012-NLR-NLR-V-48-KUMARAPPA-CHETTIAR-et-al-Appellants-and-GUNAWATHIE-et-al-Respondents.pdf
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Kumarappa Chettiar v. Gunavoathie.
1946Present: Dias J. and Nagalingam AJT.
KUMARAPPA CHETTIAR, et ol., Appellants, andGUNAWATHIE, et ol., Respondents.
373—D. C. Kegalla, 2,857
Mortgage—Compulsory novation—Right to have the bond revived as againsta stranger—Right to bring more than one hypothecary action upon amortgage bond—Mortgage Ordinance {Cap. 74), s. 16.
Where the mortgagees in a hypothecary action had made inter aliosthe mortgagor and a puisne encumbrancer, who was in fact dead, partiesdefendants and, by reason of a conveyance of the mortgaged propertyexecuted in favour of the mortgagees by the mortgagor and a personwho was not the lawful heir of the estate of the puisne encumbrancer,a compromise decree was entered dismissing the hypothecary action—
Held, that the decree must first be got out of the way before the rightsof the mortgagees under the mortgage bond could be considered to haverevived as aga'inst the lawful heirs of the estate of the puisneencumbrancer.
If a mortgagee considers that he has not been able to secure to himselfall the remedies available to him under a mortgage by reason of ahypothecary action instituted by him proving abortive it would be opento him, by yirtue of section 16 of the Mortgage Ordinance, to file anotheraction.
^^PPEAL from a judgment of the District Judge of Kegalla.
V. Perera, K.C. (with him H. W. Jayewardene), for the defendants,appellants.
R. Cunaratne, for the plaintiffs, respondents.
Cur. adv. vu.lt.
NAG ALINGAM A.J.—Kumarappa Chettiar v. Gunawat hie.
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November 29, 1946. Nacaungam A.J.—
An interesting question under the law of mortgage arises on this appeal.The plaintiffs instituted this action for a declaration of title to an allotmentof land described in the schedule to the plaint. It is common groundthat one Peruma was the former owner of the land in question. He bydeed P3 of 1930 transferred it to one Siripina who is said to have diedin 1931. One question in issue between the parties was as to who theheirs to Siripina were, the plaintiffs contending that as daughter andwidow of the deceased person they were the legitimate heirs to His estatewhile the defendants denying the alleged relationship of the plaintiffsto the deceased asserted that the deceased’s heir was his mother, oneKomali.
The learned Judge has found, and it has not been challenged, thatthe plaintiffs are the lawful heirs of the deceased Siripina and that the titleto the property has now vested in them. It is alleged by the defence,however, that Peruma had prior to his sale to Siripina executed amortgage bond bearing No. 650 of January 22, 1929, in favour of thedefendants whereby he hypothecated inter alia the land in question.The bond itself has not been produced by the defendants but the plaintiffsappear to have tacitly accepted the fact of the execution of the aforesaidmortgage bond. The defendants put the bond in suit in case No. 19,505of D.C., Kurunegala, on August 24, 1938, making inter alias the mortgagor,Peruma, and the puisne encumbrancer, Siripina, parties defendants.It should be noted that Siripina was dead at that date. No legal re-presentative had been appointed to his estate and in fact no summonswas ever reported served on him as it could never have been. But thedefendants proceeded to compromise the mortgage suit with the mortgagorand with Komali, the mother of Siripina, on the footing that she was" thelawful heir to the estate ; as a result of the compromise decree was entereddismissing the defendants’ action.
In this state- of facts the defendants claim that notwithstanding thedismissal of their action upon the mortgage bond their rights thereonrevived inasmuch as the compromise which led to the dismissal of theaction was based upon the belief that the deed of conveyance executedby Peruma and Komali of the land in question conveyed good title tothem which in fact it did not in view of the circumstance that Komalihas now been ascertained to be not the legal heir to the estate of Siripina.In regard to this question the learned Judge did not record a specificfinding. On appeal the argument has been confined to a discussion ofthe question as to whether the rights of the defendants revived uponthe mortgage bond and if so whether they are entitled to a declarationin these proceedings that the rights of the plaintiffs to the land are subjectto the rights of the defendants under the mortgage created in their favourby the bond.
Two cases were cited at the bar in order to show that the bond couldbe considered to have revived:—Silva v. Silva1. This was a case wherethe mortgagor transferred the mortgaged property to the mortgageeduring the pendency of a valid seizure effected on the property, the
1 (1909) 13 K. L. R. 33.
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NAG ALIN GAM A.J.—Kumarappa Chettiar v. Gwnauiathie.
seizure rendering the transfer ineffectual. The mortgagee instituted a6uit upon the mortgage bond ignoring the execution of the transfer inhis favour, and it was held that the rights under the mortgage bondrevived inasmuch as the transfer was void.
Mudalihamy v. Mudianse and Kalubanda1 where the facts were similarexcept that the deed of conveyance was rendered invalid by reason of anaction for partition pending at the date of conveyance. There too itwas held that the rights of the mortgagee upon the mortgage bond revivednotwithstanding the void conveyance executed in his favour.
It has been urged that the principle underlying these two cases wouldbe applicable or in any event could be extended so as to include thepresent case. There is a vital distinction between those cases and theone before me now. Those were cases of voluntary novation and theprinciple underlying was that where the novation was not real but merelynominal no novation could be said in fact to have taken place and therights under the bond revived, or more' properly, the bond was nevernovated. It has also to be noted that the bond was held to be revivedas between the parties thereto and not as against a third party. Herethere has been a compulsory novation and it is sought to have the bondrevived as against a stranger to it. The bond has been sued upon andthe rights in respect of it have got merged in the decree entered, anddifferent considerations therefore apply. The decree must first be gotout of the way before the claim to have the bond considered revived canbe entertained. No argument has been put forward to show that thedecree itself is bad ; so that the question really resolves itself into this:What are the rights of a mortgagee who having sued upon his bond andobtained a decree finds that the decree is of no avail against a puisneencumbrancer ?
Prior to the Mortgage Ordinance (Cap. 74), where a mortgagee failedto make a puisne encumbrancer a party to the hypothecary action itwas held that no further action could be brought upon the bond. Butsection 16 of the Mortgage Ordinance was specially enacted to grantrelief in such a case and it provides that a mortgagee may bring more thanone action to enforce all or any of his remedies under a mortgage bond.In Kandappa Chettiar v. Ramanayake* it was expressly held that morethan one hypothecary action may be instituted upon a mortgage bond.The resultant position, therefore, is that if a mortgagee considers thathe has not been able to secure to himself all the remedies available tohim under a mortgage by reason of a hypothecary action instituted byhim proving abortive it would be open to him to file another action.But I do not wish to be understood as saying that in the circumstancesdisclosed in this case where the action upon the bond has been dismissedI express any opinion as to whether the defendants can bring a secondaction or not. It is, however, only necessary to point out that if theyhave any rights those rights are conserved by section 16 of the MortgageOrdinance and without any such declaration in their favour by a courtof law they would be vested with that right by virtue of the enactmentitself.
11920) 2 C. L. Rec. 64.
(1936) 38 N. h. R. 33.
JAYETILEKF. J.—Arulanandam v. Kumariah.
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Besides the person most affected by a declaration that the rights underthe bond have revived would be the mortgagor himself, but the mortgagoris no party to these proceedings and in his absence and without givinghim an opportunity of being heard no such declaration can be made.On this ground too the defendants’ application must fail.
I would therefore dismiss the appeal with costs.
Dias J.—I agree.
Appeal dismissed.