021-SLLR-SLLR-2000-V-2-NATIONAL-DEVELOPMENT-BANK-v.-CHRYS-TEA-PVT-LTD-AND-ANOTHER.pdf
NATIONAL DEVELOPMENT BANK
CHRYS TEA (PVT) LTD AND ANOTHER
COURT OF APPEAL.DE SILVA. J.WEERASURIYA. J.CA 146/96.
MARCH 04. 1999.APRIL 26. 1999.
Debt Recovery (Special Provisions) Act. No. 2 of 1992. Act. No. 9 of 1994 ■S.6(2)(a)(ii). S.30 ■ Leave granted, lo defend depositing security – Adequacyof security – Giving of reasons in Ihe order – What is a Debt?
The Plaintiff Petitioner filed action against the Defendants in terms of theDebt Recovery Law to recover a sum of Rs. 7.304.063.37/-. When DecreeNisi was served the Defendants Respondents filed papers and moved forunconditional leave to defend the action or in the alternative to grantleave on reasonable terms as to security. Court allowed the DefendantRespondents to deposit Rs. 500.000/-. The said Order is bereft of anyreasons as to why the said sum was ordered, when the claim was inexcess of Rs. 7.000.000/-.
Held :
Under S.6(2)(a) or s.6(2)(b) the Court has no discretion to ordersecurity which is not sufficient to satisfy the sum mentioned in theDecree Nisi.
If the Court has acted under S. 6(2) (c) then prior to ordering securitywhich is not sufficient to satisfy the sum mentioned in the Decree Nisi theCourt must first come to the conclusion that the Court is sat isfied on thecontents of the affidavit filed bv the Respondents that they disclose adefence which is prima facie sustainable.
Documents indicate that the Respondents have acknowleged that thesums mentioned in the Plaint are due and payable. Court could not haveacted under S.6(2)(c).
The affidavit of the Respondents does nor disclose a prima faciesustainable defence in terms of the Act.
Debt means a sum of money which is ascertainable or capable ofbeing ascertained at the time of the institution of the action.
CA National Development Bank u. Chn/s Tea (Pvt) Ltd. and Another 207
(De Silva. J.)
APPLICATION in Revision from the Order of the District Court ofColombo.
Romesh de Silva P.C.. with Ceethaka Gunawardena for the Plaintiff-Petitioner.
Shibly Aziz. P.C.. with S.Srdcantha for Defendant-Respondents.
Cur. adv. vult.
July 30, 1999.
DE SILVA, J.This is an application to revise the order dated 16. 02.1996 of the Additional District Judge of Colombo wherein shepermitted the Defendants-Respondents (hereinafter referredto as the respondents) to defend the action filed by the PlaintiffPetitioner Bank (hereinafter referred to as the petitioner)under the Debt Recovery (Special Provisions) Act by depositinga sum of Rs. 500,000/=.
The facts in this case as set out in the petition are brieflyas follows:
The Plaintiff filed action on 12. 09. 1995 against thedefendants in terms of the Debt Recovery (Special Provisions)Act No. 2 of 1990 as amended by Act No. 9 of 1994 to recovera sum of Rs. 7,304,063.37/=. Upon institution of action, theCourt issued decree nisi against the defendants. When thedecree nisi was served on the defendants they filed a petitionand affidavit as required by law and moved for unconditionalleave to defend the action or in the alternate to grant leave onreasonable terms as to security. Thereafter both parties filedwritten submissions and Court made order on 16. 02. 1996allowing the defendants to defend the action upon deposit ofa sum of Rs. 500,000/=. The present application to this Courtis against the said order of the Additional District Judge.
Counsel for the petitioner contended that the said order ofthe Additional District Judge is erroneous for the followingreasons:
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That the order is contrary to the expressed provisions ofthe Debt Recovery Act and the weight of the evidenceproduced in the case.
The trial Judge has failed to give reasons for the said order.
The security ordered was neither sufficient nor reasonablefor satisfying the sum mentioned in the decree nisi in termsof the Debt Recovery Act.
On the findings of the Additional District Judge that therespondents have taken money, the Court was precludedfrom making the said order.
In an action under the Debt Recovery (Special Provisions)Act where decree nisi is entered by Court the defendant canobtain leave only upon one of the three followinggrounds as setout in section 6 of the Act as amended by Act No. 9 of 1994 withleave of Court:
Upon the defendant paying into Court the full summentioned in the decree nisi or
Upon the defendant furnishing such security as to theCourt may appear reasonable and sufficient for satisfyingthe sum mentioned in the decree nisi in the event it beingmade absolute or
Upon the Court being satisfied on the contents of theaffidavit filed that they disclose a defence which is primafacie sustainable and on such terms as to security,framing and recording of issues, or otherwise as the courtthinks fit.
It is to be noted that the Additional District Judge’s ordercontains only nine lines and it is bereft of any reasons as to whyshe ordered a sum of Rs. 500.000/= as security when the claimin the plaint is in excess of Rs. 7,000.000/= which is fourteentimes the sum ordered as security. It is an accepted principle
CA National Development Bank v. Chrys Tea (Pvt) Ltd. and Another 209
(De Silva. J.)
that there is a duty cast on Court or any administrative bodyclothed with authority, when an order is made to give reasonsfor such an order.
It is to be observed that under Section 6(2){a) or 6(2)(b)the Court has no discretion to order security which is notsufficient to satisfy the sum mentioned in the decree nisi.
The Additional District Judge has attempted to act underSection 6(2)(c) of the Act No. 9 of 1994 as it is the only sectionwhich permits the Court discretion to order security whichwould be a lesser sum than the sum mentioned in the decreenisi
If the Court had acted under section 6(2) (c) then prior toordering security which is not sufficient to satisfy the summentioned in the decree nisi the Court must first come to theconclusion that the Court is satisfied on the contents of theaffidavit filed by the respondents that they disclose a defencewhich is prima J'acie sustainable. In the Additional DistrictJudge's order there is no such finding. However her conclusionis that the respondents have taken the money from the plaintiffpetitioner. Counsel for the petitioner contended that in thesecircumstances and in terms of the applicable law, the Court isprecluded from making any order other than the order undersection 6(2)(a) or 6(2)(b) of the Debt Recovery Act.
In terms of the petitioner's plaint filed in the District Courtof Colombo (Document xi) the petitioner's case briefly was thatthere was an agreement between the parties under which thepetitioner Bank agreed to discount (up to a maximum ofRupees 7 million bills of exchange, trade debts, creditpurchases or invoices made, drawn or endorsed by the Is'respondent, in respect of the lsl respondents credit purchasefrom its customers. In terms of the said agreement, thepetitioner discounted four cheques issued and presented bythe Is1 respondent and paid a sum of Rs. 6.999.572/= thereonto the respondents. The plaintiffs action was based on thedefault of the respondents to pay back the monies due to themon these transactions.
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It is clear from the documents annexed to the plaint,specially the letters sent by the managing director of the Is'respondent to the petitioner marked T. J’ and N’ that therespondents have not repaid this money to the petitioner. Lastparagraph of document J reads as follows:
"With regard to the above we request for a furtherextension till end of March 1995 to settle all the outstandingamounts and its interest commencing from the date on whichthe payment was due.”
Again in document 'N’ there is an admission by therespondents that the amount mentioned in the plaint is due tothe petitioner. That letter commences as follows “we regret ourinability to settle the amount of Rs. 7.000,000/= due to you.”
Therefore there is no doubt whatsoever that therespondents have acknowledged that the sums mentioned inthe plaint are due and payable.
The learned Counsel for the respondents submitted thatthe plaint presented to the District Court does not disclose acause of action against the respondents. His submission wasthat the petitioner's case has to stand or fall on its ownpleadings. Counsel contended that the petitioner’s action isbased on the breach of the terms and conditions of a contractas set out in document B’ and not an action based on the'dishonour of cheques. Counsel further submitted that thepetitioner’s pleadings as they are. will not permit the petitionerto recover any money secured by cheques which have not beenhonoured because his action is not an action on the cheques.
It is to be noted that this is an action instituted underthe Debt Recovery (Special Provisions) Act. This Act wasspecifically introduced by the legislature to quicken theprocess of the recovery of ’debts” by lending institutions witha special procedure.
CA
National Developnient Bank v. Chrys Tea (Pvt) Ltd. and Another 27 1
(De Silva. J.)
Action under the Debt Recovery Act can be instituted bypresenting a plaint and not a petition. The plaint has to beaccompanied by an affidavit. According to section 4( 1) all thatis required to be sworn or affirmed to in the affidavit are wordsto the effect that the sum claimed in the plaint is justly due to*the institution from the defendants. In addition to the above adecree nisi, the required stamps, agreements, instalments ordocuments sued upon or relied on by the institution alsoshould be filed. Under the Debt Recovery Act an action couldbe filed only by a lending institution as defined in Section 30of the Act and only for the recovery of a “debt". Debt means asum of money which is ascertainable or capable of beingascertained at the time of the institution of the action.
In these circumstances I cannot agree with thesubmission of Counsel for the respondent that the plaint doesnot disclose a cause of action. If the petitioner has satisfiedthe requirements of the provisions of the Debt Recovery(Special Provisions) Act the petitioner has a right to invoke thejurisdiction of the Court seeking redress under that Act.
In the instant case as pointed out earlier the respondentshave admitted a sum of monies mentioned in the plaint is dueto the petitioner. The affidavit of the respondents does notdisclose a primafacie sustainable defence in terms of the Act.
For the above reasons I set aside the order made by theAdditional District Judge dated 16. 02. 1996 permittingthe respondents to continue with the case by depositingRs. 500.000/=. I direct the trial Judge to take steps in termsof Section 6(3) and make the decree nisi absolute. Applicationof the petitioner is allowed with costs.
T.B. WEERASURIYA, J. – I agree.
Application allowed.
District Court ordered to make the Decree Absolute.