the plaintiff agted maliciously in obtaining the arrest he will clearlybe liable in the action of injury on account of the malicious arrestThen the defendants have made out their case for they have shown thatplaintiffs acted without reasonable and probable cause and with malice.
In his judgment the learned District Judge says:“ They (plaintiffs)
have given security to meet any claim for damages, and in such a caseit does not matter whether they acted maliciously or not, but if it hadbeen necessary I should have held that they did act maliciously, usingthat word in the sense in which it is understood-in law.” If this meansthat it was unnecessary for defendants in their claim in reconventionto show malice, I must respectfully dissent, but I think the learnedDistrict Judge has been misled by a sentence in the judgment of Shaw J.
330
MACDOKEIiI* C.J.—Bosanquet & Co. v. Rahimtulla <t Co.
in Hakim Bhai v. Abdulla.1 Shaw J. referred to Abdul Azeez Marikar v.Abdul Caffoor,2 and then proceeded to say (page 188).“ It was an action
to recover damages for improperly obtaining an interim injunctionin a case, and it was held that in that case no action lay. The Judgespointed out that the law provides the remedy for a person against whoman injunction has -been improperly obtained. Under the Code there is asimilar provision to that which I have referred to in section 654 withreference to giving security, and the person again6t whom an injunctionis issued has his remedy or should have his remedy in law against thesecurity which is given by the person obtaining the injunction, andthip is his only remedy in an ordinary case. ” Section 667 of the CivilProcedure Code provides that if i.t appears to the Court granting theinjunction “that there was no probable ground for applying for theinjunction” that Court may award against the party obtaining it, to theparty against whom it was granted, compensation for “ expense andinjury” caused to him. I take it that this section 667 enunciates not onlythe remedy but also the grounds on which the remedy may be adjudged; itis a substantive enactment as well as a procedural one. Section 654, thatgiving a remedy for improperly obtaining a mandate of sequestration,is to a different purport and is differently worded. It is as follows:—
“ 654. Before making the order for a warrant of arrest or mandate ofsequestration, the Judge shall require the plaintiff to enterinto a bond (form No. 105, Schedule' II.), with or without sureties,in the discretion of the Judge, to the effect that the plaintiffwill pay all costs that may be awarded .and all damages whichmay be sustained by reason of. such arrest or sequestration,by the defendant or by any other person in whose possessionsuch property shall have been so sequestered; and it shall becompetent to the Court to award such 'damages and costsof suit either to the defendant or too those in whose possessionsuch property shall have been so sequestered.”
Now this, it seems to me, is a purely procedural enactment. It-requires security to be given to pay. costs that may be awarded to anddamages that 'may be sustained by defendant. But unlike section 667which states the grounds on which such costs and damages may beclaimed by him, namely, no probable ground for applying for the in-junction, this section 654 i's silent as to what defendant must provebefore he is entitled to costs or damages. For the substantive lawon what defendant has to prove so to entitle him, we must look beyondthe words of section 654 and doing so we find, in the authorities quotedsupra, that what defendant must prove is that plaintiff acted withoutreasonable or probable cause and with malice. The learned District Judgesays ” if it had been necessary, I shall have held that they (plaintiffs) did actmaliciously”. I respectfully concur in this conclusion but at the sametime hold that such a finding, namely, the presence of malice, is a necessaryone for the defendants to succeed in their claim in recpnvention*
There only remains the question of damages. Now there is no evidencethat the defendants did suffer in their business through the sequestrationand it is clear that their difficulties in meeting their promises to pay,1 23 N. L. R. 180.* IS. O. D. 70.
CjAEVIN S.P.J.—Bosanquet <t Co. v. Rahhntulla it Co.331
and the consequent restriction of their credit by the firms to whomthey owed money, were due to other causes. The sequestration lasteda minimum time, and though it was known to those who saw it and becameknown, according to the evidence, beyond the jurisdiction, still there isnothing to show that this affected the defendants in their business.Therefore when the judgment says “ But the seizure must have discrediteddefendants’ firm to some extent ”, it utters an opinion probable may be,but not supported by evidence. The learned District Judge says“ They must have suffered pain of miud and they were put to the expenseof having their stocks verified”. This may be readily conceded,, andthere is also the fact that the defendants are a firm of good and longstanding. On these grounds, therefore,, annoyance of mind and theright to be exempt from such an attack upon them, they are entitledto a substantial solatium. As the plaintiffs acted with something difficultto distinguish from contumelia, this lets in the exemplary or punitivefactor in computing the damages. But the amount granted them at thetrial, namely, Bs. 5,000, is clearly too high, and all things consideredshould, I think, be reduced to half, namely, Bs. 2,500.
I wish to add one word. A mandate of sequestration is a lawfulmethod of process, and nothing in this judgment must be read as dis-couraging its use under the proper circumstances, and these are that thedebtor actually is fraudulently disposing of his goods with a view toavoiding payment of debts due, or that there are facts within the knowl-edge of the person applying for the sequestration which would justifya man of ordinary experience and common sense in supposing that thedebtor was so fraudulently alienating his goods, for in either of thesecircumstances the applicant will have reasonable or probable causefor his application. But ,if neither of these circumstances be present,that is, if the debtor is not fraudulently alienating his goods and if thereis nothing known that would justify a reasonable man in supposingthat he was, then an applicant for sequestration would not have reasonableor probable cause for his application and would in all probability be actingwith that wrongful or improper motive which the law calls malice, andwould thus be exposing himself to liability in damages at the suit of thedebtor. Here the plaintiffs acted under bad advice and made statementsfor which there was neither reasonable nor probable cause and that with anintent which one is compelled to hold malicious in the legal sense of them.But these, the facts in the present case, do not affect or limit theavailability of the remedy of sequestration, in appropriate circumstances.
For the foregoing reasons I am of opinion that the appeal against thejudgment itself must be dismissed but that that judgment must bealtered into one for-Bs. 2,500 damages with the costs appropriate thereto.
• As each side has partly succeeded on this appeal, I think- there should beno order as to the costs of the same.
Garvin S:P.J.—
The plaintiffs appeal from a judgment for Bs„ 5,000 in favour of thedefendants being damages alleged to have been sustained by them inconsequence of the plaintiffs having wrongfully and maliciously obtaineda mandate sequestration before judgment and caused the seizure oftheir stock-in-trade.
882GARVIN—Bosavquet & Co. v. Rahimlulla <f Co.
On August 23, 1920, the plaintiffs filed action under chapter 53 of theCode claiming from tlie defendants in respect of three promi'ssor notesthe aggregate sum of Its. 6,853.58 as principal and interest up to date ofaction with further interest and costs. On the same day the plaintifffiled a petition supported by the affidavit of Frank Cunningham, themanager of the plaintiffs' Import Department, and R. Sivagurunathan, thepluintiffs’ Broker, and obtained a mandate to sequester the stock-in-tradeof the defendants at their business premises Xos. 214 and 49, Main streetin Colombo.. That afternoon the Fiscal’s officer went to the businesspremises with a representative of the plaintiffs, their proctor's clerk, andtwo guards. They arrived at 4.50 p.m. The manager was absent butthe officer was informed that he would be returning soon. He waited for10 or 15 minutes and at the request of the plaintiffs' agent and theproctor’s clerk commenced to make an inventory of the property. Hehad made a list of the goods in two of the almirahs when Mr. Wilson aproctor of the Supreme Court arrived, offered to pay the amount of theclaim and requested him not to go on with the sequestration. TheFiscal’s officer consulted the plaintiffs’ agent and the proctor’s clerkand on being told by them that he need not proceed further if Mr. Wilsongave him a cheque for that amount he accepted a cheque and withdrew,On September 2 the Fiscal reported to the Court that a sum of Rs. 6,927.80had been recovered without sale from the defendants under protest andreturned the mandate of sequestration to Court; Summons underchapter 53 was allowed on August 23, returnable in 5 days. It wasissued on August 26 and was served on the defendants0 on August 28.The defendants accordingly appeared on August 30. The matter wasfixed for September 6, when both parties were represented, and afterhearing them the learned District Judge made order as follows: —
"The plaintiffs’ claim as far as I can ascertain from statements at thebar and from The affidavit is not contested. The money has now beenpaid to the Fiscal but the defendant wishes to claim damages for thewrongful issue- of the mandate of sequestration. That is, he wishes tomake a claim in reconvention.I think that he ought to be allowed
to make this claim and Mr. Weerasooriya does not contest his rightto do so. He merely asks that judgment be entered for plaintiff for theamount claimed, but I think it would be awkward, even though a claimin reconvention is a separate claim, to enter a decree at this stage.Defendant will be allowed to file answer on September 20. *’
It is to be noted that the defendants did not deny their indebtednessto the plaintiffs. They were not admitted to answer the plaintiffs’claim but they were permitted by the Court to file a pleading for thepurpose of ascertaining by way of a claim in reconvention their claim todamages in consequence of the issue of the mandate of sequestration andtheir right to do so was not contested by the plaintiffs’ proctor. – Theplaintiffs did not appeal from the District Judge's refusal to enter judgmentfor the plaintiffs and they acquiesced in the order of the Judge permittingthe defendants to assert their claim by way of a claim in reconvention.
In the answer which was filed on September 20, 1929, the defendantsset out the grounds of their claim for damages but they also pleaded thatthey had given the plaintiffs a cheque for Rs. 846.73 and renewal not*?
(i.VRVIN S.I’.J.—Unxanqucl t£ Co. v. linhimlulla if Co.UJ3
for the sum of Its. 0,000 in payment of their dohl. Tin: order whichonly permitted them to file answer for the purpose of ulaiming damages inconsequence of the wrongful and malicious seuuestration appears to havebeen lost sight of when tile answer so far as if contained this plea indefence to the plaintiffs' claim was accepted. However. i< was at theoutset admitted by counsel. that the. unly purpose of this plea was toobtain the return of the cheque and promissory notes handed to theplaintiffs and no defence to the plaintiffs’ claim was set up at, the trial.The only matter submitted for decision was the pica that the mandatewas wrongfully and maliciously obtained and the claim for damagesalleged to have been sustained in consequence thereof. The plaintiffs'claim wits determined stive only that the 'District Judge refusedto enter up judgment, until the defendants’ claim had been consideredand in this the plsiintills acquiesced. The trial therefore was concernedonly with the defendants’ claim. It was urged that this claim was notmaintainable as the defendants had not obtained a discharge of themandate of sequestration. The case of Lees v. I‘aicroon1 was r'-lied onfor the proposition that no action for damages was maintainable untilthe plaintiff had first, obtained a “discharge” of the writ. The claimwas for wrongful arrest and imprisonment upon a writ ne exeat whichit was alleged had. been improperly and irregularly issued. It wasurged that no such writ should have been issued except for a definiteand ascertained amount and that it was bad for the reason that thedefendant was returning to Canada which was his home. The ratiodecidendi of that case would appear to be that so long as the writ remainedundischarged it must be taken to have been properly issued. Therecould ba no question, therefore, of wrongful arrest or imprisonment.
There* was no allegation in Lees v. Paterson (supra) that the issue of thewrit had been procured maliciously upon affidavits which were false tothe knowledge of the defendant.
In general no action for malicious prosecution or for maliciouslyinstituting other proceedings in a Court of law will lie until the prose-cution or proceeding is first determined in favour of the' person claiming-damages—so no action is maintainable for maliciously procuring theissue of a commission in bankruptcy while the commission remains un-discharged—so also no action for maliciously obtaining the issue of aninjunction is maintainable while the injunction remains operative andundischarged. Bnt there is a distinction between such cases and thatof a claim for damages sustained in consequence of a sequestration undera mandate of sequestration, the issue of which was procured maliciously,,by deceiving the Court into the belief that the defendant 'was fraudulently-alienating his property with intent to avoid payment of the debt, andwhere the mandate has had its effect and has expired. Damages ar&not claimed in this case for an illegal seizure nor were the goods undersequestration at the date of the claim. It is by no means clear to mewhy it should be necessary before the institution, of such an action .tomove the Court to "discharge” a mandate of sequestration whichhas been returned to Court and where the property sequestered underits authority has been released and is no longer under sequestration.
1 (1S77-S) 7 Ch. D. see.
834
GABVIN S.P.J.—Bosanquct & Co. v. Rahimtulla <ff Co.
Under the provisions of section 654 of the Code security has to be givenby the person applying for a mandate of sequestration for all damageswhich may result from the sequestration. In the case underconsideration security was given. The present claim was made in andto the Court which issued the mandate. The Court gave him .time toprefer his claim. Apart from the circumstance that the plaintiffsacquiesced in the order of the Court, it was in my judgment competentfor the Court to give relief in the one proceeding and treat it, if that benecessary, as an application to discharge the mandate of sequestration.and for damages. Two separate proceedings in the same Court coveringpractically the same ground would have been in the circumstances awaste of time. I am not satisfied that where the property sequestered hasbeen released from seizure and the mandate returned an action for damagesbased on the allegation that the mandate was maliciously procured isnot maintainable until the mandate so returned is first “ discharged ".
Towards* the conclusion of the argument it was urged that the pro-curing of a mandate of sequestration no matter how maliciously madewas not actionable. The case of Rama Ayyar v. Govinda Pillai et al.1which was relied upon, proceeds upon the ground that an application forsequestration before judgment does not necessarily and naturally involvedamage. In that case no attachment had.been made. All that the defend-ant had done was to make application to the Court and take out a noticeand it was thought that, no matter how false or malicious the applicationmay have been, it did not necessarily or naturally tend to cause damage.
In this case there was a partial sequestration. The Fiscal's officerentered the defendants* premises and engaged for some time in makinga list of the property sequestered. There was therefore publicationof the fact that the defendants’ property was being sequestered under amandate of sequestration.
The proposition that the bringing of an action, although falsely andmaliciously and without reasonable or probable cause, will, not supportan action, though generally true, is not without exception. Wherethe proceeding is from its very nature calculated to injure the credit ofthe person against whom it is brought an action will lie—as in a petitionto wind up a trading company (The Quartz Hill Consolidated Gold MiningCo. v. Eyre2} or in the case of the false and malicious presentation withoutreasonable or probable cause of a petition for the winding up of a tradingcompany (Johnson v. Emerson and Sparrow3).
The judgment in Rama Ayyar v. Govinda Pillai (supra) does not supportthe contention that where property has been sequestered under amandate obtained maliciously and without reasonable and probable causean action is not maintainable. An action is clearly maintainable fordamages for sequestration before judgment upon a mandate obtainedmaliciously and without reasonable and probable cause—vide Nanjappa'.Ghettiar v. Canapathi Goundon4. Such actions have been successfullymaintained in our Courts—vide Serajudeen v. AUagappa Ghetty,5 and Icannot see upon what principle a person can be denied the- right tomaintain an action for damages in consequence of sequestration provided
1 (JWtf) /. L. JR. 39 Mad. 952.8 (18 70-71) L. R. G Exch. 329.
• (1882-83) 11 Q* B. D. 674.4 I. L. R. 35 Mad. 598.
8 (1919) 21 N. L. R. 428.
GARVIN S.P.J.—Bosanquet & Co. v. Rahimiulla A Co.335
he is able to prove that the material averments in the affidavit sworn insupport of the application for the mandate were false in fact and mademaliciously.
A plaintiff who applies for sequestration before judgment. must by hisaffidavit satisfy the Judge that *4 he has a sufficient cause of actionin respect of a money claim of or exceeding two hundred rupees or becausehe has sustained damages to that amount and that he has no adequatesecurity to meet the same and that he does verily believe that thedefendant is fraudulently alienating his property to avoid payment ofthe said debt or damages/'
There is no question here of the existence of a money daim or thatit exceeds Rs. 200. The most important averment in such an applicationis that the defendant is fraudulently alienating his property to avoidpayment of his debt to the plaintiff.
The representations made to the Court "in this case were that thedefendants were disposing of their stock under market value and appro-priating the proceeds for themselves without meeting their engagements,that they did not even deposit the proceeds to their credit in the bankand that they had acted and were acting fraudulently in disposing oftheir stock with intent to avoid payment of t-heir debts, that the stockwas daily decreasing in quantity and that unless a mandate of seques-tration was issued the plaintiffs believed they would be. prevented fromrecovering any portion of their claim. These are grave allegations tomake. They were made for the purpose of inducing the Court to issuea process which it will only issue when and if it is satisfied by affidavitor evidence on oath that a defendant was acting in the manner alleged.The defendants have denied all these allegations. They have provedconclusively that their stock-in-trade was valued on August 29 and 30by Mr. Sibbald whose evidence is not challenged at Rs. 249.000, andthere is no suggestion that anything was added to their stock after the20th and before the 29th August. They have shown that they hadRs. 14,000 in fixed deposit at the bank and have shown that thoughmoneys were regularly deposited to the credit of their current accountin the ordinary course of business they did not keep a considerable-balance to the credit of that account. There is not the slightest reasonfor thinking that the defendants were fraudulently disposing of tlVeirstock or that there was any risk of the plaintiffs not being able to recoverthe amount of their claim. There is moreover ample evidence that thedefendants' financial position was perfectly sound though for the timebeing their liquid assets were not sufficient to meet all their liabilitiespromptly as they fell due.
The representations upon which this mandate was issued have beenproved to be untrue in fact, and they are representations which manifestlyshould hot have been made except after the most careful inquiry. It. isdifficult to conceive of an act which has a greater tendency to damage thecredit and reputation of a merchant or trader than the sequestrationof his stock-in-trade upon the ground that he was fraudulently disposingof his goods to avoid payment of a debt.
The purpose of a mandate of sequestration before judgment is* toprevent the alienation of his property by a debtor who is fraudulently
25/33
636GARVIN S.P.J.—Bosanq_u&t tf Co. v. Hakimtulta tt* Co.
alienating it with intent to avoid payment of a debt. A creditor whoprocures the issue of such a mandate by representing to the Court thathis debtor is fraudulently alienating his property when his debtor is notdoing so in fact and merely for the purpose of enforcing and assuringspeedy payment of his debt is actuated by an indirect motive and istherefore in the eyes of the law acting maliciously.
The evidence for the plaintiffs appears to have been directed to show■that the defendants were at the time financially embarrassed. This is not■denied by the defendants, who say that in consequence of the depressionin trade they found it difficult though perfectly sound financially to meet6very one of their obligations as they fell due. Their debts to the.plaintiffs were payable on August 20. On August 19 they sent the 'plaintiffs a post-dated cheque and two promissory notes in renewal ofthe promissory notes which fell due on that day and informed them oftheir inability to pay. The plaintiff-company replies insisting upon pay-ment. An interview took place on August 20 and it is Mr. Cunningham’sstory. that the third defendant refused to pay even Rs. 500 and toldhim to do what he liked. Here there is a conflict of evidence. Butthis *at least was clear that Mr. Cunningham was willing to give thedefendants further time if Rs. 500 was paid and would, have been contentto trust them to pay the balance sum which amounted to over Rs. 6,000.
This was the position on August 20, and yet on August 23 this affidavitwas sworn in support of the application for a mandate of sequestrationalleging that the defendants were fraudulently disposing of their stock.There is nothing in the evidence which could fairly be referred to aseither reasonable or probable cause for the belief that the defendantswere so disposing of their stock. There is no evidence to show eventhat the sales at the defendants' place of business were unusually briskAnd none at all to show that any excessive or unusual quantities of stockwere being removed from their premises. An. attempt was made to show‘that the two sales of comparatively small quantities of cloth had- takenplace at below the market price. But even this is by no means clearlyestablished. But it is hardly necessary to pursue the matter furtherfor it is evident from Mr. Cunningham's own evidence that to use hisown words he ‘ ‘ was not in a position to say on the day I (he) swore, thisaffidavit that the defendant was trying to avoid his liabilities ". In pointof fact the defendants have met all their liabilities.
It is evident that this witness regarded a mandate of sequestrationas-.a normal process to be restored to “ if the people concerned made no'effort to meet their obligations that he made the representationshe did without reflection and without reasonable or probable cause;that he did so to enforce payment of a debt by a person who appeared,:to him to be making no effort to meet his obligations, and not because;he believed that the defendants were actually engaged in. fraudulently■ disposing' of their stock to avoid paying their liabilities.
' In these circumstances the plaintiff-company is liable for damages. L'Tagree with the Chief Justice whose judgment has just reached me and for thereasons given by him that these damages should be assessed at Rs. 2,500.I agree also to the order proposed by him as to the cost of this action.
Appeal dismissed. •