ELAINE MUTHUMANI, Appellant, and MUTHUMANI et al., Respondents

135-NLR-NLR-V-49-ELAINE-MUTHUMANI-Appellant-and-MUTHUMANI-et-al.-Respondents.pdf


Elaine Alulhumani v. Mulhumani.
481
1948 Present: Wijeyewardene A.C.J., Jayetileke S.P.J. and
Nagalingam J.
ELAINE MUTHUMANI, Appellant, and MUTHUMANI et al.,
Respondents.
S. C. 109—D. C. (Inly.) Kandy, X 989.
Entail and Settlement Ordinance—Sale sanctioned by Court—Upset price fixed—Sale above upset price—Subsequent higher offers—Application to set asidesale—Power of Court.
Petitioner applied to Court under section 5 of the Entail and SettlementOrdinance for the sale of certain property which was subject to a fidei commis-sum. The sale was allowed and the Court fixed an upset price of Rs. 13,800.The property was sold for Rs. 13,950 to the ninth respondent. Thereafter thepetitioner applied to Court to have the sale set aside on the ground that sincethe sale sho had received higher offers.
Held, (Jayetileke S.P.J. dessenting), that the Court was not entitled to setaside the sale even though it was subject to confirmation by Court and minorswere interested in getting the highest possible pric3 for the property.
A PPEAL from, a judgment of the District Judge, Kandy.
H. V. Perera, K.C., with C. E. L. Wickremesinghe, for the petitioner-appellant.—The sale which the petitioner seeks to set aside in theseproceedings was a sale under the Entail and Settlement Ordinance(Cap. 54). The Court ordered the sale subject to confirmation by theCourt. Under section 4 of the Entail and Settlement Ordinance it isthe Court that has the power to sell, and the Court, for the sake ofconvenience, employs an agent, i.e., an auctioneer, to conduct the sale.In execution proceedings under the Civil Procedure Code the positionis different. Under section 218 of the Civil Procedure Code a judgment-creditor is empowered to seize and sell by the hands of the Fiscal thejudgment-debtor’s property, and the Court merely supervises the conductof such execution proceedings under the sections of the Civil ProcedureCode. The Court has no power to sell in execution proceedings, butunder the Entail and Settlement Ordinance the power to sell is vestedin the Court and in the Court alone.
On broad general principles the Court which has ordered the salesubject to confirmation by the Court has the power to refuse to confirmthe sale, just as a private owner, who has deputed an agent to sellsomething belonging to the private owner subject to such owner’sconfirmation, can refuse to confirm such sale by such agent. In such acase the contract of sale is only complete when confirmation by theowner is obtained. The private owner, in such a case, can act arbitrarilyand refuse to confirm the sale for no reason at all, but the Court must actreasonably and judicially. Subject to the restriction that the Courtmust act judicially and reasonably, the Court has power to refuse toconfirm the sale.
482
Elaine Mulhumani v. Muthumani.
There is in this connection a difference between what the Court coulddo and what the Court should do. The two things are different andshould be kept apart. This is an appropriate ease where the Court shouldhave set aside the sale, as by doing so the minor stand to benefit consider-ably. The District Court is the guardian of all minors and should seethat minors’ interests do not suffer by any act done under the Court’sauthority. The principle that the minors’ interests should be protectedin the case of sales of minors’ property was recognized and followed bothin Roman Law and in the Roman-Dutch Law.
The Courts of Ceylon are Courts of Equity as well as Courts of Law.That is to say in appropriate cases, well recognized principles of Equitywhich English Courts of Equity followed have also to be followed by theCourts of Ceylon.
What is called the practice of Opening Biddings, i.e., odering resaleof estates sold on the orders of Court when a higher price was offered afterthe sale, was a practice which has been followed by the English Courtsof Equity. See 1838 Edition 2, Burge’s Colonial Law, pp. 641 and 642.See also Lefroy v. Lefroy 1 ; Scott v. Nesbit 2 ; Brooks v. Snaith 3 ;Pearson v. Collet *.
These authorities show that opening of biddings was at one timecommon in English Courts of Equity and an advance on the purchaseprice was considered sufficient to allow the bids to be opened. There canbe no doubt that the English Courts of Equity would have ordered aresale of the property in the circumstances of this case if the matter hadcome up before them at a time when such practice of opening biddingswas followed. The fact that the Act for amending of Law of Auctions ofEstates of 1867 (30 and 31 Victoria (Chap. 4=8 ) ) put an end to opening ofbiddings cannot make a difference so far as the Courts of Ceylon areconcerned, because 30 and 31 Victoria (Chap. 48) does not form part ofthe Law of Ceylon.
No appearance for the first to eighth defendants, respondents.
N. E. Weerasooria, K.C., with H. W. Tambiah, H. W. Jayewardane,S. Kanagarayer, and W. D. Gunasekere, for the ninth defendant,respondent.—The reopening of biddings wets a practice, looked at withdisfavour by the English Courts even when such practice was in vogue.See Barlow v. Osborne 5. After the Act of 1867 (30 and 31 Victoria (Chap.48)) a sale could be set aside only on two grounds, i.e.,fraud and improperconduct in the management of sale. There is no need to resort to apractice which has been put an end to by Act of Parliament and whichhas been described as a “ pernicious practice ” by the Engish CourtSee In re Bartlet Newman v. Hook 6. See also Brown v. Oakshott 7.
Further, when one considers the conditions of sale under which theproperty in this case was sold, it is clearly wrong for the Court to set
1 (1827) 2 Russel's Reports 606 ; 38 E. R. 463.
* (1792) 3 Browne's Reports 474 ; 29 E. R. 651.
1814) 3 Vesey and B. 144 ; 35 E. R. 133.
(1824) 13 Price's Reports 213 at 215.
(1858) 6 H. L. Reports 556 at 566.
s (1880) L. R. 16, Ch. 561 at 568.
(1869) 38 L. J. Reports, Ch. 717.
WT.JEYEYVARDEXE A.C.J.—Elaine Muthumoni v. Muthumani.
483
aside the sale on the ground of price Condition (1) says the highestbidder shall be the purchaser. Condition (13) says that the sale is subjectto confirmation by the Court. It would not be right to construeCondition (1) which says that highest bidder shall be the purchaser tomean that the highest bidder shall not be the purchaser by reason ofCondition (13) which says that the sale is subject to confirmation by theCourt.
When the Court has fixed an upset price, as it has done in this case,and has said that the highest bidder should be the purchase and theproperty has been knocked down to the highest bidder at a price abovethe upsot price, the only possible view is that in such a case the Courthas no power to set aside the sale merely because a higher price has beenoffered after the sale. When the conditions are fulfilled the only groundson which a sale may be set aside are fraud and improper conduct in thoniangement of sale. The power to confirm sale reserved to Court is forthe purpose of seeing that the gale has been properly conducted. SeeSeaton on Decrees, Vol. 2 p. 1398 (1879 edn.).
The cases cited on behalf of the appellant do not assist the court as nodetails as to conditions, &c., are available. In the usual conditions ofsale there is no clause that the highest bidder shall be the purchaser.See Daniel’s Chancery Forms.
Our courts have not adopted the practice of reopening biddings. See]Vettesinghe v. Jayan 1 ; Annamalai Chettiar v. Ludovici 2.
H V. Per era, K.C., replied.
Cur. adv. vult.
•July 26, 1948. Wijeyewabdene A.C.J.—
This is an application to set a side a sale under the Entail and Settle-ment Ordinance. It comes up for hearing before a Bench of Three Judgeson a reference made by my brothers Jayetileke and Nagalingam undersection 48 of the Courts Ordinance.
Under a deed of gift executed in March, 1944, the petitioner was seizedand possessed of a small block of' land in Kandy and six tenementsstanding on it. The gift was subject to the condition that on thepetitioner’s death the property should devolve on her lawful heirs. Thepetitioner is married to the first respondent, a medical practitioner, andhas seven children—second to eighth respondents.
In November, 1946, the petitioner applied to Court, under section 5 ofOrdinance, for the sale of the property. She made her husband andchildren respondents to the petition—the first respondent being alsothe guardian ad litem of the children. In support of her application shestated that her father, who was a resident of Kandy, looked after theproperty until his death in 1946, and that after his death she and herhusband, being residents in Colombo, found it difficult to collect the rentsor attend to the minor repairs of the tenements, the need for which
1 {1891) 2 Ceylon Law Reports 33.* {1929) 31 N. L. R. 285.
484 , WIJEYBWATtDENE A.C.J.—Elaine Muthumani v. MtUhumani.
occurred frequently as the tenements were “ not built of the bestmaterials”. She made the following further averments in heraffidavit :—
“ I have had several very desirable offers for the purchase of thesetenements, due perhaps to the present favourable condition ofthe money market, which I am advised is not likely to continuemuch longer.”
“ I consider it a very favourable opportunity to dispose of the
property either by private treaty or by public auction as theCourt may be pleased to direct …”
This petition was duly inquired into by the District Judge of Kandyon December 12, 1946. The Counsel who appeared for the petitionerproduced a valuation report 9R1 from Mr. Morley Spaar, a well-knownvaluator in Kandy, who gave detailed reasons in that report for hisvaluation of the property at Rs. 13,800.
The District Judge allowed the application for sale but directed theproperty to be sold by public auction at the upset price of Rs. 13,800.
The property was put up for sale by public auction on March 15, 1947,and purchased for Rs. 13,950 by the ninth respondent to the presentpetition. The purchaser paid the auctioneer’s charges and 25% of thepurchase money on the date of sale, and deposited in court the balancepurchase money on April 11, 1947. The purchaser’s Proctor filed amotion in Court on April 23, moving for an order confirming the saleand directing the execution of a conveyance in favour of his purchaser,On the same day, but subsequent to the purchaser’s motion, thepetitioner applied to have the sale set aside.
In the affidavit filed by her in support of that application thepetitioner stated :—
“ I now find that I have offers of much larger sums and that thesale has not been properly advertised and that there have been materialirregularities in the advertising and conducting of the sale and other-wise there would have been many other bidders for this propertywhich is situate within the Municipality of Kandy.”
At the inquiry into that application, the Counsel for the petitionerstated that he was not supporting the application on the ground thatthere had been material irregularities in the advertising and conductingof the sale. The evidence of the auctioneer called by the ninth respondentshowed that the petitioner’s Counsel acted prudently in making thatsubmission, as the auctioneer has in the words of the District Judge,“ done all that is humanly possible to advertise the sale of the property ”.The District Judge had, therefore, to consider the application on theground set out in the affidavit—“ I now find that I have offers of muchlarger sums ”. It will be noted that the affidavit does not give anydetails as to these offers—the dates when the offers were made, theamounts offered or the persons who made the offers. The petitionerand her husband gave evidence at this inquiry on July 31, 1947. Therelevant parts of the petitioner’s evidence are as follows :—
“ Subsequent to that date (date of auction sale) I received otheroffers. About a week or two ago, I received some offers for this land.
W1JEYEWARDENE A.C.J.—Elaine Muthumani v. Muthumani.
485
I received an offer of Rs. 20,000 from my husband, the first respondent.Before that too I received some other offers. Those offers were also forRs. 20,000. I do not know the names of the people who made thoseoffers. I received letters containing those offers.”
(These letters were not produced).
“ The first offer I received for this land was about two or threeweeks ago. I am not sure of the date. That person made the offerto my brother-in-law, Mr. de Livera. A man came to my house andoffered Rs. 20,000 to me. That was after Mr. de Livera had communi-cated to me the offer he had received …. The offer by theman who came to my house of Rs. 20,000 was between the offer thatMr. de Livera had received and my husband’s offer. My husband’soffer was about a week ago. The person who came to my house andmade the offer did not want me to mention his name. I do not wanteven to give the race of the person who made that offer to me. ASinhalese gentleman and a Mohamedan gentleman came to my houseand offered. I do not know if they were brokers or purchasers. I now say that two persons came and offered to buy thisproperty after the offer was made to me by Mr. de Livera. I receivedall these offers after I filed papers to set aside the sale.”
The petitioner’s husband gave the following evidence :—
“ A few weeks ago my wife received the offers. The offers werereceived only about two or three weeks ago. A man called Samara-koon made one offer. The offer was Rs. 20,000. He saw Mrs. deLivera and made the offer. Mrs. de Livera is my wife’s sister…. Our Proctor, Mr. Kolugala, said that Mr. Samarakoon
refused to come to Court and give evidence. One or two days ago agentleman came to see me and said he was a relative of one Mr. Ismail,and offered Rs. 20,000. It was a Muslim gentleman who came. Ido not know his name. The offer that the Muslim gentleman madewas Rs. 17,500…. I am prepared to buy the property now
for Rs. 20,000 and I am prepared to pay the costs incurred by thepurchaser at the sale. I am prepared to deposit the money in Courtimmediately. I am offering this sum of Rs. 20,000 in the interests ofthe minors and I may, if I get a higher price, sell it for a higher price. I do not know whether Samarakoon wanted to- buy forsomebody else or buy for himself.”
That evidence shows clearly that the petitioner made an untruestatement in her affidavit when she said, “ I now find that I have offers ofmuch larger sums ”, All the offers about which she and her husbandspoke at the inquiry have been made nearly three months after she sworethe affidavit. None of those who made those higher offers, except herhusband, gave evidence. The evidence with regard to those otheroffers is so vague that the petitioner cannot justly complain if a Judgeregards her evidence and the evidence of her husband regarding thoseoffers just as untrue as the statement made by her in her affidavit. Weare then left only with the offer of Rs. 20,000 made by the petitioner’shusband, the first respondent, a week before the inquiry. I am unable todisagree with the District Judge when he says that he does not consider it
486
WIJT3YE WARDE NE A.C.J.—Elaine Muihumani v. Muthumani.
as “ a genuine one The first respondent was present in Court whenthe application was made for the sale in December, 1946, and thevaluation report 9R1 was produced. The first respondent who is amedical practitioner would have known what the upset price was.Neither he nor the petitioner took the trouble to be present at the sale,presumably because they felt that their interests and their children’sinterests were amply protected by the Court forbidding a sale of the 'property below Rs. 13,800. If they thought that the property was worthabout Rs. 20,000, and if the first respondent was willing to buy it at thatprice, he would have been present at the sale. There is another ground forquestioning the genuineness of the first respondent’s offer. Theapplication for sale was made on the ground that it was inconvenientfor the petitioner to look after the property and collect rents. The firstrespondent, who is now so solicitous about his minor children’s interests,could very well have undertaken to look after this property himself orby an agent if it was possible for him to do so. The only inference I coulddraw is that it was not convenient for him to look after the. property.And yet he now wishes to buy for Rs. 20,000 the property for which hethought the valuation of Rs. 13,800 quite reasonable.
The Valuator, Mr. Morley Spaar, gave evidence for the ninth respondent.There is not the slightest suggestion made against his integrity or capacityas a Valuator. He stated that in his opinion the price of the property hadnot risen since he issued the report.
It is clear from the evidence given by the petitioner and her husbandthat at the time the petitioner presented the application she had receivedno higher offer from any source. She wanted to get the sale set asideas she did not want the sale to go through. She thought she could getthe sale set aside by alleging irregularity in conducting the sale. Whenshe found she would fail on that ground, she locked about for offers of ahigher price shortly before the date of inquiry. Not finding any suchoffers, she was prepared to state at the inquiry that she received an offerof Rs. 20,000 from her husband a week before the date of inquiry and calledhim as a witness to support her. The husband did not bring the moneyinto Court. However, when he thought that it would help his wife’sapplication if he said that he was willing to bring the purchase moneyinto Court, he was not unprepared to make that statement undercross-examination.
The District Judge has considered the evidence carefully and cometo the conclusion that none of the alleged subsequent offers weregenuine. On the material before him, I do not think it could be saidthat he should not have come to that conclusion. In such circumstancesa Court of Appeal would not be prepared to interfere with a findingof a Judge of first instance. Moreover, in any event, the rights of theparties must be determined as at the date of the application to set asidethe sale (vide Silva v. Nona Hamine)On that date there were no higheroffers at all.
I shall consider now the argument that was addressed to us that,in any event, the Court could have refused to confirm the sale in viewof the 13th clause in the Conditions of Sale which stated “ the sale to besubject to confirmation by Court ”. I am not prepared to assent to
111906) 10 N. L. R. 44.
WIJEYEYVARDENE A.C.J.—Blaine JUnthumani v. MtUhumani.
487
that proposition. A District Judge cannot act arbitrarily and tell thepurchaser, “ It is true that you have observed all the conditions of saleand that you have given the highest bid above the upset price, but Iwill not confirm the sale.” The case of Annamalai Ghetty v. Ludovici 1is a clear authority against the appellant on that point. I am of opinionthat under clause 13 of the Conditions of Sale the District Judge couldhave refused to confirm the sale only on such grounds as fraud andimproper conduct in the management of the sale.
As the matter was argued at some length, I shall deal with the appel-lant’s contention that the District Judge should have refused to confirmthe sale, if he was satisfied that the petitioner received genuine higheroffers after the auction sale. He referred us to some early English cases.The cases cited by him were Scott v. Nesbit2 ; Brooks v. Snuith3;Pearson el al. v. CoUett et al* and Lefroy v. Lejroy5. These cases show,that in those days Courts of Equity re-opened the biddings when a higherbid was received at any time before the absolute confirmation of theMaster’s “ report of a purchaser ”. The Court re-opened the biddings“ almost as of course, but, certainly, as wholly in the discretion of theCourt ”. The terms on which the biddings have been opened have been“ very various ” according to the circumstances of each case (vide147 English Reports 970).
It will be noted that all these cases have been decided before the end ofLord Eldon’s Chancellorship, by which time Equity had become a systemof rules as well settled as ever the Common Law had been, and it hadbecome incapable of judicial alteration except by the application of oldrules to new subjects or to fresh circumstances (vide 13 Halsbury’s Lawsof England, para 2). That practice of the Courts of Equity relating to theopening of biddings was swept away by the Sale of Land by Auction Act,1867 (30 and 31 Victoria (Chapter 48)). Section 7 of that Act enacted :—
“ That the Practice of opening the Biddings on any sale by Auctionof land under or by virtue of any Order of the High Court of Chanceryshall, from and after the time appointed by the commencement of thisAct, be discontinued, and the highest bona fide Bidder at such Sale,provided he shall have bid a Sum equal to or higher than the reservedPrice (if any), shall be declared and allowed the Purchaser, unless theCourt or Judge shall, on the Ground of Fraud or improper Conductin the management of the Sale, upon the Application of any Personinterested in the Land (such Application to be made to the Court orJudge before the Chief Clerk’s Certificate of the result of the sale shallhave become binding), either open the biddings, holding such bidderbound by his bidding, or discharge him from being the purchaser, andorder the Land to be resold upon such terms as to Costs or otherwise asthe Court or Judge shall think fit.”
The Judicature Acts of 1873 and 1875 effected a fusion of law andequity and laid down certain rules either varying or affirming the previousrules in equity or at law as to specific matters, and provided generally that
1 (1929) 31 N. L. R. 285.
(1792) 3 Braion Chancery Cases 475 (29 English Reports 651).
(1814) 3 Vesey <b Beames 144 (35 English Reports 433).
(1824) 13 Price 213 (147 English Reports 968).
i (1827) 2 Russell 606 (38 English Reports 463).
488
WIJEYEWARDENE A.C.J.—Elaine Muthumani v. Muthumani.
in all other matters in which there was a conflict between the rules ofequity and rules of the Common Law, the rules of equity should prevail.But relief on equitable grounds was obtainable only in cases where itwould have been granted by a Court of Equity before the Judicature Act ’of 1873 (vide 13 Halsbury’s Laws of England, paras 73 and 74).
I cannot see how our courts could adopt today a chancery practice whichcame into existence even before the Chancellorship of Lord Eldon andwhich was discontinued in Englaxlfl nearly five years before the JudicatureAct of 1873, and has been characterised as a “ pernicious practice ”(vide In re Bartlett Newman v. Hoolc1). Our courts, no doubt, decide certainmatters according to the Law of England which has been enriched by theprinciples of equity. But it has to be remembered that our courts arecourts of law created by the Charter of 1833 and cannot claim to havethe wide and vague powers which the Chancellors of the early daysexercised on the ground of conscience.
Moreover, so far as one could gather from the few reported local caseson the subject, our courts have not adopted at any time the practice ofre-opening bids (vide Wettesinghe v. Jayan2 and Annamalai Chetty v.Ludovici [supra)). In the latter case the property of an insolvent estatewas put up for sale by auction on conditions of sale a clause of whichprovided, “ on payment of the remainder of the purchase money by thepurchaser and the confirmation of sale by Court, the vendor shall executea conveyance ….”
The property was purchased by the appellant who was the highestbidder at the sale. After the close of the auction sale, an offer was madeby a third party to purchase the property at a price “ very considerablyhigher” than the bid of the appellant. Relying on the clause referring tothe need for confirmation by court, the District Judge refused to confirmthe sale to the appellant. Fisher C.J. (Drieberg J. agreeing) said :—
“ The mere fact that a fresh offer of an enhanced sum is madeafter the close of the sale by auction is not of itself enough to justifythe court in refusing to confirm the sale, and I think, therefore, that thecourt was not entitled to refuse to confirm the sale on that ground. ’'The appellant’s counsel sought to support his argument by saying thatthe Court would be within its rights in refusing to confirm the sale, if b'such refusal it would benefit the minors. It is no doubt, necessary thatthe Courts should safeguard the interests of minors, but it is equallynecessary that Courts should not act in an arbitrary manner. If a Courtsets aside a sale on grounds not recognised by law, the faith of thegeneral public in sales sanctioned by Court will be irretrievably shakenand it will become increasingly difficult to' attract bidders to such sales.
I would affirm the judgment of the District Judge and dismiss theappeal with costs.
After I concluded writing this judgment my attention was drawn byTayetileke J. to Ramanathan v. Alagacone3 (vide S. C. Minutes ofSeptember 25, 1947) in which the District Judge refused to confirm a saleby auction as he thought the price realised was inadequate. The District
1 (1890) 16 Chancery Division 561.* (1891) 2 Ceylon Law Reports 33.
* 18 D. C. (Inly.) Jaffna 144.
■TA VRTTT.KJCF! S.P-J.—Elaine Mulh-umani v. Muthumani.
489
Judge purported to act in the interests of some minors and justified hisorder on the ground that he had reserved to himself “ a discretion to con-firm or refuse ”, when he made his order sanctioning the sale. Affirmingthe decision of the District Judge, Howard C. J. and Windham J. said :—
“ One of the conditions of the sale was that the Judge, who didnot put a reserve price upon the property, retained an absolute dis-cretion as to whether he would confirm it. In these circumstancesintending purchasers were warned that the sale might not be confirmed.Not without some hesitation, we have come to the conclusion that theDistrict Judge has not acted arbitrarily in setting aside the sale. Inthese circumstances the appeal is dismissed with costs, but at the sametime we direct that the Judge should come to a conclusion himself as to, what is the proper price which should be given for this property andgive the appellant the first opportunity of purchasing the propertyat that price.”
It will be seen that in that case no reserve price was fixed. Thesignificance of a reserve price was referred to by Lord Cranworth L. G.in Edward Barlcw v. Edward Com Osborne et al.1. He said :—•
“ Even if the original practice was right, of the Court having thispower of opening the biddings for the purpose of preventing sales at anundervalue, it does seem rather unreasonable that the vendor shouldbe, as it were, protected at both ends, not only by the reserved bidding,but by the power of putting an end to the purchase after it had beenmade; and it does appear to me to be a very useful suggestion, whethera general order might not be made, either that there should always bea reserved bidding, or, if not, that whenever there is a reserved bidding,then, upon the mere ground of advance bof price, no bidding shall ever beafterwards opened. That, however, though it may be very useful toenact hereafter, is not the law at present.”
Moreover, the direction given by this Court to the District Judge inRamanathan v. Alagaeone {supra) shows that this Court did not want theDistrict Judge to receive bids over and above what the District Judgethought was the “proper price” and then give the property to thehighest bidder but to offer the property to the auction purchaser at the“proper price ” fixed by the Judge. That decision, when closely examined,is really an authority for the proposition that, where an upset price wasfixed by Court and the property was sold by auction at or above theupset price, the Court should not set aside the sale even though the salewas subject to confirmation by Court and minors were interested ingetting the highest possible price for the property.
Nagalikgam J.—I agree.
Jayktileke S. P. J.—
This appeal relates to a sale held under- the Entail and SettlementOrdinance, Chapter 54.
By deed No. 4,595 dated March 6, 1944, one Stephen de Silva, the fatherof the petitioner, gifted to the petitioner six tenements bearing assessment
1 (1858) 6 House of Lords 558 (10 English Reports 1412).
37 – N-LJI. Vol – xlix
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■TAYRTTT.EKB S.P.J.—Elaine Muthumani v. Muthumani.
Nos. 53, 55, 57, 59, 61 and 63, situate at Mahaiyawa, in Kandy, subjectto the condition that, upon her death, the said tenements should devolveon her lawful heirs.
The petitioner is married to the first respondent, who is a doctorpractising in Colombo, and has six children by the marriage, 2nd, 3rd, 4th,5th, 6th, 7th and 8th respondents, all of whom are minors of the ages of17, 16, 13, 8, -4 and 1J years respectively.
On July 15, 1946, the petitioner made an application to the DistrictCourt of Kandy, under section 4 of the Entail and Settlement Ordinance,for leave to sell the said tenements on two grounds : (1) that they neededconstant repairs, and (2) that she found it difficult to recover the rent asshe was residing in Colombo. On November 18, 1946, she amended herapplication by making her husband and her children respondents to theapplication. She submitted a valuation report from one Mr. Spaar, aretired Superintendent of Minor Roads, in which he valued the tenementsat Rs. 13,800. The report is by no means a satisfactory one. Mr. Spaarsays that the annual value of the premises is Rs. 170, the rent is Rs. 120a month, and that the premises are worth Rs. 13,800. The basis ofthe valuation is not given in the report.
On December 12,1946, the District Judge made the following order :—“ The application is allowed. Let the premises described in theschedule be sold by public auction at the upset price of Rs. 13,800.The purchaser will get the property free from the conditions containedin deed of gift No. 4,595 of March 6, 1944, and the conditions containedin the deed of gift will attach to the money that is to be brought intoCourt on March 12, 1947.”
On Janurary 28, 1947, the District Judge issued a commission to K.Edmund Perera, returnable on March 12, 1947, which was extended lateto March 31, 1947, to carry out the sale on certain conditions of saleapproved by him.
The sale was held at the spot on March 17, 1947. Neither the petitionenor the 1st respondent was present at the sale. There were only twobidders and the 9th respondent purchased the premises for Rs. 13,950.
On April 23, 1947, the petitioner filed a petition and affidavit andmoved that the sale be not confirmed as she had received higher offerssince the sale for the said premises.
At the inquiry, the petitioner gave evidence that she received oneoffer of Rs. 20,000 through her brother-in-law, Mr. de Livera, and anotherof Rs. 20,000 personally from two persons. She also said that the 1strespondent told her that he was prepared to buy the property forRs. 20,000. The 1st respondent, too, gave evidence. He supported theevidence of the petitioner that there were two offers of Rs. 20,000 each, andhe stated that he was prepared to deposit Rs. 20,000 in Court, and to payany expenses incurred by the 9th respondent in connection with hispurchase.
The learned District Judge rejected the petitioner’s evidence withregard to the alleged offers on the ground that there was a conflict between;her evidence and her affidavit as to the dates of the offers. He has
JAY33TTLEKE SJJ.—Elaine Muthumani v. Muthumani.
491
clearly made a mistake on this point, for he has lost sight of the factthat the petitioner stated that she could not be certain about the dates.He was also of opinion that the offer made by the 1st respondent was nota genuine one. He, accordingly, dismissed the application with costs.I examined the proceedings in the case very carefully to see whether therewere any materials which supported the learned District Judge’sobservation.
“ I do not think that the offer of the 1st respondent is a genuineone.”
but I could not find any. Not a single question seems to have beenput to the 1st respondent either by the 9th respondent or by the Courtsuggesting that his offer was not a genuine one. The surest way of testingwhether or not the 1st respondent’s offer was a genuine one would have beento order him to deposit the amount in Court, but that was not done. Inthese circumstances I do not think that the observation made by thelearned District Judge was either fair or proper. I may add that, atthe argument before us, Mr. Perera offered to deposit in Court immediatelyIts. 20,000 plus the expenses of the 9th respondent, and further to payinto Court for the benefit of the minors any sum in excess of Rs. 20,000which the 1st respondent may realise by the resale of the premises.
Two questions were raised at the argument before us.
Whether the Court had the power to refuse to confirm the sale.
If so, whether, in the circumstances of the case, the Court should
have accepted the 1st respondent’s offer and refused to confirm
the sale.
Section 4 of the Entail and Settlement Ordinance gives the Court thepower ot order entailed property to be sold upon such terms and subjectto such conditions as the Court shall deem expedient. In re theapplication of Misso 1 Shaw J. said :—
“ I think that an order should be made if it is reasonable from thepoint of view of the fiduciary that it should be sold and there is noprospect of loss to the fidei commissary.”
Section 4 vests in the Court the power to give directions for the conduct ofthe sale, but it is silent as to the nature of the directions the Court shouldgive. The Ordinance leaves the whole conduct of the sale in the handsof the Court. It follows, therefore, that the directions which the Courtgives are its own, unlike sales in execution, to which the provisions ofsection 225 of the Civil Procedure Code and those sections which follow areapplicable. The particulars of the sale and the conditions of sale areusually prepared by the petitioner’s proctor with the aid, where necessary,of the intended commissioner, and submitted to the Court for itsapproval. In settling the particulars and conditions of sale the Courtlooks not only to the interests of the parties to the application, but alsoto the interests of the person who may happen to be the purchaser at thesale. The conditions of sale constitute the terms upon which the propertyis sold. Where a property is sold by auction under written conditions of
1 (1920) 22 N. L. R. 334.
492
JAYETXLEKE S.P.J.—Elaine Muthumani v. Mulhumani.
sale, such conditions, when signed, form the contract between thepurchaser and the seller. In the present case there were thirteen writtenconditions of sale of which those that are relevant to the decision of theappeal are :—
The highest bidder shall be the purchaser ….
Immediately on the fall of the hammer, the purchaser shall pay
into the hands of the auctioneer the full amount of the purchasemoney where it does not exceed the sum of Rs. 100, and,where it is above that, the purchaser shall pay to the auctioneera deposit of 25% in part payment of the purchase money andshall sign an agreement for the payment of the remainder
5. On the payment of the remainder of the purchase money by thepurchaser and the confirmation of sale by the Court, the vendor. shall execute a conveyance of the said property ….
13. Sale to be subject to confirmation by Court.
There was no condition that the sale would be subject to a reserved orupset price. The agreement which the respondent signed after thesale contains the following clause :—
“ I have this day purchased at public auction the said premisesabove described upon and subject to the conditions thereto sub-joined.”
Where a land is sold by auction on the order of the Court, it has alwaysbeen the practice for the Court to confirm the sale if it is in order. Thatis the confirmation that is referred to in condition five. In addition tocondition five there is, in this case, a special condition that the sale L- to besubject to confirmation by Court. What is the effect of the words“ subject to ” ? Mr. Perera contended that they introduce a conditionor proviso which makes the sale conditional on the Court confirming it.He contended further that no contract is concluded when the property isknocked down to the highest bidder as the sale is, by its conditions, asale subject to confirmation by the Court. I think that these contentionsare sound. In McManus v. Fortescue1 Collins M. R. said :—
“ The sale took place under conditions of which the second is thateach lot would be offered subject to a reserve price, and the fact liesat the root of the discussion that every bid is made subject to suchcondition. What then is the meaning in such a case of the fall of thehammer ? Under the authorities that have been cited, it appears thatit amounts to an acceptance of the offer of the bidder, but that offerwas, as I have said, conditional on the reserve price being reached, anda conditional offer cannot be treated as a general and unconditionalone. The condition cannot be lost sight of, and a conditionalacceptance by the auctioneer of a conditional offer cannot amountto a binding contract to sell, unless some custom is proved thatit shall be so treated, and of that there was no evidence. No authorityhas been cited to us that the fall of the hammer could do away with acondition especially stipulated for by the conditions of sale.”
1 (1907) 2 K. B. D. 1.
JAYETILEKE S.P.J.—Elaine Muthumani 1>. Muthumani.
493
and Fletcher Moulton L. J. said :—
“ I further wish to express my entire agreement with the viewexpressed by the Master of the Rolls that in a sale by auction with noticethat it is subject to a reserve every offer by the auctioneer, and everybid, including the final one, and the acceptance of that final bid indi-cated by the fall of the hammer, is conditional. The public is informedby the fact that the sale is subject to a reserve, that the auctioneer hasagreed to sell for the amount which the highest bidder is prepared togive only in case that amount is equal to or higher than the reserve.”
In an unreported case, In re the Estate of Alagakone, deceasedBamanathan v. Alagakone1, the respondent, who was.the- administratrix,of the estate, applied to the Court for permission to sell a land by publicauction for the payment of testamentary expenses and debts. Theapplication was allowed subject to the condition that the property shouldbe sold at the upset price of Rs. 19,000. The Commissioner to whomthe commission was issued returned the commission to Court' withthe report that there were no bidders at the sale. Thereupon, therespondent made a further application to the Court for leave to sell theproperty by public auction without reserve. The Court allowed theapplication but reserved to itself the right to confirm the sale or not atits discretion. At the second sale the property was knocked down tothe appellant for Rs. 11,100. After the sale the appellant moved to havethe sale confirmed and the respondent moved to have it set aside. Atthe inquiry the respondent called one Mr. Sanders who said that he wasprepared to buy the property for Rs. 15,000. The Court consideredthat, in the interests of the heirs of the deceased, some of whom wereminors, it should not confirm the sale and made order accordingly.
The appeal came up for argument on September 2,1947, before
Howard C.J. and Windham J. who remitted the case to the DistrictJudge for his report on the following points :—
What .exactly he had in his mind when he said :—“ I do not think
that I am acting arbitrarily in directing the sale to be set aside. I am onlydoing what I had in mind when I made the order when I reserved a discre-tion in me to confirm or refuse and that the sale was not to be consideredfinal till I confirm the sale.”,
Does it mean that he reserved a discretion in himself to confirmor refuse to confirm the sale in the event of his considering that a higherprice should or might have been. obtained, or had he in mind someparticular price that he considered the property should fetch at the sale ?
In the event of such a price not being obtained, was it in his mindthat he would then reiuse to confirm the sale ?
The District Judge sent his report in which he stated as follows :—
“ Counsel for the purchaser urged that, at a sale by public auctionat the instance of a private party, if the price realized was consideredby the party inadequate or for any other reason he may arbitrarilyrefuse to confirm the sale and execute a deed of transfer ; hut this was
1 IS D. C. (Int.) Jaffna 144, S. C. M. September 25, 1947.
404
JAYETIL.EJCE S.P.J.—Elaine MtUhumani v. Muthumanx.
a judicial sale and the Court could not arbitrarily refuse to confirm thesale ; a judicial discretion had to be exercised and in the exerciseof that discretion inadequacy of price -would not be a factor to beconsidered. I stated in my judgment, by way of reply, that I did notconsider my order to set aside the sale the arbitrary act of a judgewhen called upon to confirm because I had reserved already a rightin me to confirm or to refuse according to my discretion as minors’interests are my special care. What I intended to convey wasthat if parties were all majors I would have no concern, and inconfirming or refusing to confirm I would be exercising a judicialdiscretion and 1 should not act arbitrarily. But section 69 of the CourtsOrdinance has vested the care of minors’ property in me, and it is myduty to see that their interests did not suffer. Therefore, quite apartfrom any jurisdiction of a Judge to confirm a sale or not, 1 had ingranting sanction to sell reserved in me a discretion to confirm orrefuse. This reservation is expressed in the journal entry of December10, 1945, and was made a condition of sale. What I had in mindwas that I should confirm or refuse to confirm according to whetherin my opinion the price fetched was a reasonably good price. My ideawas to refuse to confirm if I thought that a better price should ormight have been obtained. I did not have in mind a particularprice.”
The case came up for further argument on September 25, 1947, beforethe same bench and Howard C.J. delivered the following judgment :—
“ The only question to be decided in this case is whether the DistrictJudge in setting aside the sale of this property was acting arbitrarily.One of the conditions of the sale was that the Judge, who did not puta reserve price upon the property, retained an absolute discretion asto whether he would confirm it. In these circumstances intendingpurchasers were warned that the sale might not be confirmed. Notwithout some hesitation we have come to the conclusion that theDistrict Judge has not acted arbitrarily in setting aside the sale. Inthese circumstances the appeal is dismissed with costs, but at thesame time we direct that the Judge should come to a conclusion him-self as to what is the proper price which should be given for thisproperty and give the appellant the first opportunity of purchasingthe property at that price.”
So far as I could follow the reading of this judgment, the learned ChiefJustice has not expressed anything in the nature of disapproval of thedecision of the trial Judge that he had the power to refuse to confirm thesale. I think this decision is an authority both on the main point as wellas on the minor point raised in this case. The judgment of the learnedChief Justice implies that a condition like condition thirteen must notbe considered as giving an arbitrary power to the District Jusge to refuseto confirm the sale, and that the District Judge will exercise that poweronly if there is some reasonable ground for doing so. This view has thesupport of the judgment of Collins M. R. in re Jackson v. Hadden'sContract. 1
(1906) L. R. 1 Gh. Div. 412.
JAYETH.E.K-E S.P.J.—Elaine Mulhumani v. Mulhumani.
495
The judgments of this Court in Annarnalai Chetty v. Ludovici1 andWettesinghe v. Jay an2 are not in point. The conditions of sale underwhich the sales were held in those cases did not have a condition that thesales would he subject to confirmation by Court. Mr. Perera concededthat, but for condition thirteen, the Court would be obliged to confirmthe sale in this case.
Mr. Weerasooria relied very strongly on condition one. He arguedthat the sale was complete on the fall of the hammer, and that conditionthirteen was intended to give the Court the power to refuse to confirmthe sale only in such cases where the Commissioner fails to followthe directions given by it. There does not seem to be any reason tolimit the scope of condition thirteen to such cases. It is verywide in its terms and the words used are very clear. When thewords used are clear it is not permissible for the Court to admitparol evidence to explain the meaning of the words. Nor is it pemis-sible for the Court to depart from the ordinary and plain meaning ofthe words used on the mere supposition that the intention of the drafts-man was otherwise than indicated by the plain and ordinary interpreta-tion of the words used. I do not think it would be necessary to makeany provision to meet a case of the kind referred to by Mr. Weerasooriabecause the Court has the inherent power to refuse to confirm a salewhen the Commissioner fails to carry out its directions. (See Feron v.Ismail Lebbe Marikar 3.)
If Mr. Weerasooria’s contention is sound it will not be possible for anowner to put a property for sale by public auction subject to confirma-tion by him. The answer to Mr. Weera.sooria’s contention is to be foundin the observations of Collins M.R. quoted above. For the reasonsgiven by me, I am of opinion that condition thirteen gives the Court thepower to refuse to confirm the sale.
With regard to the second question, it is important to bear in mindthat the difference between the highest bid and the 1st respondent’soffer is Rs. 6,050 and that some of the parties who stand to benefit bythe acceptance of the 1st respondent’s offer are minors. Under theRoman-Dutch law the guardian of a minor is empowered, under certaincircumstances, to alienate the property of his ward, but such alienationcannot be effected without the decree of a Court of competentjurisdiction. Grotius4 says :—
“ Immovable property, also rents and canons accruing to the wardsmay not be sold or encumbered by the guardian, even with theknowledge of the Weesakamer, but the same must be effected. underdirection of the Court of Holland or of the ordinary Judge, where suchis the practice. The Court and the Judge, however, may not grantpermission until after due inquiry (in which case it is the practiceto hear the nearest relations of the four quarters) it shall be foundnecessary for the discharge of any debts or the support of the minorchildren or otherwise manifestly for the ward’s advantage.”
(1939) 31 N. L. R. 283.
(1891) 2 G. L. Rep. 33.
(1930) 31 N. L. R. 319.
Herbert's Translation 1. 8. 6.
496
J*AYETILJ3JKLE S.P.J.—Elaine Muthumani v. Muthumani.
Vanderkeesel1, Van Leeuwea,s and Voet3 are of the same opinion.Iii Hitter v. Corbet * Cayley C.J. said :—
“ I think that by virtue of the rules and orders relating to thetestamentary jurisdiction of District Courts the jurisdiction of the oldWeesakamer is, for many purposes, now vested in the District Court,and that the District Court holds also in these matters the same positionas the ‘ ordinary Judge ’ mentioned by Grotius and Van Leeuwen.”
•The rules and orders referred to by the learned Chief Justice wererepealed and substantially re-enacted in section 69 of the Courts Ordinance,Chapter 6.
In Perera v. Perera 5 Middleton J. said :—-
“ Now the theory which underlies the objection of the Roman Lawto alienation by a guardian of the immovable property of his wardwithout permission was, I take it, that the minor was not to bedeprived of his hereditary lands except on the grounds of the mostabsolute necessity, those lands being indispensable for the properupholding of the rank and position in life of the minor ; and it wasdeemed, I have no doubt, that a disinterested authority should approvethe guardian’s opinion, as to the existence of such authority or restrainhis tendency to fraud on the minor.”
In Mustapha Lebbe v. Martinus 6 Layard C.J. said :—
“ The appellant’s Counsel contended that the mere power given bythe deed to the guardian to sell, if she sees it necessary and expedientfor the advantage and benefit of the minors, dispenses with the sanctionof the District Court. Notwithstanding the insertion of that powerin the gift to the minors it appears to me just as necessary for the Courtto see that the price is a fair one and that the sale is manifestly for theadvantage of the wards.”
These authorities show that, when an application is made by a guardianto sell any property belonging to a minor, it is the duty of the Court toprotect the interests of the minor. In this case the Court has protectedthe interests of the minors by providing in its order that the propertyshould be sold at the upset price of Rs. 13,800, and by making furtherprovision in the conditions of sale that the sale should be subject toconfirmation by it.
In England, before the Sale of Land by Auction Act, 18677, in thecase of sales on the orders of Court, the practice of opening the biddingsafter the estate had been sold was in vogue ; that is to say, the Courtallowed a person to offer a higher price than that at which the propertyhad been sold and, upon such offer being made, directed a resale of theproperty. In Lefroy v. Lefroy8 at a sale held under a decree oneAndrews bought part of the property for £12,010. One Smithers movedto open the biddings by offering an advance of £300. The Lord
} Thes. 130, 131.5 (1902) 3 Browne's Reports ISO.
Com. p. 96.6 (1903) 6 N. L. R. 364.
» '27.9.6.7 30 and 31 Viet. c. 48.
(1876) 3 S, C. C. 46.8 (1827) 38 E. R. 463.
J A YETI I. EKE S.P.J.—Elaine Muthumani v. MiUhumani.
497
Chancellor indicated that he was prepared to open the biddings if anadvance of £500 was offered. Smithers raised his offer to £500 and theorder was made. In the course of his judgment the Lord Chancellorsaid :—
“ What the Court looks to is the benefit of the parties interested inthe produce of the sale, and the additional sum which is offered beyondthe price already obtained ; and more particularly in the case of infants,creditors, &c., the Court is in the habit of trying how much it canmake of the estate for the persons interested. ”
In Brooks v. Snaith1 at a sale under a decree the highest bid was£10,000. A motion was made after the sale to open'the bidding, theadvance offered being £500. The Lord Chancellor allowed the motion.
Burge 2 says that an advance of 10% used generally to be consideredsufficient in the English Courts to open the biddings.
In Barlow v. Osborne 3 the Lord Chancellor said that the practice ofopening the biddings led to great inconvenience, but at the same time hecould not be affected by it. He thought that the matter may well be onefor the attention of the Legislature in order to remedy that inconvenience.In 1867 the Sale of Land by Auction Act was enacted in order to put astop to the existing practice. It provided that parties would be entitledto open the biddings after a sale by auction under the Court only on theground of fraud or improper conduct in the management of the sale.There is no such provision in Ceylon. There can be no question that,if this case came up for consideration before the English Courts beforethe passing of the Sale of Land by Auction Act, 1867, the 1st respondent’soffer would have been accepted without hesitation. To my mind theredoes not seem to be any reason why that offer should not be acceptedby us. In Kapadiya v. Mohamed 4 Shaw J. said that the Courts of thisColony are Courts of Equity as well as of law, and in Dodwell & Co., Lid.v. John 5 Viscount Haldane said that, under the principles which havealways obtained in Ceylon, Law and Equity have always beenadministered by the same Courts.
The amount offered by the 1st respondent is considerably higher thanthe amount of the 9th respondent’s bid, and it will manifestly be for theadvantage of the minors that the offer should be accepted. It wasurged that the adjoining property, which belonged to the petitioner’ssister and which was valued by Mr. Spaar at Rs. 16,000, was put up forsale on the same day, and that there were no bidders for it, and that laterit was sold by private treaty with the leave of Court for Rs. 16,000.There are no materials before us on which we can say whether or notthat property was more valuable than the petitioner’s property and whythat property fetched only Rs. 16,000. From the mere fact that thatproperty fetched only Rs. 16,000 it does not follow that the petitioner’sproperty is not worth Rs. 20,000. There is, however, the undisputed factthat the 1st respondent is prepard to pay Rs. 20,000 for the petitioner’s
1 35 E. B. 433.* (1858) 6 H. L. 566.
* Vol. 2 1st Ed. p. 642.« (1918) 20 N. L. B. 315.
5 (1918) 20 N. L. B. 206.
498
Edirisinghe v. Rajendra.
property. It seems a pity that the learned District Judge has notgiven his mind to the question whether or not the 1st respondent’s offershould be accepted on the basis that it is a genuine one. I think it isundesirable that we should be invited to decide a question which wasessentially one for the trial Judge to decide. But, however that may be,as the answer to the question does not depend on the credibility ofwitnesses, I think we are free to decide it ourselves. Having given my bestconsideration to the facts of the case, I have come to the conclusionthat it is just and reasonable that the 1st respondent’s offer should beaccepted. I do not think that it is open to the 9th respondent to complainbecause he knew that his bid was accepted by the Commissioner subjectto the sale being confirmed by the Court. Relying on the followingpassage in the judgment of Cayley C.J. in Wettasinghe v. Jayan {supra).
“ I think it is most dangerous to discredit public sales like thesebecause one of the interested parties thinks that the property wassold for less than its value. ”
Mr. Weerasooria contended that we should not interfere with the ordermade by the learned District Judge. I find myself in entire agreementwith the observation made by the learned Chief Justice, but I do notthink it is applicable to the facts of this ease. As I said before, the condi-tions of sale under which the sale was held in that case did not providethat the sale would be subject to confirmation by Court. Mr. Weerasooriaintimated to us at the argument that his client was not prepared toadvance his bid to Rs. 20,000. The order of the learned District Judgeis, in my opinion, wrong. I would, accordingly, set it aside and directhim to accept the 1st respondent’s offer. The 9th respondent will paythe costs of the petitioner in both Courts.
Appeal dismissed.