SIVACOLUNDU v. NOORMALIYA

129-NLR-NLR-V-22-SIVACOLUNDU-v.-NOORMALIYA.pdf


( 427 )
Present: Bertram C.J. and De Sampayo J.
t
SIVACOLUNDU v. NOORMALIYA.
334—D. 0. Colombo, 53.774.
ilfum'cfpaZ Council—Default of payment of taxes—Movables must besold before immovable property—Disregard of rule renders saleinvalid—Sale of land subject to fidei commissum—Does pur -chaser get land free of fidei commissum ?—Is fidei commissuman “ encumbrance ’* ?—Effect of certificate under s. 143 of theMunicipal Councils Ordinance.
Under section 143 of the Municipal Councils Ordinance, 1910,immovable property should not be sold for default of payment oftaxes if there are movables available. A disregard of this rulerenders the sale invalid.
A certificate issued under section 143 is nothing more thanprimd facie evidence that the requirements of the law have beencomplied with. It is open to a party interested to rebut thepresumption arising from the issue of the certificate.
A certificate issued under the section has not the effect ofwiping out a fidei commissum existing at the time.
Query, whether fidei commissum is an encumbrance.
facts appear from the judgment.
H. J. C. Pereira, K.C. (with him Coder), for appellants.
W. Jayawardene, for respondents.
1921.
Cur. adv. vuU.
mi.
Sivaoolundu
v.
NoormaUyo
( 428 )
July 14,1921. Bbrtbau C.J —
The case argued before us is one of considerable importance,and relates to the effeot of sales of property for the non-payment ofMunicipal rates.
It is alleged in this oaBe that a person who had purchased whatis only a fiduciary interest in a valuable shop in Main street, subjectto a fidei commissum, and who had stood by and allowed thatproperty to bo sold under the provisions of section 137 of the Munici-pal Councils Ordinance, No. 6 of 1910, and had himself purchasedthe property in conjunction with another person in a similar situationfor Rs. 65, had thereby converted his fiduciary interest into anabsolute one, and had extinguished the rights of the fidei commis-saries interested.
With regard to the facts of this particular case, the fidei commissumwas a- very old one, dating back to 1859. Various arrangementshad been made at different stages between the fiduciaries whichhad the effect of a partition of the fidei commissvm property, andit may be that questions willarise at a future date as to the effectof these arrangements. We need not go into them in this action.We are only concerned with a particular house in Main streetwhich was treated as belonging to Ahamado Alia Marikar, and ahalf of which was by him transferred on July 3,1905, to his daughter,Ayesha Umma. Ahamado Alia Marikar’s interest being only afiduciary interest, it is unnecessary to say that the right acquiredby Ayesha Umma was of this character also. She proceeded toborrow money from the plaintiff on the title thus acquired by amortgage bond. The plaintiff in due course put the bond in suit,and had the property seized and sold, and bought it in himself.He thus beoame the owner of Ayesha Umma’s interest in theproperty, whatever that interest may be. Ahamado Alia Marikaris now dead, and the interest of Ayesha Umma, in view of the factthat she had children, was a limited one, Ahamado Alia Marikarhas several other children. They also are now interested as fidu-ciaries. Therefore, all that Ayesha Umma acquired and all thatis ultimately transmitted to the plaintiff was a fiduciary interestin a fractional share.
The rates on this property fell into arrear. It was under a lease,and was used as a shop. On July 13, 1918, a seizure was effectedin respect of the arrears. The arrears were payable in respect ofthe first quarter of the year 1918, and at that date the plaintiff-had not acquired Ayesha Umma’s interest, or, at any rate, histitle had not been perfected by the Fiscal’s transfer, but inasmuchas the Fiscal’s transfer was executed in August, 1918, it may beassumed that he had, at any rate, purchased the interest. Theseizure was in due course followed by a sale on October 16, 1918,and it is plain from the facts, which have been proved in the case,that the sale was entirely irregular. It is required by section 140-
( 429 )
cf the Municipal Councils Ordinance that in carrying out such salesthe order prescribed by Ordinance No. 6 of 1873 shSll be observed,and it is an essential feature of the scheme of that Ordinance thatbefore any immovable is sold any movable property which issubject to sale shall be first disposed of. This condition was notobserved in the present case, and it appears from the evidence thatit is no longer customary for those acting on behalf of the ColomboMunicipal Council to observe it. The forms themselves which wehave looked at in this case show that it is a Condition which is inpractice disregarded. But it is a most essential feature of thescheme contemplated by the Municipal Counoils Ordinance andOrdinance No. 6 of 1873, which that Ordinance refers to.
Only two persons were presented at the sale, one was the plaintiffand the other one Majeed, who is the guardian ad litem, thedefendant in this case, and who was his-uncle and curator. Therepresentative of the Municipal Council tendered a bid for theproperty on behalf of the- Council, but the property was finallyknocked down to the plaintiff for Bs. 65. The plaintiff has nowtaken action against the defendant, nominally for the purpose ofpartitioning the property, but really for the purpose, one mayconjecture, of obtaining the advantage of a title under the Parti-tion Ordinance. It is in this partition action that the questionswe have to decide arise. The learned District Judge, althoughobviously sympathizing with the intervenients who have impugnedthe sale as fidei commissaries, has' felt himself unable to givethem, the relief which he -would have liked to give. He considersthat the previous decisions of this Court have laid it down that acertificate of sale, issued under section 143 of the Municipal CouncilsOrdinance, carries with it an irrebuttable presumption that all theantecedent directions of the Ordinance have been duly observed.The learned Judge appears to have been under a misapprehensionon that point. The leading case in which all previous authoritieshave been discussed is €himseke,re v. Toberis} It appears from anexamination of the exhaustive judgment of Wendt J. in that casethat the certificate under section 143 is nothing more than primdfacie evidence that the requirements of the Ordinance have beencomplied with. It is open, therefore, for the intervenients to rebutthat primA facie presumption, and in this case there can be noquestion that they have done so.
Mr. Jayawardene, on behalf of the respondents, contends thatthe particular provision which I have referred to, namely, theprovision requiring that the movables liable shall be first sold, isonly directory and not imperative. I cannot read the provision inthat light. It seems to me a most important and essential provision.It is most important for property owners that immovables shall notbe sold if there are movables available. It is, indeed, the very
'tfm) 10 N. L.R. 18.
1921.
Bbbtram
C.J.
Sivaoolundu
v.
Noormcdiya
( 430 )
1921.
Bhbxrau
c.j.
Sivaoolundu
v.
Noormatiya
foundation of the whole proceeding. It seems most unfortunatethat it should have been overlooked in praotice, and I think thisoase, by drawing attention to it, will have a most salutary effect.The failure to carry out this provision is, in my opinion, fatal tothe sale.
It would be sufficient to stop there and allow the appeal to bedisposed of on that ground, but as further important questionshave been discussed, I think it right to give my opinion upon them.
The first is as to the operation of section 143, the provisionwhich declares that a certificate signed by the Chairman shall besufficient to vbst the property in the purchaser free from all encum-brances. Mr. Jayawardene has contended that the effect of thosewords is to obliterate any fidei commissum which is attached to theproperty. This wojild be an extremely violent provision, if thatbe the meaning of it. I should be reluctant to believe that theLegislature ever so intended. The same opinion is expressedby Cayley C.J. in a somewhat similar case, namely, the oase of acertificate under Ordinance No. 5 of 1866. (See 3 8. C. C. 103.)The learned Chief Justice there observed: “ It couid not be theintention of the Legislature to empower a Government Agent tosell property of a third party for the debt of a commutation defaulterand transfer it to the purchaser with an indefeasible title withoutany security being given by way of compensation or otherwise tothe party deprived.”
Similarly, I should be reluctant to believe that the Ordinanceintended that, in respect of the default of the’ fiduciary, propertyof the fidei commissaries should be confiscated without compensation.
Mr. Jayawardene relied upon three authorities. The first wasa decision of Pereira J., Cassim and another v. Devendere,1 whichwas a decision under Ordinance No. 21 of 1867. We always treatwith the utmost respect any decision by that very learned Judge,but we ourselves sitting here together have had, perhaps, a fulleropportunity of examining the position than was open to him sittingalone. The other cases are two decisions in regard to covenants oftitle reported in 17 N. L. B. 164 and 19 N. L. B. 473. If thosedecisionsare carefully examined, it will be seen that their.significanceis not quite so great as was here contended. In the first case,Lascelles C.J. made an interesting observation, which has beensince quoted, that a fidei commissum is “ the most troublesome of allencumbrances.” It appears,, however, that this observation wasonly obiter, and that both Judges decided that case independently ofthat consideration. In the second case, I would point out thatthe judgment of my brother De Sampayo was expressly limited tothe particular context. In that case, in the document in which thewords appeared, the fidei Commissum itself is recited, and a particularview %as expressed as to the effect of that fidei commissum. It was
1 2 Mauura cases 28.
( 431 )
considered that by the covenant that the share of the land therebysold was “free fromall encumbrances/’ it was intended to guaranteethe view thus expressed as to the effect of the fidei commissum. .
It seems to me, therefore, that even in covenants for title theeffect of the words “ free from encumbrances ’’may some day haveto be considered. It is unnecessary for us to express an opinionon that question now, but I cannot help thinking with regard to afidei commissum, which is a limitation of a title at its very inception,that the word “ encumbrance ”is hardly an appropriate word forthe purpose of describing it. When one speaks of encumbrancesupon a title, one does not think of a limitation which is an essentialelement of that title, but of something independent superimposedupon the title. I should like to reserve my opinion as to whetherthe words “ free from encumbrances ” are apt to describing thelimitation of 'ownership which a fidei commissum imposes on afiduciary.
But what we have to do is to consider this particular Ordinance.For that purpose we must begin with section 137, and the firstquestion with which we are confronted is, What is directed to besold under that section ? Now, the property which is directed tobe sold under the section is emphatically not the property whichis liable to the rate. If that had been said, the position no doubt-would be simple. What is sold is not the property itself, but theinterest of & particular proprietor of that property. This is quiteclear, if the words are carefully examined. The direction is to levythe rates or taxes and costs of recovery by seizure and sale “ of alland singular the movable or immovable property of the proprietor,or of any joint proprietor, of the premises on account of which suchrate or rates may be due.” Therefore, it is not only this property,but all the immovable properties of the proprietor or any of thejoint proprietors of the premises that may be sold. The position,therefore, in regard to the right of a proprietor of the property rated,must be exactly what it would be in regard to any of his otherproperties, that is to say, that what is put up for sale is his interestin that immovable property. This is laid down in another case,the case which I have already quoted, Seneviratne Ranhami Mohan-diram and others v. Karavita Koralalaya Mudianse and others}The question there at issue was whether the interest of other personspassed by the sale, and it was laid down by the Court that whatpassed was only the interest of the defaulter. Similarly, wherethe proprietor in question has only a limited interest, it can only bethat limited interest which is sold.
That is the first step. We have now to proceed to section 143<It is there said that a certificate signed by the Chairman shall besufficient to vest the property, that is, the property sold, in thepurchaser free from encumbrances. Now that provision may be1 (1880) 8 a o. G. m.
1921.
Bsbtbam
aj.
Sivacolundu
v.
Noormaliya
( 432 )
1921.
Bertram
CU.
Sivacolundu
v.
Noormcdiya
interpreted in various ways. What Mr. Jayawardene contends, asI understand his contention, is that though what was sold undersection 143 Was a limited interest, yet the effect of section 143 is toconvert that interest into an unlimited one, by freeing it from allencumbranoes. That is, indeed, one way of construing it. Itmeans in effect, if it is correct, that a iife interest is sold, but anabsolute interost is acquired by the purchaser, and that the rightsof the fidei commissary are confiscated without compensation. Butthere are two other ways of construing the section which have to beconsidered. The first is that in the case of a fidei commissum themeaning is that it is a life interest that is sold, and that all encum-branoes superimposed upon that life interest are extinguished.That is a way, of construing it, and one which would seem tobe entirely justified by the words of the Ordinance, But there isa third way, which I am very much disposed to adopt. The word“ encumbrance,” indeed, may have a very wide significance, butit may also have a limited one. When we look at the scheme of thisOrdinance, and in particular the proviso to section 143,1 am verymuch inclined to suspect that what was really in the mind of thedraftsman when he used the word “ encumbrances ” was simply“ mortgages.” . The section says that “ the property shall vest inthe purchaser free from encumbrances,” but it immediately goeson to say: “ Provided, however, it shall be lawful for a mortgageeof such land or immovable to pay and discharge the amount of therate or tax and costs due under and by virtue of the warrant.” Itwould be very singular if the section used the word “ encumbrance ”in its wide sense so as to include restrictions on alienation, leases,servitudes, &c., as well as mortgages, but provided the necessaryequitable relief only in respect of one form of encumbrance, i.e.,mortgages. That mortgages were what in the mind of the draftsmanis shown by the provision made under section 148 for the registrationof mortgages and for notice of sale to mortgagees. Either of thesetwo interpretations is, in my opinion, preferable to that contendedfor by Mr. Jayawardene. In any case, whichever we adopt, it isclear that there was no intention on the part of the Legislature toconfiscate the interest of fidei commissaries.
There is a third point mentioned, which I will deal with briefly,and that is, the effect of section 92 of the Trusts Ordinance, No. 9of 1917. It is- there provided that “ Where a co-owner, mort-gagee, or other person with a qualified interest'in any property,by availing himself of his position as such, gains an advantage inderogation of the rights of the other persons interested in theproperty, or where'any such person, as representing all personsinterested in such property, gains any advantage, he must hold,for the benefit of all persons so interested, the advantage so gained.”
The* illustration appended to that section is very much on alllours with this case. As I understand the matter, the plaintiff
( 488 )
realizing that he had only bought a fiduciary interest, and that histitle was liable to be impugned by the fidei commissaries, knowingthat a sale was taking place in respect of the rates for which hehad himself become liable, and having money in his pocket withwhich he could have discharged that liability, and it being opento him at that very time to discharge it, preferred, instead of payingthe money for the purpose of discharging the liability, to pay itfor the purpose of purchasing the property.
Mr. E. W. Jayawardene said that the question of the rights offidei commissaries as against the fiduciary as a qualified ownerwere not considered in the Court below, but I think all the facts arebefore us. It appears to me that a transaction so described comesprecisely within the principle of the section, and that if, indeed, theplaintiff had acquired a valid title, he would have held that title intrust, not only for the intervenients, but also for the other defendantsin this action.
For the reasons I have explained, I think that the appeal should
be allowed, with costs.
De Sampayo J.—1 agree.
Appeal allowed.
1921.
Bertram
C.J.
Sivacolundu
v.
Noormaliya