082-NLR-NLR-V-59-PITCHCHOHAMY-DE-SILVA-Appellant-and-SIYANERIS-and-others-Respondent.pdf
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J1ASXAYA KE, C.J.—Pitctichohamy dc Silva v. Si’jancris –
1957 Present :Basnayake, C.J., and K. D. de Silva, J.
PITCHOHOHAMY DE SILVA, Appellant, and SIYANERIS and
others, Respondents
S. G. 192—D. C. Malara, 22,717
Paulian action—Fraudulent alienation—Existence oj debt at dale oj impugned deed—
Xcccssarg ingredient—Transferor must be made party—Effect of his death—
,4fli'on under s. 217 of Civil Procedure Code—Scope.
Where n judgment-creditor seeks to have a deed of transfer executed by hisjudgment-debtor set nsido on the ground that it was executed in fraud ofcreditors, ho must establish, inter alia, that tho transferor owed him moneyat the date of tho impugned deed.
Where fraudulent alienation is alleged, the transferor must bo mndo a partyto the action.
The actio Pauliann does not lie against the heirs of a debtor unless they weroparties to tho fraud or benefited thereby'.
Quaere, whether in an action under section 247 of the Civil Procedure Codewlicra the claimant bases liis titlo to tho property seized on a deed of transfer -executed by tho judgment-debtor, it is competent for tho judgment-creditorto claim a declaration that such deed was executed by tho judgment-debtor in
. fraud of creditors.
-/^PPEAL from a judgment of the District Court, Matara.
JV. E. Weerasooria, Q.C., with If'. D. Gunasckera, for Plaintiff-Appellant.•*
V. Perera, Q-C., with D. ft. P. Goonetilleke, for Defendant-Respondent.‘
Cur. adv. vitll.
September 30, 1057. "Basxavake, C.J.—‘
Tho plaintiff-appellant instituted this action under section 2-47 of thoCivil Procedure Code in order to establish her right to tho lands describedin the schedulo to the plaint which have been seized at tho instance of thedefendant in execution of the writ issued in D. C. Matara Case No. 16621.She claims that she is tho owner of the lands by virtue of a deed of giftexecuted by her husband in her favour on 11th September 1944.•
Tho defendant resists the plaintiff's action on the ground that the deed ,of gift on which sho relies was executed fraudulently and collusively bythe plantiff’s husband (hereinafter referred to as tho dbnor) in order todefraud his creditors, especially the defendant and that lie therebyrendered himself insolvent..‘-
The scope of an action under section 247 of tho Civil Procedure Codeis limited. In tho instant case tho main issue was whether’ the plaintiffand not the donor was on tho dato of tho soizure tho-'owner of tho landsseized. It is not denied that the titlo to the lands was in the plaintiff16lix .
2J. X. B 3<507—1,593 (5/5S)
3C2
B ASX AY AKE. C.J.—P ilchchohamy dc Si! va ts. Siyancris
when tho soizure was ofFcctod. Even if the defendant’s claim that thegift was made in fraud of the donor’s creditors, particularly himself,and that the donor rendered himself insolvent thereby, is established,tho title conferred by the deed would be in the donee until the deed is'set aside, for an alienation in fraud of creditors is not ipso jure voidand is valid unless it is set aside within tho prescriptive period(Voct 331c XLII. 8 ; Van dor Keessel, Select Theses, CC, Lorenz’s' Trans-lation, p. G7). Under the Roman Dutch law that period is one yearand undor our Ordinance throe years *.
Under section 2IS of the Civil Procedure Code tho defendant had powerto soizo and sell and realize in monoy by the hands of tho Fiscal “ im-movable property belonging to the judgment-dobtor, or over whichor tho profits of which the judgment-debtor has a disposing power, -whichhe may exercise for his own benefit, and whether tho same bo held byor in tho name of the judgment-debtor or by another person in trustfor him or on his behalf”. Tho lands claimed by tho plaintiff did notat tho date of seizure come within the above description of lands liabletq be seized for tho donor’s debts. Tho plaintiff is therefore entitled tosucceed in her action as sho has established hor title to them. Thisaspect of tho caso does not appear to have been given tho emphasisit deserved at the trial although an issue in tho following form was triedand answered in favour of the plaintiff :
“ Was tho plaintiff tho owner of the premises referred to in thoschedule to tho plaint at the dato of seizure—27.S.51—by virtueof deed of gift No. 7906 of 11.9.193-1. ”
Tho attention of both sides seems to liavo been directed more to thequestion whether the deed of gift was liablo to he set aside on tho groundsalleged by tho defendant. –
As 1 have pointed out abovo the question raised by tho defendantin bis answer docs not affect tho only issue in this action. Two outof tho three Judges who heard the case of Ham man i-s v. Haramanis 1 2,took tho view that in an action under section 247 where tho claimant-bases his title to the property seized on a deed oi transfer executed by thejudgment-debtor it is competent for the judgment-creditor to claima declaration that such deed was executed by the judgment-debtorin fraud of creditors. This view is based on tho assumption, asWood Renton J. points out in the same case, that an alienation in fraudof creditors is void and not voidable. It is clear from the discussion of thesubject of Frauds on Creditors in Voot, Book XLII, Title 8, and Van derKeessel, Select Theses, cited abovo, that that assumption is erroneousand that the better view is that taken by Wood Ronton J. in tho case ofHaramanis v. Haramanis {supra) and in tho cases referred to b}r himin his Judgment 3.■
1 Section 10, Prescription Ordinance.
Ahamado Lebbe ct al. v. Adam Bawa el al., 3 A. C. if. 1.
'■ 10 N. L. if. 332.
3 Abdul Coder v. Annamalay, 2 X. L. if. 166.
Wijewardene t>. Maitland, 3 C. L. R. 7.
Silva v. Xirigoris, 7 X. L.B. 105..
Silva r. Xona Haininc, 10 X. L. if. 11.
BASX'AY.AKE, C. J.—Pitchchohamy de Silva v. Siyaneris
363
Even if instead of praying by way of answer that tho deed bo sotasido tho defendant had instituted a Partlian action for the same purposetho defendant could not on tho facts proved in this case Jiavo succeeded.In the first placo tho evidonco does not establish that tho defendant wasa creditor at tho date of tho deed of gift, nor was tho donor a debtor.
• In September 1944 tho defendant had notified to tho donor that he hadpurchase*! a land called Palugahawatto which tho latter claimed and inrespect of which ho had entered a caveat. When action was eventuallyinstituted the defendant succeeded in tho District Court. Tho decisionof tho District Cour t was reversed on appeal to this Court and finallytho defendant succeeded in the appeal to tho Privy Couircrl. It is for therecovery of tho costs of tho legal proceedings which amount to.Rs. 10,513.31 that tho defendant has caused the plaintiff’s lands to beseized. In no sense of tho expression can tho defendant be said to havebeen a creditor of tho donor on 11th September 1944. On that day thodonor did not owo him any money nor did the creditor have a claimwhich, was enforceable against him. Tho debt came into existence onlyon Stli February 1951 over six years after the gift. As tho questionof prescription has not been raised at tho trial it need not bo discussedfor the purpose of this case. The defendant’s own exhibit D7 showsthat he challenged tho deed of gift in Case Ho. 1G621 and that the donorwas cross-examined as to it and the ei rerun stances under which it wasexecuted. Ho gave a long list of lands which ho still owned after hehad mado the gift and gcnorally referred to tho assets ho had at thatdate and thereafter. His evidonco shows that he was by no moansinsolvent in September. 1914. There is also no ovidonco that lie thenhad unsecured creditors whose claims ho was not able to meet. Fur-thermore the defendant has mado no endeavour to establish that thedonor has impoverished himself by tho gift by having him examined undersection 219 of tho Civil Procedure Codo. Tho defendant is thereforenot entitled to a decree setting asido tho deed.
There is a ser ious defect in the defendant’s case. Ho alleged fraud ontho part of both tho donor and the donee but did not make the donor,who was alive at tho time ho filed answer, a party to tho action. Wherefraud is alleged the party against whom the allegation is made must bemado a party h Tho defendant lias since tho death of the donor broughtin his children as parties ; but that cannot euro tho defect nor are thechildren proper parties where it is not alleged that they were parties tothe fraud or benefited thereby. Tho adio Pauliana is an action injwsonam (Voet Bk XLII S.2-), and does not lio against tho heirs of adebtor unless they aro conscious of the fraud and only if somethinghas come into thoir hands through tho guilo of tho deceased debtor(Voet Bit XLII 8.4). •-.
For tho abovo reasons I am of opinion that tho plaintiff-appellant -is entitled to succeed in her action. I therefore set aside the judgmentof tho District Judgo anti order that decree bo entered—‘/
(a) declaring tho plaintiff entitled to the lands described in the schedule
to tho plaint,•.
1 Dissmiayake v. Baban (1903), Matara Cases 211.
2S4 D. C- Balticaloa 2192 (S. C. Minutes Aug. 17, 190-3).
5 Tambyah 0.'
364 – •' '• ■■• Fonseka v. Perera_
declaring that the defendant has no power to seize and sell the lands- in question for the recovery of his decree for costs in I>. C.
.- Matara Case No. 16,621, and- . ' '
– * • t * * • *
(c) ordering the Deputy Fiscal to release the lands from seizure.
The appellant is entitled to his costs both hero and below.
pe Silva, J.—I agree./1•
'Appeal allowed.