MADAR SAIBO et al v. SIRAJUDEEN et al

029-NLR-NLR-V-17-MADAR-SAIBO-et-al-v.-SIRAJUDEEN-et-al.pdf


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Present : Pereira J. and Ennis J.MADAB SAIBO et al. v. SJRAJUDEEN et al.
1918.
203 arid 204—D. C. Kandy, 21,521.
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Purchase of land by a partner—Is it' property of partnership t—Joinderof plaintiffs—Action tn respect of separate lands to which each isseparately entitled—Civil Procedure Code, s. 17—Fraudulent deedvalid until set aside.
Pbbeiba J.—In Ceylon, land bought- by .a partner of a firm inhis own name ont of the assets of the partnership is not deemedthe property of the partnership, bat it is the property of thepartner in whose favour the conveyance is executed.
Joinder by two persons in one action of claims in respect ofseparate lands to which each is separately entitled is obnoxious tosection 17 of the Civil Procedure Code, but the irregularity may bewaived by the defendant.
' A fraudulent deed, unlike a deed executed by a person notcompetent in law to enter into contracts, is, under the Roman-Dutch law, valid until it is set aside or cancelled, and when it iscancelled, the cancellation refers back tp the date of the deed.
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fjpHE facts appear from the judgments.
E. ty. Jayewardene, for first defendant, appellant.
H. J. C. Pereira and F. J. de Saram, for second defendant,appellant.
Bdwa, K.G., Schneider, Drieberg, A. St. V. Jayewardene, and.Arulanandam, for plaintiffs, respondents.
Cur. adv. vvlt.
November 3, 1913. Pereira J.—
In this case the plaintiffs seek to have certain deeds of conveyanceexecuted by the first defendant in favour of the second defendant(to use the words of the plaint) " set aside and declared null andvoid,” on the ground of fraud on the part of the two defendantsand collusion between them. The plaintiffs are partners of thefirm of “ P. V. M. Madar Saibo,” and although it is stated in theplaint that the lands described in schedules A, B, and C are theproperty of the partnership, it is clear from what follows in theplaint itself, and in the proceedings in the case, that, in a legal pointof viewr the lands mentioned in the first schedule are the propertyof the first plaintiff, the lands mentioned in the second schedule arethe property of the second plaintiff, mid those mentioned in thethird schedule are the property of the firm. 'In the course of his
*J. K. B18828 (7/52)
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1918. opening address to the Court the plaintiff's counsel would appearPbbeira J. to have stated: 41 The effect of the partnership deed of 1905, whenMadm^Saibo 8econ^ plaintiff was admitted into the firm, was not to, vestv* Sirajudeen title in the second plaintiff in ' respect of the lands which at thedate belonged to the first plaintiff alone.1* Clearly, the title deedsof the lands described in the three schedules are, respectively, infavour of the two plaintiffs (individually) and the firm of “ P. V- M.Madar Saibo.,” It has been spid that under the English law landbought by a partner of. a firm in his own name out of the assetsof the partnership is deemed the property of the firm. Howeverthat may be, it is clear from our Ordinance, introducing theEnglish law as to partnership into this country (Ordinance No. 22of 1866), that the law as to conveyance of land and rights in landis still the law of the country and not the English law, and 1 simnot, therefore, prepared to hold that the Court can look upon thelands described in the three schedules respectively as the propertyof any but those in whose, favour the conveyances have beenexecuted. It may be that when land is bought by one of twopartners of a firm in his own name out of assets of the partnership,the other partner has a right to claim a conveyance from the firstof the land in favour of the firm, but such a conveyance should be'claimed and obtained before the firm can appear in Court and seekany redress on the footing that it is the owner of the land. Inview of the facts mentioned above, there is clearly in the presentcase a misjoinder of plaintiffs and a misjoinder of causes of action.The complaint in the case is that the first defendant, professingto act as the agent of the plaintiffs or manager of their -firm, hasfraudulently, conveyed the lands to the second defendant. Now,clearly, in respect of the conveyance of the lands described in thefirst schedule, a cause of action accrued to the first plaintiff and himalone; in respect of the conveyance of the lands described in thesecond schedule, a cause of action accrued to the second plaintiff;,and in respect of the conveyance of the lands mentioned in the.third schedule, a cause of action accrued to the firm of 14 P. V: M.Madar Saibo.’* There were, thus, at least three causes of action;and three persons practically have joined in 6uing thereon. Thisis obnoxious to section 17 of the Civil Procedure Code, whichenacts: 44 Nothing in this Ordinance shall be deemed to enableplaintiffs to join in respect of distinct causes of action.” Thewords of the old Indian Code of Civil Procedure, from which theprovision has been borrowed (see section SI of the Indian Code) . areslightly different. It enacts: 44 Nothing in this section shall bedeemed,” &c. In view of the more comprehensive words* of ourCode—words that would appear to exclude, the operation of the othersections of the Code—sections such as section 22, which provides-for the waiver of objections (to irregularities) by the defendantr—itis a question whether contravention of the provision cited above of
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section 17 is not absolutely fatal to an action. Having given the
matter my best consideration, I agree, not without much hesitation,
with my brother Ennis, that in the circumstances of the present
case the irregularity was one that might be waived by the defendant,
and that it has practically been waived. No objection based on
section 17 to the constitution of the action Was ever taken. The
issue suggested by the defendants’ counsel—“ Can the plaintiffs as
partners maintain this action in respect of the properties described
in schedules A and B? ”—involves no such objection.
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To proceed now to the merits of the case. It is not necessarythat I should here recapitulate the facts and circumstances mar-shalled by the District Judge in his judgment. I think that thereis sufficient in those facts and circumstances amounting to a primdfade case against the defence of fraud and collusion. They certainlyestablished the necessity for evidence by'.the second defendant of afact especially within his knowledge, namely, the payment by himof the consideration mentioned in the deeds, but the second defend*ant has abstained from giving evidence himself of that fact. Ashas been pointed out in the case of Ossen Lebbe v. Dias,1 the acqui-sition of property oneroso titvlo removes every presumption of fraud,and it was within the power of the second defendant to prove, ifthat was the case, such acquisition in the present instance. Hisomission to do so must naturally tell heavily against him. I thinkthat the decision arrived at by the District Judge on the mainquestion in the case is right. He has, however, declared the deedsin question null and void. As has been often laid down by thisCourt, a fraudulent deed, unlike a deed executed by a person notcompetent in law to enter into contracts, is, under the Boman-Dutch law, valid until it is set aside or cancelled, and when it iscancelled, the cancellation refers back to the date of the deed. SeeOssen Lebbe v. Dias,1 and authorities cited by Wood Benton J. inhis judgment in Haramanis v. Haramanis 2 As regards the landsbelonging to the second plaintiff, the first defendant had noauthority to execute the deeds. He was the attorney of the firstplaintiff only, and he could not alienate the property of the secondplaintiff. However, as all the deeds were fraudulently executed, itwould perhaps be best that all the deeds should be set aside orcancelled.
The District Judge Vill amend the decree accordingly. I thinkthat the plaintiffs should have their costs in both Courts.
Ennis J.—
In this case the plaintiff sued (1) to have eleven deeds set asideand declared null and void (or that the second defendant be decreedto re-transfer the lands to the plaintiffs); (2) that the plaintiff'be declared entitled to the lands and premises ; and (3) in the1 2 Bat. 41.* {1907) 10 N. L. R. 332, 338.
IMS,
Fmuu J.
Madar Saibov. Sfrafudeen
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IMS.- alternative, that Jhe defendants be decreed to pay the plaintiffsBs. 100,000, the value of the lands, and that the said deeds be
—r-re-formed accordingly.
S(Ubo
v. Sirajudeen The plaint set out that the plaintiffs were partners, and the landsand premises fohned part of the partnership property of this firm,but that the deeds for some of the lands (schedule A) were in the^ame of the first plaintiff, the deed for one land (schedule B) wasin the name. of the second plaintiff, and the deeds for the rest(schedule C) were in the names of both plaintiffs. The first plaintifffor many years carried on business on his own account, and onApril 20, 1900, executed a power of attorney in favour of the secondplaintiff and M. M. Sawool Hamood jointly and severally. In 1905the first plaintiff took thve second plaintiff into partnership by adeed notarially executed, which provided that the Iknds in thename of Madar Saibo should, inter alia, constitute the capital of thepartnership. In 1906 Sawool Hamood, by virtue of a power ofsubstitution in the power of attorney, appointed the first defendantin his stead. On December 20, 1911, first defendant transferredthe lands and premises to the second defendant,, executing the elevendeeds it. is now' sought to set aside on the ground of fraud and'collusion.
In March, 1911, criminal proceedings were instituted against bothdefendants, in the course of which the first plaintiff and the' seconddefendant gave evidence. The first plaintiff died shortly after, andthe evidence given by him in the criminal proceedings has been putin evidence in this case. The evidence given by the second defendantin those poceedings was also admitted in evidence in this case.
On the appeal the first point argued was whether this evidenceof the second defendant was properly admitted. It is a statementmade by a party to the case, and as such would be admissible as anadmission, .whatever the inference^ it may suggest.
The next point taken on the appeal was that there" had been amisjoinder of plaintiffs and causes of action. At the first hearing ofthe case no such issue was raised, but after the evidence of the secondplaintiff the following additional issue was suggested and consentedto: “ Can the plaintiffs as partners maintain thi6 action in respectof the properties described in schedules A and B? ” This issuedoes not, in my opinion, clearly raise the question of misjoinder ofparties and causes of action. It has also not been dealt with in thejudgment of the District Court. Section 22 of the Civil ProcedureCode provides that objections to misjoinder of plaintiffs not takenbefore the hearing shall be deemed to have been waived, and section17, which also deals with misjoinder of plaintiffs, expressly providesthat nothing in the Ordinance shall be .deemed to enable plaintiffsto join in respect of distinct causes of action. A consideration ofthese two sections seems to indicate that objection to misjoinder ofplaintiffs and distinct causes of action can be taken at any time,
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«ven on appeal. The Code defines “ cause of action ” as “ thewrong for the. prevention or redress of 'which an action may. bebrought.” The wrong alleged in this case was the fraudulentdisposal of the landed property of the partnership by the defendantsin collusion, but no action could be brought until the deeds .wereexecuted, as no contract for the sale of lands has any force in law(Ordinance No. 7 of 1840) unless and until it is- in writing notariallyexecuted. The illustration to section SB of the Code must, it wouldseem, be construed in the light of Ordinance No. 7 of 1840, althoughit might by itself have a wide signification. The English law Ofpartnership as applied to Ceylon (Ordinance No. 22 of 1866) does notalter the position, as the provisions of Ceylon Ordinances have beenexpressly excepted. The effect of Ordinance No. 7 of 1840 would beto make eaoh deed a separate contract of sale on whioh an actioncould be brought, but in this oase the separate causes of actionwould not, I oonsider, be " distinct ” causes of action as contem-plated by section 17, for they are all based on the same wrong, by.the same defendants, done before the suit was instituted againstthe joint interests of the plaintiffs. The Code distinguishes separatecauses of action from distinct causes of action, for separate causesof action by joint plaintiffs may be joined under sections 35 ' and36, while by section 17 nothing in the Ordinance will allow thejoinder of plaintiffs in distinct causes of action. There has not,therefore, in my opinion, been a misjoinder of causes of action.The proposition is, however, one open to doubt, but the substantialrights of the parties have not been prejudiced, and the defect, ifany, would not justify an interference on appeal (section 39 ofOrdinance No. 1 of 1899).
On the question of fraud and collusion. As regards the firstdefendant, the evidence is clear that he assigned the propertyspecified in the schedule to the plaint to the second defendant onthe deeds executed on December 20, and ha6 not accounted for thealleged purchase money, Rs. 61,320. As regards the second defend-ant, the evidence. is that the price for which the property wa6alleged to have been sold is considerably below its value; that hemust have known from the documents that the first defendant hadno power to convey the legal title to . the lands in schedule B andto half the lands in schedule C, and he took no. steps to get thesecond plaintiff to join in the sale; that he did not take possessionof the property. The payment of the consideration by him hasbeen put in issue, and he has not gone into the witness box toprove the payment; his statement in the criminal proceedings thathe told the second plaintiff on November 10, when the secondplaintiff was in Kandy, that he was going to pay part of tbs’consideration (Bs. 16,500) then, and his further statement that thesecond plaintiff was in Kandy on December 20, the day the deedswere signed, and the second plaintiff knew of, and agreed to, the
1918;
JEmna <T.
Madar Saibov. Sirajudeen
1918.
BWHM J-
If actor JMbop. Sirtyudem
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sale; have been proved to be false by the evidence of the secondplaintiff and the documentary evidence supporting it, which showedthat the second plaintiff was not in Kandy-on November 10 or onDecember 20. These facts lead to a strong inference that thesecond defendant knew of the fraud, and acted in collusion withthe first defendant. Further, the failure of the second defendantto give evidence in the case leaves the payment of the allegedconsideration unproved. It has been urged on appeal that certainfacts in favour of the 6econd defendant have not been considered.One was that the first plaintiff knew, of tjie transaction in Januaryand took no steps till March; but is this so? The argument restedon the evidence of the kanakapulle and the entry in the “ LandPurchase Account ” in the firm’s books “ On account credit entryon land purchase account, Rs. 75,823.36.” The first plaintiffarrived in Kandy on January 17, the entry closing the land purchaseaccount was made on January 13, and the kanakapulle says thatsome days after the arrival of the first plaintiff the first plaintiffasked him about the entries, and that he informed the first plaintiffthat another kanakapulle had made an entry in the rough cashbook on instructions of the first defendant.
The first plaintiff in his evidence in the criminal proceedings saidthat he did not see this entry till he looked into the books (presum-ably in March). There is a discrepancy in this evidence, but Iam unable to see that it brings home to the first plaintiff a knowledgeof the sales in January, as the entry in the account is merely aclosing entry of the land purchase account. The amount does nottally with the sums alleged to have been paid in November andDecember. It is, in fact, inconsistent with those payments, anddoes not in any way disclose them..
In my opinion the deed for the land in schedule B is null andvoid, and the deeds for the lands in schedules A and C should becancelled, and I agree with my brother Pereira that it would bebest to cancel them all, subject to which amendment I wouldaffirm the decree with costs.
Affirmed. –
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