035-NLR-NLR-V-26-KAHN-BHAI-v.-PERERA-et-al.pdf
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[Full Bench.]
Present: Bertram C.J., Ennis, Schneider, and Garvin JJ., andJavewardene A.J.
KAHAN BHAI t>. PERERA et ah154—D. C. Colombo, 32,666.
Partition action—Decree for sale—How long does prohibition againstalienation continue t—Ordinance No. 10 of 186$, s, 8.
The prohibition against alienation or hypothecation of undividedshares or interests in property subject to a partition action, wherethe Court decrees a sale, continues until the issue of the certificateunder section $ of the Partition Ordinance, 1863.
Persons desiring to charge or dispose of their interests in aproperty subject to a partition suit can only do so by expresslycharging *or disposing of the interest to be ultimately allotted tothem in the action.
T
HIS was a partition action in which a decree for partition wasfirst entered on November 12, 1912. There was an appeal
against that decree, and the appeal was dismissed on March 14,1913. At this stage, certain parties intervened, and at the trialorder was made allotting certain shares to the intervenients, anda decree was accordingly entered. There was an appeal from thisdecree also which was dismissed on May 25, 1916.
On December 1, 1916, a consent motion was filed moving for asale of the property which was allowed by the Court on December 11,1916. No sale, however, ever took place.
On October 5, 1922, the fifth plaintiffs share was sold by theFiscal under writ issued in case No. 4,129 of the District Court ofColombo, and was purchased by the appellant who obtained for itFiscal's transfer dated March 15, 1923. On March 20, 1923, theappellant moved to have himself substituted for the fifth plaintiffand to have the shares of the fifth plaintiff given to him. This wasallowed by the Court.
On an application being made to the Supreme Court, thatCourt on December 18, 1922, set aside the decree for sale andentered a decree for partition, and ordered the District Judge toconsider the scheme of partition and enter final decree.
By bond No. 702 of September 27, 1917, the fifth plaintiff hadmortgaged his 7/96 shares to the respondent, who moved on April 23,1923, to have the fifth plaintiff’s shares declared subject to thisMortgage. This application was opposed by the appellant whourged that as execution-purchaser he had been substituted in theplace of the fifth plaintiff, and that the mortgage executed by thefifth plaintiff was void, as it had been efiecied during the pendencyof the partition action.
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The District Judge allowed the respondent's application withcosts.
1928.
Kahan Bhai
The following is the judgment of the Acting Additional District p^raJudge (V. M. Fernando, Esq.): —
In this case a decree for partition was entered on November 12, 1912.There was an appeal against that decree, and thereafter several partiesintervened, and the proceedings continued till December 11, 1916, onwhich date a decree for sale was entered apparently with the consentof parties, the District Judge also stating that he thought a partitionimpracticable. There was no appeal against this order, and in Sep-tember, 1917, a commissioner was appointed to carry, out the sale.
The fifth plaintiff who is allotted 48/288 subject to an entail and*21/288 absolutely mortgaged his 21/288 share by bond No. 702 datedSeptember 27, 1917, to the intervenient, who now asks that the fifthplaintiff's rights be declared subject to this mortgage.
In October, 1922, the rights of the fifth plaintiff having been seizedby the Fiscal in execution, the same were sold and purchased by thesubstitutedfifthplaintiff who opposes theapplicationof the Intervenient.
In December, 1922, the order of this Court directing the sale of theland was set aside by the Supreme Court in revision, and an order ofpartition entered in the case.
The position taken up by the fifth substituted plaintiff is that he him-self, being the purchaser at a forced sale, is entitled to be substituted inplace of the fifth plaintiff whose rights were sold, but that the mortgagein favour of the intervenient is bad, as having been executed pendingthe partition proceedings. To the. argument that the mortgage was•executed after an order for sale had been entered in the case, he repliesthat the Court had no power to make such an order having alreadyordered a partition, and that the order for sale was therefore bad. Healso relies on the fact that that order was afterwards set aside by the"Supreme Courtin revision. No authority, however,was cited for the
propositionthata sale by a party to abona fidepurchaser for value
after a decree for sale had been entered is bad, because the Court enteringthat orderhadalready entered a decreefor partition. Even assuming
(he argument to be correct that the District Court having once ordereda partition cannot thereafter order a sale, although it is satisfied that &partition is impracticable, still I am not prepared to hold that theparties themselves are not bound by such an order for sale, if noappeal is taken from that order. If I am right, then it follows that abona fide purchaser from one of the co-owners can rely on the order ofthe Court without examining all the steps that led to that order, andthe intervenient as mortgagee is in the same position as a bona fidepurchaser. It is clear that a conveyance or mortgage after a decreefor sale is good, and the subsequent reversal of that decree for sale bythe Supreme Court cannot affect rights acquired bona fide under thatdecree. The case of Petera t>. Lebbe 1 is an authority which supportsthis position.
I therefore allow the intervention, and declare tfiat the shares allottedto the fifth plaintiff absolutely are subject to the rights of the intervenientunder bond No. 702 of September 27, 1917. The substituted fifthplaintiff will pay the costs of this inquiry.
{1916) 19 N. L^R. SOS
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1928.
Kahan Bhai
This case was reserved for argument before a Full Bench by
Bertram C.J. and Porter J. by the following judgment: —
v.
Ptrtra December 20, 1928. Bertram C.J.—
The present case raises, under somewhat peculiar circumstances,the question whether, where a Court decrees a sale under the Parti-tion Ordinance, the prohibition against hypothecation contained insection 17 of the Ordinance applies during the interval between thedecree and its execution.
Section 17 prohibits alienation and hypothecation unless anduntil the Court shall by its decree have refused to grant the appli-cation for partition or sale. Nothing is Said as to a limitation onthis prohibition where the Court does not so refuse, but grants theapplication. It appears to have been assumed in a series of cases-that inasmuch as the prohibition expires at the moment of thedecree when partition or sale is refused, so it must be held to expirefrom the moment of the decree when partition or sale i$ granted.Tn the case of a partition, the decree for this purpose must be heldto mean final judgment under section 6, so that in the case of apartition there is no interval between the decree and its execution,but in the case of a sale there is such an interval, and it appears to havebeen assumed in a series of cases that the prohibition does not applyin this interval between the decree for sale and its execution. Ifthat is the case, it would be competent to a co-owner, subject toany other principle in force, to charge his interest during thisinterval. The cases are: Perera v. Alwis,1 Louis Appuhamy v.Punchi Banda* and Abdul Ally v. Kelaart3 They are far frombeing decisive. The most definite is Louis Appuhamy v. PunchfBanda (supra), and even here the reasoning is far from clear.
Mr. Samarawickreme in this case very plausibly suggests thatthese cases all assume the existence of an interval during which nostatutory prohibition is in force, and that the true legal situationis that up to a decree for sale any hypothecation is absolutely voidunder section 17, but that after the decree the case is regulated bythe legal principles relating to lis pendens. The mortgagee, there-fore,-during such an interval, takes a security subject to the resultof the suit, and upon the sale taking place in pursuance of the decreehis security is thus transmitted into a claim against the proceedsof the sale. This sounds very plausible, but is in fact very insidious.The mortgagee is not now bound by the lis pendens unless it isregistered. The result would be that if the partition suit were notregistered, the mortgagee might bring a hypothecatory actionagainst the purchaser under the partition decree, demanding tohave the share of his mortgagor sold afresh for the satisfaction of
> (1913) 17 N. L. R. 135
(1904). 10 N. L. R. 196.
(1904) 1 Bal. 40
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his mortgage. Such a claim wap aotually made in the case ofPerera v. Alwts (supra), and De Sampayo J., speaking obiterf makessome very interesting observations on the point.
He suggests a legal principle which might be held to apply tosuch a situation. The question arises, however, whether thissupposed interval is not wholly imaginary. Section 17 itselfimposes no limitation to the prohibition, and it is by no means clearthat there is any necessity to imply one.
In the peculiar circumstances of this case, Mr. H. J. C. Pereiraraises various other points. The decree for sale on which the mort-gage was based was faulty. It purported to replace another decree,namely, an interlocutory decree for partition of the same Court. Thisdecree for sale was subsequently set aside. Mr. Pereira suggeststhat a mortgage executed during the interval and based upon thisinterlocutory decree cannot stand. He further argues relying uponan observation of Wendt J. in Abdul Ally v. Kelaarl (supra) that allthat the mortgagee could take in the circumstances was a rightagainst the proceeds, and he maintains that under no circumstancescould that right subsequently become transmuted into a rightagainst the actual share of the land allotted to his mortgagor.
If it is held that there is no limit to the prohibition againsthypothecation contained in section 17, there is no occasion toconsider these contentions of Mr. Pereira. It is so important that-there should be no doubt as to the position of a purchaser under a■decree for sale in a partition suit that I think it best the case shouldbe referred to a bench of five Judges.
loss.
Bertram
C.J.
Kohan Bkaiv.
Perera
Porter J.—I agree.
Drieberg, K.C. (with him Cooray and M. B. A. Coder), for fifthplaintiff, appellant.
Samarawickreme (with him if. V. Perera and E. 6. P. Jayatilleke),for intervenient respondent.
The judgment of the Full Court was delivered by—
August 1, 1924. Bertram C.J.—
»
The facts in this case are set out in the judgment of the learnedDistrict Judge. The question under reference is a question as tothe true interpretation of the prohibition against alienation orhypothecation of the undivided shares or interests in propertysubject to a partition action contained in section 17 of the PartitionOrdinance, No. 10 of 1863. Where the application for partition orsale is refused, that prohibition endures up to the refusal. Thequestion is, up to what point does the prohibition endure when the
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1924.
Bertram
C.J.
Kahan Bhaiv.
• Perera
application for a partition or sale is granted? No difficulty ariseswhen the Court grants a decree for partition, because in the caseof a partition decree there is no interval between the decree andits execution. The only difficulty that arises is where a decree forsale is granted, as in that case there is an interval between thedecree for sale and the issue of the certificate .under section 8, andthe point to be determined is, whether the prohibition is in forceduring this interval. The Court is of opinion that the prohibitionmust be deemed to continue as long as the common bond of co-ownership exists, that is to say, until the issue of the certificateunder section 8.
Persons desiring to charge or dispose of their interests in aproperty subject to a partition suit can only do so by expresslycharging or disposing of the. interest to be ultimately allotted tothem in the action.
On this view of the question referred, this appeal should beallowed, with costs, in this Court and in the Court below.
Ennis, Schneider, and Garvin JJ-, and Jayewardene AJ.—
Agreed.