WijeyercUne v. Mendia Appu.
1946Present: Wijeyewardene S.P.J. and Jayotileke J.
W1JEYERATNE, Appellant, and MENDIS APPU el al.,Respondents.
273—D. C. Kalutara, 22,902.
Sale—Purchase of property by decree holder at execution sale—Subsequenttransfer by him to a bona fide purchaser—Validity of the bona fidepurchaser's title if the decree is subsequently set aside.
Where at a sale in execution of a decree the decree holder purchasesproperty which he thereafter sells to a bona fide purchaser the title of thelatter is not affected if, subsequent to the sale in his favour, the decreeunder which the property was sold to the decree holder is set aside byCourt.
PPEAL from a judgment of the District Judge of Kalutara.
N. E. Weerasooria, K.C. (with him U. A. Jayasundere and VernonWijetunge), for the plaintiff, appellant.
E. B. Wikramanayake, for the defendants, respondents.
17—H 16792 (8/68)
Cur. adv. null.
WIJE YEWARDENE S.P.J.—Wijeyeratne v. Mendie Appu.
August 26, 1946. Wijbyewabdene S.P.J.—
The plaintiff was in 1932 the owner of the land forming the subject-matter of this action. By P 3 of 1932 the plaintiff leased the land to thefirst and the third defendants for a term of twelve years commencingfrom November 11, 1932, for a sum of Rs. 420 paid to the plaintiff at itsexecution. It was further provided by P 3 that, if the lessees put up aboutique on the leased land, they should pay to the plaintiff additionalrent at Rs. 60 a year during the last six years of the lease.
The second defendant, an uncle of the plaintiff, sued the plaintiff inG. R. Kalutara 8,996 and obtained judgment by default in November,
In execution of that decree the land in question was sold in July,1946, for R)S. 105. The second defendant became the purchaser at thatsale, obtained Fiscal’s conveyance D 2 of November 4, 1936, and conveyedhis interest in the land to the first defendant by D 3 of November 17,
for Rs. 200.
The plaintiff sued'the first and the third defendants in C. R. Kalutara10,181 in June, 1941, for the recovery of Rs. 25 which he said was dueto him as rent for five months under P 3 in respect of a boutique con-structed by them in January, 1941. The first defendant filed answer inAugust, 1941, denying the plaintiff’s right to recover any rent and claimingthe property by virtue of D 3. That action was dismissed in February,1942, as the plaintiff was absent on the date of trial.
In September, 1941, the plaintiff applied in C.R. Kalutara 8,995 for thevacation of the decree of 1935 entered against him. Notice of thatapplication was served on the second defendant and as he did not showcause the decree was set aside and the plaintiff was allowed to file answerin that case. As the second defendant failed to appear on the trialdate, decree was entered on December 11, 1941, dismissing the case.
The plaintiff, thereupon, filed the present action against the firstdefendant on November 6, 1942, alleging that the first defendant waswrongfully claiming to be the owner of the land. The first defendantfiled answer claiming the land under D 3. The second and the thirddefendants were subsequently added as parties on the application of theplaintiff’s Proctor. The present appeal is by the plaintiff against thedecree of the District Court dismissing his action.
I wish to observe that the issues framed at the trial of this case are ofthe most unsatisfactory nature. Some dealt with matters about whichthere was no dispute while the others were of too general a nature.Though, no doubt, it is usual for the practitioners to suggest issues, theduty rests on the trial Judge to see that the case proceeds to trial onproper issues which set out precisely the questions to be determinedby him.
The only point that was argued at the hearing of the appeal was whetherthe first defendant lost his title on D 3 of 1936 by reason of the reversalof the original decree in C. R. Kalutara 8,995 and the dismissal of thataction in 1941. That point had not been raised specifically in the issuesframed at the trial.
There is no evidence placed before us as to the grounds on which theoriginal decree in C. R. Kalutara 8,995 was set aside. The law has beenclearly established in a series of cases that where the decree holder
WIJEYEWARDENE S.P.JT—Wijeyeralne v. Mendis Appa.
himself is the purchaser at the sale in execution, the sale may be setaside if the decree is subsequently reversed. It was sought to be deducedfrom this that the first defendant who got his conveyance D 3 from thedecree holder—the purchaser at the Fiscal’s sale—obtained also a titlewhich was liable to be set aside on the reversal of the decree. We in-formed Counsel at the argument that we were unable to assent to thatproposition. Nothing has been proved or even alleged against thebona fides of the first defendant. He gave evidence at the trial thathe informed the plaintiff in 1936 that the land was going to be sold bythe Fiscal and that he bought it later for Us. 200 from the decree holderas he was interested in the property which he had taken under a lease.All that evidence stands uncontradicted. On the other hand there is asuggestion made by the first defendant in his evidence that the plaintiffand the second defendant, plaintiff’s uncle, acted in collusion in gettingthe original decree in C. R. Kalutara 8,995 vacated. The evidence ofthe plaintiff throws no light on the proceedings in that case.
I find that the view expressed by us at the argument is in consonancewith the decisions of the High Court of Madras in Marimuthu Udaiyanet al. v. SvJbbaraya Pillai etal1 and in Sheik Ismal Rowther et al. v. RajabRowther 2. In the latter case the appellants were bona fide purchasersfrom the first defendant who had purchased a property in execution of adecree obtained by him against the plaintiff. Subsequent to the purchaseby the appellants the decree was set aside on the ground that it hadbeen obtained by fraud. Holding that the title of the appellants was notaffected by the reversal of the decree Subrahmania Ayyar J. andBenson J. held :—
“ Assuming that the first defendant in obtaining the decree had beenguilty of misrepresentation or fraud, the proceedings were only voidable,and a bona fide purchaser from him is entitled to rely on his title assuch. The plaintiff had only an equity to set aside the proceedingswhich were the result of fraud or misrepresentation, and that equity• cannot be allowed to prevail against persons in the position of theappellants.”
“ It is by no means clear that it was the duty of the appellants whenaware that their vendor’s title was under a Court sale, to refer to thedecree on which the sale was held ; but, assuming that it was, we areunable to agree to the argument urged for the plaintiff that a referenceto the decree as it stood before it was set aside would have shown anyflaw in the title of the first defendant so as to fix the appellants withnotice of the first defendant’s fraud.”
I am aware that a contrary view has been taken in Satis ChandraGhose v. Rameswari Dasi et al3. The High Court of Calcutta based itsdecision on the following passage in the judgment of the Privy Council inZain-ul-Abdin Khan v. Asghar Ali Khan*.
“ Some of the defendants were the decree-holders, and some werepersons who came in under them ; but all the defendants who are in
' [1903) 13 Madras Law Journal 231.
(1906) 30 Indian Law Reports (Madras Series) 295.
* (1915) All India Reporter 42 Calcutta 363.
(1888) 10 Allahabad 166.
WIJEYEWAR.DENE S.P.J.—Wijeyeralne v. Alendis Appu.
that position may for the purpose of this judgment be classed underthe head of the decree-holders. Others of the defendants were notdecree-holders, but merely purchasers under the execution and strangersto the decree upon which the execution issued.”
The High Court of Calcutta appears to have inferred from the abovepassage that the Privy Council enunciated therein a principle that thepurchasers from the decree holders were in the same position as the decreeholders themselves with regard to the validity of their claims to propertysold in execution of a decree subsequently reversed. That inference, Iwould say with respect, is erroneous as may be seen from an examinationof the Privy Council decision. The facts in Zain-ul-Abdin Khan v.Asghar Ali Khan (supra) were briefly as follows :—An ex-parte decree wasentered in 1874 directing A, inter alia, to pay a sum exceedingRs. 100,000 to X, Y and Z. That decree was set aside by the PrivyCouncil about 1879 and at the subsequent hearing of the suit before theHigh Court of Allahabad a decree was entered in 1880 reducing theamount payable by A to X, Y and Z to Rs. 3,746 and costs taxed atRs. 4,908. Meanwhile, X, Y and Z executed the decree of 1874 andseveral properties of A were sold in execution on various occasions. Thefirst sale was on November 17, 1874, to B for Rs. 5,050 and the sales onsubsequent occasions in 1874, 1875 and 1876 were to X, Y and Z and alsoto C, D and E who were not parties to the action. After 1880, A filedan action against (i.) B, (ii.) X, Y and Z, and (iii.) purchasers from X,Yand Z to set aside the sales in execution. A, however, stated in his plaintthat the sale to B “ might stand good as satisfying what was due under thedecree of 188 ”. C, Ii and E were subsequently added as parties on anorder of Court. The Subordinate Judge who heard the case set asidethe sales of (i.) the property claimed by B, (ii.) the properties claimed byC, D and E, and (iii.) the properties claimed by X, Y and Z and the pur-chasers from X, Y and Z. An appeal was preferred to the High Courtagainst that judgment by B, C, D and E alone and the HighCourt reversedthe judgment of the Subordinate Judge against the appellants on theground that the sales to them were not rendered invalid by the modifica-tion of the ex-parte decree of 1874. The High Court decreed that the“ plaintiff’s (A’s) action will stand dismissed ”. On an appeal againstthe judgment of the High Court, the Privy Council affirmed the decisionof the High Court but observed that the decrees of the High Court wereliable to be misunderstood as a dismissal of A’s action not only againstB, C, D and E but also against X, Y and Z and the purchasers from them.The Privy Council, therefore, made it clear that the decrees of the HighCourt “ must be construed as applicable only to the defendants who hadappealed and whose appeals were decreed, and not to the defendants whohad not appealed, and who were not before the Court and had not objectedto the decision of the Subordinate Judge.” It will thus be seen that thePrivy Council was adjudicating on the rights of B, C, D and E alone andnot on the rights of X, Y and Z or the purchasers from them. Forconvenience of reference, X, Y and Z and the purchasers from them weregrouped together by the Privy Council as “ decree holders ” in contradis-tinction to B, C, D and E with whose rights alone the Privy Council wasconoemed. I have no doubt the Privy Council was thinking only of this
Abcyauriya v. Ounawardene.
convenience of reference when it spoke of “ the purpose of this judgment ”for which the “ decree holders ” and “ the persons who came in underthem ” might be “ classed under the head of decree holders Theinterpretation placed by the High Court of Calcutta on the above passagein the judgment of the Privy Council appears to me to be entirelyirreconcilable with the clear indication given by the Privy Council that thedecree passed by it applied only to the defendants who had appealedto it.
For the reasons given by me I would dismiss the appeal with costs.Jayetieeke J.—I agree.