Attorney-General vAuslanka Development and Construction
Company Ltd. (Wiiavaratne. J. P/CA)
COURT OF APPEALWIMALACHANDRA, J.
RANJIT SILVA, J.
CALA148/2005DC COLOMBO 36162/MSAUGUST 29, 2006DECEMBER 5, 2006
Civil Procedure Code – Cap 53- Section 704, Section 706 – Summary Procedureon liquid claims – Defendant objecting to jurisdiction and that promissory note isnot valid in statement of objections – Praying for leave to defend unconditionally- Validity – Judicature Act section 39 – Action barred by positive rule of law -Objections when? – Matters involving Law Merchant, which Court hasjurisdiction? – Debtor seeking creditor – Past consideration – No consideration? -Bills of Exchange Ordinance, section 27 and 91 – Prima facie sustainable defence.
Sri Lanka Law Reports
12007] 1 Sri LR
The plaintiff instituted action to recover a certain sum of money with interestowning to him on a promissory note – under Cap 53 of the Code. The petitionerwithout filing petition/affidavit filed a statement of objections/affidavit and anumber of documents praying that, the case be dismissed for want ofjurisdiction as the parties were residing outside the jurisdiction of the DistrictCourt of Colombo and on the ground that the promissory note was not a validnote, as there was no valuable consideration. The application was dismissedby the District Court.
Objection to jurisdiction must be taken at the earliest opportunity if noobjection is taken and the matter is within the plenary jurisdiction of theCourt, the Court will have jurisdiction to proceed with the matter. Wherethe action is barred by a positive rule of law objection must be takenbefore pleading to the merits of the case.
In a matter involving “Law Merchant' English Law (Common Law) hasto be applied. It is the debtor who should seek the creditor. Thereforethe plaintiff must file action in the District Court having jurisdiction withinwhich he resides.
In the instant case, there is ample evidence to show the intention of theparties that the payment must be made at the office of the defendant-petitioner. Evidence indicates that the place of residence of thedefendant-petitioner is within the jurisdiction of the District Court ofColombo.
Although the general rule is past consideration is no considerationthere are exceptions to this rule – Sections 27/91 Bills of ExchangeOrdinance once the petitioner admitted the receipt of money and aPromissory Note signed in the absence of any documentary evidenceto the contrary, it is not in the mouth of the petitioner to argue that hehas a prima facie sustainable defence.
APPLICATION for leave to appeal from an order of the District Court of Colombo.Cases referred to:
David Appuhamy v Yassassi Thero- 1987 – 1 Sri LR 253.
Actalina Fonseka and others v Dharshani Fonseka -1989 – 2 Sri LR 95 at 100.
Ponnaiya v Kanagasabai – 35 NLR 128 (distinguished)
Roland Munasinghe with G.W.R. Dammika for defendant-petitioner.
W. Dayaratne for plaintiff-respondent.
Ananda v Dissanayake
(Raniit Silva. J.)
January 24,2007RANJIT SILVA, J.
This is an application for leave to appeal filed by the Defendant-Petitioner (referred to as the Petitioner hereinafter) challenging theorder made by the learned District Judge of Colombo on 18.04.2005in case No. 36162/Ms disallowing the application of the petitioner tofile answer and defend unconditionally. By the said impugned ordermarked Z, the learned District Judge rejected the objections taken bythe petitioner to the exercise of jurisdiction, on the following grounds.
that the plaintiff's did not reside within the territorial limits of thejurisdiction of the District Court of Colombo.
that the promissory note marked X3 relied on by the plaintiff-respondent-respondent was not a valid promissory note forwant of consideration and granted leave to the petitioner toappear and defend on the condition that the petitioner shouldenter into a bond for the full sum claimed on the promissorynote in a sum of Rs. Eight Million (Rs. 8,000,000/-).
When this matter came up for inquiry before a different bench on
the matter proceeded to inquiry and the order wasreserved for 24.02.2006 on which date order was pronouncedgranting leave to the petitioner and the matter was fixed forargument. The parties made their oral submissions on 29.08.2006.The Counsel for the petitioner moved for a date to cite authorities andas undertaken the Counsel for the petitioner furnished to Court theauthorities by way of written submissions dated 05.12.2006.
The facts and the Law
The respondent instituted action in the DC of Colombo to recovera sum of Rs. 8,000,000/- together with interest due and owing to heron a promissory note signed by the petitioner on 12.05.2004. Themain action was filed under Chapter Llll of the Civil Procedure Codeunder the Summary Procedure on Liquid Claims. According to and interms of the plaint the petitioner had paid only a sum of Rs. 160,000/-as interest due on the promissory note and thereafter defaultedpayment. Therefore the respondent by letter of demand A2 filedalong with the plaint demanded the said capital and the interest dueon the note but the petitioner did not respond to the letter of demand.
Sri Lanka Law Reports
 1 Sri L.R
As the petitioner was in default the respondent filed the aforesaidaction to recover the said sum together with interest thereon.
The petitioner was duly served with summons in terms of section704 of the CPC. In terms of section 706 of the CPC on receipt ofsummons one has to obtain leave of Court to appear and defend theaction with or without conditions. If one could establish that there is aprima facie sustainable defence the court must grant leave to appearand defend unconditionally yet if the Court entertains any doubt as tothe good faith (bona tides) of the defence the Court can still grantconditional leave to appear and defend, as it was done in this case.The petitioner instead of filing petition and affidavit filed a statementof objections together with an affidavit and a number of documentsmarked X1 to X12 praying that the case be dismissed for want ofjurisdiction as the parties were residing outside the jurisdiction of theDistrict Court of Colombo and also on the ground that the particularpromissory note was not a valid promissory note as there was novaluable consideration in respect of the said promissory note.
The petitioner further argued that the Court had no jurisdiction toissue summons under form 19 of the CPC and in the alternative andin addition to the aforesaid relief prayed that he be permitted to fileanswer and defend the action unconditionally.
The respondent argued that the petitioner had no right to take upthe objection with regard to the lack of territorial jurisdiction at thatstage of the action and that he could do so only in his answer afterthe petitioner was granted leave to appear and defend. Thisargument is not tenable and ought to be rejected in limine. It was heldin David Appuhamy v Yassassi TherdV that I quote "an objection tojurisdiction must be taken at the earliest opportunity. If no objection istaken and the matter is within the plenary jurisdiction of the Court, thecourt will have jurisdiction to proceed with the matter and make avalid order. In Actalina Fonseka and others v Dharshani FonsekaW itwas held that where the action is barred by a positive rule of lawobjection must be taken before pleading to the merits of the case.
Section 39 of the Judicature Act reads thus
Whenever any defendant or accused party shall have pleaded inany action, proceeding or matter brought in any Court of first instanceneither party shall afterwards be entitled to object to the jurisdiction
Ananda v Dissanayake
fRanilt Silva. J.)
of such Court, but such Court shall be taken to have jurisdiction oversuch action proceeding or matter.
For these reasons I am of the view that the petitioner was entitledto take up want of jurisdiction as an objection together with anapplication seeking permission or leave to appear and defendunconditionally. Passing I must emphasize that section 39 of theJudicature Act covers only instances of Patent want of jurisdictionand as far as a Patent want of jurisdiction is concerned no amount ofconsent, acquiescence or waiver can cure such defect and such anobjection in regard to a Patent want of jurisdiction could be taken anytime even in appeal for the first time. Such an attack can be madeeven in collateral proceedings. The objection taken by the petitionerwith regard to the form of the summons served on him does notdeserve any consideration by this Court and could be disregarded.On the other hand I am of the opinion that the petitioner has made avalid application to Court seeking leave to appear and defend theaction, whether such application was made in addition or as analternative to other relief claimed has no significance also theargument that instead of a petition the petitioner filed a petition ofobjection and therefore there is no valid application before Court mustalso be rejected out of hand as I find no merit in that argument too.
Issues of facts – valuable consideration
It is admitted by the petitioner that the respondent gave himRs.8,000,000/- at least not refuted. However, the petitionercontended that the money was given to him some time prior to theexecution of the promissory note and therefore did not constitutevalid valuable consideration for the promissory note and hence it wasnot a valid promissory note. His contention was that for the moneylent to him there was a previous agreement and that the respondenttore the document containing the said agreement into pieces in frontof the petitioner and several others and took away even the tornpieces of paper with him. Once the petitioner admitted the receipt ofthe money and promissory note signed, in the absence of anydocumentary evidence to the contrary, it is not in the mouth of thepetitioner to argue that he has a prima facie sustainable defence thatwarrants the granting of unconditional leave for the petitioner to fileanswer, appear and defend the case.
Sri Lanka Law Reports
 1 Sri L.R
Although the general rule is ’past consideration is noconsideration' there are exceptions to this rule, one of the exceptionsis found in section 27 of the Bills of Exchange Ordinance."
Section 27 of the Bill of Exchange the relevant portion is;
Sub section (1) Valuable consideration for a bill may be constitutedby
an antecedent debt or liability, such a debt or liability isdeemed valuable consideration whether the bill is payable ondemand or at a future time.
This provision is made applicable to promissory notes by section91 of the Bills of Exchange.
Section 91(1) reads as follows:
"Subject to the Provisions in this past, and except as by thissection provided, the Provisions of this Ordinance relating to Bills otExchange apply, with the necessary modifications, to promissorynotes.
For these facts and the Law I find that the learned District Judgecannot be faulted for the conclusions drawn by him on the facts andfor the findings reached based on the facts, namely that thePromissory note was a valid promissory note.
"The petitioner raised an objection as to the jurisdiction in theDistrict Court of Colombo on the grounds that both the respondentand the petitioner were residing outside the territorial limits of the saidDistrict Court.
This objection was subsequently restricted to the fact that theDistrict Court of Colombo lacked jurisdiction as the respondent(plaintiff) resided outside the jurisdiction of the District Court ofColombo (para 06 of the Objections)
In a matter involving "Law Merchant" English Law (Common Law)has to be applied. According to the English Common Law it is the
Ananda v Dissanayake
(Raniit Silva. J.)
debtor who should seek the creditor. Therefore, the plaintiff in a casemust file action in the District Court having jurisdiction within which heresides (Ponnaiya v Kanagasabai®)).
In this case I find that the intention of the parties with regard to theplace of payment is clear. In paragraph 04 of the Petition ofobjections the petitioner himself has admitted that a receipt which ismarked X12 was issued to the respondent at his office in Colombo inrespect of the payment of Rs. 178,000/- as interest on the capitalamount borrowed by him from the respondent according to X8 oneof the documents marked and produced by the petitioner himself theaddress given therein as the place of his residence is No. 5,Mahakumarage Mawatha, Grandpass, Colombo 14 is also within thejurisdiction of the District Court of Colombo. X8 was the reply to theletter of Demand marked A2. In A2 the address of the petitioner isstated as No. 5, Mahakumarage Mawatha, Grandpass, Colombo 14the same address referred to in X8. In X8 the petitioner has notrefuted or disputed the address of the petitioner but has expresslyconfirmed and admitted the address given in A2 as correct.
The petitioner has cited Ponnaiya v Kanagasabai (supra) insupport of his argument based on ’want of jurisdiction’. In the saidjudgment it was held that "the rule of English Law seems to be this;that you must discover the place of payment from the intention of theparties. Here there was no express intention the note was silent asto the place of payment and the learned Commissioner wasdissatisfied with such evidence as was addressed to him on thatpoint. There in the absence of anything from which one can fairlydeduce what was the intention of the parties as to the place ofpayment one is thrown back on what seems to be the English Rulethat the debtor must seek out the creditor at his residence or place ofbusiness.”
In the instant case there is ample evidence to show the intentionof the parties that the payment must be made at the office of thepetitioner. What is more there is evidence, X8 and A2 to indicate thatthe place of residence of the petitioner is within the jurisdiction of theDistrict Court of Colombo. On the other hand there is no proofwhatsoever that the respondent is living at Homagama or at someplace outside the jurisdiction of the District Court of Colombo.Therefore, I hold that the decision in Ponnaiya v Kanagasabai
Sri Lanka Law Reports
 1 Sri L.R
(supra) has no application to the facts and circumstances of this case,and that the District Court of Colombo has jurisdiction over the matter.
For the reasons adumbrated I find no jurisdiction to interfere withthe order made by the learned District Judge of Colombo on
in case No. 36162/MS. I dismiss this appeal with costsfixed at Rs. 7,500/- to be paid to the respondent by the petitioner.
WIMALACHANDRA, J. – I agree.
ANANDA v. DISSANAYAKE