de Silva v. Jayakoddy.
1941Present: Hearne and Wijeyewardene JJ.
DE SILVA v. JAYAKODDY.91—D. C. Colombo, 6,167.
Administration—Petition by creditor to compel payment of debt—The claimdisputed by administrator—Jurisdiction of Court—Civil Procedure Code,s. 720.
Where a petition is presented to Court by a creditor under section 720of the Civil Procedure Code praying for a decree directing an executoror administrator to pay the creditor’s claim and the respondent deniesthe validity and legality of the claim,—
Held, that the Court is debarred from acting under the section andcompelling payment of the disputed claim.
In such a case the petition should be dismissed without prejudiceto the creditor’s right to bring a separate action.
PPEAL from an order by the District Judge of Colombo. The factsappear from, the judgment.
H. V. Perera, K.C. (with him C. E. S. Perera and Dodwell Goonewardene),for appellant.—The District Judge has misconceived the whole purpose ofsection 720 of the Civil Procedure Code.
Chapter 54 of the Civil Procedure Code was enacted “for the purposeof aiding and controlling of executors and administrators and theJudicial settlement of their accounts
Section 720 provides a speedy and summary method whereby thelegal representative could pay up creditors of the estate.
The term “ creditor ” in section 720 (a) is an approved creditor, i.e., acreditor whose debt is not disputed.
If the debt is disputed the summary procedure under section 720 and721 is inapplicable.
The claim if any would have to be made by separate action. Undersections 720 and 721 the Judge is not empowered to hold an inquiry.
After citation is issued the administrator files an affidavit settingforth facts which show that it is doubtful whether the petitioner’s claimis valid and legal. Then the petition must be dismissed.
WUEYEWAHDENE J.—de Silva v. Jayakoddy.
Sections 720 and 721 were incorporated to our Civil Procedure Codefrom the Civil Procedure Code of the State of New York. The relevantsections are 2717 and 2718.
In the commentary by M. H. Throop, page 617 (Tucker v. Tucker *)it was held that the surrogate had no jurisdiction to compel-payment of adisputed claim or to try a question in dispute.
The District Judge is obviously wrong when he says that prescriptiondoes not apply to debts under section 720 (a).
Sections 7 and 10 of the Prescription Ordinance apply and in both casesthe debt is prescribed in three years.
N. Nadarajah (with him E. B. Wikremanayake), for respondent.—Theaffidavit in this case does not specifically deny the petitioner’s claim.
The administratrix avers “ she is unaware of the circumstances underwhich the debt was contracted ”.
The District Judge is correct therefore in holding an inquiry undersection 720 of the Civil Procedure Code.
The term “ creditor ” in section 720 (a) of the C. P. C. would includea creditor whose debt is disputed by the administratrix.
Chapter 54 of the C. P. C. should be given a wide interpretation.
Once citation is issued by the Court, the onus is on the administratrixto prove the debt is not valid and legal.
The American case cited does not help as the facts are not set out.
There is no doubt that a claim under section 720 of the C. P. C. by acreditor can be resisted on the grounds of prescription. But here thereis concealed fraud.
Prescription therefore will only be arrested when the fraud isdiscovered (Dodwell & Co., Ltd. v. John=).
If not for concealed fraud sections 7 and 10 of the PrescriptionOrdinance would apply.
The District Judge is wrong when he says that prescription does notapply to debts under section 720 (a).
Cur. adv. vult.
February 13, 1951. Wijeyewardene J.—
This is an appeal from a decree passed under section 721 of the CivilProcedure Code.
The respondent and one R. H. de Alwis gave in May, 1927, the writingmarked “ P 2 ” by which they bound themselves jointly and severallyto pay V. P. L. S. Saminathan Chettiar a sum not exceeding Rs. 25,000on account of any balance that may be found due on loans made bySaminathan Chettiar to'Alwis.
Alwis died on March 9, 1932, and his intestate estate is administeredin D. C. (Testamentary) Colombo, 6,167, by the appellant.
On March 22, 1932, Saminathan Chettiar filed D. C. Colombo, 48,334,naming Alwis and the respondent as defendants, and claiming a sum ofRs. 19,375—Rs. 14,000 being on account of the balance principal due onthe writing “ B ” and Rs. 5,375 as interest. Though SaminathanChettiar became aware of the fact that Alwis was dead at the time of theinstitution of the action, he chose to continue the proceedings against,1 4 Keys 140.» 20 AT. L. R. 206.
•228WIJEYEWARDENE J.—de Silva v. Jayakoddy.
the respondent alone without making the appellant a party to the action.The respondent filed answer, and after hearing evidence, the DistrictJudge entered a decree against the respondent in November, 1933,for the amount claimed. The respondent appealed against that decreebut later agreed to the appeal being dismissed. Thereafter the respond-ent made three payments of Rs. 3,000, Rs. 9,000, and Rs. 8,000 toSaminathan Chettiar in May, 1936, August, 1936, and August, 1937,respectively. In consideration of these payments, Saminathan Chettiaragreed to the satisfaction of the decree being entered of record in D. C.Colombo, 49,334, on August, 26, 1937. During the pendency of thataction Saminathan Chettiar gave to the appellant a writing “ R 1 ” inOctober, 1933, “ waiving his claim ” against the estate of Alwis and“ discharging the estate from any liability ”.
On November 7, 1939, the respondent filed1 a petition and an affidavitunder section 720 of the Civil Procedure Code against the appellant in
C. Colombo (Testy.), 6,167, and asked for a decree against the appellantas administratrix for the sum of Rs. 20,000 paid by him in satisfactionOf the decree in D. C. Colombo, 48,334. The respondent stated in hisaffidavit that he gave the writing “ P 2 ” to guarantee the payment ofthe debt of Alwis to Saminathan Chettiar.
Gn being cited by the District Court to show cause against the applica-tion of the respondent, the appellant filed an affidavit stating that she was“ unaware of the circumstances under which money was lent by V. P.L. S. Saminathan Chettiar to (the respondent) and R. H. de Alwis ”.She denied that the respondent was a “ creditor of the late R. H. deAlwis”, or that he had a valid and legal claim. She further pleaded asmatters of law that the respondent’s claim was prescribed and that therespondent should be directed to bring a regular action.
The learned District Judge did not dispose of the matter on theaffidavits but fixed the matter for inquiry. After a hearing which tookplace on ttvo days when the evidence of the respondent and anotherwitness was recorded, the District Judge entered the decree from whichthis appeal is taken and ordered the appellant to pay Rs. 20,000 and coststo the respondent.
Does the evidence led at the inquiry prove that there was a debt ofRs; 20,000 due by Alwis, at the time of his death, to Saminathan Chettiar?The fact of the payment of Rs. 20,000 by the respondent to SaminathanChettiar and the plaint and the decree in D. C. Colombo, 48,334, do notby themselves prove the indebtedness of Alwis to Saminathan Chettiar.The respondent did not give any evidence on this point. In fact, hestated that Alwis was an “ honest ” man and he agreed to stand suretyin 1927 as Alwis told him that he would settle the debt “ in a short time ”.The respondent met Alwis some time later and “ understood from Alwisthat the money had been paid and settled The plaint in D. C.Colombo, 48,330, shows that even according to Saminathan Chettiar,Alwis’s debt was reduced from Rs. 25,000 in May, 1927, to Rs. 17,000 inJune, 1929. Considering that Alwis died in March, 1932, it is possiblethat Alwis may have effected a substantial reduction of the debt afterJune, 1929. A Court has to insist on very, strict proof of a claim againstthe estate of a deceased person. There is no doubt whatever as to the
WUEYEWARDENE J.—de Silva v. Jayakoddy.
good faith of the respondent who has had to pay Rs. 20,000 under thedecree in D. C. Colombo, 48,334, but that does not relieve him from thenecessity of adducing sufficient and definite legal proof of the indebtednessof Alwis to Saminathan Chettiar in a sum of Rs. 20,000.
I do not think it proper to express any opinion on the question ofprescription in view of the order that is going to be made on this appeal.I may add however that the plea should have been carefully consideredby tlie Judge at least with regard to that portion of the respondent’sclaim which was based on the two payments made by him to SwaminathanChettiar in May, 1936, and August, 1936. I ««m unable to appreciatethe argument that seems to have found favour with the learned DistrictJudge that a claim made under section 720 of. the Code by a creditorcannot in any case be resisted on the ground of prescription. When thelearned Counsel for the respondent was invited to address us on thisquestion he stated that he was unable to support the view of the DistrictJudge.
There remains the important question whether the District Court hadjurisdiction, in the circumstances of this case, to enter a decree undersection 721 of the Code directing the appellant to pay the amount askedfor. That section, no doubt, enacts that “ upon the return ” to thecitation the Court “ shall make such decree in the premises as justicerequires ”. These words have to be interpreted however in the light ofthe other provisions of the section. It is distinctly stated therein thatwhere “ the administrator fiiles an affidavit setting forth facts whichshow that it is doubtful whether the petitioner’s claim is valid andlegal, and denying its validity or legality absolutely, or upon informationand belief of where the Court is not satisfied that there is money or othermovable property of the estate applicable to the payment in satisfactionpf the petitioner’s claim …. the decree shall dismiss the petitionHere the appellant filed an affidavit denying the validity and legality ofthe respondent’s claim and raising a plea of prescription. The variousaverments in the appellant’s affidavit should have made it doubtful ”—to quote the words of the section—“ whether the claim was valid andlegal”. The District Judge himself,felt that he could not pass a decreewithout holding an inquiry and hearing evidence in support of theclaim. I think that in these circumstances the Court was debarredfrom acting under this section and compelling payment of a disputedclaim or trying the question in dispute. Moreover there is no evidenceto show that “ there is money or other movable property of the estateapplicable to the payment or satisfaction of the petitioner’s claim andwhich may be so applied without injuriously affecting the rights of othersentitled to priority or equality of payment or satisfaction ”. On theother hand there is a reference in the judgment to a “ final account ”filed by the appellant in the testamentary case showing that there wereseveral debts payable by her and that, the liabilities exceeded the assetsby about Rs. 14,000. The Judge has further stated that some of thesedebts have been paid in 1940 “ after the sale of certain lands with thepermission of die Court ”.
In the absence of any local decision on the scope of sections 720 and721 I have referred to the New York Code of 1876 the analogous
Sivaraman Chetty v. Ebramjee.
provisions of which were sections 2717 and 2718. By an amendment in1893 these two sections were consolidated into one section which appearsas section 2722 of the amended New York Code. The relevant wordsof that section are as follows : —
On the presentation of such a petition the surrogate must issue acitation accordingly, and on the return thereof he must make such adecree in the premises as justice requires. But in either of the followingcases the decree must dismiss the petition without prejudice to anaction or accounting, in behalf of the petitioners—
when an executor or administrator files a written answer,
duly verified, setting forth facts which show that it is doubtfulwhether the petitioner’s claim is valid and legal, and denyingits validity or legality, absolutely or on information andbelief ;
where it is not proved, to the satisfaction of the surrogate,
that there is money or other personal property of the estate,applicable to the payment or satisfaction of the petitioner’sclaim, and which may be so applied without injuriouslyaffecting the rights of others, entitled to priority or equalityof payment or satisfaction.
The notes of the decisions of the American Courts given in Stoover’sNew York Annotated Code of Civil Procedure (6th edition) dealingwith the jurisdiction of the surrogate under section 2722 of the New YorkCode appear to support the construction I have placed on section 721 ofour Code. I have not had the advantage of reading the judgmentsreferred to by Stoover as the Law Reports mentioned by him are notavailable to me.
I hold that the District Court had no jurisdiction to pass a decreeallowing the disputed claim and direct that the respondent’s petition bedismissed without prejudice to his right to bring a separate action if he isso advised.
The appellant is entitled to the costs here and in the Court below.Hearne J.—I agree.
DE SILVA v. JAYAKODDY