WEERAPPERUMA and another ,Appellants, and DE SILVA and another, Respondent

120-NLR-NLR-V-61-WEERAPPERUMA-and-another-Appellants-and-DE-SILVA-and-another-Respondent.pdf


BASS"ATATTR, C.J.—Weerapperuma v. De Silva
481
Present: Basnayake, C.J., Pulle, J., and Sinnetamby, J.W n: ftik.AT>PTO HpTTiVr A, and another, Appellants, and DE SILVAand another, Respondents
S. G. 220—D. G. Galle, 1218(MB
Addition of parties—Conditions necessary for an intervenient to be added as a party—
** Questions involved in the action ”—Civil Procedure Code, ss. 11, 14, IS—■
Mortgage Act, No, 6 of 1949, s. IS.
Where an intervenient seeks to be added as a party under section 18 of theCivil Procedure Code, any question arising on the case set up by him in hispetition anH not arising on the case set up in the pleadings of the parties isnot a question involved in the action within the meaning of the section.
No person is entitled to be added as a party under section 16 of the MortgageAct, No. 6 of 1949, unless there is an instrument in existence which gives himan interest in the land mortgaged on the bond which is being sued upon.
Plaintiffs-appellants instituted the present hypothecary action npon amortgage bond No. 3514 executed by the 1st respondent on February 1, 1948.Tn bin answer the 1st respondent asked that the action be dismissed or, in thealternative, for an order that an accounting be taken. The 2nd respondent,who had obtained a money decree against a person to whom the hypothecatedproperty had been previously mortgaged in October, 1945, sought to be addedas a party to the present action. The 1st and 2nd respondents both impugnedthe bond No. 3514 alleging that it was vitiated by fraud.
Held, that the Court had no power to add the 2nd respondent as a partyeither under section 18 of the Civil Procedure Code or under section 16 of theMortgage Act, No. 6 of 1949.
^s^PPEAL from an order of the District Court, Galle.
V. Perera, Q.G., with F. M. Dias and Neville Wijeratne, forPlaintiffs-Appellants.
H. W. Jayewardene, Q.G., with S. Ddkanayake and S. D. Jayasundera,for 2nd Defendant-Respondent.
Gur. adv. vult.
July 28, 1958. Basnayake, C.J.—
This is an appeal from an order of the District Judge permitting theadded 2nd defendant-respondent (hereinafter referred to as the 2nd21—r.Tt
2J. If. B 22823—1,995 (4/60)
482
BASTTAY'AK'JE, C.J.—Weerappemma v. De Silva
respondent) to this appeal to intervene in the mortgage action institutedby the appellants against the 1st defendant-respondent (hereinafterreferred to as the 1st respondent).
The learned District Judge’s order allowing the intervention reads—
“ Having heard both sides, in the interests of justice, I make orderunder Section 18 of the 0. P. C. read together with Section 16 of theMortgage Act allowing the petitioner to file answer in this case.He will however pay a sum of Rs. 52.SO as costs of today to thelawyers for the pltff. I add the petitioner as the 2nd deft in the case.The 2nd deft’s answer on 8.10.1956. ”
Briefly the material facts are as follows : By Bond No. 18 of 18thOctober 1945 (hereinafter referred to as Bond No. 18) the 1st respondentand Ms wife mortgaged to Don Cyrus Am arasinghe (hereinafter referredto as Cyrus) for a sum of Rs. 41,800 the lands described in the Scheduleto that Bond. On 28th January 1948 the 1st respondent’s wifetransferred to him all her rights in the lands mortgaged by Bond No. 18.On 1st February 1948 by Bond No. 3514 (hereinafter referred to asBond No. 3514) for a sum of Rs. 47,500 the 1st respondent mortgagedto the plaintiffs the lands mortgaged by Bond No. 18. It would appearfrom the attestation clause to Bond No. 3514 that .at its execution thesum of Rs. 47,500 was retained in the hands of the mortgagees for thepurpose of paying off the debt due on Bond No. 18. On 11th March1949 the 2nd respondent filed an action No. 1077 Special (hereinafterreferred to as action No. 1077 Special) in the District Court of Galleagainst Cyrus for a declaration that Cyrus held share of Bond No. 18in trust for him. To that action the 1st respondent and his wife weremade parties. The 2nd respondent succeeded in that action and decreewas entered in Ms favour in June 1952. The material portion of thedecree reads—
“It is hereby ordered and decreed that the 1st defendant above-named holds a one half share of mortgage bond No. 18 dated October1945 attested by Mr. G-. D. Jayasundera of Colombo, Notary Publicand of all moneys due and payable thereunder and of the securityhypothecated thereby and of all moneys received by the said 1stdefendant thereunder in trust for the plaintiff abovenamed.
“It is hereby also ordered and decreed that the 1st defendantabovenamed do pay to the plaintiff abovenamed the sum of RupeesTwenty Thousand Nine Hundred (Rs. 20,900) and a one half shareof all interest received by tbe said 1st defendant under the aforesaidmortgage bond No. 18 from 14th January 1946 up to the date of thisaction, namely, 11th March 1949.”
An appeal from that order was dismissed. The decree holder thereupontook steps to execute his decree by obtaining writ of execution againstCyrus. He also caused him to be examined under section 219 of theQivil Procedure Code.
BASXAlTAKE, C. J.—Weerapperunui v. De Silva
483
The 2nd respondent’s application to be added as a party defendantis opposed by the plaintiffs. The material paragraphs of his applicationfor intervention in these proceedings are as follows :—
“ 8. The M. B. No. 3514 of 1st February 1948 in suit is a false andfraudulent transaction between the 1st defendant on the one handand the late Sum anawathie Weerapperuma, the 2nd plaintiff andthe said Cyrus Amerasinghe on the other and never intended tocreate a valid hypothec over the premises referred to in the scheduleto the plaint nor does it bear any of the essential ingredients ofa mortgage and the only valid mortgage bond on the premises insuit in this action is M. B. No. 18 of 18.10.1945 referred to aboveand interest on the said bond has been paid up to 1947 by the 1stdefendant.
" 10. The M. B. No. 3514 of 1.2.1948 put in suit in this case isnull and void and of no consequence in law as no consideration passedon it, nor was there any contract to mortgage but was executedat the instance of the said Cyrus Amerasinghe fraudulently to evadepayments of the amount due to the petitioner. ”
At the hearing of the 2nd respondent’s application to be added as aparty defendant no oral evidence was led. The argument proceeded onthe pleadings and the documents relied on by the parties.
The provision of the Civil Procedure Code which governs the additionof parties in an action is section 18. In the case of a hypothecary actionsection 16 of the Mortgage Act, No. 6 of 1949, also makes provision forthe addition of parties.
I shall first deal with the claim of the 2nd respondent to be addedas a party under section 18 of the Civil Procedure Code. That sectionreads—
“ 18 (1). The Court may on or before the hearing, upon theapplication of either party, and on such terms as the court thinksjust, order that the name of any party, whether as plaintiff or asdefendant improperly joined be struck out; and the court may atany time, either upon or without such application, and on such termsas the court thinks just, order that any plaintiff be made a defendant,or that any defendant be made a plaintiff, and that the name of anyperson who ought to have been joined, whether as plaintiff or defendant,or whose presence before the court may be necessary in order toenable the court effectually and completely to adjudicate upon andsettle all the questions involved in the action, be added.
“ (2). Every order for such amendment or for alteration of partiesshall state the facts and reasons which together form the ground onwhich the order is made. And in the case of a party being added, theadded party or parties shall be named, with the designation ‘ addedparty ’, in all pleadings or processes or papers entitled in the actionand made after the date of the order. ”
484
‘RASWAT AK~ K, C.J.—-Weerapperuma v. JDe Silva
The words of the section material to the question that arises fordecision are—
“ and the court may at any time, either upon or without suchapplication, and on such terms as the court -thinks just, order thatany plaintiff he made a defendant, or that any defendant be made aplaintiff, and that the name of any person who ought to have beenjoined, whether as plaintiff or as defendant or whose presence beforethe court may be necessary in order to enable the court effectuallyand completely to adjudicate upon and settle all the questions involvedin the action, be added. ”
It would appear from the above quoted words that the grounds onwhich a person may be added as a party to an action are either (i) thathe ought to have been joined as a plaintiff or defendant or (ii) that hispresence is necessary in order to enable the Court effectually and com-pletely to adjudicate upon and settle all the questions involved in theaction. I shall first deal with ground (i). Persons who ought to be joinedas plaintiffs are those in whom the right to any relief claimed is allegedto exist, whether jointly, severally, or in the alternative, in respect ofthe same cause of action (section 11 C. P. C.) and persons who oughtto be joined as defendants are persons against whom the right to anyrelief is alleged to exist, whether jointly, severally, or in the alternative,in respect of the same cause of action (section 14 C. P. C-). In the instantcase it is not contended that the 2nd respondent is a person who oughtto have been joined as a party defendant. The contention is that heshould be made a party on ground (ii) which I shall now proceed todiscuss. To decide that ground for adding a party the Court must answerthe following questions :—
What are the questions involved in the action % and
Is the presence of the party seeking to be added necessaryin order to enable the court effectually and completely toadjudicate upon and settle them ?
To answer question (1) the meaning of the expression “ questionsinvolved in the action ” must first be ascertained. The expression“ action ” refers to the proceedings instituted by the plaintiff, againstthe parties named by him in the plaint, for the redress or relief he seeksfrom the Court. The plaint would disclose the cause of action and theanswer of the defendant would disclose the grounds on which he resiststhe plaintiff’s claim for redress or relief. When a question is soinextricably mixed with the matters in dispute in an action ” as tobe inseparable from them and the action itself cannot be decided withoutdeciding it, the question may be said to be involved in the action. Anyquestion arising on the case set up by an intervenient in his petitionand not arising on the case set up in the pleadings of the parties is nota question involved in the action.
Next the pleadings filed by the parties to the action must he examinedbecause under our system of Civil Procedure which is governed by aCode that makes specific and detailed provision in regard to pleadings,
BASlfAYAinS, C.«T.—Weerapperuma v. De Silva
485
determinations in an action should he based on a case either to be foundin the pleadings or involved in or consistent with the case thereby made.
Now in the instant case the plaint avers—
{a) that the 1st respondeat executed a mortgage Bond No. 3514dated 1st February 1948 binding himself to pay SumanawathieWeerapperuma since deceased and the 2nd plaintiff a sum ofRs. 47,500 with interest thereon at 8% ,
(6) that the 1st respondent hypothecated the lands described in theSchedule as a primary mortgage for securing the payment ofthe principal and interest due on the Bond,
that the 1st respondent has paid a sum of its. 7,000 on 11th October
1948 leaving a balance of its. 43,138*83 principal and interest,
that Sumanawathie Weerapperuma died on 18th December 1949
and that the 1st plaintiff is the duly appointed administratrixto her estate, and
that the total sum due at the date of action (11th May 1956) is
Rs. 69,300-08.
In his answer the 1st respondent asks that the plaintiff’s action bedismissed or in the alternative for an order that an accounting be taken.In support of the alternative prayer the 1st respondent states—
(а)that in 1935 he borrowed on a Bond Rs. 10,000 at 12% interest
per annum from A. D. Jayasundera now deceased hypothecatingas security the lands described in the Schedule to the plaintand that thereafter he borrowed a sum of Rs. 15,000 on- asecondary mortgage of the premises in favour of K. S. P. L.Thenappa Chetty,
(б)that in 1945 he executed a primary mortgage of the lands referred
to in the Schedule to the plaint in favour of Cyrus at the requestof the deceased A. D. Jayasundera, and that after his deathCyrus “procured” him to execute a mortgage in favour ofCyrus’s aunt Sumanawathie Weerapperuma and the 2ndplaintiff,
that the accumulated interest on each Bond was included in
capital in the subsequent Bond and that the Bond in suit isinvalid and cannot be enforced,
that he is entitled to an accounting for the purpose of determining
the amount due to the plaintiffs,
that in action No. 1077 Special it was held that Rs. 20,900 out of
the R3. 41.800 on the Bond in favour of Cyrus belonged tothe 2nd respondent and was held in trust by Cyrus,
{/) that he is not liable to pay the plaintiffs their claim disregardingthe decree in action No. 1077 Special,
JtT. B 22823 (4/60).
486
BASffAYAEE, C.J.—Weerappentma-v. De Silva
(p) that he executed the Bond sued on at the instance of Cyrus andthat he believes he was made to do so in order to defraud the2nd respondent* and
(Ji) that Cyrus and Sumanawathie Weerapperuma and the &ndplaintiff were acting in collusion to perpetrate a fraud.
Having regard to the meaning of the expression “ questions involvedin the action ” as explained hereinbefore the following questions maybe said to be involved in the instant action :
{a) Hid the 1st respondent execute a mortgage Bond as alleged inthe plaint ?
{b) Did he hypothecate the lands described in the Schedule to itas a primary mortgage for securing the payment of the principaland interest %
{c) Is Bond No. 3514 vitiated by fraud 1
(d) Is the 1st respondent entitled to an accounting for the purposeof determining the true amount due from htm 1
Now can it be said that the presence of the 2nd respondent is necessaryin order to enable the Court effectually and completely to adjudicateand settle the questions set out above ? I think not. The 1st and 2ndrespondents both impugn Bond No. 3514. But that does not make thelatter’s presence necessary in order to enable the Court to adjudicateon the questions set out above. The Court can in law decide the questionwhether Bond No. 3514 is vitiated by fraud without the presence of the2nd respondent.
The 2nd respondent’s only claim to be added as a party is based onthe decree in action No. 1077 Special. Now what is the legal effect ofthat decree which is dated 11th June 1952 and entered in proceedingswhich commenced on 11th March 1949 more than a year after the dateof execution of mortgage Bond No. 3514 ? While no doubt the firstpart of the decree declared that Cyrus held a half share of Bond No. 18and all monies due and payable thereunder and of the securityhypothecated thereby and of all moneys received by him in trust fromthe 2nd respondent it is clear from the second part of the decree, bywhich Cyrus was ordered to pay Rs. 20,900 and half share of interest,that it proceeded on the basis that Bond No. 18 was validly dischargedby the payment by the mortgagor to Cyrus of the principal and interestdue on that Bond. No trust in respect of Bond No. 18 could exist, ifthat Bond had been discharged, and, if there was a trust, no order asworded in the second part of the decree could have been made. Thetwo parts of the decree being mutually exclusive the interpretation Iplaee on the decree as a whole is that it is one for payment of moneyonly. That it was so understood by the 2nd respondent himself is clearfrom the steps taken "by him to recover the amount decreed. I amtherefore of opinion that the Court has no power to add the 2nd respondentas a party under section 18 of the Civil Procedure Code.
BAS2STAYAJKE, C. J.—Weerapperuma v. De Silva487
The next question is—Can he he added as a party under section 16of the Mortgage Act, No. 6 of 1949 ? That section reads—
** Every person having an interest in the mortgaged land by virtueof an instrument to which the mortgage in suit has priority, hut whois not a person entitled to notice of the action as hereinbefore defined,shall be bound by every order, decree or sale or thing done in thehypothecary action.
“ Provided, however, that any such person may at any time beforethe entry of the decree in the action be added a's a party on applicationmade by him in that behalf upon such terms as the Court may impose,but any person so added shall be bound by every finding or orderpreviously made in the action and by the proceedings previously takentherein except in so far as the Court may in its discretion otherwiseorder. ”
The decree entered in favour of the 2nd respondent is in two parts.As stated above the first part decrees that Cyrus held one half share ofBond No. 18 and one half of all moneys due and payable thereunderand of the security hypothecated thereby and of all moneys receivedby him thereunder in trust for the 2nd respondent. The second partorders and decrees Cyrus to pay to the 2nd respondent the sum ofKs. 20,900 and one half share of all the interest received by him on theBond up to the date of the action, viz., 11th March 1949. The plaint inthe action in which the 2nd respondent sued Cyrus is not before us.The order contained in the second part of the decree must be presumedto have been made in terms of the prayer in the plaint. Cyrus is nolonger a trustee of the money. He is a judgment-debtor obliged by thedecree to pay the amount decreed to the judgment-creditor, who hastaken steps to have the decree executed. The 2nd respondent did notname the mortgagees on Bond No. 3514 as parties to his action againstCyrus although the Bond was executed over a year before its institution.They are not therefore bound by the decree against Cyrus and the 1strespondent. The 2nd respondent is not a person having any interestin the mortgaged lands by virtue of an instrument to which the mortgagein suit has priority, because there is no instrument in existence whichgives him an interest in the land mortgaged on Bond No. 3514.
The learned District Judge was therefore wrong in adding him as aparty defendant. I must not omit to point out that the learned Judgehas failed to comply with the requirements of section 18 (2) of the CivilProcedure Code that every order for amendment or for alteration ofparties shall state the facts and the reasons which together form theground on which the order is made. He states—
“ Having heard both sides, in the interests of justice, I make orderunder section 18 of the C. P. C. Tead together with section 16 of theMortgage Act allowing the petitioner to file answer in this case. Hewill however pay a sum of !Rs. 52 * 50 as costs of today to the lawyers forthe pltff. I add the petitioner as the 2jj.cS deft in the case. The 2nddeft’s answer on 8.10.1956. ”
488
Jayanhamy v. The Panadura Motor Transit Co., Ltd.
It is important that Judges of first instance should scrupulously observethe requirements of the Civil Procedure Code. I notice a growing ten-dency among Judges of first instance not to examine elosely the provisionsof the Code when making orders on matters of procedure that come upbefore them and I cannot emphasise too strongly the need for a Judgeto examine the Code with meticulous care when deciding such matters.
I would therefore set aside the order of the District Judge and sendthe case back for trial of the issues involved in the action against the1st respondent.
I direct that the 2nd respondent do pay the costs of the appellantsboth here and below.
Pxxlle, J.—I agree.
SHnsrsTAMBY, J.—I agree.
Appeal allowed.