Sri Lanka Law Reports
 3 Sri L R.
ABEYKOON AND ANOTHER
v.NATIONAL SAVINGS BANK
COURT OF APPEALDE SILVA, J„
CA NO. 694/96.
D.C. PANADURA NO. 2575/SPLDECEMBER 18, 1998.
JANUARY 12, 1999.
National Savings Bank Act, No. 30 of 1971 – Mortgage of Property – Default- Resolution – Public auction – Purchase by Bank – Certificate of sale -Compliance with s. 2 of the Prevention of Frauds Ordinance – Generalia specialibusnon derogant.
The petitioner-respondent (Bank) instituted action seeking ejectment of thedefendant-petitioners from the properly in question. It was averred that the defendant-petitioners had mortgaged the property to the petitioner-respondent and as theyhad defaulted the Bank had passed a Resolution to sell the property by publicauction. At the public auction, the petitioner-respondent (Bank) had purchased theproperty on a certificate of sale.
It was contended that the certificate of sale which purports to pass title to thepurchaser is invalid in law as it was not in compliance with s. 2 of the Preventionof Frauds Ordinance.
S. 55 of the National Savings Bank Act contains express provisions forthe passing of title to immovable property on a Certificate of Sale signedby the Bank. The title bestowed by the Certificate of Sale becomes validby operation of law.
Upon an examination of the provisions of s. 55 it is clear that the legislaturehas recognised disposition of immovable property otherwise than byconveyance executed before a Notary.
The certificate is legally valid and passes title to the purchaser.
CA Abeykoon and Another v. National Savings Bank (Weerasuriya, J.) 145
However, the learned District Judge was in error in disposing of the mainapplication when in fact he had to decide the preliminary objections.
APPLICATION in Revision from the judgment of the District Court of Panadura.
Cases referred to:
Haramanis Perera v. Johana Perera – 3 NLR 306 at 313.
Baiya v. Karunasekera – 56 NLR 265 at 268.
Appuhamy v. Appuhamy – 3 SCC 61 at 67.
Saverimuttu v. Thangavelaudhan – 55 NLR 529 at 532.
E. D. Wickramanayake with Ms Anandi Cooray for respondent-petitioners.Adrian Pereira, SSC for the petitioner-respondent.
Cur. adv. vult.
May 07, 1999.
The petitioner-respondent (hereinafter referred to as the respondent),instituted action in the District Court of Panadura under chapter XXIVof the Civil Procedure Code, seeking ejectment of the defendant-petitioners (hereinafter referred to as the petitioners) from the propertydescribed in the schedule to the petition in terms of section 56 ofthe National Savings Bank Act, No. 30 of 1971 as amended. Therespondent averred that the petitioners had mortgaged the propertyto the respondent in a sum of Rs. 680,000 and that they had defaultedin the payment of the said sum due to the respondent and thereafterthe property was sold by public auction pursuant to a Board resolution.The respondent further disclosed that the property was purchased atthe said public auction by the respondent. The petitioners filed astatement of objections against the order Nisi and the matter was fixedfor inquiiry. Thereafter, the petitioners raised two preliminary objectionsat the inquiry and learned District Judge by his order dated 17.10.96,allowed the application of the respondent. It is from the aforesaid orderthat the present application for revision has been filed.
Sri Lanka Law Reports
[1999j 3 Sri LR.
At the hearing of this application, the petitioner raised two mattersnamely –
that the District Judge purporting to reserve his order onthe preliminary objection disposed of the main application;
that the certificate of sale which purports to pass title tothe purchaser is invalid in law as it was not in compliancewith section 2 of the Prevention of Frauds Ordinance.
Section 2 of the Prevention of Frauds Ordinance, No. 7 of 1840declares that the following classes of contracts shall be of no forceor avail in law unless in writing and signed by two witnesses in thepresence of a Notary and duly attested by him.
Any sale, purchase, transfer, assignment or mortgage ofland or other immovable property.
Any promise, bargain, contract or agreement for effectingany such object or for establishing any security, interestor encumbrance affecting land or other immovableproperty.
Any contract or agreement for the future sale or purchaseof land or other immovable property.
The significance of the requirements under section 2 of thePrevention of Frauds Ordinance could be seen from the followingobservations of Lawrie, J. in Haramanis Perera v. Johana Pereraf"at 313:
“The Ordinance No. 7 of 1840 was passed to provide moreeffectually for the prevention of frauds and perjuries. In Ceylon twoof the evils to be prevented were forgery and perjury. Confidencewas placed in the integrity of Notaries Public; the legislature enactedthat no writing permanently affecting immovable property shouldbe valid unless executed before a Notary.“
CA Abeykoon and Another y. National Savings Bank (Weerasuriya, J.) 147
Further, in Baiya v. Karunasekeraf21 at 268 Gratiaen, J. observedthat a valid notarial instrument does not by itself pass title to land,other steps being required effectively to transfer title. Delivery of thedeed is the minimum prerequisite for this purpose as constitutingconstructive delivery of the land itself.
In Appuhamy v. Appuhamtf® at 67 Berwick, J. observed that –
"The notarial execution and the registration of the deed. . .withdelivery of the deed takes the place of the old Dutch symbolicaldelivery before the Judge and registration of the proceedingsamong the acts of Court… contract of sale plus symbolic deliveryequal to dominium."
Section 55 of the National Savings Bank Act provides –
that if the mortgaged property is sold the Bank shall signa certificate of sale and thereupon all the rights, title andinterest of the debtor to and in the property shall vest inthe purchaser;
that a certificate of sale signed by the Bank shall beconclusive proof with respect to the sale of property;
that every certificate of sale shall be liable to the stampduty and charges fixed for conveyance of immovable propertyand to any registration or other charges authorised by law.
Since the enactment of the Prevention of Frauds Ordinance,transfer of immovable property can be made only by means of anotatrial conveyance. Thus, section 2 has been framed to take withinits scope all transactions relating to land excepting –
(a) leases at will or for any period not exceeding one month,and
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[19991 3 Sri LR.
(b) contracts or agreements for the cultivation of paddy-fields orchena lands for any period not exceeding twelve months ifthe consideration for such contract or agreement shall bethat the cultivator shall give to the owner any share of thecrop or produce.
The notarial conveyance form the contract of sale and it is by virtueof the effect which the law attributes to a notarial conveyance thatthe purchaser obtains his right to be placed in possession of theproperty.
In the case of Saverimuttu v. Thangavelaudharf4) at 532 thePrivy Council in considering the scope of the Prevention of FraudsOrdinance observed that –
" It is evident that the aim of the Prevention of Frauds Ordinanceis to prevent frauds by making evidence other than the evidenceof a notarially attested document. Their Lordships think that thedeparture permitted by law from the general rule should not beextended as any undue extension would interfere seriously withthe object sought to be achieved by the statute law of Ceylon."
It is to be noted that section 55 of the National Savings Bank Actcontain express provisions for the passing of title to immovable propertyon a certificate of sale signed by the Bank. The title thus bestowedby the certificate of sale becomes valid by operation of law. It wouldbe seen that the requirement in section 55 of the National SavingsBank Act by expressly providing for passing of title on a certificateof sale without a notarial attestation directly conflicts with section 2of the Prevention of Frauds Ordinance. Therefore, it is vital to considerwhether these competing considerations effectively harm the objectivesof section 2 of the Prevention of Frauds Ordinance. Insofar as thisaspect is concerned it is noteworthy that effectiveness and sanctityleading to the finality of the certificate of sale is secured by section3 of National Savings Bank Act with the stipulation to affix the sealof the Bank (which is in the custody of the Board of Directors) inthe presence of two members of the Board who are mandated tosign the instrument in token of their presence.
CA Abeykoon and Another v. National Savings Bank (Weerasuriya, J.) 149
Finally, it is necessary to consider whether the National SavingsBank Act being a later specified enactment takes precedence overthe provisions of the Prevention of Frauds Ordinance by the applicationof the principle "generatia specialibus non derogant" in the interpre-tation of statutes. It would be clear that upon an examination of theprovisions of section 55 of the National Savings Bank Act, that thelegislature has recognized disposition of immovable property otherwisethan by conveyance exec'uted before a Notary.
Bindra's Interpretation of Statutes (8th edition 1997 page 510)referring to the conflict between general and special statutes, statesthat
But, if they cannot be fairly read in such a way as to give fullmeaning to each consistently with the other, then one must giveway and the one to give way will be the general provision."
Therefore, it seems to me that the certificate of sale is legallyvalid and passes title to the purchaser.
The learned District Judge was in error in disposing of the mainapplication, when in fact what he had to decide was on the questionof preliminary objections. In the circumstances, District Judge isdirected to proceed with the inquiry relating to other objections raisedby the petitioner.
Subject to the above condition, this application is dismissed withcosts.
DE SILVA, J. – I agree.
District Judge directed to proceed with inquiry.
ABEYKOON AND ANOTHER v. NATIONAL SAVINGS BANK