SUPPRAMANIAM et al. v. ERAMPAKURUKAL et al

117-NLR-NLR-V-23-SUPPRAMANIAM-et-al.-v.-ERAMPAKURUKAL-et-al.pdf


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(fou Beech.]MB*
Preseal: Bertram CU. and Barter and Schneider JJ.SUPPRAMANIAM et aL v. KRAMPA KURUKAL d at76—D. C. Jaffna, 13,170.Prescription^Trutiproperty—Deedofdedicationforfowtdingavandem—Appointment of another person as co-truetee along with the persondedicating the property—Does title pass to co-trustee t—Is det&ara*tion of trust an instrument which requires registration ?—Mortgageby heir of person dedicating—Prior registration of morigagebond—Priority—Acceptance of mortgage with knowledge of trust—
Prior registration of Fiscal e transfer by purchaser tender themortgage decree—Priority—Is Fiscals transfer an instrument forvaluable consideration f—Can persons asserting the trust go behindjudgment and show that mortgage woe collusive and not forvaluable consideration f
In 1881 Vlsuvanather and bis wife, Kathir&sipillai, dedicated afield and a garden lor the purpose of founding, a madam* andappointed themselves and Suppramaniam (a brother of Visuva-nather) as trustees. The (feed which was not registered merelydedicated the land for the propose, but did not transfer any titleto Suppramaniam who signed it as a party. In pursuance of aplan to get rid of the trust among scone of the heirs of Visovanatherin 1893, Arunachftlam (an heir of Visovanather) granted a usu-fructuary mortgage of a share of the properties to Sinnetambyby a deed which was duly registered. Twenty-five years later,Chellachchi, the heir of Sinnetamby, put the bond in suit, and atthe Fiscal’s sale purchased the share mortgaged and* obtained a'
Fiscal’s transfer, which was duly registered. On the Fiscal goingto place Chellachchi in possession, the respondents objectedclaiming the property as trust property;#
Held, (1) Per Bertram C.J. and Porter J.—No title passed toSuppramaniam, the co-trustee, as the deed did not convey any titleto him.
‘' It was doubtless supposed that by the mere dedication and by theappointment of Suppramaniam as co-trustee, title passed tohim and would devolve from time to time on the varioustrustees successively appointed. This, of course, is a mistake,though a mistake that is often made. The title remained afterthe dedication in Visovanather and his wife subject to thetrust. In order to vest Suppramaniam and the other trusteeswith the legal title, notarial transfers were necessary, and thesuccessive trustees were at all times entitled to call for thesetransfers. Consequently, on the death of Visovanather, thelegal title to his interest in these properties passed to his heirs,subject in all cases to the obligations of the trust, and, in32'14-22/463
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i m
Suppratm-
partiautob to the obligation to transfer the legal title to theMteos for the time being. For this purpose the heirs wereconstructive trustees of the charity.”
(2) Per Frax. Cotjbt.—Sinnetamby gained no priority by regis-tration of the mortgage bond over the declaration of trust.
A declaration of trust does not require registration; consequently,declarations of trusts are not documents which are liable to bedefeated by the prior registration of a subsequent competinginstrument. It is only where a trust of immovable propertyis established by a document inter partes that this documentmust be registered in order to secure priority.
(2) Per Fran Bench.—If Sinnetamby had notice either actual.or constructive of the trust he would be bound by it; if he advancedhis money in good faith without notice of the trust he would not beso bound.
Per Fran Sketch.—Chellachchi gained no priority by theregistration of her Fiscal’s transfer.
“The deed by virtue of which the petitioner's claim the adverseinterest is the mortgage bond and not the Fiscal’s transfer, andtherefore the registration of the Fiscal's transfer would notavail them.”
“ In Perdinando v. Ferdinando»there are certain observations ofmy own which seem to suggest that where there is a series ofdeeds each dependent upon the other and each registered, thefact of fraud or collusion in one of them would destroy thepriority which might otherwise be claimed on behalf of thesubsequent deeds by virtue of registration. I think it mustbe admitted that those observations require qualification. Aparty claiming the benefit of prior registration can ordinarilyrely on any one of the deeds in such a series …. Butthis principle, I think, only applies to successive deeds whichare in fact independent transactions. A mortgage deed, asale to the4 mortgagee in execution of that mortgage, and;a Fiscal’s transfer in pursuance of that sale are circumstancesso closely connected that it would be extraordinary if fraudin the first should not be held not to affect the last for thepurpose of priority,”
“ It would be competent to those supporting the trust to go behindthe judgment and show, that it really represented a collusivedebt, and that consequently there was no genuine valuableconsideration for tiie transfer.”
Per Brbtbam C.J. and Poster J.—No length of possessionavails against a charitable trust where it is sought to recovertrust property taken with the knowledge of the trust. Section 3(1) (e) rrydcra no change in the law in this respect.
rnHB plaintiffs, appellants, instituted this action for declarationof title in.favour of the second plaintiff, appellant, for one-
fourth share of the land called Paranthanpuliyady and Varipulamfor an undivided one-third share of the paddy field called Basah-kulankari andSuriveli.
*{1921) 23 N. L. B. 143.
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The seoond plaintiff, appellant) purchased the said shares at a saleunder writ of execration issued in ease No. 11,370 of the DistrictCourt of Jaffna, in which action the second plaintiff, appellant, who
is the sole heir of the late Kovindar Sinnetamby, sued on an otty Stamp*-mortgage bond granted in 1893 by one Arumugam Arcraachalam in *Mrw"a*favour of her deoeased father, Kovindar Sinnetamby.
The seoond plaintiff, appellant, obtained a writ of possession incase No. 11,370, and when the RscaTa. officer went to deliverpossession to her, the respondents objected to the delivery ofpossession. Thereupon, the plaintiffs, appellants, applied to theCourt under section 325 of the Civil Procedure'Code, and notice wasissued on the respondents to show cause why they should not bedealt with for obstruction oaused by them.
The respondents filed objection claiming title to the entirety ofthe' lands on behalf of a charity madam called VeBikkilamaimaddinly’virtueoftwodonation deeds (D1 and D 2) of 1881, wherebythe original owners—Arumugam Yisuvanather and wife Kathirasi-pillai—donated to the madam the entirety of the two landsreferred to above. The first and second respondents claimed to bethe officiating priests of the Pillaiyar temple, situated in a roomin the said madam by virtue of a deed of appointment marked D 6of 1886, and the third respondent claimed to be the manager of themadam on behalf of the then trustee Subramaniar Tiruchittampalam.
In view of the claim of the third respondent, the District Judge(Q. W. Woodhouse, Esq.), ordered that the petition of the appellantsbe registered as a plaint in termsof section 327 of the Civil ProcedureCode. The District judge dismissed plaintiff's action.
The deed of dedication was as follows :—
No. 2,188.
We, Arumugam Yisuvanather and wife Kathirasipillai of Yannar-ponnai West, Jaffna, wishing that our souls may go to heaven, haveexecuted charity deed, to wit:—
Whereas it is necessary to have Viknechuvara Puja performed onthe Vianayakachatiya Nadchathiram occurring on the twenty-firstday from the Roekaney Nadchathiram in the month of November ofevery year, to have Suppramania Swamy Puja performed on the VichakaNadchathiram of the month of Nay, &c., to have Siva Puja performedon every Friday, sued to give rice and things enough for a day meal toevery one of the Brahmins; Saivakkurukkal singers of Thevaramand Saiva people who may at any days come from the holy places ofIndia, &c., and to allow those who are willing to cook rice and takemeal to do so, and also to have Saiva Puja, Kara Puja, Brahmin’s meal,and Saivites’ meal performed on all the aforesaid occasions, the placewe fix and appoint for these matters is our land by right of purchaseand possession, as per transfer deed executed on April 26,1841, beforeKantappa Yisuvanather Mudaliyar, Notary of Nalhir, in favour, of thefirst-named of us, situated at Vannarponnai West, registered in thethombu in the names ofMudaliyar, Yiaasithamby,
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and others called "Varipula Paranthanpuliyady, ” in extent 11}lachams with four-sided stone-built house, kitchen,* building, portico,well, palmyras,and plantations, &c.,js bounded, &o. Wehaveexeontedcharity deed for the whole of the land, buildings, well, palmyras, andplantations contained within these boundaries, giving it the name ofVeUikkilamai madam, in order to do the aforesaid several matters andthings and to be useful for the •. The estimated value of this
. is the sum of Bs. 4,000. Weshallmanage all these aforesaid matters, andall the movable andimmovable properties that shall be given to the saidmadam during our lifetime as trustees, and further, in order to managethe said matters and the properties, we do appoint Arutnugam Suppra-maruam of Vannarponnai as a trustee together with us. If we intendto appoint another trustee or trustees more than one in order to managethe said matters and the properties before our death or after it, thefirst-named of us and the said Arumugam Suppramaniam shall jointlydo the same, or if either of them dies, the other'surviving one shall soappoint individually. The trustee or trustees so appointed shall havethe right of appointing trustee or trustees in their stead, or to managethe matters together with them from age to age. There shall alwaysbe trustees more than one to look* over and manage the said matters,otherwise if it happens that one trustee to be alone, and individuallythat trustee who is alone and individual shall at once appoint anothertrustee or trustees more than one. The aforesaid trustee, Supprama-niam, consenting to be such a trustee, has set his haud. Witnesses heretoare Dr. Thampiyapillai SivaprakasapiUai of Vannarponnai; KantapparArtmachalam of the same place; Aiyampillai Ohinniah of the sameplace; these being witnesses this charity deed has been executed onApril 18, 1881.
W. Jayawardene (with him Spencer Bajarainam), for plaintiffs,appellants.—The appellants haveprescribed against the trustees byadverse and uninterrupted possession since 1893. Section 111 (c)of Ordinance No. 9 of 1917, which takes charitable trusts oat of theprovisions of the Prescription Ordinance, does not affect titlesacquired before that Ordinance. It 'has no retrospective effect.Under the English common law, which applies to Ceylon, trustscould be prescribed by a third party in possession (Lewin on Trusts,11th ed.9 p. 1087); Where a cestui que trust and his trustee areboth out of possession for the prescriptive period, the party in: possessiongains a good title against them both(Lewdlin v.Maekworth})Xt was held in Magdalen Hospital v. Knots 2 that charitable trustscould be prescribed by a person who claims independently of thecharity. Sixmetamby and his descendants have been possessing thelands bya title independent of tbetrust. Counsel cited also Hov&ndenVi Annesley.3 Attorney-General v. Christ's Hospital* does not apply,as here is no evidence that we had notice of the trust. In that casethere was clearly an express notice of a charitable trust. It washeld in India that a third party in possession who had got the 1
1 2 Eg. Oases Ah. 579.
* (187$) 4 App. Oases 524.
8 (1806) 2 Sch Lef. €07.
4 (1884) 3 Myh Sheen's 344.
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property for valuable consideration could proscribe against it.(Dattagiri o. Dattaraya? Sannadhi v. Pandaram* and Nandi v.Ooswani.6
[Bertram O.J.—The deed itself does not transfer'any property.So the legal title is in the heirs who may be called upon by thetrustees to transfer the same to them at any time.]
The registered mortgage bond of 1393 is entitled to priority overthe unregistered trust deed of 1881. There is nothing in our lawwhich exempts trust deeds from registration. The learned DistrictJudge holds that publio and Crown lands are exempted fromregistration by seotion 48 of Ordinance No. 6 pf 1877. That Ordi-nance dearly does not apply to lands in Jafina, as it has not beenproclaimed there. Section 104 of Ordinance No. 3 of 1907 has atrinnilar provision, but this Ordinance has not become law yet.Thus seotion? 16 and 17 of Ordinance No. 14 of 1891 applies.The third respondent had no interest at the time he objected, and,therefore, he cannot maintain this action (Silva v. Fernando4 andPonnamma s. Weerasunytn«) An action has to be determinedaccording tc the rights of the parties as existing at the date of itsinstitution. (Sitea ®. New Hamine® and Cooneratne v. FenmKdo.'1)
Aruianandan, for defendant, respondent.—Shmetamby beingthe holder of thelegal estate he is a constructive trustee (28 Sals. 8?),and, therefore,cannot prescribe against his cestui que trusts. Svenif he were not a constructive trustee, he must he presumed to havehad notice of the trust at ths time he got the mortgage. This is thevery property he got as dowry, and there is evidence that theentrance to the garden contains figures, such as are found in Hindutemples. As by the most casual inquiry he would have becomeaware of the trust, prescription cannot enure to his benefit. (Attom&j-General ©. Christs Hospital (supra).) The District Judge has roundthat the transactions are fraudulent. No priority can be gained byregistration under the circumstances. The present appellants arein the same position as Sinnetamby as they ar e his heirs.
W. Jogamtrdene, in reply.—Thera was no allegation of fraudin the answer, nor was it ever raised at the trial. Plarty raising fraudasadefencemustspeoiallyraiseandproveit. “ With regard to fraud,if there be any principle which is perfectly well settled, it is thatgeneral allegations, however strong may be the words in which theyare stated, are insufficient even to amount to an averment of fraud ofwhich any Court ought to take notice.” (Per Sdbome L.O. Walling-ford v. Mutual Society6): <! Fraud is never to ba presumed.”(Poothan v. Kathtmsan.6)
Cur. ads. mlt.
1 (1802) I. L. R. 27 Bos*. 802.* (1908) 1117. L. R. 217.
8 (1S99) I. L. E. 22 Mail. 872.9 (1906) 20 N. L. ii. 44.
» (MO) I. L. B. 38 OdL 612.8 (1912) 3 Q.A. O. 29.
* (1912) 15 N. L. jft. £99.• (1889) 6 App. Ocms 697.
* (1391) S Tam. 93.
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1922. March 20,1022. Bbbtram O.J.—
Juoamtmow© raised important questions in connection with the law
of religious ..trusts. It relates to a madam founded in theneighbourhood of Jaffna in the year 1881 and land dedicated inconnection with it, and the questions for consideration are, whetherthe heirs of the donor can annul the pious founder's bountythrough the operation of the law.of prescription; and, secondly,whether they have succeeded in effecting the same result by tAlringadvantage of the law relating to registration.
The madam in question was founded by one ArumugamVisuvanather and his wife, KathirasapiUai, in' the year 1881. 1 F6rthis purpose they dedicated, in the first place, a piece of landcomprising 11} lachams with the building and plantation thereon(subsequently in this judgment referred to as “the garden”). Theydeclared that they would manage this property together with allmovable and immovable property given to the madam during theirlifetime as trustees, and they appointed a brother of VisuvanatherBuppramaniam, as co-trustee. They, further, made provision forthe appointment of subsequent trustees. The deed specified thevarious rites to be performed in the madam throughout the year,and provided for sustenance to be given to the Brahmin priestsof the madam and to religious pilgrims from India. The donorsfurther dedicated, in connection with the madam. two otherpieces of property, one a field of the extent of about 92 lachams(afterwards referred to as the field) (D 2), and five years later by adeed dated August 6, 1886 (D 6), the endowment of the madamwas increased by the addition of another field of the extent of 81}lachams. All these deeds gave the most specific directions for themaintenance and proper execution of the charity. No questionarises with regard to the last mentioned deed, as none of the donor’sheirs has made any attempt to appropriate this property. Thegarden on which the madam was situated was bought by Visuva-nather before bis marriage. The field of 92 lachams, however,was bought after the marriage, and was, consequently, part of thethediathetam.
The. madam was duly established, and during Visuvanather’slifetime and for some short time after his death, the prescribed riteswere performed and the prescribed charities were attended to.Persons were initiated into the Saivite religion in the madamand a free school was also established in connection with it. Veryshortly after the death of Visuvanather, however, his two brothers—Arunaohalam and Muttucumaru—together with the children of adeceased brother, Binnetamby, deliberately set themselves fraudu-lently to appropriate the greater part of the endowments of themadam. Buppramaniam, another brother of Visuvanather, whohe had appointed co-trustee, was an honest man, and took nopart in this conspiracy. Its discreditable character is aggravated
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by the fact that before hia death, which took place in 1888, Visuva-nather and his wife executed a joint will (D 8), in which the madamand the lands dedicated in connection with it wore expresslyreferred to and excluded from the dispositions made by the will.Muttucumaru, one of the brothers, was made exeoutor of the will,and the other brother must have been acquainted with itscontents.
It will be convenient at this point to state the legal position at thedeath of Visuvanather. The deeds of dedication were, unfortunately,none of them registered and they had a further unfortunate feature,they merely dedicated the lands, they do not transfer any title toSuppramaniam who was appointed co-trustee with the donors.It was doubtless supposed that by the mere dedication and by theappointment of Suppramaniam as co-trustee, title passed to him andwould devolve from time to time on the various trustees successivelyappointed. This, of course, is a mistake, though a mistake that isoften made. The title remained after the dedication inVisuvanather ami his wife subject to the trust. In order to vestSuppramaniam and the other trustees with the legal title, notarialtransfers were necessary, and the successive trustees were at alltimes entitled to call for these transfers. Consequently, on thedeath of Visuvanather, the legal title to his interest in theseproperties, which had been excluded from the will, passed to his heirs,subjectin all cases to the obligations of the trust and in particular tothe obligation to transfer the legal title to the trustees for the timebeing. For this purpose the heirs were constructive trustees ofthe charity.
Who then were the heirs of the properties in respect of whichVisuvanather thus died intestate t The heirs with respect to thegarden on which the nurlam was situated were his brothers—Suppra-maniam, Arunachalam, and Muttucumaru—and Anunugam andPonniah, the son of his deceased brother Sinnetamby. With regardto the field of 92 lachams, as this was part of the thediathetam* andas his wife survived him only half of this field passed to the. brothers and nephews above-mentioned, the remaining half beingstill vested in Visuvanather’s wife, Kathiresapillai.
As I have said, on Visuvanather’s death, an attempt was madsto despoil the charity, and it is claimed on behalf of those who madethis attempt that they have successfully carried it through, andthat they have acquired by prescription a tide to the property soappropriated.
The case, as a matter of fact, does not turn upon this question ofprescription which only arises incidentally. But it may be con-venient at this point to recapitulate the law as to the acquisition oftrust property by prescription. The law is, of course, now regulatedby our Trusts Ordinance (No. 9 of 1917), section 8. But it seemsdear that if a prescriptive title had been acquired before the
192ft
q,J.
mom p.
Stamp*-haratal
enactmentof that Ordinance in 1917, it could not be affected by theprovisions of that section. We must, therefore, inquire what wasthe law of the Colony upon the subject before the enactment ofthe Trusts Ordinance.
The English law of Trusts was long ago received into the law ofthis country. (See MarahalPs fadgmente, p. 523, and Ibrahim v.Oriental Banking Corporation?) One of the principles of that systemof law is that for certain purposes it does not allow a trustee to setup the Statute of limitations against a cestui gue trust, or any oneclaiming on his behalf. The same principle has been applied inCeylon with reference to our own Prescription Ordinance. (SeeAnfko PuUe v, Ghristoffd PuKe.2) The English principle that timewas no bar to an action oh a trust applied only to express trusts.But the doctrine was esrt&uled to certain cases of constructive trustswhioh for the purpose ware by the law of England put upon the samefooting as express trusts. The law on this subject will be foundexpounded in the judgment of Bowen LJ. in the leading case ofSoar r>. AshweR? It was clearly with reference to that case, and inorder to gr*e effect to the principles there expounded, thatsub-section (5) was inserted in section 3 of our own TrustsOrdinance (No. 9 of 1917).
It will not be necessary to determine whether the present case (inwhich constructive trustees have fraudulently appropriated trustproperty as their own) comes within any of the categories enume-rated by Bowen L.J. as cases to which the doctrine applies, becausethere is another principle of the English law of Trusts which is ofitself effective for the purpose of disposing of the plea of prescrip-tion. It is that no length of possession avails against a charitabletrust, where it is sought to recover trust property taken, withknowledge of the trust. In the case of Attomey-Oenerci v. ChiefsHospital (sttpro) the principlewasaasertedagainst a corporationaffcerthe lapse of over ISO years. It is quite true that the principle hasbeen seriously trenched upon in English law by the operation ofsections 24 and 25 of 3 & 4 William IV., c. 27, which, after someconflict of judicial opinion, was held to apply to charitable trusts.(See St. Mary Magdalen, Oxford, v. Attorney-General.*) But it is thegeneral principles of the English law which apply in Ceylon andnot their statutory modifications. Section 3 (1) (c) of our TrustsOrdinance thus appears to make no ohange in the law.- Thesuggestion, therefore, that Muttucumaru, Arunachalam, and theirnephews, and those claiming through them, have destroyed orimpaired this charitable trust by prescription need not furtherconcern ps. As above observed, however, it is not upon thisquestion that the case really turns.
'IMQSN.L. B. 248.8 Q889) X N. L. B. 398.
9 (2893) 2 Q, B. 390.
* (ttff) 6H. L. 289.
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The attempt to despoil the charity commenced almost immediatelyafter the death of Visuvanather. In 1889 Sdppramaniam, thetrustee and only honest brother, took criminal proceedings in thePolice Court against Arunachalam and the others to protect thetrust property, but though he succeeded in the Police Court he wasreferred by the Supreme Court to his civil remedy. Four yearslater, those attacking the trust took another step. A daughter ofMuttucumaru, Valliamma, was to be married to one KovindarSinnetamby who resided at Pussellawa. Arumugam and Muttu-cumaru then concerted the following scheme. Muttucumaru by adeed of September 18, 1893 (P 2), purported to convey by way ofdowry to his daughter one-fourth of the garden on which themadam was situated and one-third of the field of 92 lachams.On the same day Arunachalam executed an oWy mortgage infavour of Kovindar Sinnetamby, also purporting to deal with one-fourth of the garden and one-third of the field. The considerationfor the mortgage was recited to be an old debt and a further advance.Almost immediately afterwards, that is, on September 16, 1893,by what the learned District Judge describes as “ a most ingeniousstep/’ Kovindar Sinnetamby and bis wife leased both the dowryand the (My shares to ThamotherampiUai, son of Arunachalam.All these deeds were duly registered.
The fraudulent and dishonest character of this dowry deed andthis mortgage, so far as Muttucumaru and Arunachalam are con -cerned at any rate, are apparent. Both of them must have knownall about the trust, particularly Muttucumaru who was the executorof his father’s will. The fact that the deeds were executed on thesame day shows that the arrangement was a concerted one. Bothbrothers must have known that quite apart from the trust they hadnot the legal title to one-third of the field of 92 lachams. Tobegin wi&i, Kathxresapillai, the wife of Visuvanather, was stillalive, and thus had the legal title to half. In the second place,whatever legal title they may have had, Suppramaniam, the trustee,was on the same footing as themselves. In appropriating the dedi-cated* properties they thus appear to have deliberately ignoredthe title of both KathiiesapDlai and Suppramaniam. The onlyexplanation which appears to be put forward for this extraordinarystep is the peculiar one, that as Suppramaniam was faithful to thetrust, and as Muttucumaru and Arunachalam and presumably thechildren of Sinnetamby were unfaithful tp it, Suppramaniam hadforfeited all his rights to a share in the legal title.
The learned District Judge, with regard to these transactions,very truly observes that Muttucumaru and Arunachalam “ had setto work to manufacture deeds and other documents in order toobtain possession of the lands.” Indeed, so soon as the followingyear the real object of the transactions became apparent, namely,that the brothers might arm themselves with documents to repel
14*
1922.
Bertram
C.J.
Supprama-niam v.Erampa-kuruhal
( 486 )
Bumanwnt
gj.
any further assaults from the trustee, Suppramsniam. In 1891Suppramaniam renewed the attack in the Police Court (see P 1),including Kovindar Sinnetamby among the persons accused.ThamotherampQlai, Kovindar Sinnetamby, Anmaohal&m, andMuttucumaru then came forward and made formal statements.
Era/npa-
kurukal
Th&motherampfllai said ho had taken the lands on lease fromKovindar Sinnetamby; Kovindar Sinnetamby pot forward tinedowry deed and the otty mortgage and referred to the previous caseof 1889. Muttucumaru actually, declared that the field originallybelonged to bis parents, that he inherited it as mudue&n property.He further declared that he had solemnly pat Kovindar Sinnetambyin possession, that he had given him the key, and that he had pathim in possession of the house itself. As a result Suppramaniamwas again referred to bis civil remedy.
To continue the story of this property, in 1901 Suppramaniam,apparently despairing of further protecting the trust, retired to hisvillage, and appointed two new trustees in his place (D 3). Herecites the deplorable position ol the trust, and specially changesone of the trustees with the duty of bringing it to order.
Xn 1908 there was a peculiar incident. Thamotherampillai whowas the only heir of Kathires&pillai, widow of Visuvanather, broughtan action against the other members of the family claiming that halfof the dedicated properties belonged to himself. They claimed tohave acquired title against him by long possession. The DistrictJudge said that there tas “ abundant evidence showing that thethree brothers—Arunachalam,Muttucumaru, and Sinnetamby—hadbeen in possession and dealing with the whole land of 92| lachamsas their common property.” In this case Th&motherampillai, who itwill be remembered had. taken a lease from Kovindar Sinnetamby,boldly denied this transaction, and said that the lease bond was aforgery. Neither the Judge nor anyone, in this civil action, seemedto have thought it necessary to have made inquiries as to the originaltrust, although the trust is incidentally referred to. _
The next development is that in the year 1909 (the learned Judgesays 1902, but 1 do not understand on what authority) the childrenof the deceased brother, Sinnetamby, having, as the District Judgesays; “ probably taking the cue from Arunachalam and Muttu-ggmaru ” themselves, began to manufacture deeds tq demonstratetneir ownership in the property. Their share is made to pass in acircuitous course from hand to hand among the members of thefamily. As the District Judge says there are “ any number ofdocuments all made with the one object, namely, to get a firm titleto the property that Visuvanather and his wife had donated to the
VeUikkilamai modem in 1831.”
Kovindar Sinnetamby and hb wife left FiisseUawa and went tolive in the Federated Malay States, where they died, leaving astheir only heir a daughter, Chellachohi, who is the 2nd petitioner
( 427 )
in this case, and who married A. Suppramaniam, the first petitioner.In 1911 petitioners appointed an attorney to represent their interests,and ih 1917 they pat the* otty bond in suit and obtained judgment.At the salem execution of the judgment, GheOachchi, the heir of thedeceased mortgagee (according to the petition of appeal), herselfpurchased the share which was the subject of the mortgage action.There is some confusion as to who was the actual purchaser, as inthe petition it is stated that both she and her husband sued on themortgage bond and became the purchasers, while in the Fiscal'sconveyance (P 20) it is stated that the highest bidder was Ghangata*pillai Ampalavanar, the attorney of the husbandof the first petitioner.The amount realized by the sale was less than the mortgagedebt. Id pursuance of the sale the petitioners obtained a writ ofpossession, and upon the Fiscal's officer going to the land to putthem in possession, the defendants-respondente set up a claim to theland, and that claim was investigated in the proceedings underappeal in pursuance of sections 326 and 327 (ft) of the Civil ProcedureCode.
1822.
clj.
Supprama-
mama
Brampa-
kundcal
The claim was made in the interests of the trust, end the personssetting it up were the first and second defendants-respondents.The first respondent was one of the original officiating priestsappointed by VIsu vanather, and the second respondent who was a sonof another of these .priests and had succeeded to his father’s office,and the third respondent, a son of Thamotherampillai, who, at thetime ol the institution of the proceedings, claimed to be in possessionof the madam on behalf of one of the trustees of the trust,Tiruchittampalam, and who since the institution of the proceedingshas himself been appointed a trustee.
The claim which the petitioners make under the purchase is tothe share set out in the otty deed, namely, one-fourth of the gardenand one-third of the field of 92 lachams. As 1 have above explained,Arunachalam had not even a We legal title tp one-third of thefield at the time of the mortgage. He had a legal title to only one-eighth, that is to say, a half share was still vested in Kathiiasapill&i,and he, Muttucumaru, Suppramaniam, and the Children of Sinne-tamby were each legally entitled to .one-fourth of the remaininghalf, that is to say, one-eighth each. Therefore, he was not com*petent in any view of the facts to mortgage more than this one-eighth.It is contended on behalf of the petitioners that by long possessionthis title to one-eighth had been enlarged into a title to one-third,but as I have already pointed out it is not possible for a person whooccupies a property comprised in a charitable trust with noticeof the trust to acquire title by prescription against the trust. Itis not possible, therefore, for Eovindar Sinnetamby or las heirsto enlarge any rights they may have under the mortgage deed- byprescription at the expense of the trust.
(. 428 )
1928. There remain, therefore, two questions for consideration. The—-first is this: Did Kovindar Sinnetamby by taking the mortgage of
Bb^am the year 1893 from Arunachalam and by roistering the deed obtain
priority as against the deeds of trust to the extent of the title which
was vested in his mortgagor at the date of the mortgage, or was heEranypa- precluded from obtaining that priority through fraud or collusionkurukdl • in obtaining the deed ? The second question is this: Assunpogthatthe mortgage deed was tainted with fraud or collusion, and thatpriority could not be claimed in respect of it, are the petitioners,as against the trust deeds, entitled to rely upon the Fiscal's transferas parties claiming an adverse interest on valuable consideration byvirtue of a subsequent deed."
With regard to the first of these questions, the learned Judge hasmade no express finding. He was satisfied with a solution of hisown which was unfortunately erroneous. In perusing the pagesof the Legislative Enactments dealing with land registration, hiseye seems to have caught section 48 of Ordinance No. 5 of 1877,and he appears by mistake to have treated this, as though it wasa section of the Land Registration Ordinance of 1891. Heconsidered, therefore, that those interested in the trust, as asection of the. public, were protected by that section. This isclearly erroneous, and the section cited , even though it could be sointerpreted has nothing to do with this subject. Being satisfiedwith this solution, the learned District Judge made no finding on thequestion of fraud or collusion, but he, nevertheless, clearly indicatedwhat his opinion was.. In more than one place in bis judgment herefers to the deeds of 1893 as mere manipulations for the purposeof creating an ostensible title; and he clearly believes that KovindarSinnetamby was party to these collusive transactions, for hedescribes his lease to Thamotherampillai “ as a most ingeniousstep.” Further, he obviously regards with the utmost suspicion theevidence of the alleged leases made by Kovindar Sinnetamby.
It is, of course, necessary to prove that Kovindar Sinnetambywas a party to this transaction. It is not sufficient to prove thatArunachalam and Muttuoumaru were actuated by a fraudulentmotive, nor would it be sufficient to hold merely that KovindarSinnetamby must have been acquainted with the trust. Mereknowledge of the competing instrument is not sufficient. He waslegally entitled even though he knew that there was an unregisteredtrust affecting lands claimed by the family into which he wasmarrying to take a mortgage over a share of that land and toregister it, if he could do so, in advance of the trust deed. If,however, this was a family conspiracy and he became a party tothat conspiracy; if there was that laying of heads together, which isreferred to in one of the previous cases, and Kovindar Sinnetambywas one of the persons who took pari in it, thenhe could hot claimpriority for his mortgage. Personally, I find. Very great difficulty in
( 429 )
seeing how Kovindar Smnetamby could have foiled to he a partyto this arrangement. He could not have honestly believed that thefamily into which he was marrying had any sort of honest claim tothe land. Kathiresapfllai, one of the original donors, was still alive.Four years before, the deceased Snppramaniaxn had, asserted therights oi the trust, and the most elementary inquiries would havedisclosed to him the will of Visuvanather. The very foot thatSuppramaniam was impliedly excluded, from the share in theproperty must have disclosed to him what was going on. 1 do notbelieve that he would have made any further advance on such asecurity, and further his going into Court a year later and solemnlyreciting a bogus transaction as though it took place, in pursuanceof a genuine chain of title, seems to me to point very strongly tohis being implicated in the fraud. As, however, J think it desirablethat the second point above referred to should receive furtherdisoussion, I think it would be best to leave open the question offoot with regard to the first point.
With regard to the second point, it seems to me a question ofsome difficulty. Assuming that the purchaser at the Fiscal’s salewas Ghellachchi, the heir of Kovindar Sinnetamby, can it be saidthat she paid valuable consideration for property transferred to herunder these circumstances. The purchase was in liquidation of themortgage decree and no money actually passed, and if the trans-action of 1893 was a bogus transaction, it is a question whether therewas any actual debt to support the decree. The determination ofthis question may depend upon the view taken of the tacts of thecase, and as the question does not appear to have arisen before andis of some importance, I think it is desirable that any furtherdiscussion, both of this question and of the connected question of ,fraud and collusion, should be referred for further argument before aCourt of three Judges.
PpB-TER J.—I agree.
The case was duly listed for argument before a Court of three.Judges consisting of Bertram C.J. and Porter and Schneider JJ.
W. Jayawardene (with him Spencer Bajaratnam), for plaintiffs,appellants.—Section 16oi Ordinance No. 14 of 1891 dearly applies tothe trust deeds, and they must, therefore, be- registered. UnlessSmnetamby was guilty of collusion in obtaining the deed in hisfavour, the deed is good. Mere knowledge of the existence of thetrust deed after he had got the mortgage bond will not make hismortgage a fraudulent transaction. Nor will Sinnetamby be guiltyof fraud in securing prior registration, unless it is shown that heactively prevented the registration of the trust deed before his deed
1922.
OJ.
Supprama-niam t>.Erampa-kurukal
( 430 )
im
Supprama-mam v.
kwruJSi,
(Aserappav. WeenOunga lhnndBroumv. Vinaeitamby*)i The evidenceshows that no attempt was made at any time to have the trust deedregistered.
Issue of fraud must he specifically raised and proved. “ Defendantcould not be,allowed in special appeal to object that the Lower Courthad not determined the bona fides of plaintiff’s purchase unless he(defendant) had not only alleged fraud, but shown the way in whichthefraudwasintendedto becarriedout.” (Settv. Bvrmono*and Qwptav. Chouodkry.*) In this case the issue of fraudhas been of set purposeabandoned. The Appeal Court should not try issues raised for thefirst time in appeal, unless all the evidence is before the Court(Martian v. Sanmugam B).
Even assuming that the deed in Sinnetamby’s favour is taintedwith frauds the appellants are not affected by it. They are thepurchasers at a FiscoTs sale for valuable consideration and haveobtained a conveyance from the Fiscal. The deed of conveyance isgood till it is Bet aside on the ground of fraud or want of considerationin a properly constituted action.
A. St V. Jayawardene, K.G. (with him Arvianandan), for de-fendant, respondent.—The trust deeds need not be registered as theydo not transfer any property, but merely create a trust. Section16-of the Registration Ordinance, No. 14 of 1891, is taken verbatimfrom Ordinance No. 7 of 1840, section 2. These deeds whichmerely declare a trust do not come under the latter section. Theyneed not be notariably executed, as that section does not refer to adeclaration of trust which is only a unilateral contract. Underthese deeds the trustees do not get any interest beneficiary orotherwise. .
[Bbetbam C.J.—“ A declaration of trust ift the exact oppositeof any conveyance or transfer of the property. It imposes thetrust without any conveyance upon the person who holds it.”Per Lord Bvchnaster in O'Meara v. Bennett.*]
The real transaction between the parties Shows that Sinnetambymust have been aware of the trust at the time he got the mortgage.The present appellants who are heirs of Sinnetamby are on thesame footing, and are subject to the same equities as Sinnetamby.They cannot acquire a title superior to that which Sinnetambybad. If the appellants had been innocent purchasers for valuethey would get a dear title. At the Fiscal’s sale no money waspaid, but appellant was given credit to the extent of his judgment.Counsel cited Mutturaman v. Masilamany;7 Silva v. Qoonewardene; 8Jaya on Begnpp. 100-103 ; and Bhat v. Bhat,9 “ Fraud is not a
1 (1911)14 N L. B. 417..6(1920) 22 N. L. B.249 at p. 251.
1 (1206)4 Tam. 147.6(1921) lA. 0. H. L. p. 80 at p. 85.
9 (1868)10 W. B. 231.7(1913) 16 N. L. B.289.
9 (1888)/. L. B. 16 Cal. p. 533 at 8 (1916) 18 N. L. B.241.
v. 637^8 (1879) 1. L. B. 3 Bom. 30atp. 33.
( 431 )
thing that can stand even when robed in' a judgment ” {Black on 1932.Judgments, voL I., paragraphs 292-293.)^njjjiiiiiin*
W. Jayawardene, in reply.—The attestation by the notary in*
the mortgage bond shows that Bs. 730 in cash passed beforehim as feiraferfpart consideration. Fraud is not even alleged in the course oi theproceedings. Ordinance No. 9 of 1917, section 6, declares that trustsaffecting immovable property shall be notarially executed.
[Bertram O.J.—A deed merely constituting an interest in landdoes not necessarily require registration.]
All trust deeds will be in this form unless cestui que trusts aredearly defined. There has been a sufficient acceptance by Suppra-maniam on behalf of cestui que trusts. Assignment of an interestcomes under section 2 of Ordinance No. 7 of 1840. Fraud'does notvitiate a judgment [Madar JSaibo Sirayudeen1). Under Roman-Dutoh law a fraudulent deed is valid until it is cancelled
The appellants are not mere volunteers, but purchasers for value,t.e., their judgment.
Cur. ado. vutt.
June 2,1022; Bertram 0. J.—
The questions for the consideration of the Full Court in thin easeand the facts relating to them are set out in the previous judgment ofmyself and my brother Portef. They were, firstly, whether themortgage of 1893 obtained priority by registration over the unregis-tered declaration of trust of 1881 T And secondly, whether,assuming that this priority was not established, it could be claiinedby virtue of the registration of the Fiscal’s transfer twenty-fiveyears later ?
It was assumed in submitting these questions that the declarationof trust is a document requiring registration. Mr. A. St. V. Jaya-wardene, however, who appeared for the first time before the FullCourt, has raised the contention that a declaration of trust does notrequire registration, and that, consequently, declarations of trustsare not documents which are liable to be defeated by the priorregistration of a subsequent competing instrument. This question- is so fundamental to the first question reserved that, though notexpressly propounded, it must be taken into consideration.'
The contention appears to me well founded. The two documentscreating the trust, namely, P I and P 2 (we need not consider P 3for present purposes) are both simple declarations of trusts. Theytransfer no title, and, so far as the creation of the trust is concerned,are unilateral instruments. As was said, in a recent case in thePrivy Council [O'Meara v. Bennett *). “ A declaration of trust is theexact opposite of any conveyance or transfer of the property. Itimposes the trust without any conveyance upon the person who holdsit.” Now, «ingnln,T as it may seem, thougha declaration of trust
1 {1913) 17 N.L.B.97.1 (1929) A. O. onp. 36.
( 432 )
1022.
MU
C.J.
ntam t>.Erampa-kurukal
constitutes ant interest affecting the land to whioh it relates, and.though it would seem most desirable that a document creating suchan interest should be registered, it does not come within the termso£ the enactment requiring registration of documents, namely,section 16 of Ordinance No. 14 of 1891* Mr. Jayawardene appears
the necessity of registration upon all documents whioh were required
to he notarially executed by section 2 of QrdinanceNo. 7 of 1840*A comparison of these two sections is of assistance in determiningthe construction of the former. The document* tfhich are requiredto be registered on pain of losing priorL% will be best appreciatedif set out in the following form:—
Every deed or other instoiment—
(a) Of purchase, transfer, or assignment;
jjjk) Of mortgage : Of any land or other immovable property;
Of promise, bargain, contract, or agreement—
For effecting any such object, or
For establishing or transferring any security, interest,or encumbrance affecting land or other immovableproperty;
Of contract or agreement for the future sale or purchase or
transfer of any such land or property.
If the above arrangement of ti^e words of the section be examined,it will be found that the documents in question do not come under,any of these heads. They undoubtedly establish an interestaffecting land, but they are not deeds of promise, bargain, contract,or agreement for that purpose. In other words, it is only where atrust of immovable property is established by a document interpartes that this document must be registered in order to securepriority.
Mr. E. W. Jayawardene sought to escape from this position bypointing out.that the first of these documents was executed by thetrustee,Suppramaniam. I do not think,however,that thisexecutionby Suppramaniam meets the case. Suppramaniam merely executedthe document to show that he consented to act as trustee! Nointerest in the property was actually conferred upon him. Thisacceptance of the office of trustee might have been embodied in anentirely separate. instrument. It did not make him a party toany promise, bargain, contract, or agreement for the purpose ofestablishing the trust. The trust was established simply by thewords of dedication.Suppramaniam was, in any case, not a party
to the second document .which relates to the field of 92 lachams.Mr. E. W. Jayawardene suggested that the use of the word “ grant ”“ we have granted this charity” indicated that here an interest mustbe presumed to have passed to somebody. But here the word
( 438 )
Sr
translated “ gwmfo** M must, I think, simply have meant “ dedi-cated.” A gimilar phrase -was used in the document consideredin the case of (yMearav. Bennett (supra) above cited, bat it washeld nevertheless, that no interest was transferred.
The result appears to be that we have now to consider thisquestion entirely independently of the question of priority ofregistration. We are not thereby altogether emancipated fromconsidering the question of foot. Amnaaalaro, the legal owner of
1928.
Bsbxbak
CJ.
MOMS.
Xmm>
favufcrf
deed of 1893, purported to transfer an interest in the property toKovxndar tfinnefcamby. Kovindar ffinnetamby if be had notice,either actual or eonstnietfve, of the trust would be bound by it. Ithe advanced his money in good faith without notice of the trust, hewould not be so honed (see section 60 of the Trusts Ordinance, No. 9of 1917, the principle of which presumably would apply to personsacquiring an interest in property by way of mortgage). Thequestion oi fact, therefore, is not |eoefaiely the same as that originallycontemplated- It is not whether Kovindar fihmstamby by takingthe mortgage was a partyto a franduleator coUnavB arrangement, batwhether in tekfag this mortgage he had actual or constructivenotice of tiie trust, Jn whichever form the question is propounded,in my opinion, it must be answered in the affirmative. The footsset out in mypcceions judgmentoonvince me that the whole arrange-ment was a hogus arrangament, and that fSnnetamby was a partyto it. That ecmclsrion is intensified by the circumstance to which.1 had not previously alluded, that the mortgage bond remainedunenforced for twenty-five yeans, and I do not in the least believethe suggestion that this was so, because Sinnetamby and his heirwere enjoying tbs fruits of the property by virtue of continuousleases. It is hardly neoesaary seriously to consider, therefore, whetherKovindar Sinnetamby had actual or constructive notice of the frost.The most elementary inquiries would have put him on the track ofVisuvanather’s will and the deeds of trust.
Mr. ML W. Jayawaxdene urged that the issue oi fraud or collusionwas never definitely raised in the Court below, and that under thesecircumstances we ought not to base our judgment in this Court on afinding of fraud or collusion. All the facts, however, were fullybefore the Court below. I do not think that any further facts oouldhave been adduced on either Bide if the issue had been expresslyraised, and it would be futile to refer the matter to the DistrictJudge for a considered opinion as he has so plainly hinted what hisopinion is. Inasmuch, however, as what, we have now to consideris not the question of fraud, but the question of constructive notice,we need not concern ourselves with this aspect of the case.
We are equally relieved from the necessity of giving an opinionon the most difficult question in the whole case, namely, the seoondquestion referred to the Full Oourt: As, however, the question has
33-
been formally referred and has been fully discussed, I think it wouldbe better that we should express our opinion. The {sets brieflyslated are these. In 1893 Kovindar Smnetamby took fromArunasalam -what, for the consideration of this question, must betakento have bcena fraudulent or collusive mortgage deed. Twenty-five years 'ater his heir, to whom his interest under the deedhas passed, pat the mortgage deed in suit, recovered judgment,bought in the property at the Fiscal’s sale, obtained a Fiscal’stransfer, and duly registered it. Did he, by the registration of this
transfer, obtain priority over the deed of trust which it was the objectof the original fraudulent mortgage to defeat ? We have not here'to consider the general principle of the law relating to fraud.. Wehave to interpret the words of -a particular statutory enactment,namely, section 17 of Ordinance No. Id of 1981. There are twopoints which arise on the interpretation of that section. The first is,by virtue of what deed are the petitioners really claiming an interestadverse to the trust ? In a previous case in which a question -somewhat akin to this arose, namely, Ferdinando v. Ferdinando1there are certain observations of my own which seem to suggest thatwhere there is a series of deeds each dependent upon the other andeach registered, the fact of fraud or collusion in one of them woulddestroy the priority which might otherwise be claimed on behalfof the subsequent deeds by virtue of registration. I think it must beadmitted that those observations require qualification: A partyolaiming the benefit of prior registration can ordinarily rely on anyone of the deeds in such a series. As a matter of fact, in the oase in.question, the District Judge found as a foot that both the successivedeeds were collusive,and this Court would, I have no doubt, have soheld if it had expressed its opinion.
But this principle, I think only applies to successive deeds whichare, in fact, independent transactions. a A mortgage deed, a sale tothe mortgagee in execution of that mortgage, and a Fiscal’s transferin pursuance of that sale are circumstances so closely connectedthat it would be extraordinary if fraud in the first should be heldnot to affect the last for the purpose of priority. If KovindarSizmetamby immediately on obtaining the mortgage had pat itin suit, bought in the property, and obtained a Fiscal's transfer, thiswould, I think, ha^e seemed incontestable. The position is notreaDyaffeoted by the two circumstances that Sinnetamby’s interestin the mortgage has passed to his heir, and that twenty-five yearshave elapsed between the date of th$ mortgage and its enforcement.There is a previous derison of this Court in which the relationbetween a mortgage and a Fiscal’s transfer is commented upon.(See Mt&tlramanv. MasQamany (supra).) LasceQes CJ. there said:“ What is the registered deed by virtue of which am interest adverseto the lease is claimed? Surely,it is the mortgage bond, and not the
Mmi)23 N.L.R. m.
*{1913) 1$ N. L. B. 289m
(. 436 )
Fiscal's transfer. Taking the transactions in chronological' order,it is clear that as soon as the mortgage bond was executed and .registered, an interest adverse to the lessee was claimable under that.The subsequent sale and conveyance by the Fiscal are merelystages in the procedure by which the mortgagee is allowed by law torealize his interest under the mortgage bond/’ In such a case as thepresent,I think it may well be held that the deed by virtue of whichthe petitioners actually claim the adverse interest is the mortgagebond and not the Fiscal’s transfer, and that, therefore, the regis-tration of the Fiscal’s transfer would not avail them.
There is, however, another point on the interpretation of thissection. Was the Fiscal’s transfer given for valuable consideration ?As between the parties to the suit it might well be argued that thiswas the case. The obligation of Arunasalam on the mortgage deedhad been reduced to. a judgment, and the judgment was enforceableagainst him. The plaintiffs in obtaining the Fiscal’s transfer gavecreditfor aproportion of the judgmentdebt. Theythus relinquisheda legally enforceable debt, and this it may be said was valuableconsideration. But the person affected by the priority thus claimedwould be entitled to show the real nature of the transaction. If themortgage was a bogus debt, the judgment to which it was reducedwas infeoted by the same vice. If there was no real debt to support .the mortgage, there would be equally no real debt to support thejudgment. Jt would be competent to those supporting the trustto go behind the judgment and show that it really represented acollusive debt, and that, consequently, there was no genuinevaluable consideration for the transfer. As was said in a workcited by Mr. Jayawardene (Black on Judgments, vol. I., 'paragraphs292-293): “ Fraud is not a thing that can stand even whenrobed in a judgment.”
I have considered this quegtionsimply from the point of view ofthe interpretation of section 17 of Ordinance No. 14 of 1891. It issatisfactory to find that the conclusions arrived at are in harmonywith the general principles of the law relating to fraud which areexpressed in the judgment of my brother Schneider. I would,therefore, diamiaa the appeal, with costs.
There are two questions which I should like to bring to the noticeof those interested in these trusts. The first is that under presentcircumstances the trust property is not properly vested. The thirdrespondent has, no doubt, since the institution of these proceedingsbeen appointed a trustee in pursuance of the instrument of trust(seel) 4). That appointment tookplace since tie enactment of theTrusts Ordinance (No. 9 of 1917), and, consequently, no doubtsection 75 would be held to apply. The document was notariallyexecuted, and it would appear that under section 77 on the appoint-ment of the third respondent as a new trustee by a notarial instru-ment, in pursuance of the instrument of trust, all the trust property
1932.
Bbbz&am
O.J.
Supprama*
niam
Erampa-
kurukal
( 436 )
Bbssbau
CJ.
ntamv.
Brrnmpo-
kuru&d
for the time being vested in the contamdng tedsteedtee&me vestedin the new trustee jointly with the continuing trustee. Unfortu-nately, it does not appear Ifcat the Inst property was ever vestedin the continuing trustee or in any of the previous trustees. It may,,well be considered if this is not a case in which it is uncertain inwhom the title to the trust property is vested, and whether, therefore,application might not be made for a vesting order under section 112of the Trusts Ordinance.
There is a further point. It has been suggested in the courseof the argument that some of those who now purport to uphold thetrust are doing so with a view to their own advantage and with thehope of using the revenues of the property for their own purposes.It is further said that owing to local developments the charity requiresreconstitution and adaptation. With a view to making such re-proaches impossible, and with a view to the adaptation of thecharity, if any such adaptation is necessary, it may be wertii vrhileto consider whether an application should not be made to-Gwuft
under section 102, and whether a schema Bhould not be drawn upunder which there should he some regular system of accounting forthe revenues of the charity and a verification of accounts iaiy^oheme authorized under this section could provide for the necessaryadaptation of. the charity, could pat it on a regular footing, andcould provide for its iuture management. The vesting order undersection 112 might possibly be made as part of the general reliefauthorized under paragraph (j) of section 102.
Ports®. J.—
This appeal was axgfted before Bertram <U. and myselfon March20,1922, and forreasons fully set out in the judgment of Bertram C.J.,the appeal was referred to a Full Bepeb. At that time it has beenassumed that the documents D1 and D 2, which are the documentswhich create the trust, were such instruments m required registra-tion under the Land Registration Ordinance of *1891. There was,in fact, no suggestion to the contrary throughout the appeal beforeBertram C.*T. and myself. On this assumption it was argued thatalthough D 1 and D 2 were of earlier date than the mortgage deedof 1893 they bad lost their priority by reason of lack of registration'over the mortgage deed of 1893, which had been registered.
On the hearing of the appeal before the Full Bench, Mr. A. St. V.Jayawardene has submitted that documents I) 1 and D 2 are notdocuments which require registration.
The submission is I think a so und one, and goes to the root of thisaction. D1 and X> 2. oertainly *do establish an interest 'affectingland, but they are not “ deeds of promise, bargain, contract, oragreement for that purpose.” They are merely unilateral agree-ments. It has been contended that D1 was executed by the first
( 437 )
trustee Suppramaniara. I do not thmk that thin is bo. He appearsto have merely signified Mb willingness to aot as a trustee.
The question, therefore, as to fraud, and collusion does not arise.I do not consider it necessary, in view of the comprehensive mannerwith which Bertram C.J. has examined and dealt with the question,to do more than to say that I agree with him on this question.
I would, therefore, dismiss this appeal, with costs.
1982.
Sugprama1mamv.Erampa•humhal
SCKHMDBS J.—
The argument before u» resolved itself into two broad questionswhich I would state to be:
Are the documents D1 and 1>2, which create the trust,instruments which most he registered under the provisions ofsection 18 of " The Land Registration Ordinance, 1891 ” (No. 14of 1891).
If they are such instruments, does the priority churned byreason of the registration of the otiy bond P1 and of the Fiscal’stransfers P20 and J? 23 not come into existence for want of “ valu-able consideration,’" or is it defeated by the existence of “ fraud orcollusion ” (section 17, No. 14 of 1891). It is evident that if thefirst of these questions he decided in the negative, the second neednot be considered. By the dose of the argument we were agreed 'that it should be hdd in regard to the first question that D 1 and D 2 .are not instruments which are required to he registered. Thosedocuments are the oldest in point of time of all the documents whichare in competition. They must, therefore, prevail upon the maxime* qui prior es£ tempore potior mt yure ” to the extent of impressingthe trust upon the lands in dispute. Upon this question andaspect of the case I feel I need say no mote- than that I have bad. theadvantage of perusing the judgment of my Lord the Chief Justice,and that I agree, not only with his holding, but also with the reasonsgiven by him.
But although there is no real necessity to consider the secondquestion for the purpose of deciding the appeal, yet, in view of thefact that the matters involved in it were argued at great length, £would express my opinion in respast of those matfeasB, but not atany length.
The several matters raised by tire second question were for-mulated into two questions by my Lord the Chief Justice in his’ earlier judgment, I wiE adopt the questions as formulated by himwith a mail addition to cover the further ground which has beenopened by the tore which the appeal took in argument before the,Full Bench. The two questions are: (1) Bid Kovindar Sinnetombyby taking the mortgage of the year 1893 irem Arunaselam and by.registering the deed obtain priority as against? the deeds of trust tothe extent of the title which was vested in the mortgagor at the date
1982.
SOHHKXPBB
A J.
Sujyprama-mam v.Erampa*huruktU
( 438 )
of the mortgage as being a party claiming an adverse interest on'valuable consideration, or, if he was such a party, was he precludedfrom obtaining that priority through fraud or collusion in obtainingthe deed; (2) momming that the mortgage deed was tainted withfraud or collusion, and that there was no valuable considerationfox it given by Kovindar Sinnetamby, so that priority could not beclaimed by him in respect of it, are the petitioners as against thetrust deeds entitled to rely upon the Fiscal’s transfers as partiesclaiming an adverse interest on valuable consideration by virtue of asubsequent deed and as parties untouched by the fraud and collusionof Kovindar Sinnetamby.
The first of these questions is a pure question of fact. Tomy mind it presents no difficulty. The evidence, in theview X take of it, points just as unmistakably to the fact thatKovindar Sinnetamby participated in*the fraud of Arunasalamand Muttucumaru and the children of Sinnetamby who had pre-deceased Yifluvanather, as it leads one to the inevitable conclusionthat shortly after the death of Visuvanather, Arunasalam, Muttu-cumaru, and the children of Sinnetamby entered into a conspiracyto defeat the trust created by Visuvanather. The opinion of thelearned District Judge, who has had large judicial experience of thepeople of the Jaffna District to which the parties in this case belong,and also the opinion of the Chief Justice in both his judgments upon; the evidence on record, are to the effect that Kovindar Sinnetamby,in accepting the oUy bond P1, acted in collusion with Arunasalamand Muttucumaru in the fraud they were then engaged in to defeatthe object of the trust and to establish a claim to the trust property.But the Chief Justice in his earlier judgment stated that he wouldleave open for th6 consideration of the Full Bench the question ofthe fact whether Kovindar Sinnetamby was implicated in the fraud*The observations of the Chief Justice in his earlier judgment, andthe effect of the learned District Judge’s judgment, 'afford to mymind good reasons for the conclusion that Kovindar Sinnetambymust be regarded as having become a party to the fraud in whichhis father-in-law to be, and. the brother of that father-in-law wereengaged in at the time of the execution of the oUy bond P 1. Thereseems to me one reason which I might characterize as conclusive onthis point, and, that is, that in the stale of facts as they existed at the■ date of the execution of the oUy bond, it was not possible for Kovin-dar Sinnetamby to be ignorant of the true history of the lands nowin dispute. The dedication of these lands for the charities he.intended was effected by Visuvanather in 1881. He died in1887 or six years after that dedication. It is proved that inthe lifetime of the donor, Visuvanather, the buildings necessary forthe use of the garden of 1lachams as a madam, and templewere in existence. The District Judge finds, as a foot, that so longas Visuvanather was alive, the madam and the temple were
( ,*» )
maintained in the manner intended by .the declaration of trust inD1, and that the produce of the land of 82 laobams wasused for the maintenance of the modem as contemplated in thetrust deed D 2. On the evidences holds that certain ceremoniescontinued to be performed in the temple publicly, and certain peopleto -be feasted in tbe madam even after the death of the donor anddespite the interference of his brothers. He holds that Hindus wereinitiated into the Hindu religion, and children taught free in themadam after the death of the donor. He accepts the evidence of awitness who deposes that a free school was held in the madam as ofright, and as a place to which the publio had right of access; thatin the gateway at the entrance to the nuzdamare to be found even atthe present day images of certain deities which are not to be foundexcept at entrances to public places like madams or temples. Healso accepts the evidence that the garden is known as VeUikbQamaimadam. The deed D1 enumerates a number of pujas orceremonies which should be performed in the garden oflachams. The madam which was in the same garden is, as Xunderstand it, a resting and lodging place for pilgrims and retigionhpersons. D1 directs that rice and other things necessary for aday’s meal were to be given to every Brahmin who sought shelter,and a& pilgrims from India and &1Twayfarers who desired to cook,their meals and to have a shelter, were to be allowed within themadam.
Considering the history of tbe litigation before the year 1893 whenthe otiy bond was executed, in regard to these lands, the fact that thefigures on the gateway must arrest the most casual eye and proclaimto every Hindu the character of the land and the buildings on it,that the name by which the land was known left no room formistake as to its character, that the uses to which it was put publiclywere such as could not but be semi by ail people, and could not butconvey the fact that the land was subject to a trust; taking all thesefacts, together with the circumstances immediately connected withthe execution of the o&y bond, it is almost impossible to accept tbeposition that Kovindar Biimetamby was unaware of the existenceof the trust, or that he was not a participator by the very acceptanceof the otty bond in the conspiracy to defeat the trust. Nor Is itpossible upon these facts to believe that he paid any “ valuableconsideration ” for that deed. I
I would, therefore, hold that the cMy bond was tainted with fraudand executed with the object of furthering the fraud to whi§h 'Arunasalam and Muttucumaru and Kovindar Sinnetamby wereparties with others. I would also bold upon the evidence thatKovinder Sinnetamby had actual notice of the trust before and atthe time he accepted the o% bond, and that he paid no considerationwhatever for that deed.
( 440 )
1922.
BOHRHBtoB
J.
Supprama-
niamv.
Enmpa«
kurukal
I shall now proceed to consider the second question, viz., whetherupon the assumption that the otty bond was fraudulent and collusive,and without valuable consideration on the part ot Kovindar Sinne-tamby, the petitioners axe precluded from claiming priority asagainst the trust deeds upon thb Fiscal’s transfers as being “ partiesclaiming an adverse interest on valuable consideration by virtue o£a subsequent deed and who are not guilty of any fraud or collusion ”within the meaning of section 17 of Ordinance N6. 14 of 1881.What are the facts upon which the decision of this question rests fIn 1893 Kovindar Shmetamby accepted the otty deed P1 infurtherance of a fraud. He paid no consideration for it. He diesintestate, and by operation of the law of intestate succession hisheir succeeded to his rights under that bond. That heir and herhusband put the bond in suit about twenty-five years after itsexecution, obtained a dft&oe/andat the sale in execution purchasedthe lands mortgaged, and obtained the Hscal’s transfers P 20 andP21. Two distinct points arise upon these facts :.(1) Is the fraudand collusion of Kovindar Sinnetamhy to be imputed to the secondpetitioner, his heir; azxd ^S) can that heir be deemed to be a partyclaiming an adverse interest on valuable consideration.
If the priority was claimed by Kovindar Shmetamby upon theground of the prior registration of the My bond, it iB quite evidentthat the claim would have failed for two good reasons—the existenceof fraud and collusion and the absence of valuable consideration.Do the events which have happened since his death, and which Ihave already mentioned, operate to grant a priority'to the secondpetitioner who is the heir of Visuvanather, to which Visuvanatherhimself was not entitled.
There is no evidence to support a finding that the second peti-tioner was in any manner a party to the fraud of her father. Itmust, therefore, be assumed that so far as her own acts are concerned,she is innocent of any fraud. But her innocence does not help her.She is a mere volunteer so far as the devolution of the right under,the oUy deed is concerned, for she acquired those rights by operationof the law of intestate succession, and was therefore not a purchaserfor value. This view of the law is expressed by Spencer-Bower• in his book on Actionable Misrepresentation : “ Thus, it is to heobserved that, for this purpose, any person to whom property isassigned by operation of law, or by force of some statutory provision,such as a trustee in bankruptcy, is a volunteer and not a purchaserfor value, and a representee may exercise as against him any rightof avoidance or reoission (and thereby recover property otherwisedistributable amongst the creditors)' which he might have exercisedagainst the bankrupt.”
In the same paragraph thesameauthorproceedsfco say: “ that theproperty may be taken out of the hands of an assignee who is a merevolunteer; or the recipient of bounty, whether he acted in good
( 441 )
faith and without notice or not, has been established from theearliest fames. The role is forcibly stated in a celebrated case (e),where the question arose whether the innocent donees, of portionsof the property acquired by imposition could retain what they hadbeen so given, and where WQmot 0 J., one of the Lords Commis-sioners of the Great 8eal, delivered himself thus: ‘ there is nopretence that Green’s brother or his wife was party to an imposition,or had any doe or undue influence over the plaintiff; but does itfollow from thence that they must keep the money V Ho; whoeverreceives it must take it tainted and infected with tire undue influenceand imposition of tire person procuring the gift.' His partitioningturd cantoning it out amongst bis relations andwill not
purify, the gift and protect it against the equity of tire personimposed upon. Let tire hand receiving it be ever so chaste, yet, if itcomes through a corrupt, polluted channel, tire obligation of resti-tution will follow it (d).’ And in numerous subsequent derisions,both of misrepresentation and of undue influence, unconscionabledeeding, and non-disclosure, this doctrine, which is common to alleases of imposition and oppression, has been consistently andrigorously applied (e).”
So Kerr on Fraud and Mistake : “ If a transaction has beenoriginally founded on fraud, the original vice will continue to taintit, however long the negotiation may continue, or into whateverramifications it may extend {q). Not only is the person who hascommitted the fraud precluded from deriving any benefit under it,but an innocent person is so likewise, unless there has been someconsideration moving from himself (r).”
The same conclusion is arrived at by the reasoning in theFull Bench derision in the case of James et al. v. GaraUs1 whereLssoeUes CJ. held in regard to the competition of deeds executedby “ A,” and after his death by “ A’s ” heir that the estate of theheir must be regarded as that of his intestate.
The lapse of twenty-five years between the execution of .thefraudulent oUy bond and the date of the action for its realizationmakes no difference.
To quote, again, from Kerr and the same book: “ In equity nolength of time will run to protect or screen fraud (a). The right ofthe party defrauded to have the transaction set aside is not affectedby lapse of time, bo long as he remains, without any fault of his ownin ignorance of the fraud which has been committed (<).” Noquestion of the limitation of this action by lapse of time arises.The etty bond accordingly passed into tire possesrion-and ownershipof tiraseoand petitioner tainted with the fraud attached to it in thehands of Kovindar Sinnefcamby and as an instrument not obtained“ on valuable consideration." It cannot be successfully contentedthat the fraud was terminated by the conversion of the rights under1 {1914) 17N.L.JL. 78,
j.
Svpprama-
tuam.e.
Brampa-'
hmutal
the bond to them under the decree obtained in (be action upon thebond. Intheoaseof Khanv. Khan* where certain transactions wereattached upon the ground of collusion and band in (be judgment ofthe Privy Council, the. following diotom of Chief Justice de Gray inthe Duchess of Kingston^ case is cited with approval:u Fraud is anextrinsic collateral act, which vitiates the most solemn proceedingsof Courts of Justice.” And the judgment refers to (be case ofCollins e. Blantem as “ an authority to show, if any were needed,that a Court will strip off all disguises bom a ease of fraud and lookat thetransactionas it really is.” Intbeease of Bhat e. Bhat (supra)West J. Baid: “ if the ostensible sale or mortgage was really a merecolourable transaction, the vendee from the mortgagor can claimthat it be disregarded, even though the fraud has been carried astage farther, so as to give to the sham mortgage the corroborationof a decree.”
Agein,the local case of MvUwraman o. MasUamany (supra) maybecited as an authority for the proposition that in a competitionbetween a purchaser at a sale by the Fiscal under a mortgage decreeand a transfer from the mortgagor, it is the mortgage and not theFiscal’s transfer on the one hand and the transfer bom themortgagor on the other which should be regarded as compering.LasceDes C J. said: “ the Fiscal's transfer under a mortgage decreecannot, in my opinion, be regarded as a source of title. It is theformal instrument legalizing a sale under a mortgage decree whichdeclares the property to be bound and executable in satisfaction ofthe mortgage bond. The mortgage bond, X should have thought,was the root of the purchaser’s ride/’
It may, therefore, be taken that the second petitioner was in nobetter position than Kovindar Sinnetamby in regard to any claimfor preference which might have been put forward as arising under(be provisions of (be Registration Ordinance.
X agree with (be order the Chief Justice proposes should be madein regard to this appeal.
Appeal dismissed.
♦ 1
110 Moore'* Ind* dpp* Casts 640 at p* 866*