032-NLR-NLR-V-13-SIVA-v.-DIAS-et-al.pdf
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Present: The Hon. Sir Joseph T. Hutchinson, Chief Justice,and Mr. Justice Wood Benton.
May 9, 1910
SILVA v. DIAS et al.
D. C., Colombo, 28,868.
Application to set aside fiscal's sale—Material irregularity—Inadequacyof price—Civil Procedure Code, ss. 276 and 282.
A person seeking to set aside a Fiscal’s sale on the ground ofmaterial irregularity must lead direct evidence to prove that thesale of the property at an undervalue was due to the irregularity;a mere allegation of inadequacy of price without proof that it wasthe effect of the irregularity, on the ground of which the sale isimpeached, is not sufficient evidence of substantial damage causedby such irregularity.
rp HE facts of this case appear sufficiently from the judgments.
Van. Langenberg, Acting S.-G. (with him Koch), for appellants.The Privy Council has held in Tasaddult Rasul Khan v. AhamadHusain1 that the connection between the low price and the irregu-larity must be proved by “ direct evidence. ” The respondentshould have called some person to testify that if he had seen the 'advertisement in the Gazette he would have bought the things for ahigher price. In Muttukumaraswamy v. Nannitamby2 our Court hasheld the same. See also Jagan Nath v. Makund Prasad,s ShinnBegum v. Agha Ali Khan * The respondent (petitioner) is estoppedby his conduct from impeaching the validity of the sale, inasmuchas he was present at and bid at the sale; and he does not say thathe was unaware of the non-advertisement. See Arunachellam v.ArunacheUam.3
1 (1893) I. L. R. 21 Cal. 66.3 (1896) I. L. R. 18 AU. 37.
* (1904) 4 Tam. 34.* (1896) I. L. R. 18 AU. 141.
1 (1888) 1. L. R. 12 Mad. 12.
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May 9, 1910 Do Sampayo, K.C. (with him W. H. Perera), for the respondent.—Silva~v~~Dias When a material irregularity is proved to have occurred in theconduct of a sale, and it is shown that the price realized is muchbelow the true value, it may ordinarily be inferred that the lowprice was a consequence of the irregularity, even though the mannerin which the irregularity produced the low price be not- definitelymade out (Venkatasubbaraya Chetti v. Zamindar of Karvetinagar,1Nona Hamine v. De Silva2) Evidence of facts which warrant aninference that the irregularity was the cause of the inadequate priceis M direct evidence." within the meaning of the Privy Counciljudgment (21 Gal. 66). See Foodroffe and Amir Ali, Indian Codeof Civil Procedure 985. Counsel also cited Rosenberg v. Silva.3
Cur. adv. vult.
May 9, 1910. Hutchinson C.J.—
The respondent, the plaintiff in this action, under a writ ofexecution against the defendant's property, caused the Fiscal toseize and sell certain movables of the defendant. The appellantswere the purchasers. The respondent then applied to the DistrictCourt to set aside the sale on the ground of a material irregularityin its publication, which irregularity caused substantial injury tohim. The irregularity was the non-publication of the sale in theGazette.
Section 256 of the Code requires that, when the property seizedunder one writ exceeds Bs. 1,000 in value, the Fiscal shall (besidesthe notices by tom-tom and otherwise thereinbefore' required)advertise the sale in the Gazette. The property seized under therespondent’s writ was valued at Bs. 699 by the Fiscal’s officer whomade the seizure in the plaintiff's presence. No objection wasmade before the sale that the things were undervalued, or that thesale ought to be advertised in the Gazette. They were actuallysold for Bs. 157.85. There was evidence upon which the Courtcould find that they were really worth more than Bs. 1,000; andthe Court did so find. The failure to advertise in the Gazette wastherefore an irregularity.
The. plaintiff then had to prove that he sustained Substantialinjury by reason of the irregularity. There was no direct evidenceon that point; neither the plaintiff nor any witness deposed thatthe property would have been likely to sell better if the sale hadbeen advertised in the Gazette, or that other people who were notpresent at the sale would have been likely to be present. The onlycircumstance from which the Court could infer that the plaintiffwas injured by the irregularity was that the things were sold verymuch below their value; and the learned Judge drew that inference;
1 (1890) I. L. R. 20 Mad. 169.* i 1908) 2 Leader L. R. 108.
8 (1904) 8 N. L. R. 210 ; 31 Cal. 815.
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he thought that it was plain that the things would have sold better MayJhJBlOif the sale had been advertised in the Gazette.Hutchinson
When the Court js satisfied that the things sold have been soldfor much less than their market value, it does not necessarily Silva v. Du*afollow that the low price was in consequence of the irregularity;for we all know that absurdly low prices are common at Fiscals’sales which are conducted quite regularly. It may be a reasonableinference in some cases, but not in others; we must look at thenature of the properly and the nature of the irregularity and allthe circumstances. The property in this case was of a very specialkind: theatrical scenes and dresses and other paraphernalia, andthe copyright in certain plays. It was properly for which there canonly be a very limited market in Ceylon, if there is any; it is costlyto produce, but when you want to' sell it you may find that thereis no one in Ceylon who wants to buy it. The plaintiff himself wasat the sale and bid for the things, but was over-bid by the appellants.
I think that it was not reasonable, considering the nature of theproperty, to infer that the undervalue was the result of the irregu-larity, without any evidence to support the inference, evidencewhich, if it was the fact, could very easily have been produced.
There should at least have been evidence that there were otherpossible buyers of property of this kind in Ceylon who were not atthe sale, and who might possibly have heard of it if it had beenadvertised in the Gazette. In these cases the purchaser also shouldnot be left out of consideration; if he has taken the trouble toattend the sale, and has bought in good faith and without notice ofany irregularity, it is hard on him to set aside the sale, and (as wasdone in this case) order him to pay the costs of the application to setit aside.
I think that the order under appeal should be set aside, and thatthe respondent should pay the appellants’ costs in both Courts.
Wood Renton J.—
I see no reason to differ from the finding of the learned DistrictJudge that there is nothing in the evidence to estop the petitioner-respondent from now challenging the validity of the sale in question.
The serious issue, however, is whether such a case for setting asidethe sale as will satisfy the provisions of sections 276 and 282 of theCivil Procedure Code has been made out. In view of the fact thatthe former of these sections expressly recognizes the setting aside ofa sale of movable property on the ground of an irregularity whichhas caused substantial damage to the person impeaching it, I amdisposed to hold, following the authority of the case of Muttiah v.
Fernando,l that the present proceedings are competent. I think,also, that there is evidence justifying the learned District Judge inholding that the value of. the property here in question exceeds
1 (1893) 2 A. C. R. 86.
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May 9,1910 Bs. 1,000, and that, consequently (see the case of Rosenberg v.
Silva1), the omission on the part of the Fiscal to advertise theRbnton J. property in the Ceylon Government Gazette is a material irregularity.v. Dias The only question that remains is whether the petitioner-respondenthas complied with the provisions, contained alike in sections 276 and282, and requiring proof on his part that substantial damage hasbeen caused to him by the irregularity of which he complains.There is no evidence here of “ substantial damage. ” Propertyexceeding Bs. 1,000 in value, and found by the learned DistrictJudge to be worth Bs. 6,000, has been sold for Bs. 152.85.There is nothing in the evidence, however, to show directly thatthe undervalue realized at the sale was “ caused ” by the Fiscal’somission to advertise the property in the Ceylon Government Gazette.The causal relation between this irregularity and the sale of theproperty at an undervalue may no doubt be a reasonable inferencefrom the facts of the case, but the question that we have to decideis whether it was open to the District Judge to draw that inferencein the absence of any direct evidence connecting the two. This isa question in regard to which there has been a good deal of differenceof judicial opinion both in Ceylon and in India in the constructionof section 311 of the old Indian Code of Civil Procedure, whichclosely corresponds to the provisions of section 282 of our ownCode. There are cases (see Venkatasubbaraya Chetti v. Zamindarof Karvetinagar,1 2 and see a decision of my own in Nona Haminev. De Silva3 *) in which it has been held that it may be ordinarilyinferred from the fact that the price realized at a sale is much belowthe true value, that the low price was the consequence of theirregularity, even although the manner in which the irregularityproduced the low price has not been definitely made out. On theother hand, the Privy Council has held in Machnaghten v. PershadSingh1 (and compare Tasadduk Rasul Khan v. Ahmad Husain5) thata mere allegation of inadequacy of price without proof that it wasthe effect of the. irregularity, on the ground of which the sale wa.3impeached, is not sufficient eviden©' of substantial damage causedby such irregularity. These decisions, and see also Jagan Nath v.Makund Prasad 3 Shirin Begum v. Agha Ali Khan,7 Arunachellamv. Arunachellam 3 Amcraisekera v. Kinmenika,9 and Muttukumara-swamy v. Nannitamby,10 are of course binding upon us, and I amcontrained to hold that the appeal must be allowed. The order ofthe District Judge will be set aside, and the application of thepetitioner-respondent will be dismissed with all costs here and below.
Appeal allowed.
1 (1904) 8 N. L. R. 110.
{1896) I. L. R. 20 Mad. 159.
3(1908) 2 Under L. R. 108.
« (1882) 1. L .R. 9 Cal. 656, 660.
» (1893) I. L. R. 21 Cal. 66.
(1895) I. L. R. IS Att. 37.
7 (1895) I. L. R. 18 Att. 141.3 (1888) I. L. R. 12 Mad. 19.
(1893) 3 C. L. R. 30.
10 (1904) 4 Tam. 34.