The reason is quite simple, the most specific method depending upon the argument is called. Here, null can be passed to all the 3 methods but FileNotFoundException class is the subclass of IOException which in turn is the subclass of Object. So, FileNotFoundException class is the most specific class. So, this method is called. Had there been two most specific methods, it would not even compile as the compile will not be able to determine which method to call. For example:

public class TestClass{
   public void method(Object o){
      System.out.println("Object Version");
   }
   public void method(String s){
      System.out.println("String Version");
   }
   public void method(StringBuffer s){
      System.out.println("StringBuffer Version");
   }
   public static void main(String args[]){
      TestClass tc = new TestClass();
      tc.method(null);
   }
}

Here, null can be passed as both String Buffer and String and none is more specific than the other. So, it will not compile.