016-NLR-NLR-V-14-SULTAN-v.-PACKEER-et-al.pdf
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2,1910PresentHutchinso; t^.J. and Wood Renton J.
SULTAN PACKEER, et al248—D. C. Colombo, 28,953.
Action by judgment-debtor to set aside sale on. the ground of fraud and
material irregularity—Action maintainable—Civil Procedure Code.
ss. 282 and 344.
Certain lands were sold in execution of a decree against theplaintiff, who was a judgment-debtor in another action. . Hebrought this action against the purchaser at the sale, the auctioneerand the judgment-creditor alleging that by reason of fraud andcollusion between the purchaser and the auctioneer, and by reasonalso of certain material irregularities in the publishing and conduct -ing of the sale, the lands were sold under their value, and claimedthat the sale and conveyance to the first- purchaser beset aside and& fresh sale ordered.
Held, that the plaintiff was entitled to have the sale set asidein the present action.
Wood Renton J.—The provisions of section 344 would notjustify the dismissal of a separate action brought in contraventionof its directions.
Obiter.—According to Burge, while the purchaser at a judicialsale was bound to ascertain that the sale had been made in con-formity with sentence of the Court and the solemnities prescribed bylaw, the debtor could not, as against the innopent purchaser, setaside the sale without restoring to him the price which he had paidfor the property with interest. As against the creditors, he couldnot set it aside without paying to them the principal and interestof their demands. If a judicial sale was impeached, not by the• debtor, but by a creditor, he was not bound to restore the purchasemoney to the purchaser, but the latter had his remedy against thedebtor who by means of the purchase money had obtained a dis-charge from his debt, or against the person conducting the sale who
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by his default had subjected it to rescission It may be A?ov. 2, 1910
necessary some day to decide whether this is h correct statement oft —~~
the Roman-Dutch haw, and if so, whether there is anything in the‘'
sections of the Civil Prooeduro Codo dealing with judicial sale bo * ac*coerset it aside.
T
HE plaintiff was the judgment-debtor in D. C., Colombo,
No. 26,729, which was an action on a mortgage, and wasordered to pay C. H. Bury Palliser, the present third defendant, thesum of Rs. 22,500, with interest. In default of payment certainpremises described in the schedule annexed to the decree wereordered to be sold, and the proceeds applied in payment of thejudgment debt. It was also ordered and decreed that the sale ofthe mortgaged property be conducted by J. W. H. Ebert, Auctioneer,the second defendant; that notice of the sale be advertised in theCeylon Independent, Muslim Friend, and the Government Gazette;and that the properties be put up for sale by public auction at thespot, upon certain conditions of sale. The second defendant soldcertain of the premises on April 1, 1909, when the first defendantbecame the purchaser, the premises sold being No. 22 and Nos. 22uand 22c, Maligakanda road.
In this action the plaintiff averred that the properties are worthRs. 25,000, but were sold for Rs. 12,900, and that the sale wasconcluded by reason of fraud and collusion between first defendantand second defendant. The plaintiff also complained of variousirregularities in the publishing and the conducting of the sale, whichhe alleged caused him substantial damage. He prayed that theconveyance be cancelled and a fresh sale ordered.
The following issues were framed :—
The plaintiff not having taken steps to set aside the saleunder section 282 of the Civil Procedure Code on theground of material irregularities, can he proceed to doso by action ?
Whether the sale of April 1, 1909, under the mortgagedecree, was under chapter XXII ?
Under the decree in D. C., Colombo, 26,729, was theallotment of land first mentioned in the said decree andof the extent of 371<> perches at all advertised for salein accordance with the directions contained in the said■ decree ?
If not, has first defendant any title to the same underthe conveyance executed in his favour by the seconddefendant ?
Was it essential, for the due carrying out of the sale underthe decree in D. C., Colombo, 26,729, that the seconddefendant should publish the notices required under theCivil Procedure Code to be published in the case of salesheld by the Fiscal ?
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If it was essential, were there the irregularities in publishingand conducting the sale as mentioned in paragraph 5 ofthe plaint ?
Did the second defendant, contrary to the terms of the saiddecree in D.C. Colombo, 26,729, announce and advertisefor sale as separate and distinct lots the three compo-nent allotments of the premises called Kajugahalanda,described in the said decree, whereas they form oneallotment, and should have been advertised for sale inone allotment ?
What is the value of the lands sold ?
If there were irregularities, what damages has plaintiffsustained ?
The learned Acting Additional District Judge (E. W. Jaya-wardene, Esq.) made the following order on the first issue :—
“ The decree in D. C. Colombo, 26,729, was one under section201 of the Civil Procedure Code. The Court directed that the saleshould be conducted by the second defendant (now deceased), andthat he should execute the instrument of conveyance. The questionis whether the provisions of section 282 apply to a sale undersection 201, or do those-provisions apply only to Fiscals’ sales.There is no case in point, and section 311 of the Indian Code, which,corresponds to section 282, and the decisions under that section, donot help us.
44 The I st paragraph of the section 282 lays down that it is the dutyof the Fiscal to report every sale of immovable property within tendays, and that no sale is absolute until thirty days of the receiptof such report by the Court, and until such sale is confirmed bythe Court. The 2nd paragraph of the same section contains theprovisions that are material to the present question : 4 any person
whose immovable property has been sold under this chapter
may apply by petition to the Court to set aside the sale on the groundof a material irregularity in publishing or conducting it.’
“ It is argued that all sales under the orders of the Court are salesunder this chapter (chapter XXII.), and that the plaintiff shouldhave proceeded under section 282. I am inclined to think that the2nd paragraph of section 282 applies only to sales reported to Courtunder the 1st paragraph of that section. The latter part of the 2ndparagraph seems to put it beyond doubt when it provides that thegrounds of the irregularity should be notified to the Court withinthirty days of the receipt of the Fiscal’s report. In the absence ofa Fiscal’s report, section 282 cannot apply at all. The present salewas not by the Fiscal, and there is no Fiscal’s report.
“ A mortgage decree is a decree for the payment of money undersection 217 of the Civil Procedure Code (Don Jacovis v. Perera1),
i {190$) 9 N. L. H. 7$6 ; 3 Bal. 11$.
Nov. 2f 1910
Sultan v.Packeer
(6)
(7)
(8)
(9)
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but all the sales under chapter XXII. are sales by the Fiscal. The Nov- 2>1910sale in this case was under section 201 (chapter XX.), and not under Xuitan v.chapter XXII. Even if it were a sale under chapter XXII., 1 do Puckeernot think section 282 applies, as it was not a Fiscal’s sale.
“ The dictum of Lord Justice James in Gavin v. Haddenthatirregularity, error of fact or of law, must be shown in the suit itself,does not apply in a case of this kind, where the irregularity iscommitted not by the Court, but in process of execution of thedecree. In Gobind Singh v. Ram Doss,- it was open to the debtorto move under section 256 of the Indian Act; the correspondingsection of our Act only applies to sales by the Fiscal.
“ Section 344 of the Civil Procedure Code does not apply, as thefirst defendant was not a party to the previous action. It has beenheld that a purchaser at a sale in execution of a decree is not aparty to the action under section 244, the corresponding section ofthe Indian Act.3
“ On the first issue I hold that the action is maintainable.”
On the other issues the learned District Judge held as follows :—
“ I am of opinion that No. 22, Maligakanda, was sold for nearlyhalf its value. It was not advertised for sale at all. It is reasonableto think that a proper advertisement as required by the Court wouldhave attracted more bidders and helped to realize a better price. Ihave no hesitation in cancelling the sale of No. 22, Maligakanda.
It was argued that Nos. 22, 22b, and 22c really formed one propertybelonging to the plaintiff, and every one knew that the plaintiff’sproperty at Maligakanda was to be sold. The advertisement wasnot to be confined, according to the decree, to the small circle ofplaintiff's acquaintances. The case of Silva i Dias' is distinguish-able. The property seized in that case was valued by the Fiscal’sofficer, who made the seizure in the presence of the plaintiff in thatcase. No objection was made before the sale that the- things wereundervalued, neither the plaintiff nor any witness in that casedeposed that the property would have been likely to sell better ifthe sale had been advertised in the Gazette, or that other people whowere not present at the sale would have been likely to be'present.
The property sold in that case was of a special kind, for which therewas a very limited market. In the present case the property sold wasa boutique and some tenements in Maligakanda. Their situation,according to Mr. Daniel, was good. The evidence in this case isthat Muhammadans buy tenements largely. The plaintiff has statedin his evidence that if there was a proper advertisement there wouldhave been more bidders, and more people would have come to bidand buy. It is fair to think so. The non-advertisement of theproperty was a material irregularity, and J think it is sufficiently
1 8 Moore s P. 6*. (A’. 6’.) p. 90 at :i KumpinVs Civil I’rocrn’urc Code,p 117.p. 423.
119 W. R. 414.* (1910) 13 N. L. R. 125.
Vov. 2,1910
Sultan v.Paekeer
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proved that afyice much below the market value has been realizedowing to that irregularity. The loss has been connected with theirregularity as effect and cause in the case by means of direct evidence.The conditions required to vitiate a sale on the Indian cases—Jagan Nath v. Makund PrasadArunachalam v. ArunachalamTasaduk Rasul Khan v. Ahmad Hussain* MacNaghton v. Mahabir1—are to my mind present. Next, with regard to the premisesNos. 22b and 22c, Maligakanda, the plaintiff complains that thesecond defendant announced and advertised for sale as separateand distinct lots the three component allotments of those premises,whereas they form one allotment, and should have been advertisedfor sale in one allotment. The schedule annexed to the decreedescribes this property as ‘All those three portions of Kadjugaha-landa annexed in one, now forming one property, with the buildingsstanding thereon, presently bearing assessment No. 22b and 22c, andsituated at Ketawalamulla, now called Maligakanda road, in Mara-dana aforesaid,’ gives its boundaries and states that the premisescomprise three allotments described in sub-heads (a), (6). and (c).The advertisement was clearly not in terms of the decree. I aminclined to think that the terms of a. decree must be strictly compliedwith, and on that ground alone I would be inclined to cancel thesale of this property also. It was argued that the irregularity mustbe a material one, and must cause substantial loss or damage. Thefirst part of the description seems very material and important,where three portions of the property are described as forming oneproperty with the buildings on it and bearing the Municipal assess-ment Nos. 22b and 22c. This property only fetched Rs. 5,000.According to Mr. Daniel's assessment, 22b and 22c would beworth Rs. 10,000. The plaintiff says they were worth Rs. 12,000.
I think Rs. 10,000 would be a fair valuation.
“ The evidence is not, however, sufficient to enable me to hold thatthere was fraud and collusion between the first defendant and Ebert(the deceased second defendant). It shows, however, that Ebertwas busying himself actively for the first defendant, and did notwish Mr. de Saram to stop the sale. The plaintiff was protestingagainst the sale, complaining of the low prices realized. There wasa material irregularity in publishing the sale of the premises 22b and22c, and substantial injury, in that the sale realized only half themarket value of the property. Are they connected as cause andeffect ? The plaintiff says that the property being advertised insmall lots only a few attended the sale, as people do not think itworth while to buy small blocks. If these premises were advertisedas one property, the plaintiff states that there would have beenmore bidders, and the sale would have realized a larger price. Asin the case of No. 22, Maligakanda, the conditions required by the
1 (im) /. L. R. 18 AU. 37.3 (JS93) 1. L. R. 21 Cal. 68.
31. L. A. 12 Mad. 19.4 (1882) /. L. A. 9 Cal. 656.
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Indian cases for the cancellation of a sale are, I think, present inthe case of the sale of the premises Nos. 22b and 22c.
“ I answer issues (7), (9), (10) in the affirmative. I enterjudgment for the plaintiff as prayed for, that the conveyanceNo. 2,453 of April 28, 1909, attested by F. A. Prins, Notary Public,be cancelled and declared void ; that a fresh sale of the premisesdescribed in the decree in D. C., Colombo, No. 26,729, be heldafter due advertisement as therein required. The first defendantwill pay the plaintiff the costs of this action.”
The first defendant appealed.
Sampayo, K.C. (with him Weinman), for the .first defendant,appellant.
Van Langenberg, Acting S.-G. (with him F. M. de Saram), forrespondent.
Cur. adv. vult.
November 2, 1910. Hutchinson C.J.—
The plaintiff is the judgment-debtor in another action in whicha decree was obtained against him, and certain lands were soldin execution of the decree. He brings this action against threepersons—the purchaser at the sale, the auctioneer, and the judgment-creditor—alleging that by reason of fraud and collusion between thepurchaser and the auctioneer, and by reason also of certain irregu-larities in the publishing and conducting of the sale, the lands weresold under their value, and he therefore claimed that the sale andconveyance to the first defendant be set aside and a fresh saleordered.v
The first defendant denied that there was any fraud or collusionor irregularity, or that the sale was at an under-value. The seconddefendant (the auctioneer) filed no answer, and died before the trial.The third defendant filed no answer.
The District Judge found that there was no evidence of any fraudor collusion, and that finding is not disputed. But he found thatthere had been a material irregularity in the publication Of the noticeof the sale, that the land was in consequence sold at a price muchbelow its value, and that the plaintiff had sustained substantialinjury by reason of the irregularity ; and he ordered that the con-veyance to the first defendant be cancelled and declared void, andthat a fresh sale should lake place, and that the first defendantshould pay to the plaintiff the costs of the action.
The irregularity in the case of one of the lots sold, No. 22, wasthat it was not mentioned at all in the advertisement of the sale. Inthe case of the other lot it was that the advertisement did not followthe description of the property in the order for sale, and did notshow that the three allotments of which it was composed were infact one block. As regards lot 22 the irregularity was manifestlymaterial. As to the other lot, I am not sure that I should myself
Nov. 2, 1910
Sultan v.Par.ke.er
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Nov. 2, mo
Hutchinson
C.J.
Sultan v.Packeer
have found, without better evidence than was before the Court, thatthe irregularity caused any injury. But there was some evidencethat it did ; the Judge believed that evidence ; and I do not thinkthat we can set aside his finding. Nor do L think that we can rejecthis finding as to the value of the property.
. The appellant complains, lastly, of the order that he should payall the costs of the action. And I think that if he is, as we mustassume him to be, in the absence of any evidence to the contrary, aninnocent purchaser, who has done no legal or moral wrong, and whowas obliged to come into Court and defend himself against a chargeof fraud, and defends himself successfully, he has good cause tocomplain. The Court ordered the sale and invited buyers ; he knewnothing of any irregularity in the conduct of the sale ; he bought andpaid the price and incurred expenses of notary’s and other fees andstamps. Then, the man whose land was sold, the man whom onewould have expected to see and notice whether the sale was properlyadvertised and conducted, brings forward certain irregularities, ofwhich he probably knew at the time of the sale, and for which thebuyer was in no way responsible ; charges the buyer with fraud ;fails on that issue, but succeeds in getting the sale set aside becauseof the irregularities ; and obtains an order that the buyer shall payall his costs of the action. And the costs will probably be no smallmatter, for I see that the cost of one day, July 30, 1909, which theappellant was ordered to pay were taxed at Rs. .194 *53. The.appellant has for the present lost the money which he paid for theland; it is in Court, and if he can get it back, it will cost him some-thing to do so ; and he has lost all the other expenses to which hewas put, and his time and trouble. It seems to me that it would bereasonable in such cases where there has been an irregularity forwhich the buyer was not responsible, and of which he was not aware,that the Court should not set the sale aside, except on the terms thatthe buyer should get back all the money and expenses that he hashad to pay. But, however that may be, I think that where thebuyer is charged with fraud and defends himself successfully againstthat charge, it is wrong in principle to make him pay the costs of theaction. It is possible that if no charge of fraud had been made, thecourse of the action might have been quite different. I wouldamend the decree of the District Court by striking out the order forpayment of costs. And I would make no order as to the costs ofthis appeal.
Wood Renton J.—
His Lordship stated the facts, and continued :—
There is direct evidence connecting, and the District Judgeconnects, the irregularities in the publication of the sale with thelow prices obtained as cause and effect. There were few bidders,
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although the locality is populous and land in it is valuable. Therespondent says in his evidence that the non-advertisement of No. 22and the omission to advertise Nos. 22b and 22c as one propertywere responsible for this. On the other side we have merely sucharguments as these, that a distinct property—described in the caseas the Maradana property—and sold the day after Nos. 22, 22b, and22c, although valued at Rs. 12,000, sold for only Rs. 5,300 ; thatforced sales frequently yield results unsatisfactory from the seller'sstandpoint; that Mr. de Saram said in cross-examination that theMaradana property fetched what it was worth—an answer, by theway, withdrawn in re-examination ; that the lots in question werewell known in the neighbourhood as forming one property, and thatthere was a sufficient local publication of the sale. These consider-ations do not seem to me to outweigh the evidence of the respondent.As regards lot No. 22, I have had no difficulty in coming to theconclusion that the District Judge is right, and even as regards lots22b and 22e, 1 do not see the answer to Mr. van Langenberg’sargument in commenting upon the evidence of the respondent on thepoint that the irregularity in the advertisement would prevent theattendance of the class of bidders who would buy large blocks ofproperty, while the fact that it was blocks of that character thatwere being sold would put them beyond the reach of the smallbidders whom the local publication might have attracted. On thesegrounds, I think that the decision of the District Judge that thesale must be set aside should be upheld.
In the view that I take of the question of costs, it is unnecessaryto deal at length with Mr. de Sampayo’s argument, that, under thesection 344 of the Civil Procedure Code, the respondent’s presentclaim should not have been made the subject of a separate action.I do not think that the use of the word “ parties ” in that section(see Carpen Chetty v. Hamidu') precludes a person in the positionof the appellant from raising this objection. But the objection, ifsuccessful, is one to which effect could only be given by an orderas to costs. The provisions of section 344 would not justify -thedismissal of a separate action brought in contravention of itsdirections. In the present case the failure of the respondent toestablish the charge of fraud against the appellant which he distinctlymade in his plaint, although it did not form part of the issuesoriginally framed, entitles the appellant to be relieved entirely fromthe costs both of the action and of the appeal. I concur in theformal order proposed by His Lordship the Chief Justice.
If the point had been taken and made the subject of an issue atthe trial, there might have been a good deal to be said on the ques-tion as to whether the appellant in these proceedings, an innocentpurchaser, was not entitled to further relief. According to Burge(vol. II., pp. 578 and 579), while the purchaser at a judicial sale
1 (1909) 1 Cur. L. n. m.
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WoodRenton J.
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itw. 2, mo
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was bound to ascertain that the sale had been made in conformitywith the sentence of the Court and the solemnities prescribed bylaw, the debtor could not, as against an innocent purchaser, set asidethe sale without restoring to him the price which he had paid for theproperty, with interest. As against the creditors, he could not setit aside without paying to them the principal and interest of theirdemands. If a judicial sale was impeached, not by the debtor, butby a creditor, he was not bound to restore the purchase money tothe purchaser, but the latter had his remedy against the debtor whoby means of the purchase money had obtained a discharge from hisdebt, or against the person conducting the sale who by his defaulthad subjected it to rescission. In support of these statements Burgerelies on Matthaeus deAuctionibus (book 1, C. 12, N. 12 and C. 16,N. 16). I have looked at the passages in Matthaeus to which Burgerefers, and they seem to bear out the propositions that he deducesfrom them. It may be necessary some day to decide whether thisis a correct statement of the Roman-Dutch law, and if so, whetherthere is anything in the sections of the Civil Procedure Codedealing with judicial sale to set it aside. There can be no doubt,however, but that, as Mattheeus says, in such a case as the present,ipsa aequitas dictat pretium emtori restituendmn esse. Here, however,as I have already said, the point was not taken in the DistrictCourt or in the petition of appeal. It is a point the answer towhich might well have depended on evidence that has not beenrecorded, and I do not think that we can entertain it now.
Appeal dismissed.