Silva v. Sai Nona
Present : Rajaratnam, J., Weeraratne, J., and
MAHANANDA, alias MANAM MAGGIE SILVA, Appellant, andMANIKKUGE SAI NONA, Respondent
S. C. 519/69 (F)—D. C. Negombo 120S/L
Debt Conciliation Ordinance—Effect of Certificate issued under Section32(2)'—Applicability of Section 39 to a rei virtdicatio action bypurchaser qua owner against the vendor and his successors.
* K ’ the owner of the premises in suit sold the said premises on05.02.64 to ‘ F ’ subject to the condition of reconveyance if thevendor re-paid the vendee the sum of Rs. 1,250 with interestthereon within a period of 3 years from 05.02.64. ‘ F ’ sold thepremises to the Plaintiff on 17.06.65 subject to the aforesaidcondition of reconveyance. ‘ K ’ died on 26.04.65 without obtainingthe reconveyance. The stipulated period of 3 years expired on 05.02.67without the heirs of ‘ K ’ obtaining the reconveyance. On 11.07.66the widow of ‘ K ’ and the administratrix of his estate madeapplica ion to the Debt Conciliation Board to have the conditionaltransfer treated as a mortgage and settlement thereof effected withthe plaintiff. The Debt Conciliation Board by its order dated20.08.66 determined that the conditional transfer was, in the opinionof the Board, in reality a mortgage. At the inquiry before the Boardon 21.04.67 the said application was dismissed but the Board issueda certificate in terms of Section 32(2) of the Debt ConciliationOrdinance. On 12.08.67 the plaintiff instituted action against thewidow of ‘ K ’ (defendant) for declaration of title, ejectment anddamages. The defendant resisted the action mainly on the groundthat the said Certificate issued in terms of Section 32 (2) of theDebt Conciliation Ordinance operated as a bar to a rei vindicatioaction and the remedy was to institute an action for the recovery ofthe principal and interest on the transaction which, the Board haddetermined, was in reality a mortgage.
Held, (Rajaratnam, J. dissenting) that the certificate issued underSection 32(2) of the Debt Conciliation Ordinance read with ActNo. 5 of 1959 cannot reduce a conditional transfer in law to amortgage. Section 39 of the said Ordinance postulates an actionbeing brought by a creditor for the recovery of any debt in respectof which a certificate has been granted. A rei Vindicatio actioninstituted by the purchaser qua owner against the vendor and hissuccessor for the recovery of possession of his property is not anaction for the recovery of a debt and the said Section 39 has noapplication to such an action.
Per Rajaratnam. J :
“ In my view, the creditor’s title is affected by the impact of acertificate under Section 32(2). The creditor must remove thecertificate out of his way before he could bring a rei vindicatioaction and to do so he may have to come to this Courf in anappronriate case by asking for a Writ of Certiorari. The creditor’sright however to proceed against the debtor on the security givenby the debtor for the recovery of any debt is not affected orprejudiced.”
PPEAL from a judgment of the District Court, Negombo.
II. V/. Jayawardene, with R. L. N. de Zoysa and I. Mohamed,for the plaintiff-appellant.
Niir.al Senanayuke, with Rohan Perera, for the defendant-respondent.
Cur. adv• vult.
RAJARATNAM, J.—Silva v. Sai Nona
November 27, 1975- Rajaratnam, J.—
The main question for consideration by this Court was whethera certificate issued under s. 32 (2) of the Debt Conciliation Ordi-nance read with Act, No. 43 of 1952 and Act, No. 5 of 1959 canreduce a conditional transfer in law to a mortgage.
In this case, the defendant did go before the Debt ConciliationBoard and made a fair offer which the Creditor ought reasonablyto have accepted and on this basis the Board granted the defen-dant a certificate in the prescribed form in respect of a debtowed by her to the Creditor.
D7 is the application made to the Board on 22nd of July, 1966.D13 is the certified copy of the certificate issued by the Board interms of s. 32 (2), wherein the Board has held that the Creditor—the plaintiff in this case has refused a fair and reasonable offerof settlement which the said Creditor ought reasonably to haveaccepted. It is also stated in the certificate that the rate of inte-rest provided in the deed was 16 per cent, per annum andordinarily the Board fixed the rate of interest at 8 per cent, and10 per cent, per annum. It is also stated in para. 3—that s. 39 ofthe Debt Conciliation Ordinance of 1941 and s- 22 of the Regula-tions published in the Government Gazette No- 8979 of July 31st1942 as amended by s. 2 of the Regulations published in Govern-ment Gazette No. 10,462 of October 1952 apply to thesetransactions.
In para. 1 of the certificate it is stated that the transfersreferred to in deed No. 21446 of 5.2.64 and deed No. 423 of 17.61965,i.e.. PI and P2, are both considered to be a mortgage under DebtConciliation Act No. 5 of 1959. This certificate I presume, is in theprescribed form and it is signed and dated 13.5.1967 by theChairman of the Debt Conciliation Board-
The conditional transfer is marked PI which is deed No- 21446>)i 5.2.1964. The right to obtain a re-transfer was reserved inUiese deeds for any time within a period of 3 years and irrespec-tive of the provisions of the Debt Conciliation amendments, thetransferer could have obtained a re-transfer at any time beforethe 5th of February 1967. The interest payable was 16 per cent-on this deed. In other words the vendor on this deed reservedfor himself, his heirs, executors, administrators and assigns theright to obtain a re-transfer of the said premises before February,1967. The vendor also reserved the right to possess and enjoythe said premises during the said period of 3 years. The landin question was an undivided extent of 2 acres 1 rood and 8 per-ches after excluding an undivided extent of 1 acre alreadyalienated.
RAJARATNAM, J.—Silva v. Sai Nona
The vendee on PI and by P2 sold the said property to theplaintiff in this case Maggie Silva on 17.6.65 subject to the rightof re-transfer reserved by the vendor in PI. The defendant isthe wife and administratrix of the estate of her husband Comelisde Silva Karunaratne (died on 26.4.65) who was the vendor onthe deed PI.
The defendant filed papers in a testamentary action applyingfor letters of administration to the intestate estate of thedeceased, the husband making among others the plaintiff as arespondent. The respondent filed objections and inter alia inpara- 11 stated that monies were due to the plaintiff upon thesaid deeds 21446 and 423 as debts due from the estate of thedeceased. The defendant before the date she lost her right ofre-conveyance on 5.2.67, it will be seen, went to the Debt Con-ciliation Board for relief and according to her evidence at thetrial was prepared to pay the principal and interest during theproceedings before the Debt Conciliation Board held on 21.4-67.The proceedings on 21.4.67 states that the defendant wasprepared to redeem the half share belonging to her or even thewhole share. There is a finding that the plaintiff’s attitude wasunreasonable and an order has been made for an issue of certifi-cate under s. 32(2) to the defendant.
The plaintiff notwithstanding the certificate issued by theBoard by D13 dated 13.5.67 filed a plaint in the present actionon 12.7 67 and therein pleaded PI and P2 and asked for a declara-tion of title and for ejectment of the defendant from the land inquestion.
The defendant, however, took up the position that the transac-tions on PI and P2 were considered by the Board in terms of theDebt Conciliation Ordinance as a mortgage. The trial Judgemade a finding that the plaintiff was not entitled to a declarationof title on the basis that the orders and certificate issued by theBoard reduced PI and P2 to a transaction in the nature of amortgage.
Mr. Jayawardena appearing for the appellant cited the deci-sion in the case of Johanahamy v. Susiripala reported in 70 NLB.page 328 which was followed in an unreported case, S.C. 140/67(F) along with S.C. 156/67 (Inty.), Supreme Court minutes of19.5.1972. The facts in the latter case are not revealed in thejudgment but the judgment does not in itself deal with thequestion that arises from the provisions of the Debt Conciliatioa
316RAJ AR ATX A 51, J.—Silva >. Sen' Xomi
Ordinance but merely states that it follows the decision inJohanahamy v. Susiripala referred to above. Therefore thisdecision is not of much help.
Before I deal with the decision in Johanahamy vs. SusiripalaI must state with respect that I am of the view that an executionof a mortgage must conform to the formalities imposed by s. 2of the Prevention of Frauds Ordinance- There is no question inmy mind about the correctness of the decision of the PrivyCouncil in the case of Adaicappa Chetty v. Caruppen Chetty}22 NLR 417, and the other case of Saverimuttu v. Thangavelau-than, 55 NLR 529, which is also a decision of the Privy Council.The principles laid down in these two Privy Council decisionswere followed in the case of William Fernando v. Cooray in1957 which is reported in 59 NLR page 169.
There is no doubt that the prohibition to lead oral evidencerelating to the conditional transfer to make it a mortgage isprohibited by s. 92 of the Evidence Ordinance. Further more it isa correct position in law that s. 2 of the Prevention of FraudsOrdinance prevented the creation of a mortgage, otherwise thanby a notarial instrument duly executed according to law.
On the other hand the correct legal position enunciated in theabove cases does not mean that the Court should not considerthe impact of the amending Act No. 5 of 1959 to the Debt Con-ciliation Ordinance, whereby in 1959 the legislature insertedimmediately .after the definition of the word “debtor” in theDebt Conciliation Ordinance, the following new definition to theterm “ Mortgage ”, “ with reference to any immovable property,includes any conditional transfer of such property which havingregard to all the circumstances of the case, is in reality intendedto be security for the re-payment to the transferee of a sumlent by him to the transferor ”. That is to say, by statute a debtorfor purposes of the Ordinance can mean a person who hasconditionally transferred his property under certain cicrcums-tances which in reality is a transaction where the land transferredis intended to be a security.
Therefore, when the defendant went to the Board with anapplication for relief she was deemed to have gone as a debtorby reason of the subsequent order made by the Board.
In this particular case, the Board was quite justified in makingthe order taking all the circumstances into consideration, forinstance, the defendant was in possession of the land in suit andshe endeavoured to invoke the provisions of the law to reducethe interest or to effect a set'lenient. When she went to theBoard she still had time within which she could as a right
RAJ AK ATX AM, -f. -Silva e. Sai Nona
obtain a re-transfer of the property and during the proceedingsof the Board which was unfortunately 2 months after the redeem-able date, she failed to effect a settlement but succeeded in con-vincing the Board that she made a fair offer which was unfairlyrefused by the creditor and obtained a certificate under s. 32- If,there had been an amicable settlement and if it had beenapproved by the Board under s. 30 (2), this settlement wouldhave been valid and effectual for all purposes notwithstandinganything to the contrary in the Prevention of Frauds Ordinance.That is to say, that although it was a settlement or an agreementaffecting land it did not require the formalities imposed by thePrevention of Frauds Ordinance.
In the present case, the question is whether the certificateobtained by the defendant under s. 32 (2) is of no avail to herwhen the plaintiff brings a rei vindicatio action. It was argued•by Mr. Jayawardena that the only purpose of this certificate willbe when a creditor brings an action in any Court for the recoveryof any debts. I am of the view that by D13, the defendant ob-tained certain benefits given to her by the provision of the law.The whole purpose of the Debt Conciliation Ordinance asamended by the Acts was to give relief to debtors includingconditional transferors1 in certain circumstances.
There is no question that the defendant was entitled to thisrelief given by statute and I do not think that in such a case, itcould be 1'ghtly said that she lost these statutory reliefs becausethe plaintiff notwithstanding the operation of the provisionsof the Debt Conciliation laws preferred to bring into Court are: vindicatio action.
If a creditor is permitted to bring in a rei vindicatio action not-withstanding the provisions of the Debt Conciliation laws theprovisions of s. 32(2) are rendered useless and of no avail inrelation to the conditional transfers, if a transferee in an appro-priate conditional transfer can always bring a rei vindicatioaction. There will also be no likelihood of any settlement whichwill a’most always be against the interests of the transferee. Itwill be only a very kind creditor who will submit himself to asettlement when he could take over tho land transferred to himby not arriving at a settlement. The purpose of the Debt Concilia-tion laws was never meant fo operate only with regard to sue!kindly creditors and s. 32(2) has no meaning if a creditor unfairlyrefusing a reasonable offer of the debtor is permitted to bringa rei vindicatio action inspite of the finding given by the Boardin respect of the debts owed by the debtor which includesconditional transfer under certain circumstances-
R A J ARATNAM, J.—Silva v. Sai Nona
The facts in the case of Johanahamy v. Susiripala are asfollows: —
It was a case of conditional transfer and there was a settlementrecorded under s. 40 of the Djebt Conciliation Ordinance. It wasagreed that the arrears of interest due to the plaintiff in thatcase and the capital amount due to him should be paid on certaindates fixed in the settlement and if there was a default the rightto redeem was to be at an end.
The defendant defaulted and thereby lost the right that wasrestored to him by settlement to redeem the property. Thedefendant took up the position in his answer when the plaintiffbrought a rei vindicatio action that the conditional transferexecuted by him was in fact a mortgage, in other words claimingwhat even the settlement denied him. In this case, there is nodoubt that the defendant lost his right to redeem and even on theterms of the settlement the true nature of the conditional trans-fer by a single default was restored. The settlement did notinvalidate the conditional transfer, but on the other hand,suspended the operation of the conditional transfer as long asthe defendant paid the interest and principal on due datesAccording to s. 30(2), the settlement took effect and by the veryvalidity of the settlement the defendant lost his relief. Nowherein the settlement was the transaction reduced to a mortgage, ifthe conditions in the settlement were violated. Therefore, thedefendants in Johanahamy’s case did not take up the correctposition as stated on page 329 of 70 NLR in that the conditionaltransfer executed by them was in fact a mortgage. It was reallya conditional transfer which was to be treated as a mortgage oncertain conditions being fulfilled. In that situation, it was not acorrect position to take that a mortgage was created by thesettlement. In the teeth of s. 2 of the Prevention of FraudsOrdinance and s. 91 of the Evidence Ordinance, the plaintiff inthat case certainly could not have brought a rei vindicatio action,if the defendant did not fulfil the term of the settlement. If hehad fulfilled the terms of the settlement notwithstanding thedecisions in Adaicappa Chetty v. Caruppen Chetty, Saverimuttuv. Thangavelauthan and William Fernando v. Cooray, theconditional transfer would have been reduced to a mortgage. Butit may be argued that s. 30(2) specifically states that a settle-ment will be valid and effectual for all purposes notwithstandinganything in the contrary in the Prevention of Frauds Ordinancebut it is silent with regard to s. 91 of the Evidence Ordinance.This sub-section moreover came into operation long beforeconditional transfers were included in the amending law by ActNo. 5 of 1959.
RAJAR ATNAM, J.—Silva v. Sai Nona
If a conditional transferee is allowed under these circums-tances to bring a rei vindicatio action, the statutory benefitsconferred on a conditional transferor in a situation like thiswould be rendered ineffectual and the amending Act may as•well be torn up.
Section 32(2) entitles the debtor to the certificate by reasonof which he enjoyed a statutory benefit which in my view hecould plead on his behalf in answer to the creditor’s claim to arei vindicatio action. What the law gives him with one handcannot be taken away by the other hand.
The Debt Conciliation law contemplates a settlement or areasonable offer by the debtor which ought not to beunreasonably refused. If there is an unreasonable refusal on thepart of the creditor to a reasonable offer on the part of thedebtor there is a sanction imposed by the law by issue of a certi-ficate which certificate in my view is relevant when a reivindicatio action is brought to Court by reason of a conditionaltransfer.
Section 32 (2) must be given a meaning and a purpose whichthe legislature contemplated when it amended the law by ActNo. 5 of 1959. I am mindful of the well known maxim that aninterpretation must be given “ res ut magis valeat quam pereat. ”
I have taken into consideration the fact that s. 39 refers to a•creditor bringing “ an action in any Court for the recovery ofany debt” and not bringing any action. I have also taken intoconsideration that nowhere in the Debt Conciliation Lawsthere a provision making the certificate valid and effectual forall purposes as it did in the case of settlement. However, I takethe view, that the submissions made by learned Counsel for theappellant do not convince me beyond the point that there isanother view that could be taken on this question. But I wouldrather take the view to give life and purpose to the provisionsof the law, so that this interpretation might give life to ActNo. 5 of 1959 read with s. 32 (2) of the Debt ConciliationOrdinance.
My interpretation of the law is in no way in conflict with the .decision in Johanahamy’s case or the other cases mentionedabove. The conditional transfer according to the provisions ofthe law became processed by law in this case for the benefit ofthe debtor. The decision in Henderick Appuhamy v. JohnAppuhamy, 69 NLR 29. is not exactly in point but the reasoningtherein is not altogether unhelpful on the matter before me. In
R A ,J A RAT NAJ1, .1.— Silva o. Sai Kona
Doe v. Bridges as was observed in that case, Lord Tanterden said“Where an act creates an obligation and enforces the perfor-mance in a specific manner, we take it to be a general rule thatperformance cannot be enforced in any other manner” (18311 B. and Ad. 847) . A similar rule, it was stated, was enunciated byWills J. in Wolverhampton New Waterworks Co. v. Hawkesford,(1859) 6 C.B.N.S. 336, where he said, “ Where the statute createsa liability not existing at common law, and gives also a parti-cular remedy for enforcing it the party must adopt the
form of remedy given by the statute I agree with theobservations maJe in that case by Sansonj C. J. that “anotherprinciple applicable here is that where a statutory right cannot,without very great inconvenience, co-exist with the ordinarycommon law right, the former must have been intended as asubstantial and not as an additional remedy
I have considered the decision in Johanahamy’s case. The factsin the present case are different. It is unfortunate that althoughs. 43 of the Debt Conciliation Ordinance was relied on by theappellant’s Counsel its impact was not examined by the Court.But even if it had been and answered in favour of the appellantthat the creditor should have come under s. 43 of the Ordinance,it would have been of no avail to the defendant as he had losthis right to redeem under the settlement.
In mj view, the creditor’s title is affected by the impact of acertificate under s. 32 (2). The creditor must remove the certifi-cate out of his way before he could bring a rei vindicatio actionand to do so he may have come to this Court in an appropriatecase by asking for a Writ of Certiorari. The creditor’s righthowever to proceed against the debtor on the security given bythe debtor for the recovery of any debt is not affected orprejudiced. But there must be a demand, for the debt which wasnot made in the present case, on the other hand the cieditorcarried on regardless of the certificate to bring a rei v'ndiostloaction, which in my view he could not have successfully pursuedin Court. Kir title was affected by the certificate duly issuedaccording to law under .=. 32(2) of the Ordinance.
I therefore- hold that this appeal must be dismissed with costs.
1 n.g-cc vri'.h the u-dg.nmt and order of Sharvnnanda J., andfor tii.- reason', stated by him. T allow the plaintiff’s appeal.
SHA.KVAXANUA J.—Silva v. Sai Nona
I regret my inability to agree with the judgment ofRajaratnam J. In my view, the certificate issued under section32(2) of the Debt Conciliation Ordinance read with Act No. 5of 1959 cannot reduce a conditional transfer in law to amortgage.
One Cornelius de Silva Karunaratne was the owner of thepremises described in schedule B to the plaint. By deedNo- 21446 dated 5.2.64 (PI), he sold and transferred the saidpremises, the subject matter of this action, to Daniel Fernando,subject to the condidon that if the vendor repaid the vendee thesum of Rs. 1,250 with interest thereon at the rate of 16% perannum within a period of three years from 5-2.64. the saidpurchaser shall reconvey the said premises to the vendor. Thesaid Daniel Fernando transferred the land to the plaintiff bydeed No. 423 dated 17.6.65 (P2) subject to the aforesaid condi-tion of reconveyance. The aforesaid vendor Karunaratne diedon 26 4.65 without obtaining the reconveyance. The stipulatedperiod of three years expired on 5.2.67 without the heirs of thesaid vendor availing themselves of the condition of obtaininga reconveyance and the plaintiff instituted this action on 12.8.67for declaration of title, for restoration of possession, ejectmentand damages against the defendant who is the widow of thedeceased Karunaratne and administratrix of his estate.
The defendant, in her answer, stated that:
the plamtiff is bound by deed No. 21446 (PI) and that
she (the defendant) as administratrix and heir of thedeceased Karunaratne made application D7A dated11.7.66 to the Debt ConcBiation Board in terms of fhcprovisions of the Debt Conciliation Ordinance(Chap. 81) as amended bjr Act No. 5 of 1959 to havethe conditional transfer PI treated as a mortgage and
a settlement therec'
id with tha plaintiff;
the Debt Conciliation Board entertained the application
and by its order (D3) dated 20.8.66 determined thatthe deed No. 21446 (PI) is a conditional transfer
which in the opinion of the Board, is ir. reality amortgage.
at the inquiry held by the Debt Conciliation Board on!
21A67, the plrntT refused a fair end reasonableoffer of a sotPcment and the said Board therefore
cMsm'^se-1 e-nPecPcn but issued a cmPPcaie cindersection 32(.2) ii the Ordinance to the defendant. The
SHARVANANDA, J.—Silva v. Sai Nona
certificate (D13) testified that “ the creditor, in ouropinion, has refused a fair and reasonable offer of asettlement by the said debtor which the said creditorought reasonably to have accepted
The defendant resists the action on the main ground thatin view of the certificate issued by the Debt Conciliation Boardin terms of section 32 (2) of the Debt Conciliation Ordinance(Chap. 81), the plaintiff is barred from maintaining a reivindicatio action and that his remedy is to institute an actionto recover the principal and interest on the transaction whichfor purposes of proceedings before the Board, had been im-pressed with the character of mortgage.
The defendant also pleaded that the plaintiff is estopped inlaw from claiming title to the land in suit as the plaintiff hadadmitted, by her objections dated 7.4.66 filed in the testamentarycase No. 4303/T of the District Court of Negombo, that the saiddeeds No. 21446 and No- 423 on which her title to the landis based were in effect mortgages and that the money due onsame were debts due from the estate of the late Karunaratneto the plaintiff.
The learned District Judge has held with the defendant onboth the aforesaid grounds and dismissed the plaintiff’s actionwith costs. The plaintiff has appealed to this Court against thedecision and has submitted that the grounds of the decision are. not tenable in law.
The deed No. 21446 (PI) dated 5.2.64 by which Karunaratneconveyed the premises in suit to Daniel IFernando embodiedex facie a contract of sale subject to the reservation that thesaid vendor and his heirs, executors, administrators and assignshad “ a right to obtain a re-transfer of the said premises at anytime within a period of three years from the date hereof onpayment unto the said vendee and his heirs, executors andassigns the said consideration herein mentioned (i.e. Rs. 1,250)with interest thereon at the rate of sixteen per centum perannum in one payment and also reserve the right to possessduring the said period It is not open in a Court of Law toa party who makes an absolute conveyance of immovable pro-perty for valuable consideration with such conditions attachedthereto to show by other extrinsic evidence that the transactionwas not a sale but a mortgage—Fernando v. Cooray (59 N.L.R.169). On the failure of the vendor to comply with such condi-tions, title vests absolutely on the purchaser free from any
SHARVAI5ANDA, J-—Silva v. Sai Sana
obligation in favour of the vendor and the purchaser by virtueof his title becomes entitled to lawful possession of the propertyfrom the time of the expiry of the period stipulated by thevendor to obtain a reconveyance.
By the Debt Conciliation Ordinance, No. 39 of 1941, the DebtConciliation Board was established to effect a settlement of thedebts owed by a debtor to his secured creditors. ‘Debtor’ wasdefined to mean a person who has created a mortgage or chargeover an agricultural property. In Femandopulle v. Perera Appu-hamy (52 N.L.R. 204), it was held that where there was atransfer of property with an undertaking to re-sell it within aspecified time and the transferor continued to be in possessionof the property, the transaction was not in form a mortgage ora charge over property and could not, therefore, be the subjectmatter of proceedings before the Debt Conciliation Board. Sub-sequent to this decision, Amendment No. 5 of 1959 was enacted,enlarging the jurisdiction of the Debt Conciliation Board bygiving an extended definition of the term ‘mortgage’. . Theamendment provided that for the purposes of the Ordinance, theterm ‘mortgage’, with reference to any immovable property“includes any conditional transfer of such property which,having regard to all the circumstances of the case, is inreality intended to be security for the repayment to the trans-feree of a sum of money lent by him to the transferor ”. By virtueof this amendment, the Board is enabled to entertain, for thepurposes of exercise of its jurisdiction, a new category of trans-actions, viz. conditional transfers savouring of a mortgage. TheBoard is now authorised to effect a settlement between theparties to a conditional transfer. Any such settlement, on beingreached and authenticated, supersedes the terms and stipulationsof the original conditional transfer—section 40. The questionarises as to the consequences when no settlement between theparties is possible because of the unreasonable attitude of the‘creditor’ the transferee. Section 32 of the Ordinance providesfor the dismissal of the application in such an eventuality andfor the grant of a certificate in terms of the section. Section 39postulates an action being brought by a creditor for the reco-very of any debt in respect of which a certificate has been grant-ed. On his bringing such an action, it visits him with certainpenal consequences. The liability flowing from such a certificateattaches only to an action instituted by a creditor for the reco-very of the debt referred to in the certificate and not to anyand every action filed by the creditor. ‘Debt’ has beendefined in section 6 to “ include all liabilities owing to a creditorin cash or kind, secured or insecured ”. Ordinarily, a mortgageehas to file a hypothecary action for the recovery of the debt due
324SHAKVANANDA, J.—ijifa i r. Su, unit i
*o him on the mortgage executed by the debtor, and no strainingof language is invo-ved when section 39 is read to apply to anaction oi such a kind. But, when a conditional transfer has beensqueezed into the definition of mortgage for the purpose ofproceedings before the Debt Conciliation Board, the engraftingdoes not outlive such proceedings and the transaction resumesits old label and nature after such proceedings get terminated bythe dismissal of the application in terms of section 32 of theOrdinance. When the condition underlying the conditional trans-fer is not fulfilled, the transferee becomes absolute owner interms of the agreement of parties, free from any obligation tomake a re-transfer. Then, no action can lie for the recovery ofany debt, since there is no debt to recover. What is to be recov-ered is vacant possession of property of which the plaintiff is theowner. No relationship of creditor and debtor betweenthe vendor and purchaser was ever constituted, except for thepurposes of proceedings before the Debt Conciliation Board.Outside the Board, the relationship of the parties and theirmutual obligations were determined by the original contract interms of which the purchaser became owner, subject to the obli-gation to re-transfer. It was an outright transfer with a pactumde retrovendendo, time being of the essence of the contract—Thambipillai v. Muthuhumarasamy (58 N.L.R. 387). The sale tookeffect at once but got dissolved on the fulfilment of the con-dition On the expiry of the stipulated period, the vendor, re-maining in possession of the premises without fulfilling the con-dition, rendered himself liable to be ejected by the purchaser asthe present owner of the premises. Such a rei vindicatio actioninstituted by the purchaser qua owner against the vendor andhis successors for the recovery of possession of his property can,by no straining of language, be described as an action for therecovery of a debt, and section 39 cannot be held to apply tosuch an action. In this context, the case Johanahamy v. Susiri-pala (69 N.L.R. 29) may be usefully referred to. In that case itwas sought to be argued, as in the present case, that once theDebt Conciliation Board chose to treat a transaction involving aconditional transfer as a mortgage, it got transformed into amortgage and the stamp of mortgage attached to the transactioneven in proceedings outside the Board also. This argument wasrightly rejected. It was held that a conditional transfer wastreated as a mortgage only for purposes of the iurir diction of theBoard and that such recognition by the Board as Mortgage didnot entail the consequence that title remained with the vendor(debtor). This case was followed in the unrepnrted case. S.C.140/67 D.C. Ratnapura 6244, S.C. minute of 19.5.72. The processof reasoning in the above case reinforces the argument of the
SHAK VAXAXUA, J.—Silva v. & a l not* u
plaintiff that Section 39 does not bar her from maintaining thisaction, that title is with her and that her remedy under thecommon law revives to her after the dismissal of the vendor’sapplication by the Board. This case discloses a gap in the legis-lative scheme of the Debt Conciliation Ordinance read with itsamendment No 5 of 1959 The function of this Court is inter-pretation and not legislation, and a Judge acting judiciallycannot, under the guise of interpretation, usurp the function ofthe legislature and supply the gap or omission. A lacuna notprovided for in the Debt Conciliation Ordinance cannot bedealt with under it merely because there does not appear to beany good reason why it has not been provided for. On the basisof the principle of ‘ut res magis valeat quam pereat’, the Courtis not warranted in re-writing the language of Section 39 byadding or subtracting words from it. Section 39 can be given asensible meaning and effect without violence being done to itslanguage. That section applies to actions for the recovery of adebt. In the original scheme of the Ordinance, prior to it beingamended by Act No. 5 of 1959, this section covered and wasintended to cover hypothecary actions. The hiatus isrevealed when by the amending Act No. 5 of 1959 the Debt Con-ciliation Board was given jurisdiction to treat conditional trans-fers as mortgages and to endeavour to settle them as such. Butno effective relief is provided against a recalcitrant transferee(creditor). The issue of a certificate under Section 32 to thevendor (debtor) is futile as the purchaser will not at any timeconceivably be instituting action for recovery of a debt whichhas been defined in Section 64 “to include all liabilities owingto a creditor, in cash or kind, received or unreceived. ” Sections39 deals with proceedings before another tribunal after theBoard has become functus. The meaning given statutorily tothe word ‘ mortgage ’ for the purpose of jurisdiction of theBoa^d cannot be extended to other jurisdictions unless there iswai ant in the language of the statute. The unnatural senseascribed to the word should be confined to the statutory contextand should not be extended to other contexts though in parimateria.
SHARVAUANDA, J.—Silva v. Sai Nona
The plea of estoppel raised by the defendant was based on thefact that the plaintiff had, in her objections dated 7.4.66 markedD2 in Karunaratne’s testamentary case No. 4303, admitted thatmoneys were due to her upon deeds No. 21446 (PI) and No. 423(P2) from the estate of the deceased. The right to obtain a con-veyance subsisted for three years from 5.2.64, and hence on7.4.66 when the objections D2 were filed by the plaintiff, she wasjustified in stating that a debt or obligation was due in terms,of Pi from the estate of the deceased ; but non constat, thisobjection involved the admission or representation that title tothe premises was in the deceased. Paragraphs 8, 9, 10 and 11 ofthe statement of objections (D2) unequivocally sets out theposition. It is stated there that the 3rd land in the petition (thesubject matter of this action) was transferred by the deceasedduring his life-time upon deed No. 21446 dated 5.2.64 to P. DanielFernando for Hs- 1,250 subject to a right of reconveyance withinthree years from the date of the said deed and that the said P-Daniel Fernando, had, by^deed No. 423 dated 17.6.65, sold andconveyed bis right, title and interest upon the said deed No. 21446to the plaintiff for a sum of Rs. 1,466-64 and that the money dueto the plaintiff upon the aforesaid deeds No. 21446 and No. 423were debts due from the estate of the deceased. These aver-ments in the objections (D2) describe truly a subsisting fact andimport no representation that the title to the land was not in theplaintiff. From these averments, one cannot reasonably spellout that the plaintiff was only entitled to a debt and not to theland. The plea of estoppel by representation fails and has to berejected.
The learned District Judge has erred in upholding the defen-dant’s contention and dismissing the plaintiff’s action. I setaside the judgment and decree entered by the District Court andallow' the appeal and enter judgment for the plaintiff as prayedfor, but with damages at Rs. 10 per month only, from 6th Feb-ruary, 1967, until the defendant is ejected from and the plaintiffis restored to possession of the land and premises described inthe schedule B to the plaint. In the circumstances, the plaintiffappellant is entitled to costs of this appeal only.
MAHANANDA, alias MANAM MAGGIE SILVA, Appellant, and MANIKKUGE SAI NONA, Respond