Adaicappa Chetty V. Perera Et Al.,

Present : Schneider and Garvin J J.

ADAICAPPA CHETTY v. PERERA et al.

6-D. C. (Inty.) Colombo, 20,443.

    Mortgage of movables-Sale under two hypothecary decrees-Right of preference of prior hypothecary creditor-Judicial hypothec.

Where movable property was sold in execution of hypothecary decrees entered in pursuance of two mortgages effected under
duly registered instruments in writing,-

Held, that the prior mortgage creditor had a preferent right to the proceeds of the sale.

APPEAL from an order of the District Judge of Colombo.

H. V. Perera, for appellant.

H. H. Bartholomeusz, for respondent.

July 26, 1928. GARVIN J.-

The appellant and the respondent to this appeal were both holders of duly registered mortgages created over his stock in trade by one M. A. Perera who was doing business in the Pettah. The appellant sued on his mortgage in case No. 20,443 which was dated May 26, 1926, and obtained a hypothecary decree on July 9, 1926. The respondent, whose mortgage was created by a bond dated May 24, 1925, put his bond in suit in case No. 20,451 and obtained decree on July 10, 1926. In each instance an order to sell the property was issued to the Fiscal, but inasmuch as the appellant

with great promptitude procured the issue of his order to sell on the very day on which decree was entered in his favour the order issued in case No. 20,443 was prior in date.

On July 23, 1926, the proctor for the appellant notified the Court of his decree and moved in case No. 20,443 that the Fiscal be directed not to give the respondent credit at the sale of this property which was advertised for August 7. This motion was allowed. On August 5, however, it was agreed that the respondent be allowed credit on his undertaking to bring into Court the proceeds of sale if it is held by the Court that the plaintiff in 20,451, i.e., the present respondent, had a preferential right.

The property was ultimately purchased by a third party. The Fiscal duly made return to the orders to sell issued in the two cases, and reported that the nett proceeds amounting to Rs. 4,365.75 had been deposited by him in the Kachcheri.

Upon motion made at the instance of the respondent that the proceeds sale be paid to him as the holder of a decree under a prior mortgage a discussion took place and order was made by the learned District Judge upholding his claim to preference. The appeal is from this order.

At the time of the sale there was in the hands of the Fiscal two orders to sell issued by the Court in accordance with the decree entered in cases Nos. 20,443 and 20,451, and it is said that the Fiscal announced that he was selling the property under both orders. But in the view most favourable to the appellant the case j is that of a sale of a pledge at the suit of a posterior hypothecary creditor. The respondent, a prior hypothecary creditor, who had earlier given notice, claimed that he had a preferent right to the proceeds realized by the sale of the pledge and his claim was admitted. Was it rightly admitted ?

It is well settled law in Ceylon that immovable property subject to hypothecs passes to a purchaser subject to the incumbrance-- a prior hypothecary creditor therefore remains unaffected by the sale of such immovable property. It has also been held that when movable property subject to hypothecation is sold in execution of a judicial decree obtained by a third party the price succeeds in place of the thing-pretium succedit in locum rei; and the right of the hypothecary creditor to preference in the proceeds has been recognized-vide ex parte M. M. Abdul Rahman, Cosy Lebbe Marikar v. Aydroos Lebbe Marikar.1[1 1 C. L. R. 1.] This judgment which approved and followed the judgment in Ramen Chetty v. Hardie 2[2 (1882) Wendt's Rep. 217.] and has in turn been uniformly approved in a long series of judgments, of which it is sufficient to mention Meera Saibo v. Muttu

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