Range Bandara v. Gen. Anuruddha Ratwatte
and Another (Fernando, ACJ)
LEELA NONA AND OTHERS
COURT OF APPEAL.
WEERASEKERA, J. ANDWIGNESWARAN, J.
A. 80/92 (F).
DECEMBER 9. 1996, JANUARY 24 AND JULY 14, 1997.
State Mortgage and investment Bank Law 13 of 1975 – Mortgage – failure toredeem – Public Auction – Certificate of sale – Conclusiveness section 59 (2) -Restoration of possession and ejectment – Order Nisi sections 60(1) (2) (3) (A) ofLaw 13 of 1975.
The Premises were mortgaged to the State Mortgage and Investment Bank byMr & Mrs J. On the failure to redeem the mortgage, the premises were put up forsale by public auction, after sale a Certificate of Sale was issued in favour of theoriginal petitioners in terms of section 60(1) Law 13 of 1975. In terms of section60(2) of the said Law they moved by summary procedure for restoration ofpossession and the ejectment of the respondent-respondents. Order Nisi wasissued. After inquiry the learned District Judge rejected the plea that Iherespondent-respondent was a tenant of the premises, but, on the basis that hewas a trespasser he discharged the order on the footing that section 60(1) did notextend to a trespasser. It was contended that the purpose of section 60(3) and (4)
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of Law 13 of 1975 was to restrict the ejectment of two specific categories ofoccupants viz: debtors and tenants, and any person outside these categoriescould be ejected only by recourse to the general law.
(1) The thinking of the legislature has been to see that the Bank which is a statelending institution recovered amounts lent by it with interest, in order to do so itassured the buyer by legislature quick and effective method of recovery ofpossession. The most reasonable interpretation that could be given to section 60is that all persons other than those enumerated or falling within section 60(3) and(4) would be liable to be ejected by the operation of the conclusiveness of theCertificate of Sale, given under section 59(2) and its consequential enablingprovisions contained in section 60(1) — 60(2).
Per Weerasekera, J.
‘Good and prudent Banking practice would have to be sacrificed if we are tointerpret section 60(3) and (4) dealt with the only persons or categories ofpersons to whom section 60 applied and therefore did not include trespassers. Itis my view that the central concept on which section 59(2) and section 60(1) havebeen promulgated is to eject trespassers. Section 60(3) and (4) deal withtrespassers who may be entitled to certain rights. If it were not so against whichcategory of persons would section 60(1) operate?
APPEAL from the judgment of the District Court of Colombo.
Case referred to:
Imbuldeniya v. D. de Silva – 1987 – 1 SLR 367 at 371.
A. K. Premadasa PC., with C. E. de Silva for 2nd petitioner-appellant.
L. V. P. Weltasinghe for 2nd defendant-respondent.
1st defendant-respondent absent and unrepresented.
S. Mahenthiran for Substituted 1 st petitioner-respondent.
Cur. adv. vult.
September 21, 1997.
The petition of appeal has been filed by only the 2nd petitioner-appellant. The 1st petitioner in the original application before theDistrict Court died after the filing of the appeal and the substituted1st petitioner-respondent was substituted in his place.
I have examined the original case record and the docketmaintained by the Court of Appeal and find that the substitution
Chandrasena v. Leela Nona and Others (Weerasekera, J.)
effected and the appearances of Counsel have been incorrectlyrecorded with regard to the appeal to the Court of Appeal and evenin the written submissions. I have corrected the appearances ofCounsel in the caption hereinbefore set out in my judgment.
I propose to recapitulate the events that led to this appeal. Theoriginal petitioners before the District Court viz. the husband of thepresent substituted 1st petitioner-respondent and the 2nd petitioner-appellant by their petition dated 28.08.90 pleaded the originalmortgage of premises morefully described in the schedule thereto byMr. & Mrs. Jayathillake on Bond 335 of 04.03.86 with the StateMortgage and Investment Bank. On the failure to redeem the saidmortgage it was pleaded that the premises were put up for sale bypublic auction. After sale a Certificate of Sale (P4) was issued infavour of the original petitioners in terms of section 60(1) of the StateMortgage & Investment Bank Law No. 13 of 1975. In terms of section60(2) of the said Law they moved by way of summary procedure forthe restoration of possession and the ejectment of the respondent-respondents. Order nisi was duly issued and in pursuance ofobjections filed by the respondent-respondents who pleaded thatthey were tenants of one Rita Fernando, inquiry was fixed.
At the inquiry the 1st respondent-respondent being absent ordernisi was made absolute as against her.
The 2nd respondent-respondent supported his objections byevidence by himself and documents.
The learned District Judge rejected the claim of the 2ndrespondent-respondent that he was the tenant of the premises in suit.But on the basis that he was a trespasser he discharged the ordernisi on the footing that sections 60(3) and 60(4) of Act No. 13 of 1975specified, to the exclusion of others, the persons against whom anejectment order was by law permissible and that the provisions ofsection 60(1) did not extend to a trespasser. This appeal is from thatorder discharging the order nisi against the 2nd respondent-respondent dated 28.02.92.
Rita Fernando, the alleged landlord of the 2nd respondent-respondent, purported to rent the premises on 14.04.88. The right to
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occupancy under such agreement terminated on 14.03.91 by 2D1.But Rita Fernando had transferred all her right, title and interest byDeed No. 285 of 25.02.86 to Mr. & Mrs. Jayathillake who in turn hadmortgaged the premises in suit to the State Mortgage & InvestmentBank by Bond No. 335 of 04.03.1986. The Certificate of Sale in favourof the original 1st petitioner and the 2nd petitioner-appellant was on25.06.1990. When the alleged tenancy agreement (2D1) was enteredinto in 1991, Rita Fernando had already parted with her rights. It isnow settled law following the decision of Imbuldeniya v. D. de Silva0',at page 371 that “A person without any title to a particular piece ofproperty may grant a tenancy thereof to another person. Such atenancy is valid between the landlord and tenant but is not binding onthe true owner".
The learned District Judge in the circumstances of the facts of thiscase concluded correctly that inasmuch as the Rent Act gave noprotection to the tenant against a person who is not his landlord butthe true owner that the 2nd respondent-respondent in this case didnot have the protection of the Rent Act and was therefore atrespasser vis-a-vis the true owner.
It was argued on behalf of the 2nd respondent-respondent that thepurpose of sections 60(3) and (4) of Law No. 13 of 1975 was torestrict the ejectment to two specific categories of occupants namelydebtors and tenants, and any person outside these two categoriescould be ejected only by recourse to the general law.
I have given my best consideration to this argument and thereasoning of the learned District Judge when he refused to make thedecree nisi absolute.
It is my considered view that Law No. 13 of 1975 not only intendedto provide financial assistance to mortgagors but also provided forthe recovery of the mortgaged amount in the event of non payment,as any prudent lending institution would do. To do so, the Lawprovided that when there was a failure to redeem a mortgage themeans for the recovery of the mortgaged amount was by Sale. TheSale had to carry with it a reasonable securement that it would
Chandrasena v. Leela Nona and Others (Weerasekera, J.)
recover what had been lent. To achieve this result it provided for Saleby public auction and an adequate guarantee for the buyer torecover possession of the property sold. The statutory provisions inthis regard was contained in section 60 of the Law. It went further andspecified the method of seeking recovery of possession as, what usewould it be to a buyer without possession? An ordinary action by wayof regular procedure is not unknown to be a cumbersome process.No buyer is going to invest money to purchase a property withoutpossession being guaranteed. No lending institution could recover itsmoney without an enterprising buyer. The Statute therefore by section59 whilst vesting the purchaser and holder of a Certificate of Saleabsolute title, provided under section 60(1) for the right of recoveryupon the production of the Certificate of Sale in Court by way ofsummary procedure as set out in section 60(2). The thinking of thelegislature in my view has been to see that the State Mortgage &Investment Bank which is a State Lending Institution recoveredamounts lent by it with interest. In order to do so it assured the buyerby legislation a quick and effective method of recovery ofpossession. If not for such provisions no prospective buyers woulddare bid at a public auction held under the provisions of the StateMortgage & Investment Bank Law No. 13 of 1975 and the Bankwould not be able to recover what it had lent. Not only did Certificateof Sale convey legal title but it also vested with the purchaser a rightof recovering possession speedily. Even so tiie provisions of LawNo, 13 of 1975 inter alia dealt with certain categories of occupiers ofproperties under section 60(3) and 60(4). The most reasonableinterpretation that could be given to the provisions of section 60 isthat all persons other than those enumerated or falling within section60(3) and 60(4) would be liable to be ejected by the operation of theconclusiveness of the Certificate of Sale given under section 59(2)and its consequential enabling provisions contained in section 60(1)and section 60(2). Linder section 60(3) and section 60(4) the type ofpersons dealt with are persons who are otherwise "entitled" to certainrights and not “trespassers". Good and prudent banking practicewould have to be sacrificed if we are to interpret that sections 60(3)and (4) dealt with the only persons or categories of persons to whomsection 60 applied and therefore did not include trespassers. It is myview that the central concept on which sections 59(2) and 60(1) havebeen promulgated is to eject trespassers section 60(3) and (4) deal
Sri Lanka Law Reports
[199713 Sri LR.
with trespassers who may be entitled to certain rights. If it were notso, against which category of persons would section 60(1) operate?If sections 60(3) and section 60(4) were to apply in isolation sections59(2), 60(1) and 60(2) of the State Mortgage & Investment Bank Lawwould become meaningless. It is my considered opinion thereforethat the first category of persons that section 60(1) and (2) conceivesof and against whom an order for delivery of possession is availableby way of summary procedure is the class of persons who would fallwithin and be described as 'trespassers'. Thereafter, of these,namely, those falling within the category of trespassers if any of themwould fall within the category specified in sections 60(3) and (4), theDistrict Court would take steps against them in the manner providedin the said sections. The legislature cannot be understood to havegiven a state lending institution such as the State Mortgage &Investment Bank a reasonable and justifiable benefit with one handand then taken it away totally with the other. Such illogical motivescannot be attributed to the framers of the Law. The purpose for whichthe State Mortgage and Investment Bank was established was to“assist in the development of agriculture, industry and housing byproviding financial and other assistance in accordance with the law".Nothing is more logical than for the legislature to provide the statutorymeans by which a State lending institution could recover what hasbeen lent and to see that such an end is achieved.
I am therefore of the view that the learned District Judge hascompletely misdirected himself and misconceived of the purpose ofsections 59 and 60 of the said Law.
For these reasons I allow the appeal since the conclusion of thelearned District Judge is hot tenable in law.
I set aside the order dated 14.05.91 and make order that thedecree nisi issued on the 2nd respondent-respondent be madeabsolute.
The 2nd petitioner-appellant will be entitled to taxed costs ofappeal from the 2nd respondent-respondent.
WIGNESWARAN, J. – I agree
CHANDRASENA v. LEELA NONA AND OTHERS