NAGALINGAM J.—-Na.nayalcka.ra v. Abeygunawardene
1949Present: Nagalingam and 'Windham JJ.
NANAYAKKARA, Appellant, and ABEYGUNAWARDENE,Respondent
S. C. 332—D. C. Oalle, L 755
Mortgage Ordinance—Hypothecary action—-Lis pendens not registered—Saleby mortgagor after decree—Sale in execution—Who has superior title—Necessary party—Section 6—-Chapter 74.
Section 6 of the Mortgage Ordinance must be read as limiting thescope of its provisions to necessary parties in esse at the time that ahypothecary action is instituted.
The title of a purchaser under a hypothecary decree does not relateback to the date of his bond.
Appeal from a judgment of the District Judge, Galle.
W. Jayewardene, for plaintiff appellant.
E. B. Wikramanayake, K.C., with Cyril E. S. Perera, for defendantsrespondents.
Cur. adv. vuU.
May 9, 1949. Nagalingam J.—
This is an action by a purchaser under a mortgage decree for adeclaration of title to the land purchased by him against a privatepurchaser from the mortgagor who obtained his conveyance subsequentto the date of the mortgage decree but prior to both the sale and theconveyance to the mortgage purchaser.
Eor a proper appreciation of the legal points involved it may be bestto set out a few salient facts. The mortgage was executed in 1936. Themortgagee put his bond in suit in 1941, and obtained his decree the sameyear. The decree of the District Court was appealed against and thejudgment of the Supreme Court was delivered on March 19, 1942, affirmingthat of the lower Court. Five days later, namely on March 24, 1942,the mortgagor transferred by deed 1D1 the land mortgaged to the 1stdefendant who by a later deed conveyed it to the 2nd defendant. Theproperty hypothecated was under the decree sold on August 27, 1942,and purchased by the plaintiff to whom conveyance P6 of October 27,1942, was duly issued.
The contest revolves round the question as to whether the plaintiffhas a title superior to that of the 1st defendant. The case has beenargued on the footing that no question of registration is involved. Onbehalf of the plaintiff-appellant Mr. Jayawardene relies upon section 6of the Mortgage Ordinance Cap. 74 Legislative Enactments and contendsthat as the 1st defendant had not at the date of the filing of the plaintin the mortgage action registered his deed and furnished an address forservice on him of legal documents as required by sub-section (2) thereof thedecree entered in the mortgage action by virtue of sub-section (3) thereofbinds the 1st defendant.
XAGAI.IZN'GAM J.—Naiiayakkara v. A-beyg una-war dene
Section 6 of tlie Mortgage Ordinance it is true in sub-section (1) thereofdeclares that every person is a necessary party to a hypothecary actionwho has any mortgage on or interest in the mortgaged property to whichthe mortgage in suit has priority. Sub-section (2) proceeds to say thata party declared to be necessary under sub-section (1) shall not be anecessary party unless the instrument under which the necessary partyderives his title is duly registered and the party has also furnished anaddress for service of legal documents on him. But it is clear bothfrom a reading of sub-section (1) and sub-section (2) that section 6 of theMortgage Ordinance must be read as limiting the scope of its provisionsto necessary parties in esse at the time that a hypothecary action isinstituted. This will be clear when one asks the question as regardssub-section (1) not necessarily: Who is a necessary party, but moreappropriately : To what does the sub-section declare a person to be anecessary party ? The obvious answer is that it is to the hypothecaryaction. This is made clearer still if one has recourse to sub-section (2)of the section which specifies the point of time at which the instrumentunder which a necessary party derives title should be registered. Theanswer again is obvious for the section declares that the point of timeshould be that at which the plaint is filed and that is the plaint in thehypothecary action.
Wow, if a puisne encumbrancer was not in existence at the time theplaint is filed could it be said that such a person is a necessary party ?Mr. Jayawardene contends that it is immaterial when a puisneencumbrancer acquires his title but that every person who subsequentto the mortgage in suit even after decree acquires any title or interestis a person who is not only declared to be a necessary party to the actionbut also one who is required to have the document under which hederives his title or acquires interest to be duly registered and have hisaddress furnished and that any such person failing to comply with theserequirements is a person who is declared by sub-section (2) cf section 6to be a not necessary party, and therefore by virtue of sub-section (3)bound by the decree.
I do not think this contention can prevail. The only persons who aredeclared to be necessary parties are puisne encumbrancers in existenceat the date of the institution of the action and correspondingly a puisneencumbrancer in existence at the date of the institution of the hypothe-cary action who fails to have the instrument under which he deriveshis title registered and fails to register his address is declared to be a notnecessary party who alone would be bound by the decree entered inthe hypothecary action. To uphold Mr. Jayawardene’s contentionwould be not only to revolutionise all notions relating to mortgageactions but to attribute to the legislature an intention to compel theperformance of acts which would be impossible and incapable ofaccomplishment. A mortgagee cannot possibly make a puisne encum-brancer who acquires his title after the entering up of the decree in themortgage action a party to the suit and a puisne encumbrancer whoacquires his title subsequent to the decree cannot possibly register theinstrument under which he derives his title or register his address sothat it may be in the registers at the date of filing of the plaint.
1*3". nr. A 90969 (8/49)
486NA6ALINGAM JNanayalcTcara v. Abeygunawardene
I do not therefore think that the scope of section 6 of the MortgageOrdinance extends to puisne encumbrancers whose title comes intoexistence only subsequent to the institution of the mortgage action.Mr. Jayawardene however relied upon a passage in the judgment ofGarvin S.P.J. in the case of Subasinghe v. Palaniappa Pillai1 whereno doubt the learned Judge in discussing the right of a person whoacquires interest in the mortgaged property even subsequent to themortgage decree to intervene in the mortgage action said :
“ Assuming that the petitioner was the person who during thependency of that action (mortgage action) had acquired an interestin the property under hypothec then it was his duty to avail himselfof the provisions of section 6 (3) and intervene in the action.”
It wiffbe noticed that the learned Judge was not dealing with the precisepoint with which I am concerned in the present case. It is undoubtedlytrue that section 6 (3) enables a person who is declared by sub-section (2)to be not a necessary party to intervene but the observation of thelearned Judge cannot be regarded as implying that he took the viewthat a person who acquires his rights subsequent to the institution of theaction is one who is deemed a necessary party under sub-section (2) ofsection 6 of the Ordinance.
Support for the view I have expressed is to be found in the case ofWijewardene v. Perera2 where certain parts of the headnote are some-what misleading and which I am afraid has misled Mr. Jayawardene toofor he relied upon this case as well in support of his proposition.Fernando J. delivering the judgment of the Court said :
“ When the action on the mortgage bond was filed the 1st defendanthad no title, was not in a position to have title registered and thereforehad no interest in the property which would entitle her to be a partynecessary to the determination of the action.”
I am therefore of opinion that the 1st defendant was -not a necessaryparty within the meaning of sub-section (1) of section 6 nor was he a partydeclared by sub-section (2) of section 6 to be a not necessary party. Theresulting position therefore is that the 1st defendant was neither anecessary party within the meaning of sub-section (1) of section 6 nor anot necessary party under sub-section (2) of section 6 nor was he in facta party to the action. The decree, therefore, entered in the hypothecaryaction was not binding on him.
Mr. Jayawardene presented alternatively another line of argumentand that is that the plaintiff is entitled to faff back upon the mortgageitself which is the source of his title and relied upon the case of MohamedBuhari v. Silva 3. In that case de Sampayo J. no doubt held that “ thepurchaser under the mortgage decree is entitled to refer his title backto the mortgage bond,” relying on the cases of Muttu Raman v. Marsila-many4 and Silva v. Ounewardene5. Had the case cited stood withoutmodification Mr. Jayawardene’s contention would have been entitledto succeed. But the view expressed in that case came up for consideration
i (1934) 35 1ST. L. R. 289.3 (1923) 24 N. L. R. 477.
* (1937) 11 C. L. W. 57.4 (1913) 16 N. L. R. 289.
3 (1915) 18 -Y. L. R. 241.
NAGALHTGAM J.—Nanaydkkara v. Abeygunawardene
before a bench of five Judges in Anohamy v. Hanifa1 where the Judgesdefinitely expressed the contrary view and held that the doctrine ofrelation back could not be sustained. The doctrine of relation backwas built up on the doctrine of lis pendens. So long as no statutoryprovision was made in regard to registration of lis pendens, from themoment of litis contestatio any dealing with the property would havebeen void as against the rights acquired under the decree. The legislaturestepped in in view of the hardships caused by applying this principle andenacted a provision regarding the registration of lis pendens firstly byOrdinance 29 of 1917, and subsequently by the Registration of DocumentsOrdinance Cap. 101; by section 11 of this latter Ordinance the legislatureenacted that no lis pendens instituted after November 9, 1917, shouldbind a purchaser unless and until the lis pendens is duly registered. DeSampayo J. in regard to the corresponding provision of the Ordinance29 of 1917 took the view that the registration merely enabled the purchaserto use it as a weapon of offence against persons acquiring title subsequentto the lis but held that the non-registration permitted the purchaser tofall back on the mortgage bond and contest the title afresh against aperson desiring title subsequent to the lis. In the five bench case thisview too was dissented from and it was held that the effect of non-registration of lis pendens was to leave the title of a subsequent purchaserunaffected by a title derived under the decree-entered in the lis that wasnot registered. The doctrine of relation back of the title of the purchaserto the mortgage bond is of no assistance to the plaintiff.
Mr. Jayawardene is unable to rely on the registration of the lispendens in regard to the mortgage action as in fact no registration hastaken place. Had the lis pendens been registered then the 1st defendantwould have been bound by the decree and the title of the plaintiff wouldbe superior. It is disheartening to find that Proctors do not even afterthe Registration Ordinance has been in operation for a number of yearsseem to utilise its salutary provisions and prevent clients who have themisfortune to retain their services from suffering irreparable loss merelybecause of their own ignorance of the provisions of the law or theircarelessness in regard to fulfilling the obligations cast on them as membersof a learned profession. The mortgagee’s rights are very simply andeffectively conserved by the two enactments the Mortgage Ordinanceand the Registration of Documents Ordinance. A mortgagee plaintiffneed only consult the registers at the date of the institution of his actionand add as parties all puisne encumbrancers whose names are placed onthe register. This step effectively binds all persons who had acquiredinterests up to the date of action but subsequent to the mortgage in suit.Immediately the action is filed if the lis pendens is registered and if thissecond step is taken no further dealing by the mortgagor can in any waytend to detract from the validity of a conveyance executed in pursuanceof the mortgage decree.
In view of the foregoing the appeal fails and is dismissed with costs.Windham J.—I agree.
1 (1923) 23 JST. L. R. 289.
NANAYAKKARA, Appellant, and ABEYGUNAWARDENE, Respondent