085-NLR-NLR-V-34-MOHAMED-ANNAMALAI-CHETTIAR-et-al.pdf
Mohamed v. Annamalai Chettiar.
321
1932Present: Garvin S.P.J. and Maartensz A.J.
MOHAMED v. ANNAMALAI CHETTIAR et al.
D. C. Colombo, 3,795.
Insolvency—Certificate of conformity refused—Appeal to Pripy Council—Application for protection pending appeal—Powers of Supreme Court.
The Supreme Court has inherent power to grant protection fromarrest to an insolvent, while an appeal by him to the Privy Councilagainst an order of the Supreme Court refusing him a certificate ofconformity-is pending.
T
HIS was an application for protection from arrest pending an appealto the Privy Council.
The petitioner was adjudged insolvent by the District Court of Colomboon November 23, 1927, and on December 18, 1930, the District Judgegranted the petitioner a certificate of conformity of the second class.
On an appeal by the opposing creditors, the respondents, the SupremeCourt reversed the order of the District Court and refused the petitionera certificate of conformity. The petitioner thereupon applied to thePrivy Council for special leave to appeal, which was granted on November19, 1931. Since then, the petitioner applied for and obtained leave toappeal to the Privy Council in forma pauperis.
H. V. Perera (with him Nadarajah), for petitioner.—Leave to appealin forma pauperis has been obtained. Stay of execution until appealis heard is always allowed under the inherent powers of the Court. See(2905) 33 I. L. R. Cal. at 932-934. Whether or not a stay of executionhas been obtained, the Court can order a stay of execution.
Once a Court is given jurisdiction, it must be deemed to havejurisdiction over all procedural matters incidental to such jurisdiction.In Nityamoni Dasi v. Madhu Sudan Sen 1 the Privy Council held that theHigh Court had power to stay execution notwithstanding that the appealhad been admitted by special leave of the Privy Council.
1 (1011) 1. [,. I(. 38 Cal.0 330.
! i
-J. X. R 16CS1 (4/52)
322
GARVIN S.P.J.—Mohamed v. Annamalai Chettiar.
The matter is still pending, and'is not finally determined. The Courtreferred to in section 152 of the Insolvency Ordinance, No. 7 of 1853,is the District Court, not the Supreme Court. The Appellate Courtmust be deemed to have, for this purpose, at least the power which bystatutory provision is given to the District Court.
N. E. Weerasooria, for respondent.—The Court of . Appeal has nooriginal jurisdiction in insolvency proceedings.
[Garvin S^P.J.—Even an Appellate Court must give directionsincidental to carrying out its own decrees'.]
The Appellate Court is not here asked to vary or set aside an ordermade by an original Court. This is not a matter which arises in regardto an execution of a decree. See Mohes Chandra Dhal v. Satrughan DhaVwhere the High Court held that it had no jurisdiction to stayexecution where leave to appeal was granted by the Privy Council.
Unless the Appellate Court is vested with jurisdiction, whateverinjustice may be done, the Appellate Court has not the power to grantrelief. The authorities are clear that insolvency proceedings are distinctfrom the remedies contemplated by the Code with reference to a stay ofexecution. In the absence of any provision, statutory or otherwise,or any decided cases in support of a grant of this application, the AppellateCourt should not exercise its inherent power to grant relief.
H. V. Perera, in reply.—This Court made the order refusing a certificate.It is quite open for this Court to suspend the operation of this order untilthe matter is finally decided by the higher Court.‘
December 16, 1932. Garvin S.P.J.—
This is an application for an order granting the petitioner protectionfrom arrest pending the decision of an appeal to His Majesty in Council.The petitioner was adjudicated insolvent by the District Court of Colomboon November 23, 1927, and his estate was laid under sequestration.The proceedings thereafter followed the usual course and on December 18,1930, the District Judge granted the petitioner a certificate of conformityof the second class.
The opposing creditors, who are the respondents to this application,then appealed, and this Court by its judgment dated June 25, 1931,reversed the order of the District Court and refused the petitioner, acertificate of conformity.
The petitioner then applied to this Court for conditional leave toappeal to His Majesty in Privy Council. But this application wasrefused on the ground that the power of this Court to grant such leaveis limited to applications for leave to appeal from judgments or ordersof this Court in “ civil suits or actions ” and does not extend to the caseof judgments and orders in insolvency proceedings which, by a longseries of decisions binding on this Court, have been held not to comewithin the meaning of these words.
* (I«99) 27 7. L. R. Cal. at p. 3.
GARVIN S.P.J.—Mohamed v. Annamalai Chettiar.
323
Application was then made to the Privy Council for special leave toappeal which was granted on November 19, 1931. Since then thepetitioner has applied for and obtained leave to appeal to the PrivyCouncil in forma pauperis.
Pending his application to the Privy Council for special leave thepetitioner applied to the District' Court to grant him protection andthat Court by its order of October 5, 1931, allowed the application. Anappeal was entered by the present respondents which was successful.It was held that the District Court had no power to grant protectiononce this Court had refused the petitioner a certificate. In the courseof his judgment, Macdonell C.J. held that the proper Court to whichsuch an application should be addressed is the Supreme Court.
Such an application has now been made and the question for us iswhether this Court has power to grant the petitioner the relief he praysfor and, if so, whether this is a case in which such powers should beexercised.
It is not disputed that the Privy Council Appeals Ordinance does notapply to the case before us, nor is there any other legislative enactmentby which provision has been made for such a matter as the one withwhich we have to deal. This Court has no statutory power to entertainor grant such an application, but it is urged that it has inherent powerto do so. I should be reluctant to subscribe to the proposition thatthis Court has no powers other than those derived from express legislation.Like other Courts in the Empire, and, in particular, superior Courts,this Court has always been considered to possess a certain reserve ofpowers which are generally referred to as its inherent powers. It hasbeen said that these powers are equal to its desire to order that whichit believes to be just. This is perhaps too wide and somewhat mis-leading a statement. No Court may disregard the law of the land orpurport in any given case to ignore its provisions. Where a matterhas been specifically dealt with or provided for by law, there can be noquestion that the law must prevail, for justice must be done accordingto law. It is only when the law is silent that a case for the exerciseby a Court of its inherent powers can arise. Section 839 of the CivilProcedure Code recognizes the existence of such powers and to. an extentdefines them when it says that nothing in that Code “ shall be deemedto limit or otherwise affect the inherent power of the Court to makesuch orders as may by necessary for the ends of justice or to preventabuse of the process of the Court ”.
Subject to the limitations above referred to, the inherent powers ofthis Court would seem to extend to the making of such orders as may benecessary for the ends of justice and to prevent abuse of the process ofthe Court. But these powers must be exercised in accordance withsound legal principles and not arbitrarily or whenever a case ariseswhich is not provided for by legislation.
The case under consideration is not dealt with or provided for by theLegislature. Is it a case which comes within the scope of the inherentpowers of this Court, and is it one in which those powers should beexercised?
324
GARVIN S.P.J.—Mohamed v. Annamalai Chettiar.
The refusal of a certificate to an insolvent immediately brings section152 into operation and every proved creditor becomes entitled to receivea certificate in form R and to issue and enforce a writ of executionagainst the body of such insolvent. The effect of an order refusing acertificate is that the insolvent immediately becomes liable to be arrestedand cast in prison at the instance of a proved creditor. This is thesituation in which the petitioner finds himself as a result of the judgmentof the Supreme Court refusing him a certificate from which he has obtainedthe leave of the Privy Council to appeal. Finality has not yet beenreached and it is possible that the Privy Council may reverse the orderof this Court and grant him a certificate. The allowance of a certificatewould necessarily imply that he should have received it in the firstinstance and should not therefore have been exposed to the risk of beingarrested and imprisoned. An interval of some months, at least, mustintervene before the Privy Council decides the petitioner’s appeal. Ifin the interval he is arrested and cast into prison—and this is what theopposing creditors^ claim to be entitled to do—the appeal if successfulwould be rendered largely nugatory.
Where a matter is sub judice by reason of the pendency of an appealto His Majesty in Privy Council it is but right and proper that this Courtshould be able to stay proceedings based upon its decree in any case in’which not to do so Will be to render the decree of the Privy Councilpartly or wholly infructuous or nugatory or to make orders in regardto such further proceedings so that no injustice or’prejudice will becaused, to a successful appellant or his interests. It seems to me to bea sound principle that this Court should have power to control actiontaken on its own decree while that decree is under appeal to the PrivyCouncil, so as to prevent irreparable loss or injury to the appellant inthe event of his appeal being allowed.
Section 761 of the Civil Procedure Code vests in the Court of firstinstance power in appropriate cases and on terms to stay the executionof appealable decrees before the expiry of the time allowed for appeal.
Section 763 of the same Code which deals with applications forexecution pending appeal empowers the Court to protect the interests ofthe appellant by requiring the applicant for execution to give securityfor the restitution of any property which may be taken in executionor the payment of the value of such property and for the due performanceof the order which may be made in appeal.
Similarly, in the case of those appeals to His Majesty in Council fromdecrees of the Supreme Court which are admitted by leave of this Court,rule 7 seems to contemplate that there will be no execution of the decreeunder appeal but empowers this Court to allow execution on the decree-holder entering “ into good and sufficient security, to the satisfactionof the Court, for the due performance of such order as His Majesty inCouncil shall think fit to make thereon ”.
These provisions clearly proceed upon the principle that when « decreeof a Court is under appeal to a higher tribunal the Court which passedthe decree should remain vested with such powers of control over the pro-ceeding subsequent to and based on its decree as are necessary to preventinjustice or prejudice to the person who may ultimately be successful.
MAARTENSZ A.J.—Mohamed v. Annamalai Chettiar.
325
In acting in accordance with this principle we shall be acting inaccordance with a principle that has the approval of the Legislature.
An order refusing an insolvent a certificate is not executable as such.But as has already been said its effect is to decree every proved creditorentitled to proceed to personal execution against the insolvent. ShouldHis Majesty in Privy Council hold that he is a person to whom a certi-ficate of conformity should have been granted, it would amount to adeclaration inter alia that he was not liable to arrest and imprisonment.
Must we stand by and do nothing to prevent the arrest and imprison-ment of the applicant in the interval, which may well be a long one,before the order of the Privy Council is made known? His estate isunder sequestration and. no pecuniary or other loss or prejudice to theopposing creditors is involved in granting his prayer for protection. Itonly means that their right to arrest his person and cast him in prisonfor debt will be postponed until the Privy Council decides whether heis a person who is liable to be arrested and imprisoned.
For my part I am satisfied that this is a case in which this Court hasinherent power whicli should be exercised to prevent what might proveto be a grave injustice to the applicant and that in granting his applicationwe shall be acting on a sound judicial principle and in accordance withthe intention of the Legislature manifested in parallel cases for whichit has made provision.
I would accordingly direct that the insolvent be granted protectionuntil the decision of His Majesty in Council upon his appeal is madeknown.
The applicant is entitled to the costs of this application.
Maartensz A. J.—
The petitioner- is an insolvent who was granted a certificate of con-formity by the District Court. In appeal this Court held that he wasnot entitled to such a certificate and he has obtained leave to appealfrom it to the Judicial Committee of the Privy Council. The presentapplication is for an order protecting him from arrest pending theproceedings in the Privy Council. .
– The application is opposed by the respondents who opposed the grantof a certificate to the insolvent. They contended that this Court hadno jurisdiction to make the order prayed for, as an order protecting aninsolvent from arrest could only be made by a District Court in thecircumstances provided for by sections 36 and 133 of the InsolvencyOrdinance, No. 7 of 1853.
The question for decision is whether the Court has jurisdiction to makethe order prayed for, and if so whether the petitioner is in the circumstancesentitled to protection from arrest until his appeal to the Privy Councilis decided. Section 36 enacts that—
“ If the insolvent be not in prison or custody at the date of theadjudication, he shall be free from arrest or imprisonment by anycreditor in coming to surrender, and after such surrender during thetime by this Ordinance limited for such surrender, and for suchfurther time as shall be allowed him for finishing his examination,
326MAARTENSZ A.J.—Mohamed v. Ann-amalai Chettiar.
and for such time after finishing his examination, untii his certificatebe allowed, as the court shall from time to time by endorsement uponthe summons of such insolvent, or by writing under the hand of theJudge of such court, think fit to appoint; . ..
By section 152 of this Ordinance—
“the assignees for the time being of the estate and effects of anyinsolvent, when the accounts relating to his estate shall have becomerecords' of the court, shall be deemed judgment-creditors of suchinsolvent for the total amount of the debt which shall by such accountsappear to be due from him to his creditors and every creditor of anyinsolvent, immediately after the proof of his debt shall have beenadmitted, shall be deemed a judgment-creditor of such insolvent, tothe extent of §uch proof; and the court, when it shall have refused togrant the insolvent any further protection, or shall have refused orsuspended his certificate, shall, on the application of such assigneesor of any such creditor grant a certificate in the form R in the scheduleto this Ordinance annexed, and every such certificate shall havethe effect of a judgment entered up in the said court, until the allowanceof the certificate of conformity of such insolvent; and the assigneesor the creditor to whom according to such certificate, the insolventshall be indebted as therein mentioned, shall be thereupon entitledto issue and enforce a writ of execution against the body of such insolvent;and the production of any such certificate to the secretary of suchcourt shall be sufficient authority to him to issue such writ; Providedalways that every such last mentioned certificate shall be deemedto have been cancelled and discharged by the allowance of the certi-ficate of conformity of such insolvent, from the time Of such allowance;
Section 132 of rhe Ordinance enacts that—
“ No such certificate shall be delivered to the insolvent until afterthe expiration of the time allowed for entering an appeal; and if anappeal be duly entered against the judgment of such court for theallowance of such certificate, or for the refusal, the withholding, orthe class of the certificate, and notice thereof be given to the court insuch manner as may by any general rule or order to be made inpursuance of this Ordinance be directed, the certificate shall befurther kept by the court and abide the judgment of the SupremeCourt thereupon; …
Section 133 is not relevant to this appeal.
The petitioner had applied for and obtained an order from the DistrictCourt of Colombo protecting him from arrest till the determination ofhis application to the Privy Council for leave to appeal.
This order was set aside in appeal on the ground that the powers ofthe District Court to grant protection from arrest were limited to the'powers created by section 36 of the Ordinance and that once the certi-ficate was refused the proviso to section 152 came into operation.
The Chief Justice was of opinion that if the insolvent in this casedesired protection pending his application to the Privy Council for leaveto appeal to it, the Court to apply to would seem to be the SupremeCourt.
MAARTENSZ A.J.—Mohamed v. Annamalai Chettiar.
327
This decision is reported in the 12th Volume of the Ceylon LawRecorder, p. 88, under the name of Mohamed v. Ramasamy Chettiar andanother.
The petitioner’s counsel admitted that he could not point to anyprovision of law under which the order prayed for could be made andappealed to the inherent powers of this Court to make an order whichjustice required should be made. He submitted that the purpose ofthe appeal to the Privy Council would be defeated if the insolvent wasarrested and imprisoned pending a decision in his appeal, and citedthe case of Hukum Chand Boid v. Kumalanand Singha1, where it was. heldthat (I read the head note) —
“ The Code of Civil Procedure binds all courts so far as it goes. Itis however not exhaustive and does not affect previously existingpowers unless it takes them away; in matters with which it does notdeal the court will exercise an inherent jurisdiction to do that justicebetween the parties, which is warranted under the circumstances andwhich the necessities of the case require.”
It was argued on the authority of this. case that the order prayed forcould be granted by this Court as there was no provision of law whichforbade the making of such an order. Counsel for the respondentcited, in support of his contention, that this Court had no jurisdictionto make this order—the case of Mohes Candra Dhal v. Satrughan Dhal andothers', where the High Court held it had no jurisdiction to order astay of execution, where leave to appeal was granted by the JudicialCommittee of the Privy Council and not by the High Court.
This decision was followed, but not with approval, in the case ofNityamoni Dasi v. Madhu Sudan Sen '. In the latter case the JudicialCommittee of the Privy Council, on appeal to it, held that the High Courthad power to stay execution notwithstanding that the appeal had, asin this case, been admitted by special leave of His Majesty’s Council.
The rule in force in India is that “ notwithstanding the grant of acertificate for the admission of any appeal the decree appealed fromshall be unconditionally executed unless the Court otherwise directs—Rule 13 of Order 45.
There is no such rule in Ceylon. On the contrary, rule 7 of schedule I.of The Appeals (Privy Council) Ordinance, 1889, which enacts that—
“ Where the judgment appealed from requires the Appellant topay money or perform a duty, the Court shall have power, whengranting leave to appeal, to direct that the said judgment shall becarried into execution if the persons in. whose favour it was givenshall before the execution thereof enter into good and sufficientsecurity, to the satisfaction of the Court, for the performance of suchorder as His Majesty in Council shall think fit to make thereon.”inferentially contemplates a stay of execution unless leave to execute isgiven.
There are therefore stronger grounds for holding that under our lawthis Court has jurisdiction to stay the execution of a decree pending thedecision of His Majesty’s Council in an appeal admitted by special leave.
> (190',) 33 I. {.. R. Cal. 027.* (1809) 27 1. L. R. Cal. 1.
3 (lulli I. /,. R. m Cal. 330.
328
AKBAR J.—Abraham Singho v. Harmanis Appu.
It was next contended by the respondent that this was not anapplication to stay the execution, of a decree.
I am unable to accept the distinction respondent’s counsel sought todraw between the present application and an application to stay theexecution of a decree in an action by way of regular procedure.
In my opinion, the certificate in the form R takes the place of a decreein a regular action, and an application to the secretary for executionagainst the body of an insolvent is as much an application to execute adecree as an application made in an ordinary action. I accordinglyhold that this Court has jurisdiction to make the order prayed for. Itis, I think, manifestly a case in which the order prayed for should bemade. The object of the appeal to the Privy Council would be to aconsiderable extent nullified if the insolvent were to be imprisonedwhile the appeal is pending. The stigma of imprisonment would alwaysremain and the petitioner would not be able to obtain restitution byway of damages as the imprisonment would be the result of legal processproperly obtained.
I allow the application.
Application allowed.