HARAMANIS v. HARAMANIS

065-NLR-NLR-V-10-HARAMANIS-v.-HARAMANIS.pdf


I 882)
1907.
October! 0.
[Full Bench.]
Present: The Hon. Sir Joseph T. Hutchinson, Chief Justice,
Mr. Justice Middleton, and Mr. Justice Wood Renton.
HARAMANIS v. HARAMANIS.
D. C., Negombo, 6,525.#
Action under s. 247, Civil Procedure Code—Question of fraudulent aliena-ti<m—Adding of judgment-debtor as a party—Paulian action—Civil Procedure Code, ss. 14, IS, and 243-247.
Held (by Hutchinson C.J. and MiddletonJ., disserUrentc
Wood Renton J.), that in an action under section 247 of the CivilProcedure Code, where the claimant bases hia title to the propertyseized on a deed of transfer executed by the judgment-debtor, it iscompetentfor the judgment-creditor to claim a declaration that
such deed *was executed* by the judgment-debtor with a view todefraud creditors, and is therefore null and void.
In eucha case the grantorofthe deed (judgment-debtor)should4
be joined as a party to the' action, and where he is not alreadyjoined, theCourt may add himasa party, under section 18of the
Civil Procedure Code.c
1 ussen hebbe v. Daniel Dice1 and Fernando v. Joodt2 over-ruled.
. * «
T
HE defendsmt obtained judgment against one Ungappu in C. R.,
Pasyala, 3,200, and issued writ and seized certain immovable
property on May 15, 1906, which was claimed by the plaintiff, who
i (1906) 2 Bal. 41 ‘= (1906) 2 Bal. 1&.
( 333 )
based his title on a transfer (No. 6,580) executed by the said Ungappuon May 14, 1906. At the claim inquiry it was agreed that as thejudgment-debtor was in possession of the properly that the claimshould be dismissed. Thereupon the claimant brought this actionunder section 247 of the Civil Procedure Code for a declaration thatthe property was not liable to be seized and sold under the abovewrit. The defendant (judgment-creditor) alleged the said transferwas executed by the judgment-debtor fraudulently and withoutconsideration, with the object of defeating his creditors.
At the trial the following issues were framed:—
Did the plaintiff acquire title by the deed pleaded in the first
paragraph of the plaint?
Was the transfer in favour of the plaintiff fraudulent and
executed without consideration and with the object ofdefeating the defendant in executing his writ in caseNo. 3,200 of the Court of Requests of Pasyala?
Has the plaintiff sustained any damages?
The District Judge (A. de A. Seneviratne, Esq.) held that it wasnot competent for the defendant to raise the second issue in thisaction, and that the answer disclosed no defence. He accordinglyentered judgment in favour of the plaintiff as claimed with costs.
The defendant appealed.
H. A. Jayewardene, for the defendant, appellant.
A. St. V. Jayetvardene, for. the plaintiff, respondent.
Cut. adv. tmtt.
>
October 10, 1907. Hutchinson C.J.—
The appellant, who is the defendant in this action, was execution-creditor in a previous action; in that action he. took out a writ ofexecution, under which a certain land was seized in execution onMay 15, 1906. The respondent thereupon put in a claim to theland under section 241 of the Civil Procedure Code; at the investi-gation of the claim it was agreed that as the judgment-debtor wasin possession of the land the claim should be dismissed, and it was* dismissed accordingly. The respondent then brought this actionagainst the execution-creditor .in accordance with section 247 of theCivil Procedure Code, alleging that he was the owner of the land byvirtue of tt deed dated May 14. 1906 (the day before the seizuie),#and claiming a declaration that he was entitled *to havp the landreleased from seizure.->
The defendant filed -an answer admitting the bare execution of theplaintiff’s deed, but denying, that the plaintiff thereby became theowner of ^ the land, and alleging that the deed was fraudulent and
1907.
October IQ,
( 384 )
1907 without consideration, and executed with the object of defeating himOctober 10. ir* the execution of his writ; and he claimed that the land was at theHutchinson date of the seizure, and still is, the property of the judgment-debtor,C. J. and as such liable to be sold in execution under the said writ. Hedid not in terms ask that the .deed should be set aside, but hesubstantially did so; he asserted that it was fraudulent and void,and asked that the action should therefore be dismissed.
The District Judge held that the answer did not disclose a defencewhich can be maintained in this action, and that the plaintiff’s deedcannot be set aside for fraud except in a properly constituted action;and upon reading the plaint and the answer, and upon hearing thearguments on each side, he gave judgment declaring the plaintiffentitled to the land, and ordering the defendant to pay the plaintiffBs. 50 as damages, and ordering the plaintiff to pay the costs of theaction.
The parties were before the Court, and the issue was raisedwhether the plaintiff had any interest in the land, or whether thedeed under which he claimed-was fraudulent and void as against thedefendant. The Court held that the issue could not be tried in thataction, because the action was not properly constituted, meaning,I suppose, that the grantor of the deed was not a party. H theissue should afterwards be tried and should be decided in thedefendant’s favour, the plaintiff will have got damages for inter-ference with land to which he had no title, and his claim to whichwas fraudulent; he will have got the damages as the reward of hisfraud from the man whom he defrauded' That hardly seems right.The Court should, I think, at least have given the defendant anopportunity of bringing an action to have the issue* tried beforeawarding damages against him.
The question, however, which we are now asked to decide iswhether in such an action as this the defendant be allowed to set upthis defence, or whether he must bring another action claiming tohave the deed declared to be fraudulent and void £bs against him.The opinions of Judges have differed on this question. Pereira A.J.in Ossen Lebbe v. Daniel Dias1 expressed his opinion, and WoodBenton J. in, Fernando v. Joodt2 decided, that the defence couldnot be set up. In Abdul Cadet v. Annamalay3 Bonser C.J. appeai’9to have thought, though it was not necessary to decide it, that thedefendant in an action under section 247 might counterclaim.
If the Court, on investigating a claim to property seized in execu-tion, is satisfied that for the reason stated in the claim the propertywas not, when seized, in the possession of the judgmdnt-debtor orof some one in trust for him, or of his tenant, or that, being in hispossession, it was so not on his account or as his own property,the Court must release the property; but if it was in his possession
i (1905) 2 BcxL 41.. * (1906) 2 Bal. 139.* 8 (1896) 2 Ar. h'. R. l«f.
( 335 )
as his ora property, or in the possession of some one in trust for him,or of his tenant, it must disallow the claim (sections 244 and 245).And the party against whom an order under section 244 or 245 ismade may institute an action within fourteen days *# to establishthe right which he claims to the property in dispute, or to have thesaid property declared liable to be sold in execution of the decree inbis favour ” (section 247).
Here the Court, having found that the property was in the posses-sion of the debtor at the time of the seizure, disallowed the claim,and the claimant thereupon brought this action within fourteendays.
The execution-creditor contends that the property was liable tobe sold in execution of the writ, because- the deed on which theclaimant relies was void as against him. If the Court should find thatthe deed was void as against him, I think it follows that the propertywas so liable. The contention of the plaintiff is that at the date ofthe seizure the deed was in force, being valid until declared to bevoid, and that therefore the property was not at the time liable to besold. But a subsequent judgment declaring that the deed was voidwould imply that it was void at the date of the seizure.
It is also objected that the grantor of the deed is not a party tothis action, and that the issue, whether his deed was fraudulentought not to be tried in his absence. If a formal claim in reconven-tion for a declaration that the deed is void is necessary, the CivilProcedure Code allows the defendant to set up such a claim. Andsection 18 empowers the Court, either upon or without the applica-tion of any party, to add the name of the grantor as an addedparty.” Those provisions, apply to every action, their objectbeing to enableJ the Court in one action, instead of in two, toadjudicate on ” all the questions involved in the action.” The courtmight refuse to exercise the power given by section 18. If it shouldso refuse, the execution-creditor would then, if the presence of thegrantor of the deed was necessary, be compelled to bring anotheraction; and if the fourteen days allowed by section 247 had thenexpired, his claim in that action could not be, as it is in this, to have, the property declared liable to be sold in execution of the decree inhis favour. Possibly it might be for a declaration that the claimant’s#deed was void; and perhaps, if he succeeded in obtaining such adeclaration, he might then take out a fresh writ of execution andhave the property seized again. But I see no reason to doubt thatthe Court has the power to add the grantor as a party in the presentaction.
I think, therefore, that the judgment of the District Court shouldbe set aside and the case sent back to- enable the grantor* of the deedto be added as a party to this action and for trial of the second issueproposed by the defendant on September 27, 1906. I would makeno order as to the costs *of this appeal.
1907.
October 10.
Httxobihsom
CJ.
25- '
( 836 )
1907. Middleton J.—
October 10.
This was an appeal by an execution-creditor, who was defendantin an action under section 247 brought against him by an unsuccess-ful claimant of the property of defendants execution-debtor, againsta judgment, holding that the property seized was at the date of theseizure not liable to be seized and sold as the property of defendant'sexecution-debtor.
The plaintiff upon the claim inquiry consented to his olaim beingdismissed, and then brought this action under section 247. Thedefendant, being decree-holder in action C. B., 3,200, against oneUngappu, caused the Fiscal to seize certain property of his debtoron May 15, 1906. On May 14, 1906, the plaintiff, by deed No. 6,580registered on June- 19, 1906, purchased the property subsequentlyseized from defendant's judgment-debtor Ungappu.
In his answer the defendant alleged that the transfer of May 14,1906, was fraudulent and without consideration, and executed forthe purpose of defeating the plaintiff in the execution of his writ,and without making a claim in reconvention sought the dismissal ofthe action.
Possession ut dominus at the date of seizure, is, in my opinion, thecriterion of liability to seizure (7 N. L. B. 195; 10 N. L.R. 44).Such a deed as the plaintiff relies on is not in itself void, but can beavoided if it is shown that it was executed in fraud of the plaintiff.Beyond the fact that the deed was executed one day before theseizure there is nothing to show it was .fraudulent, or that Ungappuhad not other property sufficient to meet the debt due by him to thedefendant.
There was no evidence taken in the case, and th4 defendant didnot claim in reconvention, and the ground the District. Judge wenton was that the deed must be held good until it is declared voidfor fraud. There is no reason therefore on the record .why thejudgment of the District Judge should not stand.
Assuming, however, – that there was evidence that the deed wasfraudulent to the knowledge of the plaintiff as against the defendant,the Court would in a so-called Paulian action declare by its judgmentthat the defed was void; in other words, that the property had notbeen conveyed. This would imply that at the date of seizure thepossession ut dominus was still in the defendant's judgment-debtor
In the Ceylon Courts it has not been the practice, so far as I amaware, to distinguish between Paulian and rescissory actions (Voet* bfc. 41, tit. 8, De Vos’ translation), but in what is known as thePaulian action the Courts here have granted rescission of contracts.The distinction between the two actions appears to be that thePaulian action was in personam and the rescissory action in rem{Voet 42, 8, 2, and 12, De Vos' translation), so that, strictljspeaking, an action to avoid a deed and to recover * the thing
I 387 )
fraudulently conveyed would be an action in rent and so not a 1007.Paulian action.October 10^
It has hitherto not been the practice, except, as I understand, in Mn>i>imo&the Colombo District Court, to cite the judgment-debtor on a claiminquiry or to make him a party to an action under section 247.
In an action also under section 247 Pereira A.J. in Oeeen Lebbev. Daniel Dias1 doubted whether an issue can be raised that theproperty in dispute has been transferred by his judgment-debtorin fraud of the judgment-creditor, and my brother Wood Benton inFernando t>. Joodt2 held .that such an issue cannot be raised.
One ground for those decisions might be the view that it wasuseless to allow it to be raised, inasmuch as the effect would bevalueless to the judgment-creditor, because the order of the Courtsetting aside the deed might not affect its validity at the date ofseizure, which is the test of the action.
Tn my opinion, however, if the Court in.its judgment declared thedeed was void on account of fraud, as it would be entitled to declareif fraud were proved on both sides, the effect of that declarationwould be to declare that the property had not been conveyed, andtherefore at the date of the seizure was the property of the judgment-debtor and liable to be seized. I, therefore, can see no reason underthe Civil Procedure Code why a claim to set aside the deed might hotbe added to .the plaint in an action under section 247, or be pleadedin the answer in reconvention, as in a case like the present where thejudgment-creditor is the defendant.
The matter put in issue, under sections 241—247 is whether theproperty seized is that of the judgment-debtor, and I do not accedeto the proposition that the sequence of sections 243 and 246 showthat it is only property belonging to the judgment-debtor, or overwhich he had a disposing power at the date of seizure, which can bepu.t. in issue under section 247.
I think that in such a case as the present, as I said in my judgmentin 284. D. C., Batticaloa, 2,192,3 the judgment-debtor should becited as a party defendant under section 14 of the Civil ProcedureCode as being a person against whom the right to some relief isalleged to exist, he having fraudulently conveyed his property,which was liable for his debts, to a third person. The* effect of thisis to obviate the necessity of another action to set aside the deedand to enable justice to be done conveniently, and speedily. In myopinion, therefore, the defendant should be allowed to amend hisanswer if he desires to prove that the deed was fraudulent, by claim-ing that the deed be declared void at the date of its execution. . »
Fofr this purpose I would set aside the judgment of -the DistrictJudge and send the case back for * the necessary amendment andcitation of the judgment-debtor and trial. Under the circumstances
i (1906) 2 Pal. 41.* (1906) 2 Bat. 139.
C. Min. Aug. 17, 1908.
. 1907.
October 10.
Mzddlbton
J.
( 838 )
I would order each party to bear his own costs of this appeal, andleave the question of costs of all proceedings in the District Court tobe decided by the District Judge in his judgment in the case.
Wood Bbntok J.—
I think that this appeal should be dismissed with costs. Thesequence of sections 243 to 246 of the Civil Procedure Code seems tome to show that it is only property belonging to the judgment-debtor,or over which he had disposing power, at the date of seizure that canbe put in issue in an action under section 247. In support of thisview I refer to the following decisions:—Abdul Cader v. Annamalay,1Wifewardene v. Maitland* Silva v. Kirigoris,3 Silva v. NonaHamine * By the common law of the Colony (see Vander Keesel,Tkes. 200; Grotius 2, 5, 4; Voet 42, 8) an alienation alleged to bein fraud of creditors is not void but voidable; that is to say, validtill it is set aside and not invalid till it is confirmed (c/. on thispoint Duncan v. Dixon),5 and the appropriate remedy for setting itaside is the Paulian action. It follows, therefore, that if a judgment-debtor has prior to the seizure alienated his property, the propertyso alienated does not belong to him; nor has he any disposing powerover it at the date of seizure, if the deed of alienation is then still inforce. Even if under .the Roman-Dutch Law the setting aside of adeed by the Paulian action as a fraud on creditors relates back to thedate of the conveyance and involves as a matter of common law andnot merely of Praetorian remedy (Voet 42, 8, 11) the restoration ofintermediate fruits, I still think it would' not do so for the purposeof the strictly limited statutory procedure under section 247. AFiscal's conveyance relates back to the date of the execution sale,and therefore enures to the benefit of a party to whom the execution-purchaser conveyed it before obtaining the Fiscal's conveyance(Abubakker v. Kalu Ettena6). But the relation ■ back does notapply to proceedings under section 247 (Silva v. Nona Haminet ubisup.). I think that the view taken by Pereira A.J. in Ossen Lebbe v.Dias7 and again in D. C., Galle 7,555,® and followed by myself inFernando v. Joodt8 was sound. If it creates any hardship, theLegislature cap deal with the question. In England the statutoryrules regulating interpleaders (R. S. C. Ord. 57, rr. 7 and 8) give theCourts wide powers to add parties and to secure jhe trial of anyquestion that may arise either summarily or by the framing of anissue according to its difficulty and importance. At present wehawe, as regards proceedings under section 247, no adequate machi-nery of thisjrind iq Ceylon. Under section 18 of the Civjl Procedure
1 (1896) 2 N. IS. R. 166.3 (1898) 8 0. L. R. 7.
3 (1908) 7 N. L. R. 196.*■(1906) 10 N. L. R. 44.
« (1890) 44 Oh. D. 211.e (1889) 9 S. C. C. 82.
(1905) 2 Bal 41.
S, C. Min., Aug. 28, 1906.
• (1906) 2 Bal. 139;
( 339 )
Code it might no doubt be competent for the Court to add a partysimply as “ added party/’ where, as here, it is difficult to describehim correctly as either a plaintiff or a defendant. But the decisions,as they stand, place grave difficulties in the way of any such mani-pulation of section 18 of the Code. On the one hand, it has beenheld that a judgment-debtor is not a “ party M against whom anorder is passed within the meaning of section 247 (StZua v. Gune~wardana^t though he may be entitled to notice {Silva v. Silva*).On the other hand, the Court has repeatedly said that there cannotbe a'finding that a conveyance is fraudulent unless the vendor hasbeen made a party to the action (291, Matara, D.C., 1,015,® LayardC.J. and Grenier J., 284, D.C., Batjbicaloa, 2,1924).' In addition to allthis the Civil Procedure Code contains no special provision forsecuring the full trial of the issue of fraudulent alienation such as wefind.embodied in the English rules. If such provision is to be made,it should be the work of the Legislature and not of the Judiciary.
I regret to differ in this case from the rest of the Court. But 1have formed a strong opinion on the question before us, and I recordit for what it is worth.
1907.
October 10.
WoodRenton J.
Appeal allowed: case remitted.