129-NLR-NLR-V-30-SHAW-&-SONS-v.-SULAIMAN-et-al.pdf
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Present: Lyall Grant and Drieberg JJ.
SHAW & SONS v. SULAIMAN et al.
37—D. C. (Inty.) Colombo, 25,143.
Execution—■Property seized by several creditors—Estate declared insolvent—Court orders executor to sell property—Order acquiesced in bycreditors—Objection to sale.
Property which formed part of an estate administered by Courtin testamentary proceedings, was advertised for sale after it hadbeen seized in execution by several creditors. After* notice to allthe creditors the Court declaring the estate to be insolvent stoppedthe sale and directed the executor to sell the property, and bringthe proceeds to the orddit of the estate.
Held, that it was not open to a oreditor, who had acquiesced in theorder to sell, to execute his decree by seizure and sale of the property.
Per Dbxebebg J.—In Ceylon there is no provision by which,on proof that an estate is insolvent, thesadministration proceedingscan be transferred to the Court of Bankruptcy.
I PPEAL from an order of the District Judge of Colombo.The facts appear from the judgment of Lyall Grant J.
Croos da Brera, for plaintiffs, appellant.
H. V. Perera (with Ameresekere), for first and second defendants,respondents.
H. H. Bartholomeusz, for third respondent, purchaser.
March 27, 1929. Lyall Grant J.—
This is an appeal from an order of the District Judge of Colombodirecting the release of a seizure effected at the instance of theplain tiffs-appellants.
The plaintiffs, an English company, sued the defendants, theexecutors of one Ilema Lebbe Naina Marikar Hadjiar of Colombo,on certain bills and obtained judgment against the estate on July 8,.1928, for Rs. 24,000.-
A number of other creditors had also obtained judgment againstthe estate, and in two cases decree was entered and writs issued,against the property of the deceased.
The premises now in question were seized at the instance of athird creditor and were advertised for sale on July 28,1928. Beforethis date five other creditors who had filed actions petitioned theDistrict Court to stay the sale. It appeared at the inquiry thataltogether three creditors had obtained seizure of the premises.
1929
Lyau.Grant J.
Shaw <t>Sana v.Sulaiman
( 458 )
Meanwhile testamentary proceedings had been instituted by theexecutors, and in this testamentary action the Court on February29, 1928, declared the estate to be insolvent.
In these proceedings the plaintiffs took part. All the creditorsexcept the plaintiffs agreed to participate in a judicial settlement.The position then taken up by the plaintiffs was that they were notinterested in the matter as they claimed to have been paid in lull.They also denied the insolvency of the estate.
It is quite clear that from this date the estate was treated by theCourt as an insolvent estate, and on this looting the Court on July24, 1928, proceeded to inquire into the application for. the stay ofsale. The sale was stayed and an order was made empowering theexecutors to sell the premises at a certain price to a certain purchaserand to deposit the proceeds to the credit of the case.
The negotiations with this purchaser fell through, and on thepetition of the executors the Court directed that the premises shouldbe sold by public auction, the mortgagee paid off, and the balancebrought into Court for distribution among the unsecured creditors.It further directed that the conditions of sale should be approvedby the Court and that the sale should be subject to the Court’sconfirmation. The premises were sold and the sale confirmed onDecember 13, 1928.
The appellants object that there were a number of irregularitiesin this transaction, for instance, that the conditions of sale were notapproved by the Court and that the confirmation of the sale fixeda higher price than the amount bid at the auction, the higher amountbeing agreed to by the purchaser.
Whatever the importance of these irregularities may be, theplaintiffs did not appeal against this order.
They seek to justify their failure to appeal on the ground thatthey were not a party to the proceedings.
They have produced the proxy given to their Proctor in thetestamentary proceedings and contend that it only authorized himto appear for the purpose of drawing out an amount of moneylying in Court at the credit of the estate and alleged to have beenseized by the plaintiffs. They contend that when permission towithdraw this money was finally refused the proxy ceased to be ofany effect.
The powers given by the proxy are not clear and it might beTead as giving the Proctor authority to press the plaintiffs’ claimin the testamentary case.
In any event it is alleged for the respondent and not contradicted,that the plaintiffs actually participated in the testamentary actionfor the purpose of drawing a dividend from the estate.
1929
( m )%
The learned District Judge has held that the proxy empowersMr. Motha to appear on behalf of the plaintiffs and to recover ontheir behalf in the testamentary case such moneys as he could.Mr. Motha was present at the inquiry which resulted in the order ofDecember 13, 1928, and asked that his appearance be hoted, andthe Judge is satisfied that he was then acting in concert with othersin opposing the confirmation of the sale.
I see no reason to disagree with the view taken by the DistrictJudge, that the plaintiffs were represented at the inquiry whichresulted in the order confirming the sale and that it was an orderfrom which they had a right of appeal which they did not exercise.
I Instead of exercising this right of appeal the plaintiffs proceededto make a fresh seizure of the premises which they registered onDecember 22, 1928. At this time the conveyance to the purchaserunder the order of Court had not been executed. It was onlyexecuted on January 28, 1929, and registered on January 30, 1929.
It is admitted that if the seizure was a valid one it has priorityover the conveyance.
The seizure was brought to the notice of the Court and onFebruary 8, 1929, the Court ordered it to be released and its regis-tration cancelled. From that order the plaintiffs now appeal,i Apart from the question of the status of the plaintiffs in thetestamentary case, a matter I have already dealt with, the plaintiffsfaise the objection that the Court had no power to sell the propertywithout notice to the mortgagee or to the seizing creditors. Thisobjection might have been raised on the order allowing the sale oron the order confirming the sale if- the plaintiffs had no notice of theformer inquiry. But I do not think it is now open to the plaintiffswho had notice of the proceedings to question the correctness of the'procedure adopted in the testamentary case.
The plaintiffs in effect now claim the right to ignore proceedingsto which they have been a party and orders by which they aretherefore bound, and to enforce their decree without reference to therights of other creditors and in defiance of the Court.
I think their position has only to be stated to carry its owncondemnation.
In Aniriskamy v. Silva,1 which has been brought to my noticeby my brother Drieberg, de Sampayo J. held:—
“ When the Court exercised its jurisdiction and took upon itselfthe sale of the property, the executor had no longer anyauthority to dispose of the property, except upon furtherorders of Court, mid cannot be allowed to defeat the actsof the Court in regard to the sale, for that would be not onlydirectly to defy the Court, whose jurisdiction had! been exer-cised at his own instance, but to set himself above.theCourt.”
» 18 N. L. R. 454.
Lyaxx.Grant J.
Shaw S> *Sana v.Stdaiman
( 460 )
There an executor who had applied to Court for and obtained anorder for the sale of immovable property upon which the propertywas sold to A was held to have no right to sell the property to Bpending the conveyance to A, and in an action rei vindicatio by Aagainst B, A was held entitled to succeed although B’s conveyancewas earlier in date.
The same principle applies to a creditor who has notice of theproceedings and who has appeared in the administration case.
The appeal is dismissed with costs.
Dbxeberg J.—
I agree with the judgment of my brother Lyall Grant.
It appears to me that the appellants are concluded by theiracquiescence in the course ordered by the Court on the 29thFebruary.
We have no provision similar to section 125 (4) of the BankruptcyAct, 1883, by which on proof that an estate is insolvent the adminis-tration proceedings can be transferred to the Court of Bankruptcy.Under section 199 of the Civil Procedure Code the administrationof a deceased person’s estate as insolvent according to the lawregarding the estates of persons adjudged insolvent, which isgoverned by Ordinance No. 7 of 1853, can be effected only in thecourse of an administration suit [Hay v. Administrator of the Estate
. of Nunn1). Administration suits, which were of common occurrencebefore the passing of the Civil Procedure Code, have since falleninto disuse owing to the very complete provision made for thejudicial settlement of accounts by executors and administrators andto the power given to the Court under section 724 of the CivilProcedure Code of compelling the legal representative to render anaccount at any time-(Karonchihamy v. Angohamy2).
On the 29th February, 1928, the position was simply this. Someunsecured creditors had seized these premises, and they would in theusual course have proceeded to sell them. Subject to the preferen-tial claim of the creditors who held mortgages over these premises,the balance proceeds of sale would under section 352 of the Civil Pro-cedure Code have been divided among all those judgment-creditorswho had prior to realization applied to the Court for execution oftheir decrees. The appellants would have been in a position torecover a rateable share of the proceeds. All that the Court didwas to direct that the sale should not be effected in the course ofexecution by any particular creditor, but that it should be carriedout by the executors under its own supervision and directions so asto ensure the best price being realized in the interests of all thecreditors. This order in no way affected the right of the appellantsto share rateably in the proceeds in precisely the same manner as
* {1913) 4 Bal. Notes 15.
1929
LyaixGrant J.
Shaw <ScSonsv.Siilaiman .
> (1906) 9 N. L. R. 161.
( 461 )
if the sale had been carried out by the Fiscal in execution of thedecrees of any of the execution-creditors who had seized the property.This order, which I may say is in accordance with the regularpractice of the Court, was made with notice to the appellants. Theappellants only contended that they did not wish to participate inthe judicial settlement, i.e., the settlement by the Court of theAccounts to be rendered by the executors, but they did not objectto the Court taking away from particular creditors the right to sellthe property on their own writs and itself controlling the sale of theproperty. It must be taken that they agreed to a sale by theexecutors under the direction of the Court and that they waivedtheir right to seize and sell the property under their decree.
What they now seek to do is to ignore the order for sale by theCourt and to defeat the title of the purchaser under the sale byexecuting their decree and effecting a seizure which by reason of itsregistration will give it priority over the conveyance to the purchaserat the sale.
The respondents fear that this registration will give the rights ofthe appellants under the seizure priority over the purchaser’sconveyance by reason of the provisions of section 238 of the CivilProcedure Code, and the appellants undoubtedly claim that it will,for that is the reason underlying their action. The sale by theorder of Court was not a sale in execution of a decree but a sale bythe executors who had power to sell without the order of Court.The fact that in the special circumstances of this case they got thesanction of the Court and were subject to its directions may notdeprive the sale of the character of a private alienation. The onlygrounds the appellants have for objecting to the order of February29, 1928, are concerned with the manner in which that order wascarried out. If they were prejudiced in this way, the proper courseopen to them was to have moved in the testamentary proceedingsby application in the Court or by appeal if necessary. It is notpossible to permit them by independent action to defeat theexecution of an order in which they acquiesced.
1M9
Dbiebero J.
Shaw «fcSons v.Sulaiman
Appeal, dismissed.