093-NLR-NLR-V-05-PALANIAPPA-CHETTY-v.-ISMAIL-SEIDIK.pdf
( 322 )
1902.March 7and 12.
PALANlAPPA CHETTY v. ISMAIL SEIDIK.D.C., Colombo, 14,310.
Competition between creditors—Right of Crown to preference for Customs dutiesand warehouse rent—Its right to intervene without a decree in its favour,as against other judgement-creditors—Civil Procedure Code, s. 352. •
Where a debtor's money is brought into Court, the Crown has a rightto intervene even without a judgment in its favour, and be awardedpreference for Customs dues and warehouse rent payable by the debtor,as against other creditors who are armed with judgments.
The Crown has only to satisfy the Court that it has a bond fide claim.
M
ESSRS. Mack, Proctors, moved the District Court of Colombofor a notice on the Attorney-General, plaintiff in Crown case
No. 2,194 of that Court, to show cause why orders of paymentshould not be issued in favour of the plaintiff in case No. 14.810,and the plaintiffs in cases Nos. 14,266, 14,241. 14,311, &c., for theproportionate share due to each out of the sum of Rs. 6,065.25belonging to the defendant and brought into Court.
After argument heard, the Additional District Judge (Mr. FelixDias) made the following order, which explains fully the facts of theca se: —
" A sum of Rs. 6,065.25 realized by the sale of some rice belong-ing to the defendant has been seized under the plaintiff’s writ andpaid into Court.
“ The defendant has left the country, and several other decree-lioldfers againsthimhavealso seized thefund in Court.The
Crown has a claim against the man for some Customs duesand warehouserent,for whichan actionNo. 2,194 hasbeen
instituted; but no decree has been entered in that case as thesummons has not yet been served on the defendant. The plaintiffand other judgment-creditors now apply to divide the money inCourt rateablv, but the Crown appears and applies for preferenceof payment ofits claimundersection 5of the CrownDebts
Ordinance. No. 14 of 1863. I am of opinion that this claim cannotbe supported under this section, which clearly shows that suchpreference is only allowable as against private debts contractedsubsequent to the date of the accruing of the Crown debt! Thealleged debt to the Crown was incurred between the 24th and 30thOctober, 1900,butthedebtsto the present plaintiffwere
contracted between the 20th August and the 24th October. Theplaintiffs’ claim is based on six promissory notes, and even layingaside the note of the 24th October for Rs. 2,007.50 the balance of
I 323 )
his claim alone is far in excess of the sum in Court. This decreewas signed on the 30th November, 1900, but that fact has no bearingon the contention now put forward by the Crown. The dateto be considered under section 5 of the Ordinance is the dateon which the debt was ‘ contracted', ’ and not the date on whicha decree was obtained on it.
“ In any case it seems to me that in claiming concurrence withother creditors in the proceeds of sale of a debtor’s property theCrown is in no better position than a private party. Section352 of the Civil Code is the law to be applied-in such cases,and under it no one who is not a decree-holder 'has any voice in thematter, and in the present instance the Crown has no decree
•* I therefore allow the application of Messrs. Mack of the 17thMay with costs.
The Attorney-General appealed.
Walter Pereira, for appellant.—The Crown claims preferencein respect of Rs. 906.51 under the Roman-Dutch Law, as for dutiesdue to it. The District Judge thinks the Crown cannot claimconcurrence under section 252 of the Procedure Code without adecree. That section does not bind the Crown, as it is not namedin it. The Crown cannot be deprived of its prerogatives exceptby express legislation. The old summary procedure which wasavailable to the Crown before the introduction of the Code is stillavailable to it. No decree is necessary7. An affidavit setting forththe claim is amply sufficient to give preference (1 Thomson’sInstitutes. 456). Here the claim is for Customs dues and ware-house charges. The Crown is entitled to priority. King .v.De Bedier, Ramauathau. 1820-33, p. 158, per Marshall, J.;in re Henley & Co.. L. R. 9, Oh. Div. {1818) 469.
Sampayo, for plaintiff, respondent.—The Crown should have, ajudgment. The passage from Thomson will not bear the con-struction put upon it. It simply says that questions of claim andpreference may be tried summarily, but it does not relieve theclaimant of the duty of being armed with a decree. CivilProcedure Code. § 352. The question of the claim need not bedecided by a separate action since the Code. The old procedureand the Roman-Dutch procedure have been repealed (Konamalaiv. Sivakolunt.hu,9 S. C.G. 203).The preferentialrights of
special mortgagesmust beconceded.Velliappa Chettyv. Pitcha
Maula, 4 N. L.R. 311.Preference ' is a clam forfull satis-
faction as against proportionate division, which is concurrence.It is not disputed that the Crownhas a prior right, but it
must have a judgment. Taxes and other dues to the Crown are
1902.
March 7and 12.
( 324 )
1902.March 7and 12.
governed by section 5 of the Ordinance No. 14 of 1843. The Crownprerogative under the Roman-Dutch Law is a Common Law prerog-ative, and it can be extinguished only by express statute, and § 5touches all claims, even those of the Crown. The preamble ofthe Ordinance No. 14 of 1843, shows what is meant by a debt tothe Crown. That Ordinance is for the security and recovery ofall debts due to the Crown, and this is a debt due. It is an impliedcontract. It is a contract by implication of law. [Middleton, J.—Where is the contract?] One need not expressly agree to paytaxes, but by simply being a citizen or staying in this country oneagrees to pay taxes which such citizenship and residence involves.Compare the contract by record. In that a man does notexpressly agree to the judgment, but the fact that a judgment hasbeen passed against him imports a contract against him. Leak OnContracts, p. 10, speaking of implied contracts, says that a simplecontract is that raised by law independent of agreement. It mayhave no existence in fact, but the law fastens the contractualrelation. This case is one of contract, and within section 5 ofOrdinance No. 14 of 1843. The judgment cited from Rdmandthimwas one of the Roman-Dutch Law purely, and does not applyafter this Ordinance.
Pereira (in reply).—Taxes are not due by reasou of a contract,but by reason of the King’s Fiscal prerogatives. Blackstoneexplains that. Pereira’s Institute, p. 45. It is not a contractwhich the subjects can repudiate. That being so, the Ordinanceonly touches contracts and not prerogatives like this. As toprocedure, the passage from Thomson is clear, and the judgmentsfrom 9 S. .S'. C. and 4 N. L. R. are only based on section 352 anddo not apply.
Cur. adv. vult.
12th March, 1902. Moxcreikf, A.C.J.—
In November, 1900, one Palaniappa Chetty got judgment in anaction against Ismail Seidick for upwards of Rs. 9,000 due uponvarious promissory notes.
Tn that action, upon the 27th March, 1901, Messrs. GeorgeSteuart & Co. brought into Court a sum of Rs. 6,065.25' whichwas due from them to the debtor. Thereupon certain creditorswho had obtained judgment against the same debtor put in claimsfor concurrence in the distribution of the sum paid into Court,and the Crown put in a claim of preferential payment for a debtdue to it by the same debtor in respect of Customs duties, harbourdues, and warehouse rent. The Crown had not obtained a judg-ment: it had taken proceedings, but had been unable to pursue
( 325 )
them to judgment, because the debtor had absconded, or at allevents gone to India. Of the amount due by the debtor to theCrown, a balance of. Rs. 906.51 is still unpaid. It- appears fromsection 5 of Ordinance No. 14 of 1843 that the Crown has apreference of payment over all specialties and other debts due toother persons for debts due to it upon mortgage, judgment, award,bond, or other specialty, or upon simple contract, provided that thespecialties or other debts referred to have been contracted afteithe date upon which the debts were contracted to the Crown.Now, the contraction of the debt due to the Crown was notanterior to, but was admittedly subsequent to, the contractionof the various judgment debts upon which the claims for con-currence have been based in this case.
It was argued in opposition to the claim of the Crown that, inview of the terms of that section, the Crown could not havepreference, because its claim is founded upon simple contract andis later in date than the debts of the other creditors. It was arguedthat a debt due to the Crown in respect of Customs duties, harbourand warehouse dues was a debt due upon an implied contract.I do not appreciate that argument. This is a revenue debt. Thereis an obligation to pay such debts, but because there is an obligationit does not follow that it is an obligation arising from contract.In point of fact it does not legally rest upon any contract.
Then comes the question as to whether, putting aside' thissection, the Crown has a preference of payment in cases of thiskind. I think that undoubtedly it has. I do not propose to gointo the subject, because in spite of a passage in Vander Lindenwhich has the appearance of expressing a contrary view, there isno room for doubt in the matter. The question was discussed ina case reported in Ramanathan, in the year 1827, p. 158. Referenceto the matter will also be found in Pereira's Institutes, vol. I.,p. 20. I entertain no doubt that the views expressed in both ofthose references are correct.
There remains the last question, whether the Crown has anyright to intervene without being in possession of a judgment.There appears to be no doubt that before the Civil Procedure Codebecame law, it was the practice for persons who sought to inter-vene for concurrence or preference to support their claims bymeans of affidavits, and the judges were in the habit of dealing'with the claims in a summary way (as is .set forth in volume I. ofThomson’s Institutes, p. 456.
If there was no opposition to a claim, if it had all the appearance-of being a bond fide claim, it was allowed without referring theparty to a separate action. That having been the practice before
1002.Marsh 7and 12,
Moncbbiff,
A.C.J.
( 326 }
1902.
March 12.
Moncreiff,
A.C.J.
the Civil Procedure Code, a practice founded upon materials inthe Boman-Dutch Law, I think that parties should not be deprivedof any right to which they were entitled under that practice,unless the Legislature has taken that right away. Section 352 ofthe Civil Procedure Code undoubtedly requires that litigants whoseek to intervene shall be in possession of – judgments, but it isplain that in this case the Crown is not bound by that provision,because the Crown is not bound by provisions of this descriptionunless it is expressly mentioned, and there is no mention of it inthe section. That proposition is discussed at page 40 of Pereira’sInstitutes, vol. /., and I entertain no doubt that the question isthere correctly stated. That being so, I think that the Crown isentitled to be treated in these proceedings as it would have beentreated before the passing of the Civil Procedure Code. If itsclaim is not opposed, if there is no reason to doubt- it, it shouldbe preferentially admitted.
In my opinion the learned judge was wrong. The claim of theCrown should be admitted jn preference to the claims of the othercreditors who have obtained judgment.
Middleton , J.—Agreed.
♦