PERERA v. JONES et al

044-NLR-NLR-V-41-PERERA-v.-JONES-et-al.pdf


Perera v. Jones.
193
1940Present: Howard C.J. and Soertsz J.
PERERA v. JONES et al.
110—D. C. Colombo, 48,598.
Mortgage decree—Sale of property by auction—Application for commission—Notice to judgment-debtor—Execution against other property—Applica-tion for writ—Civil Procedure Code, s. 347—Mortgage Ordinance, s. 1~(.Cap. 74).
Where a decree is entered in a hypothecary action under section 12of the Mortgage Ordinance directing that the property mortgaged' besold by auction, and where the judgment-creditor applies for a com-mission for the sale of the property by an auctioneer, it is not necessaryto give notice as required by section 347 of the Civil Procedure Code.
Where, in such a case, it is proposed to levy execution on propertyother than the mortgaged property the Court would, require an applica-tion for execution under sections 223 and 224 of the Civil ProcedureCode.
Muttu Raman Chetty v. Mohamedu (21 N. L. R. 97) distinguished.
T
HIS was an action on a secondary mortgage brought by the plaintiffagainst the first defendant. Under the decree entered in the
action the property mortgaged was ordered to be sold by an auctioneerfreed from the interests of the second defendant, who had purchasedthe property from first defendant after the mortgage. When theplaintiff’s proctor moved for a commission to be issued to a licensedauctioneer to sell the mortgaged property in terms of the decree, hesubmitted an application for execution framed in terms of section 224of the Civil Procedure Code and the District Judge ordered notice onthe first defendant. After notice was served the defendant was absentand the commission to sell was issued.
Before execution of the transfer, the second defendant made anapplication to set aside the sale on the ground that he had no notice ofthe issue of the commission and the sale, as he claimed he was entitledto have under section 347, Civil Procedure Code.
The District Judge refused the application.
N.Nadarajah (with him H. A. Wijemanne), for second defendant,appellant.—The question for consideration is whether section 347 of theCivil Procedure Code is applicable in execution proceedings in a hypothe-cary action. When section 201 of the Code was in force it was held inWalker v. Mohideen1 that the “ General Provisions ” of the Code, viz.,sections 336 to 354 were applicable to sales in execution of mortgagedecrees. See also Peiris et al. v. Somasunderam Chetty *. The positionis the same even after section 201 of the Code has been superseded bysection 12 of the Mortgages Ordinance of 1927 (Cap. 74)—AnnamalayChetty v. Sidambaram Chetty It is true that the sale in the present caseis not by the Fiscal. But the “ General Provisions ” of the Civil ProcedureCode would be applicable even to an auctioneer’s sale.
1 (1924) 26 X. L. R. 310 at p. 315.* (1924) 2 Times of Ceylon 189.
» (1931) 33 X. L. R. 277.
0J. X. B 17627 (5/52)
194
Perera v. Jones.
[Soertsz J.—Why were sections 255 to 288 and 290 to 297 expresslymentioned in section 12 (2) of Cap. 74 unless it was to exclude the othersections of the Civil Procedure Code ?]
The other sections were not expressly mentioned because according toWalker v. Mohideen (supra) they were already accepted as applicable.Section 12 (2) of Cap. 74 was intended to provide for the gap caused by theruling in Walker v. Mohideen. Sections 336 to 349, Civil Procedure Code,would be applicable to all execution proceedings whether relating to hypo-thecary or money decrees. Otherwise, in mortgage actions in the caseof assignment, for example, or death, mortgage decrees will be left un-provided for, because no special provisions have been made concerningthose matters in the Mortgage Ordinance. Further, it has been decidedthat a mortgage decree is a decree for the payment of money—MuttuRaman Chetty et al. v. Mohamadu et al.'; Don Jacovis v. Perera'.Chapter 22 of the Civil Procedure Code would, therefore, be generallyapplicable to the execution of a .mortgage decree, except the sectionsmentioned in section 12 (4) of the Mortgage Ordinance.
The appellant should be regarded as a judgement-debtor within themeaning of section 5 of the Civil Procedure Code. He ought, therefore,to have been noticed. A non-observance of the provisions of section 347,Civil Procedure Code, would render the sale which took place null andvoid—Keel et al. v. Asirwatham et al.’; Shyam Mandal v. SatinathBanerjee
H. V. Perera, K.C. (with him E. B. Wikremanayake and F. C. deSaram), for plaintiffs, respondents.—Shyam Mandal v. Satinath Banerjeemerely lays down that a sale held without jurisdiction is void. Onecannot contest that position. Section 347 of our Civil Procedure Code isdifferent from the corresponding Order 21, rule 22 of the Indian Code.In India the Court executing the decree is different from the Court whichpasses the decree. As long as a Court has jurisdiction to sell property,a non-compliance with any section dealing with procedure, such assection 347, would merely constitute an irregularity, and the sale willnot be set aside unless it can be shown that substantial injury has beencaused to the owner of the property sold—Kumed Bewa v. PrasannaKumar Roy'. No substantial prejudice has been alleged in the presentcase. Nor can it be said that the Court under whose direction the sale. took place had no jurisdiction. The difference in effect between totalabsence of jurisdiction and an irregularity caused by non-compliancewith a merely procedural provision is clearly brought out in the decisionof the Privy Council in Malkarjun v. Narhari et al". That case has, how-ever, been misapplied in certain later Indian decisions. See alsoRagunath Das et al. v. Sundar Das Khetri et al. ’.
The governing section concerning decrees in hypothecary actions issection 12 of the Mortgage Ordinance. Under that section it is withinthe jurisdiction of Court to order a sale of the mortgaged propertywithout notice to any one. It should be noted that in the decree in the
■ {1919) 21 X. L. if. 97.• {1916) I. L. R. 44 Cat. 954.
‘ {1906) 9 N. L. if. 166.s (1912) 1. L. if. 40 Cal. 45.
* (1935) 4 C. L. W. 128.* (1900) I. L. if. 25 Bom. 337.
■ A. I. R. 1914 P. C. 129.
SOERTSZ J.—Perera v. Jones.
195
present case it was an auctioneer and not the Fiscal-who was appointedto sell. The directions regarding sale of the mortgaged property are nota part of the mortgage decree—Zdhen v. FernandoBartlett v. Renga-samy’. The directions can be changed from time to time by Court.If they are no part of the decree they do not impose on the parties anyof the duties mentioned in the sections dealing with execution by theFiscal.
N. Nadarajah, in reply.—The absence of notice to the appellant is morethan an irregularity and renders the whole proceeding void. All theconflicting decisions of the Indian Courts are considered by a Full Benchin Rajagopala Ayyar v. Ramanujachariar et al.3.
Cur. adv. vult.
February 22, 1940. Soertsz J.—
The respondents to this appeal, brought this action on April 28, 1932,to recover from the first defendant a sum of money he owed them, on aloan secured by a secondary mortgage of certain landed property thatbelonged to the first defendant, at the time of the transaction, that is tosay, on July 12, 1929.
They prayed that the first defendant be ordered to pay the sum ofRs. 42,748.49 which was the amount alleged to be due at the date of theinstitution of the action. They also prayed that the mortgaged propertybe declared specially bound and executable, and that in default of pay-ment by the first defendant of the amount decreed, the mortgagedproperty be sold by an auctioneer appointed by the Court, freed from theinterests of one W. Siman Perera who had purchased this propertyfrom the first defendant after they had obtained their mortgage.
In view of this prayer for a hypothecary decree they made SimanPerera a party, in conformity with section 6 of the Mortgage Ordinance,and in the caption of their plaint, they described him as the seconddefendant. This was in accordance with what, I believe, has been theinvariable practice, but it seems to me that it would have been sufficient,and, perhaps, more logical if they had only named him, and by way ofdescription, added the words “ necessary party under section 6 of theMortgage Ordinance ”. In their plaint, however, they expressly statedthat they sought no relief against this party, not that I see that theycould have asked for any relief against him. There was no privitywhatever between them and him, and they had no cause of action againsthim, as that phrase is understood in the Civil Procedure Code. Themortgagor had given a warrant of attorney to confess judgment, andon the production of that warrant duly perfected by the proctor to whomit had been given, judgment was entered against the mortgagor onJanuary 25, 1933. On the same day Siman Perera, the necessary partywho is the present appellant, asked that he be given three years’ time topay the amount decreed against the mortgagor, and when this applicationwas refused, he preferred an appeal, and asked the District Judge to staythe sale pending the hearing of his appeal. This request was grantedto him on terms. In the end, his appeal was dismissed, and the casewent back to the District Court on November 6, 1933. Thereafter, nosteps appear to have been taken in the case till July 20, 1938. On that
1 {1931) 1 C. L. W. 170.* (1932) 34 N. L. R. 139. s I. L- R. (1923) 47 Mad- 288.
196
SOERTSZ J.—Per era v. Jones.
day, the plaintiff’s proctor moved that the Commission directed in thedecree be issued to a licensed auctioneer to sell the mortgaged propertyin terms of the decree. With this motion they submitted an applicationfor execution in the form prescribed by section 224 of the Civil ProcedureCode. The District Judge made order “ notice 1st defendant for 22. 8. 38.”The notice was served on the first defendant. He did not appear andthe “ notice was made absolute ”—whatever that may mean,—andCommission to sell went out.
On November 8, 1938, the Commissioner appointed for the sale,submitted his report stating that the respondents, had purchased themortgaged property on October 31, 1938. All that remained to be donewas for the Secretary of the Court to satisfy himself that the sale wasin conformity with the conditions of sale approved by the Court, and toexecute a conveyance in favour of the purchasers.
But before this could be done, the appellant made application prayingthat the sale be set aside on the ground that he “ had no notice whateverof the issue of the Commission and of the sale ”, and contending that“ the said sale held under a Commission issued without notice to himis bad in law ”.
The District Judge refused this application with costs, and the presentappeal is the appellant’s protest against that refusal.
On this appeal, the questions arising for determination are (a) Doessection 347 of the Civil Procedure Code apply in a case in which ahypothecary decree has been entered and direction given that anauctioneer shall carry out the sale, when the judgment-creditors aremoving for a commission for the sale of the mortgaged property by. anauctioneer ? ; (b) If it does apply, is the appellant a judgment-debtorwithin the meaning of that section, and as such, entitled to be servedwith the notice indicated therein ? ; (c) In the absence of such notice,is the sale that took place on October 31, 1938, void or only voidable ?The second and third questions will, of course, have to be answeredonly in the event of the answer to the fjrst being in the affirmative.
A close examination of the matters involved in these questions has ledme to thp conclusion that section 347 of the Civil Procedure Code doesnot apply.
The difficulties in this case appear to take their origin in the fact thatthe respondent’s proctors, when they asked for a commission to sell toissue, tendered along with their motion, an application for executionin accordance with section 224 of the Civil Procedure Code. This wasunnecessary, and indeed inappropriate in the case of such a decree ashad been entered in this case, for in that decree, there were directionscut and dried in regard to what was to follow on the default of themortgagor, that is to say, on his failure to pay the amount decreed. Inthe case of an ordinary money decree, however, an application for execu-tion is the sine qua non for bringing into operation the functions of theFiscal by way of enabling a creditor to recover or, at least, to attemptto recover his judgment debt by the seizure and sale of property.
Section 226 of the Civil Procedure Code, for instance, requires a demandfor payment to be made of the judgment-debtor before he can be put
SOERTSZ J.—Perera v. Jones.
197
in the wrong in such way as to make his property liable. That demand,of course, is possible, only if the Fiscal’s Officer meets the judgment-debtor. If the debtor is absent, the absence itself constitutes the defaultwhich entitles the judgment-creditor to point out property for seizureand sale. Section 223 of the Civil Procedure makes this quite clear.It enacts that “ /or the purpose of effecting the required seizure and sale…. the Fiscal must be put in motion by application for execution
of decree to the Court which made the decree sought to be enforced ”.Section 224 then goes on to provide the form of that application.
Now, the decree entered in this case is such that the intervention ofthe Fiscal is not required, for this decree not only orders the mortgagorto pay the amount decreed, but also declares the mortgaged property“ specially bound and executable freed from the interests and rights ”of the present appellant and goes on to direct that “ in default of paymentforthwith ”, the specially bound and executable property “ freed fromthe rights and interests of the appellant, be sold by public auction, bya licensed auctioneer, on conditions of sale approved by the Court.” Itdirects further that “ in the event of there being a deficiency ” themortgagor dp pay to the plaintiffs the amount of the deficiency, andfinally, it provides that the plaintiffs shall be “ at liberty at any time,in the course of the proceedings, and until payment of their claim andcosts, to apply to this Court for any directions either in regard to the saleor otherwise”.
In the case of such a decree as this, there is really no place for theFiscal. No demand need be made for there is already direction in thedecree itself that the sale shall take place " in default of payment forthwith ”,nor is the Fiscal required in order to effect seizure and sale, for anauctioneer has been appointed to carry out the sale.
It might have been different, if in default of directions such as thosegiven in this case under section 12 of the Mortgage Ordinance, or directionsgiven expressly to ^hat effect, the sale came to be held by the Fiscal.That was just what happened in the case of Muttu Raman Chetty v.Mohamadu '. The decree in that case was entered on December 15, 1902,and it directed that the defendants do pay a sum of money, and that indefault of payment, the mortgaged property be sold by the Fiscal, andthat if the proceeds of sale were insufficient, the balance be recoveredby execution levied upon any other property of the defendants. No stepswere taken till January, 1911, and the writ that issued on that occasionproved fruitless. In February, 1913, the plaintiffs applied for a re-issueof the writ, and the question then arose whether section 337 of the CivilProcedure Code applied and operated to debar them. It was held thatit did. That case is clearly distinguishable from this. In the first placeit arose long before our Mortgage Ordinance “ amending and consolidatingcertain laws relating to mortgages ”, was enacted. Secondly in that casethe decree provided for the sale of the property by the Fiscal and it gaveno special directions to him in regard to the conduct and to the conditionsof sale, and in the absence of such directions, as the law then stood,the Fiscal could be put in motion only in the manner indicated in section223 and 224 of the Code, and in the train of those sections come the other
> 21 .v. L. R. 97.
198
SOERTSZ J.—Perera v. Jones.
provisions of Chapter XXII of the Code. Under the law as it obtainedbefore 1928, the Court had no authority to give directions for the execu-tion of the decree except in the decree itself—Walker v. Mohideen *.To-day the position is quite different, for section 12 of the MortgageOrdinance specially authorizes the Court to give directions in the decreeor subsequently in regard to the enforcement of the decree. The result isthat what section 337 of the Civil Procedure Code has in view can now besecured by the Court using the power vested in it by section 12 of theMortgage Ordinance to give or not to give directions as it thinks fitwhen they are asked for in regard to the sale of the mortgaged property.Thirdly, that case is distinguishable on the ground that there wasprovision in that decree for the sale of property other than the mortgagedproperty in the event of a dificiency and failure to pay it. That probablyis the position even in the law as it is to-day. If occasion should arisefor directions to be asked for and to be given for the sale of other propertyafter the mortgaged property had been discussed, the provisions ofChapter XXII of the Civil Procedure would apply, and the Court wouldrequire an application for execution to be made under sections 223 and224 of the Civil Procedure Code, for the decree entered in a case like thisauthorizes the auctioneer to sell only the mortgaged property. In fact,section 12 of the Mortgage Ordinance empowers a Court to give directionsin the decree or subsequently only in regard to the sale of the mortgagedproperty. If after that property has been discussed, resort to otherproperty is found necessary, it would appear, that the provisions of theCivil Procedure Code relating to the execution of decree is the only wayin which to put into operation the functions of the Fiscal whose inter-vention is then necessary.
In the course of the argument before us, appellant’s counsel relyingupon the judgment in the case of Muttu Raman Chetty v. Mohamadu',and in the case of Don Jacovis v. Perera’ submitted that a mortgagedecree is a decree for the payment of money, and from that submissionhe sought to deduce the proposition that all the provisions of ChapterXXII of the Code, except those specially excluded by section 12 (4) ofthe Mortgage Ordinance, applied to every mortgage action. I am quiteunable to accede to that proposition, because as I have already observed,although in the decree that was entered in the present case, there is anorder for the mortgagor to pay the amount, there is also a directionas to what shall be done on default of payment of the sum found due,and a demand under section 226 of the Code is, therefore, not necessary.From this fact it follows that the Fiscal need not be put in motion undersection 223 of the Code for the sale of the mortgaged property. Theinevitable result is that section 347 has no application whatever in thecircumstances of this case because that section applies only when theremust be application made for execution and when that application ismade after more than a year has elapsed from the date of the decree.
But it is contended that in this case there was in point of fact, anapplication for execution made, evidently in compliance with section 224of the Code. The question then, is whether because the plaintiffs when1 26 N. L. R. 310.* 21 N. L. R. 97.J 9 N. L. R. 166.
NIHILL J.—Attorney-General v. James Singho.
199
they moved for a Commission to sell, went further and resorted to a formprescribed for certain cases, they are bound by all the other provisionsin Chapter XXII of the Code which are connected with section 224in cases in which section 224 applies. In my opinion, the answer to thatquestion must be that they are not so bound. The principle of law is“ quando plus fit quam fieri debet, videtur etiam Mud fieri quod faciendumest All the plaintiffs need have done was to move that a Commissiondo issue. They did that, but while doing it, they did more. Theysupported their motion with an application provided for cases differentfrom theirs. What is the legal consequence of that? In my opinion,it would be fallacious to say that a party who has done all that he w jsrequired to do to achieve the end he had in view, and who had gonebeyond, and done what he need not have done, is thereafter bound by allthe consequences of the superfluous wrong procedure. In my view,this is surplusage that may be ignored.
In regard to the cases of Don Jacovis v. Perera (supra) and Silva v. Sing-ha' it must not be overlooked that the application was for the executionto recover the balance due on the decree after the mortgaged propertyhad been discussed, and in those cases the questions arose between the“ mortgagor-creditor ” and the “ mortgagee-debtor ”. There was no partyin those cases occupying the position of the present appellant.
In that view of the matter, the other questions (b) and (c) above do notarise.
I dismiss the appeal with costs.
Howard C.J.—I agree.
Appeal dismissed.