055-NLR-NLR-V-39-SAMARASINGHE-v.-SECRETARY-,-DISTRICT-COURT,-MATARA.pdf
SOERTSZ J.—Samarasinghe v. Secretary, District Court, Matara. 175
1S.37Present: Soertsz J. and Fernando A.J.
I
SAMARASINGHE v. SECRETARY, DISTRICT COURT,
MATARA.
1—D. C. Matara, 3,590 (Testy) .
Estate duty—Application for execution and sale of property—^Applicationmust be made by Commissioner of Stamps—Citation to issue to doneeof property—Person interested—Mortgage of property—OrdinanceNo. 8 of 1919, ss. 18 and 32.
An application for execution by sale of property for failure to payestate duty must be made by the Commissioner of Stamps Under section32 of the Estate Duty Ordinance upon a citation issued to the personaccountable to pay the duty.
Where the duty is payable by a person- to whom the deceased hasgifted the property notice must be served on such party.
A mortgagee of the property on which the duty is leviable is a personinterested in the application.
Mackie v. Commissioner of Stamps (15 C. L. Rec. 123) and Kagoo v.Commissioner of Stamps (5 C. L. W. 90) referred to.
A
PPEAL, from an order of the District Judge of Matara. The factsare stated in the judgment of Fernando A.J.
H. V. Perera, K.C. (with him N. E. Weerasooria), for appellant.
A. L. Jayasuriya, for second and third respondents.
Elliot, K.C. (with him Jayasuriya), for fourth respondent.
Cur. adv. vult.
June 21, 1937. Soertsz J.—
Mr. Elliot in the course of his argument, stated repeatedly that thiscase would probably go to the Privy Council. I do not quite understandthe purpose of this peristent intimation—but I wish to say that I havegiven this case as careful ‘ a consideration as this Court gives to allcases, including cases in which an appeal to the Privy Council is notadumbrated, and I agrefe with my brother that the appeal must beallowed. It is clear, and it is not denied that the appellant has verysubstantial interests in the land that has been sold and he,- therefore,had a right to come before the Court and ask that he be allowed to pay the
176 SOERTSZ J.—Samarasinghe v. Secretary, District Court, Matara.
estate duty due by instalments, and when that application was refused,and an order was made for the sale of the land, he was entitled to appeal.
I cannot, therefore, understand the preliminary objection which Mr. Elliotsought to take that no appeal lies from the order of the District Judge.
In regard to the merits of the appeal, Mr. Elliot contended that becausethis sale was carried out on the orders of a Court which had jurisdictionand his client purchased the land at such a sale, the sale could not becanvassed any further. To my mind, he was there begging the questionof jurisdiction by putting upon the word “jurisdiction” the meaning;that the sale was the act of a competent Court for testamentary mattersand that the sale was ordered by a Court within the limits of which theparties reside, and ignoring the appellant’s contention that the Courthad no jurisdiction to make the order in the sense that the Court wasnot authorized by law to make it. The journal entries show that therehas been great delay in the payment of estate duty and the administratoron several occasions brought to the notice of the Court the fact that theCommissioner of Stamps was pressing him for payment. He finallymoved that he be authorized to lease this land for five years in orderto raise a sufficient sum to pay the amount due on account of duty.The Court ordered notice of this application to issue on the heirs and thenon June 4, 1935, overlooking the fact that the notice issued on the heirswas one calling upon them to show cause why the land should not beleased for five years, made order in the absence of the heirs that someother property be sold. That sale fell though for want of bidders andthen the administrator on December 23, 1935, disregarding his earlierapplication to be allowed to lease this land for five years, and evidentlytaking a cue from the order of June 4 asked that writ be issued to sellthis land. Now it is perfectly clear from section 32 of Ordinance No. 8of 1919 that the proper course would have been for the Commissionerof Stamps to ask for execution to issue for the recovery of estate dutyand in the event of his making such an application, citations would haveto be served on the person or persons in default' to show cause againstexecution issuing under section 19 (2) of the Ordinance. The appellantwas one of the parties in default and he was therefore entitled to a citation.Here no citation went on any party to show cause against the proposedsale. This case is much worse than a case in which an order is madewithout the other side being heard. For here not even one side washeard. I mean the Commissioner did not make the application althoughhe was the proper person to make it. In my opinion, therefore, theorder for sale was unlawful and therefore without jurisdiction. Thefact that the parties whose land has been sold came forward (see journalentry of May 18, 1933) and stated that they did not authorize theappellant to pay the estate duty and asked that his application be refused,does not and cannot cure that defect. This desire that their land shouldbe sold and that the money of another should not be accepted to save it'cannot be regarded as a pure altruism on the part of the owners of the land.To my mind it is an attempt pure and simple on their part to get backtheir land through the medium of a friendly purchaser entirely freed of allobligations in which they have involved themselves towards the appellant.
I agree to the order proposed by my brother.
FERNANDO A.J.—Samarasinghe v. Secretary, District Court, Matara. 177Fernando A.J.—
This is a testamentary action in which the estate of Mohamed Joonooswho died in October, 1929, is being administered by the first respondent.It would appear that Joonoos gifted a tea estate called Razeena Groupto four of his children, namely, Samee, Anvar, Razeena, and Jezimathe second respondent, by a deed of gift dated July 24, 1929. Joonooshaving died in October, 1929, the estate which was gifted in July, 1929,must be considered as property passing on the death of Joonoos in termsof Ordinance No. 8 of 1919, and estate duty became payable on thevalue of Razeena Group on that footing.
It would appear that on June 4, 1935, a writ was issued to sell premisesdescribed as situated at Station road, Matara, but the Fiscal reportedthat the sale fell through for want of bidders, and the Official Adminis-trator on December 23, 1935, moved that writ do re-issue for the saleof the second respondent’s share of this estate in order to recover hershare of the estate duty. That application was allowed, and writre-issued returnable on March 16, 1936-
It would appear from the journal entries that a sale of the propertyunder this writ was fixed' for a date later than May 18, and on May 18,Proctor for the appellant moved that the writ be re-called and that he beallowed to pay the estate duty in certain instalments. This applicationwas made on the footing that the appellant had a lease and a mortgage ofa one-fifth share of the estate, and it is stated that the second respondenthad mortgaged her share to the appellant by a bond dated March, 1932,and had also entered into an agreement dated July, 1933, by which theappellant was allowed to work the land and take a certain share of theprofits to himself. On May 19, after hearing Counsel for the appellant,the learned District Judge refused his application and ordered the saleto be carried out at an upset price of Rs. 10,000. It is now stated thatthe appellant has also purchased the two-fifths share of the estate whichhad been gifted to Samee, and had a lease of the two-fifths share belongingto Anvar and Razeena.
Counsel for the appellant contends that section 32 of Ordinance No- 8of 1919 provides that the Commissioner of Stamps may apply to theCourt to issue a citation to the person accountable for the duty callingupon him to pay the estate duty due ori the property that has beengifted to him, and if such person fails to appear or to show sufficientcause, the Court may cause execution to issue for the amount of theestate duty. In this case he urges that there was no application for acitation, that no citation issued, and that in these circumstances, theCourt had no power to order that writ should issue for the sale of thesecond respondent’s share of this estate.
• Counsel for the fourth respondent, the purchaser at the sale, contendedthat it was not open to the appellant to appeal to this Court. He arguedthat this was a sale by order of Court, that the fourth respondent hadpurchased the property, and that the appellant could no longer disputethe power of the Court to order the sale as against the fourth respondentwho was no party to the action. I do not see how this contention canprevail- The appellant claims to have an interest in the property thatwas sold, and he seeks by this appeal to have it declared that the order-
178 FERNANDO A.J.—Samarasinghe v. Secretary, District Court, M a tar a.
by which the learned Juqlge issued writ for the sale of this property wasan order made without jurisdiction, and that the sale held in pursuanceof that order is therefore a nullity. If a person claims an interest in aproperty, and if that property has been sold by an order which theCourt had no power to make, I cannot understand how such a personcan be barred from appealing to this Court against the order madedirecting the sale of the property.
Counsel for the fourth respondent next argued that the question of thejurisdiction of the Court to make the order complained of, was not raisedin the District Court, and therefore, cannot now be raised -in appeal.For this reason he at first declined to argue the question raised by theappellant, namely, whether the Court had jurisdiction to make the order.
I am unable to understand the ground on which this contention is putforward. The question whether the Court has the power to makea particular order or not is a question that can be raised by any partywho is affected by that order, and even if in the Court below the questionof jurisdiction of the Court was not expressly raised, I find it difficultto say that a person cannot in appeal contend that the order was withoutjurisdiction. We, therefore, invited Counsel for the fourth respondentto address us on the question raised by Counsel for the appellant.
Mr. Elliot then argued that the Official Administrator was appointedin 1931, that the duty of paying the estate duty was on such Adminis-trator, and that the Administrator was, therefore, entitled to ask theCourt to order the sale of property in order to enable him to pay theduty. Section 18 of the Ordinance, however, makes such portion of theduty as is levied on the value of. property gifted by the deceased a firstcharge on such property in the hands of the person to whom the propertyhas been gifted, and the obligation of the Administrator to pay estateduty is limited to such portion of the duty as is levied on the propertythat comes into his hands. Mr. Elliot also contended that the appellantwas not the owner of the property, his interest being merely that of amortgagee or of a person allowed to possess the property under anagreement.
Counsel for the appellant contended, on the other hand, that in termsof section 32 of the Ordinance, it is only the Commissioner of Stampsthat can apply for execution on -the failure to pay estate Duty. He alsoargued that where estate duty was demanded by the Commissionerof Stamps, a notice should issue even to a person in whose favour amortgage bond had been executed by the deceased, and relied on theauthority of Mackie v. The Commissioner of Stamps1. He also referredto the case of Kagoo v. The Commissioner, of Stamps '', where it was heldthat an application for a citation signed by a subordinate officer for theCommissioner of Stamps was hot sufficient, and that the applicationmust be signed by the Commissioner of Stamps himself. It seems to methat the contention for the appellant on this point must succeed. TheCommissioner of Stamps has the power to make arrangements withregard to the payment of estate duty on such terms as he may think fit,and the property left by the deceased or donated by him is ordinarilynot to be sold for the recovery of estate duty, unless it become impossible3 7-5 Ceylon Law Recorder 223.* 5 Ceylon Law Weekly's V.
179
SOERTSZ J.—Wijeyewardene v. Raymond.
to arrive, at some arrangement with the executor or the donee. TheOfficial Administrator as such has no more power than any otherAdministrator, and he has to apply for leave of Court to sell propertyeven for the payment of the duty which has to be paid by him. Theestate duty in this case was payable by the second respondent or byany other person having an interest in the property, and the order issuingwrit for the sale of this property appears to have been made withoutany notice either to the second respondent or to any other person. Theappellant was, therefore, entitled to ask that the writ be re-called. It isnot necessary at this stage to discuss the rest of the application madeon behalf of the appellant on May 18, 1936. The order reissuing thewrit, and the order made by the Court on May 19 that the sale was to becarried out in spite of the appellant’s application, must be set aside.In the result, the sale to the fourth respondent must also be set aside,and it will be open to the Commissioner of Stamps, if he so desires,to make an application for execution for the recovery of the estate dutydue from the second respondent. The second and third respondents,and the fourth respondent jointly and severally will pay to the appellanthis costs of this appeal.
Appeal allowed.