SOEKTSZ J.—Ceylon Theatres and Dombal.
1993Present : Soertsz and Hearne JJ.
CEYLON THEATRES, Appellants, and DOMBAL et al., Respondent
62—D. C. Colombo, 9,611.
Administration—Sale of business—Sanction of Court—Right of purchaser to be-heard.
Where an inquiry is being held by a Judge in administration proceedings;to consider whether he should or should not sanction the sale of abusiness, the intending purchaser should not be allowed as of right to-be heard.
Where, however, the sale had taken place by agreement as to priceand the purchaser had been placed in charge of the business, pendingthe sanction of Court, the purchaser may be heard in support of a.completed sale he was advancing.
A PPEAL from an order of the District Judge of Colombo.
V. Perera, K.C. (with him N. Nadarajah, K.C., and H.. W. Ja-ye~wardene), for appellant and applicant in revision.
F. C. W. VanGeyzel for first respondent.
S.J. V. Chelvanayagam (with him E. B. Wickremanayalte). for second!and third respondents.
E. F. N. Gratiaen (with him D. W. Fernando) for fourth respondent.
■Cur. adv. vult.
November 26, 1943. Soertsz J.—
The material facts necessary for answering the questions raised on the:appeal, and on the petition for revision before us may be stated brieflythus:
Lancelot de Dombal died intestate leaving as his heirs his widow the-1st respondent and two minor children, the 2nd and 3rd respondents,,both of whom were represented in the testamentary action by a guardian.ad litem. The principal asset of the deceased’s estate appears to be ascinema business, with all its appurtenances, known as The GintupitiyaTalkies, valued in the inventory at Rs. 26,763.
This business was carried on, on premises vested in the trustee of aHindu Temple, which premises had, by the Trustee, been leased to onerW. C. Brodie. The deceased was Brodie’s tenant. Brodie’s lease has a.short period yet to run, and he is under covenant not to sub-lease thesepremises without the consent of the Trustee his rentor. Brodie is arcreditor of the estate of the deceased.
The -widow is the administratrix of the estate. In the course ofadministration, she decided to sell this business, and her proctors negotiated for that purpose and found purchasers, namely, The- Ceylon TheatresLtd., who were willing to pay Rs. 90,000 for it. -The Administratrix was;prepared to accept this offer but with the reservation that the sanction'of the Court should be obtained for her final acceptance of it. Both she-and her proctors appear to have thought that the sanction of the Courtwould be given for the asking, and so informed The Ceylon Theatre^.
SOERTSZ J.—Ceylon Theatres and Dombal.
Ltd. In that view of the matter they paid the sum of its. 90,000 to theproctors for the administratrix and she agreed that the Ceylon Theatresshould carry on the business pending the sanction of the Court. When theoffer was brought to the notice of the Court, it very properly intimatedto the administratrix that it would sanction the sale provided theguardian ad litem agreed to it. This the guardian ad litem was unwillingto do, for he was of opinion^and he was quite competent to form anopinion on that matter—that the business was worth more. He lookedabout for another purchaser and found one C. C. Roche who was preparedto pay Rs. 110,000 and he announced this fact to the Court. The Courtwas disposed to sanction this sale, but the Ceylon Theatres sought tointervene at this stage, and filed petition and affidavit stating certaingrounds upon which they claimed that a sale bad already taken place andthat conveyance should be made to them and not to Roche.
On September 2, 1943, the Judge made order disallowing the applicationof Ceylon Theatres, Ltd., to intervene and also disallowing an applicationmade on behalf of Roche for a direction to the administratrix to -conveyto him, but sanctioning the sale to Roche and directing that theRs. 110,000 be deposited in Court on September 3, 1943. But on Sept-ember 2 itself, the Rs. 110,000 was paid into Court and the Judge directedthat “ the money must be deposited to the credit of the Estate. It willnot be drawn upon for any purposes connected with the administrationuntil and unless the assignment goes through ”. On that day, the CeylonTheatres filed the appeal now before us.
On September 23, 1943, the administratrix made an affidavit declaringthat there were certain difficulties encountered by her in and about givingRoche a conveyance of the business and possession of it and she askedfor directions. This matter came up for inquiry on October 9, 1943.On that date, Counsel appearing for the administratrix stated thatCeylon Theatres, Ltd., were prepared to increase their offer to Rs. 100,000.
The result of the inquiry was that Roche agreed to take a conveyanceof all the right, title, and interest of the administratrix in the machineryand the business of the Gintupitiya Talkies and to be content with suchpossession as the administratrix had, and to indemnify the adminis-tratrix against any claims made by Brodie and one Tampoe with the latterof whom there was in existence a contract for the supply of films. Orderwas made accordingly. On this occasion too the Ceylon Theatres soughtto intervene but were not allowed to do so. They then moved that theCourt do direct that all proceedings relating to the matter of the salethat had been sanctioned be stayed pending the decision of the appealthey had taken against the order of September 2, 1943. The applicationwas refused. They then moved this Court in revision and obtained astay of the sale on terms.
The questions that arise upon the facts I have stated are :
Had the appellants a right to be added as parties under section 18of the Civil Procedure Code and to be heard before the Court made anorUer regarding the sale of this business ?
If they had, what order should be made by us in the matter ?
SOERTSZ J.—Ceylon Theatres and Dombal.
On the first question I should have been disposed to uphold the ordermade by the trial Judge that “ any intending purchaser should not beallowed as of right to be heard at an inquiry ” that is being held by theJudge in order to Consider whether he should or should not sanction asale for which an administratrix is seeking his sanction. Mr. Perera’ssubmission on behalf of the appellant was that they were entitled to beheard because they were contending (a) that a sale to them took placewhen they paid the price agreed upon between them and the adminis-tratrix and when they were put in charge of the business and were, thereby,enabled to conduct it; (b) that even if that contention failed, they wereentitled to preference and to be given an opportunity to object to theproposed sale to the 4th respondent or, alternatively to ask that thebusiness be sold to them at the price offered by the 4th respondent. Inthe circumstances of this case, I am inclined to agree with the first ofthese contentions that the appellants should have been heard in supportof the case of a completed sale that they were advancing, but I am quiteunable to entertain Mr. Perera’s other submissions.
In this view of the matter, ordinarily the case would have had to go backfor the Ceylon Theatres, Ltd. to be made added parties and to be heardon the question indicated, but in this instance it seems clear from theproceedings that the trial Court while professing not to give the CeylonTheatres, Ltd. and Roche any hearing on the question before it, was ineffect hearing them and that the order appealed from was made withfull knowledge of the relevant facts. Be that as it may, we are now infull possession of all the facts and can deal with the matter ourselveswithout sending the case back and so involving the testamentary proceed-ings in further delay.
am unable to take the view that a valid sale to the Ceylon Theatres,Ltd. had taken place when the administratrix went before the Court.It may be that it was competent for the administratrix to sell thisbusiness directly without seeking the' sanction of the Court. But shedid not take the course, perhaps, because there were minors concerned.She made it quite clear to the Ceylon Theatres, Ltd., that the sale mustdepend on the Court’s sanction of it and they agreed to it. Whateversanguine expectation the parties entertained in regard to that matter,they entertained at then- peril, and they cannot be heard to say that thepayment made and the possession given were sufficient to compel thesanction of the Court. The guardian ad litem of the minors was entitledto do what he did, and once a better offer was before the Court, it wasthe duty of the Court, in the interests of the minors, to prefer it. Andit did. Itsanctioned thatsale. Suchreservations asthere were in that
offer whenit was first made have nowbeen withdrawn and the sale will
be on the terms laid down by the Court in the final order made by it.
In passing, I would observe that the appellants had an opportunityto raise the offer it had made before the sale to the 4th respondent wassanctioned. – They did not choose to take it. After that sale had beensanctioned,they made anoffer of Rs.100,000. Notonly was that too
late, butits acceptancewould havemeant a lossto the estate of
Rs. 10,000, half of which the minors would have to bear.
SCXEBTSZ J.—Ceylon Theatres and Dombal.
For these reasons, I do not find any occasion to interfere with thedirections given by the trial Judge. I dismiss the appeal. The proceed-ings in revision were only ancillary to the appeal and no order is nowineeessary in regard to them. The appellants and 'the 4th respondent'will bear their own costs. The costs of the minors and of the adminis-tratrix will come out of the estate. The sum of Us. 90,000, if it is indeposit in Court, will be paid out to the appellants with sueh interest, ifany, as might have accrued to it.
HIbarne J.—I agree.
CEYLON THEATRES, Appellants, and DOMBAL et al., Respondents