DE SILVA et al., Appellants, and DE SILVA et al, Respondent

067-NLR-NLR-V-49-DE-SILVA-et-al.-Appellants-and-DE-SILVA-et-al-Respondent.pdf


de SUva v. de Silva.
219
1948Present: Howard C.J. and Dias J.
DE SILVA et al., Appellants, and DE SILVA et al., Respondents.
S. C. 17—D. C. Inty. Balapitiya, M 34.
Civil Procedure Code—Action on ■promissory note,—Summary procedure—Is it availableto executor of holder ? Defence not prims facie sustainable—Order for security—Chapter S3 of the Code.
The provisions of Chapter 53 of the Civil Procedure Code relating to summary-procedure on liquid claims can be utilised by the executor of a deceased holderof a promissory note.
In such an action where the defendant’s affidavit indicates that bis defenceis not prima facie sustainable he should be required to give security as a conditionof bis being allowed to appear and defend.
'A. I. S. {1933) P. C. 58.2 A. I. R. (1925) Allahabad 263.
•220
HOWARD C.J.—de Silva v. de Silva.
-AlPPEAL, from a judgment of the District Judge of Balapitiya.
H. V. Perera, K.C., with H. W. Jayewardene, for plaintiffs, appellants.
C. Thiagalingarn, with V. Arulambalam and M. L. S. Jayasekere,for defendants, respondents.
Cur. adv. vult.
February 24, 1948. Howabd C.J.—-
This is an appeal by the plaintiffs from an order of the District Judgeof Balapitiya allowing the 1st defendant to file answer to the plaintiffs’claim without giving security. The plaintiffs who are the executorsof the late P. H. A. de Silva obtained a provisional Probate in D. C.Balapitiya Testamentary Case No. 110 on April 24, 1946. On July 8,1946, plaint was filed by the plaintiffs claiming a sum of Rs. 57,500 on apromissory note P 1 given by the defendants to the late P. H. A. deSilva on November 1, 1944. The plaint was accompanied by an affidavitby the plaintiffs setting out the facts relating to the promissory note,the averment that probate had been issued to them and that the sumclaimed was justly and truly' due and owing to them from the defendants.Summons under section 703 of the Civil Procedure Code (Cap. 86) wasissued on July 8, 1946, for defendants to appear within 7 days from dateof service of summons and obtain leave of Court to defend action. Thissummons was served on July 26, 1946. On July 31, 1946, the 1st defend-ant filed a petition and affidavit applying for leave to defend the actionwithout giving security. On a joint motion filed by the parties followingan objection by the plaintiffs the matter was fixed for inquiry onNovember 15, 1946. The learned District Judge in allowing the 1stdefendant to file answer without giving security has held that the summaryprocedure provided by Chapter 53 of the Civil Procedure Code cannotbe utilised by the plaintiffs in this case because (a) they are executorsand their names are not on P 1 and (6) there is no averment in the affidavitthat the amount sued for is due on the note. Further, on the merits heconsiders that the affidavits filed disclose such a tangle of transactionsand accounts that the defendant would be entitled to defend withoutsecurity. He held that it was unnecessary to discuss the merits atlength but he could not say that the defence set out is not a bona fide one.
In holding that the plaintiffs could not utilise the summary procedureprovided by Chapter 53 of the Civil Procedure Code the District Judgerelied on the judgment of Bonser C.J. in Meyappa Chetty v. BastianFernando1. In this case it was held that the defendants must be allowedto defend unconditionally by reason of the fact that the plaintiffs hadnot sworn that the money is due on the note as required by section 705of the Civil Procedure Code. The judgment of Bonser C.J., however,contained the dictum that he doubted whether the summary procedureapplies to a case where the names of the defendants do not appear-in the
1 {1899) 1 Browne's Reports 127.
HOWARD C.J.—de Silva v. de Silva.
221
instrument sued on. It appeared to the learned Chief Justice that thesummary procedure was intended to apply to oases where there was nodoubt as to the identity of the persons who made themselves liable onthe instrument sued on, and that it was not intended to apply to oaseswhere the preliminary question to be tried was whether the instru-ment is binding on the defendant or not. This point the learned ChiefJustioe held it was unnecessary to deoide. The Diatriot Judge heldthat this principle was applicable to the present case, as evidence thatthe plaintiffs were the executors of P. H. A. de Silva and thereforeentitled to sue was dehors the contract, the summary procedure wasnot applicable. The application of the summary procedure wasconsidered again in Letchivnanan v. Ramanathan Chetty 1. In this casethe Court was constituted by Bonser C.J. and Browne A.P.J. Theformer recapitulated the doubts he had expressed in Meyappa Chetty v.Bastion Fernando, but Browne A.P.J. on the other hand stated atpage 371 that he did not feel those doubts but considered that thesummary procedure was applicable to the case they were consideringand proof might be given of the alleged members of a partnershipand they might be sued by such procedure. But in the casexonder consideration the appellant was given leave to defendunconditionally as personal service as required by section 705 hadnot been made. In a subsequent case Mather v. Peri Thamby Chetty2the decision in Letchimanan v. RarrMnathan Chetty [supra) in regardto the necessity for personal service was overruled. In my opinion thedoubts of Bonser C.J. as expressed in that case and Meyappa Chetty v.Bastion Fernando [supra) in regard to the necessity for the names ofthe defendants to appear in the instrument sued on were not justified.Hence the principle applied by the District Judge to the case wherethe plaintiff were the executors of the payee was not based on anylegal principle.
In regard to the lack of an averment in the plaintiffs’ affidavit thatthe amount sued for is due on the note I would refer to the case ofPaindathan v. Nadar3 where it was held that the affidavit will substan-tially comply with the requirements of section 705 of the Code if thefacts therein set out show that the sum was rightly and properly due.In the present case I am satisfied that the affidavit does comply withthis requirement.
Mr. Thiagalingam in contending that an executor cannot employ thesummary procedure of Chapter 53 of the Civil Procedure Code reliesnot only on the doubts expressed by Bonser C.J. but also on certainIndian decisions. These Indian decisions do not specifically deal withthe situation which arises when an executor seeks to stand in the shoesof a deceased payee. I do not consider that it is necessary to haverecourse to such authorities in order to arrive at a decision in the presentcase. Mr.Thiagalingamalso maintains that by reason of the phraseologyemployed in Form No. 19 in the First Schedule to Cap. 86 the summaryprocedure is not applicable. Section 703 provides that “ the summons
1 (1901) 1 Browne’s Reports 368.*
8 (1936) 37 N. L. R. 101
(1927) 28 N. L. R. 443.
222
HOWARD C.J.—de Silva v. de Silva.
shall be in the form No. 19 in the First Schedule, or in such other formas the Supreme Court may from time to time prescribe Form No. 19is worded as follows :—
“ Summons in an action of Summary Procedure on a Liquid Claim.To the above-named defendant (or defendants),
Whereas the above-named plaintiff has instituted an action againstyou in this court under Chapter LIU., of the Civil Procedure Code,
for rupees principal and interest (orrupees,
balance of principal and interest) due to him as payee (or indorsee)of a bill of exchange (or as the case may be : state the instrumenton which the claim is made), of which a copy is hereto annexed.
You are hereby summoned to obtain leave from the court within
days from the service hereof, inclusive of day of such
service, to appear and defend the action, and within such time to causean appearance to be entered for you. In default whereof the plaintiff
will be entitled at any time after expiration of such days
to obtain a decree for any sum not exceeding rupees (name
the sum claimed), together with interest thereon at the rate specifiedin the said (instrument) to the date of payment in full, and the sumofrupees for costs.
Leave to appear may be obtained on an application to the courtsupported by affidavit showing that there is a defence to the actionon the merits, or that it is reasonable that you should be allowed toappear in the action.
(Here copy the instrument sued on, and where it is a negotiableinstrument and carries endorsements, with the endorsements).
By order of Courts
Sgd.-.
Secretary.
Theday of19”
Mr. Thiagalingam contends that as the words “ due to him as payee(or indorsee) ” are employed in the form the summary procedure is notavailable to any one who is not a payee or indorsee. I do not considerthat the Form can place such a limitation on those entitled to makeuse of the summary procedure. Section 703 makes provision for actionsnot only on a “ Bill of Exchange ” but also on “a promissory note,or cheque or instrument or contract in 'writing for a liquidated amountof money or on a guarantee ”. The words “ payee (or indorsee) ” donot apply to all these instruments and hence if the limitation contendedfor was imposed the procedure would not apply in the case of instrumentslike guarantees and other contracts. In support of his contention Mr.Thiagalingam has cited the case of PaUmiappa Chettiar v. Hassen Lebbe1in which it was held that a warrant of attorney given to confess judgmentin favour of a person, his heirs, executors, administrators and assignsis invalid. ' It must also be restricted to the Form No. 12 in the FirstSchedule prescribed in section 31 of the Civil Procedure Code. FormNo. 12 does not provide for “ assigns ”, In my opinion having regard
* (1939) 40 N. L. R. 409.
HOWARD C.J.—de Silva v. de Silva.
223
to the difference in wording in sections 31 and 703 of the Civil ProcedureCode this case does not assist Mr. ThiagaJingam. Section 31 providesthat a warrant of attorney may be given. If given, it must be in theForm No. 12 in the First Schedule. The wording of section 703 is notsimilar.
There now only remains for consideration the question as to whetherthe District Judge was correct in holding that he was unable to saythe defence set out is not a bona fide one and that the defendant wasentitled to defend without giving security. In coming to this decisionthe learned Judge has stated that the affidavits filed disclose atangle of transactions and accounts. In these circumstances itis obvious that he has not embarked on a voyage of careful scrutinyto discover whether the defence is a bona fide one. The plaintand affidavits of the plaintiffs are of the simplest character andhence if there is a tangle of transactions and accounts this tanglearises solely from the affidavit and petition of the respondent. Thelaw in regard to the interpretation of section 70-1 (2) of the Civil Pro-cedure Code has been considered in several cases and is quite clear asstated by Hutchinson C.J. in Supramaniam Chetty v. KrishnasamyChetty1. In that case the Full Court held that the District Judge hadreasonable grounds for doubting the good faith of the defence. In thisconnection the learned Chief Justice considered that the Court shouldconsider whether the defendants’ affidavit “ is satisfactory to the Court ”.The question was whether the defendant had paid Bs. 1,300 out ofBs. 2,000 owing on a formal acknowledgment. He swore that he had,-but his affidavit was not supported by receipts and accounts. TheChief Justice also referred with approval to the case of Wallingford v.The Directors of the Mutual Society 2 under order XTV. of the EnglishBuies. At pp. 701-705 Lord Blackburn stated as follows :—
“ Now I think what we have to see here is, what is it that the Judgeis to be satisfied of, in order to induce him to refuse to make the orderfor the plaintiff to sign judgment. If he is satisfied upon the affidavitsbefore him that there really is a defence upon the merits, it is a matterof right, unless there is something very extraordinary (which I canhardly conceive), that the defendant should be able to raise thatdefence upon the merits, either to the whole or to a part. He mayfall far short of satisfying a Judge that there is a defence upon themerits ; still he may do so if he discloses such facts as may be deemedsufficient to entitle him to defend.
And that, my lords, raises another question altogether. Theremay very well be facts brought before the Judge which satisfy himthat it is reasonable, sometimes without any terms and sometimeswith terms, that the defendant should be able to raise this question,and fight it if he pleases, although the Judge is by no means satisfiedthat it does amount to a defence upon the merits. I think that whenthe affidavits are brought forward to raise that defence they must,if I may use the expression, condescend upon particulars. It is not
2 L. R. (1880) 5 A. C. 685.
(1907) 10 N. L. R. 327.
224*
HOWARD <J.J.—de Silva v. de Silva.
enough to swear * I say I owed the man nothing Doubtless, ifit was true that you owed the man nothing as you swear that wouldbe a good defence. But that is not enough. You must satisfy theJudge that there is reasonable ground for saying so. So again, ifyou swear that there was fraud, that will not do. It is difficult todefine it, but you must give such an extent of definite facts pointingto the fraud as to satisfy the Judge that those are factswhich make it reasonable that you should be allowed to raise thatdefence. And in like manner as to illegality, and every other defencethat might be mentioned.
So looking at the affidavits (they are very long and I will not gothrough them) which were used before Mr. Justice Manisty, I thinkthat in none of these particulars did the appellant satisfy the burdenthat was cast upon him. He makes general statements of fraud,but nowhere does he condescend upon any particular of fraud, suchas in my mind, if I had been in Mr. Justice Manisty’s place, wouldhave made me think that it was at all fit that he should be allowedto defend upon that ground. There are long statements resultingin saying that this society was illegal upon various grounds, whichI cannot follow at all. One ground, among others, is, because therewas a drawing of lots on one occasion, therefore, it was illegal ascoming under the Lottery Acts. I cannot think that that was agood ground of defence.”
A careful examination of the respondent’s affidavit reveals the factthat no real defence is disclosed to the plaintiff’s action. Paragraph 4of the affidavit admits the payment by the deceased of a sum of Es. 50,000in order to enable the respondent to discharge a mortgage bond of a similaramount. At the same time a promissory note for Rs. 5,000 was drawnin favour of the deceased to cover interest. Properties of the respondentwere also hypothecated to the deceased by mortgage bond of August 25,1942. In paragraph 5 of the affidavit it is stated that it became necessaryto obtain a release of this mortgage bond. One of the properties has beensold to Dr. Abeysuriya for Rs. 12,500 and the deed of release should befor Rs. 44,000 which according to paragraph 5 (6) was the amount dueto the respondent on the Bokkara estate account and for professionalservices rendered to the deceased. It was in these circumstances thatthe respondent signed the promissory note for Rs. 57,000. In thisconnection it is stated in paragraph 5 (c) that it was agreed that therespondent should stand security for the said sum of Rs. 12,500 owedby Dr. Abeysuriya. In paragraph 3 it is stated that the Bokkaia estatewas a joint venture of the respondent and the deceased and that therespondent’s share of the property should remain with the deceasedfor the purchase of another estate in common. Hence.it is difficult toreconcile paragraphs 3 and 5 (6). Moreover, to use the words of LordBlackburn, the respondent has not condescended upon particulars in regardto the amount alleged to be owing to him on the Bokkara estate accountand for professional services rendered to the deceased. The respondents’affidavit merely amounts to saying “I owe nothing”, which is notsufficient. In paragraph 13 of his affidavit the respondent sets out
Setha v. Weerakoon.
226
various defences which I have already dealt with in this judgment.Paragraph 14 states that the deceased was a money-lender and hencethe action cannot be maintained, as :—
(а)proper books of accounts have not been kept by him; and
(б)the promissory notes sued upon were fictitious to his knowledge.In regard to (6) the affidavit does not indicate for what reason thepromissory notes were “ fictitious ” within the meaning of this termin section 14 of the Money Lending Ordinance (Cap. 67). With regard to
(o)it was held in de Silva v. Edirisuriya1 that the bar created by section 8
of the Ordinance does not apply to the administrator of the estateof a deceased money lender. Moreover the respondent in affirming thatthe deceased was a money lender does not set forth the grounds of hisbelief. Generally speaking the nature of the affidavit of the respondent,the first defendant, indicates that his defence is not prima facie sustainable.The learned Judge should have felt reasonable doubt as to its good faith.
For the reasons I have given I ain of opinion that the first defendantshould under section 704 (2) of the Civil Procedure Code have beenrequired to give security as a condition of his being allowed to appearand defend. The order of the District Judge is therefore set aside andt he case is remitted to lum so that as a condition of being allowed toappear and dofond the first defendant shall give security for a sum ofUs. 10,000. The plaintiffs are awarded the costs of this appeal and thoseof the inquiry on November 15, 1946. Costs incurred before this datewill abide the final result of this case.
Dus J.—I agree.
Order set aside.