BRUNSWICK EXPORTS LTD. v. HATTON NATIONAL BANK LTD

026-SLLR-SLLR-1999-V-1-BRUNSWICK-EXPORTS-LTD.-v.-HATTON-NATIONAL-BANK-LTD.pdf


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Brunswick Exports Ltd. v. Hatton National Bank Ltd.
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BRUNSWICK EXPORTS LTD.
v.HATTON NATIONAL BANK LTD.
COURT OF APPEALDE SILVA, J..
WEERASURIYA, J.
A. NO. 430/97
C. COLOMBO NO. 15837/MBFEBRUARY 15, 1999
High Court of the Provinces (Special Provisions) Act No. 10 of 1996 – S. 2 (1)First schedule – Commercial High Court – Art. 154P Constitution – MortgageAct – Commercial transaction – Civil Procedure Code – S. 5, 207 – Cause ofaction – Jurisdiction.
The original plaintiff (Emirates Bank Int. Ltd) instituted action seeking to recovera certain sum of money with interest and for an order declaring that the landand premises described in the schedule are primarly bound and executable forthe payment of the stated sum. The defendant filed answer praying for thedismissal of the action. When this, matter was taken up for trial, the defendantpetitioner made an application that in terms of the provisions of S. 2 (1) of theHigh Court of the Provinces (Special Provisions) Act No. 10 of 1996, the caseought to be transferred to the Commercial High Court of Colombo. The substitutedplaintiff-respondent objected to the said application, and Court upheld the objection.
Held:
The substituted plaintiff-respondent which is a licensed Commercial Bankhad sought to recover the monies which it alleged were due to it fromthe defendant as being monies advanced to it in the ordinary course ofits banking business on the security of a Mortgage of immovable property.
The mortgage had been executed to secure the repayment of a commercialloan given by a Commercial Bank to a company for the purpose of itsbusiness.
The Mortgage Act provides both the substantive law and the procedurerelating to actions based on mortgage bonds and the enforcement thereof.
Act No. 10 of 1996 does not prescribe substantive law or procedure inrespect of actions for the enforcement of Mortgage Bonds or any actionof any nature whatsoever.
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Act No. 10 of 1996 merely vests jurisdiction in the Commercial High Courtto hear and determine certain civil actions.
Item (1) of the first schedule manifestly embraces within its fold allbanking transactions except actions instituted under the Debt Recovery(Special Provisions) Act No. 2 of 1990.
The 'Media' upon which the plaintiff has instituted action was a commercialtransaction and therefore, action must necessarily stand removed to theHigh Court.
Cases referred to:
Lowe v. Fernando 16 NLR 398.
Samichi v. Peiris 16 NLR 257.
S. L Gunasekera with N. R. Sivendran for defendant-petitioner.
S. Sivarasa, PC with A. A. M. Illiyas for substituted plaintiff-respondent.
Cur. adv. vult.
March 12. 1999.
WEERASURIYA, J.
The facts as set out by the defendant-petitioner (hereinafter referredto as the defendant) are briefly as follows:
Emirates Bank International Limited by plaint dated 09.01.89,instituted action against the defendant seeking judgment in theaggregate sum of Rs. 5,375,000 with interest till payment in fulland for an order declaring all the land and premises described in theschedule to the plaint especially and primarily bound and executablefor the payment of the above sum and in default of payment thesaid property to be seized and sold by the fiscal. The defendant filedanswer praying for the dismissal of the action.
On 28.01.97, when the case was taken up for trial, defendant madean application that in terms of the provisions of section. 2 (1) of theHigh Court of the Provinces (Special Provisions) Act No. 10 of 1996,the case ought to be transferred to the Commercial High Court ofColombo. Learned counsel for the substituted plaintiff-respondentobjected to the said application and the District Judge havingdirected the parties to file written submissions, by his order dated31.03.1997, rejected the application of the defendant and fixed the
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case for trial in the District Court. It is from the aforesaid order thatthis application for revision has been filed.
At the hearing of this application, learned counsel for the defendantsubmitted that the present action is one which falls within theambit of item (1) of the first schedule to the High Court of theProvinces (Special Provisions) Act No. 10 of 1996, and hence thecase stands removed to the Commercial High Court of Colombo.
Learned President's Counsel for the substituted- plaintiff-respondentcontended that in the absence of a specific reference to theMortgage Act in the first schedule of the aforesaid Act, CommercialHigh Court has no jurisdiction to entertain this action.
Section 2 (1) of the High Court of the Provinces (Special Provisions)Act No. 10 of 1996 reads as follows:
“Every High Court established by Article 154P of the Constitutionfor a Province shall, with effect from such date as the Ministermay, by Order published in the Gazette appoint, in respect of suchHigh Court have exclusive jurisdiction and shall have cognizanceof and full power to hear and determine, in the manner providedfor by written law, all actions, applications and proceedingsspecified in the first schedule to this Act, if the party or partiesdefendant to such action resides or reside, or the cause of actionhas arisen, or the contract sought to be enforced was made, orin the case of applications or proceedings under the CompaniesAct, No. 17 of 1982 the registered office of the company is situated,within the Province for which such High Court is established."
Items Nos. (1), (2) and (3) of the first schedule referred to insection 2 (1) read as follows: 1
(1)All actions where the cause of action has arisen out ofcommercial transactions (including causes of action relatingto banking, the export or import of merchandise, servicesaffreightment, insurance, mercantile agency, mercantile usage, andthe construction of any mercantile document) in which the debt,damage or demand is for a sum exceeding one million rupees orsuch other amount as may be fixed by the Minister, from time totime, by notification published in the Gazette, other than actionsinstituted under the Debt Recovery (Special Provisions)Act No. 2 of 1990.
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(The Minister of Justice and Constitutional Affairs by an Orderpublished in the Government Gazette No. 943/12 of 01.10.1996increased the monetary limit of Rupees 1 Million to 3 Million.)
All applications and proceedings under sections 31, 51, 131,210 and 211 of the Companies Act, No. 17 of 1982.
All proceedings under the Code of Intellectual Property Act,No. 52 of 1979 (other than proceedings referred to in item (2) ofthe second schedule).
In view of the above provisions of section 2 (1) of the High Courtof the Provinces (Special Provisions) Act and the Order published inthe Gazette notification, the Commercial High Court establishedby Article 154P of the Constitution for the Western Provincehas exclusive jurisdiction in respect of the actions, proceedings andapplications set out in the first schedule to the Act, provided the valueof the action exceeds Rupees 3 Million.
Learned President's Counsel for the substituted plaintiff-respondentsubmitted that if it was the intention of the legislature to includehypothecary actions as well in the actions to be heard by the CommercialHigh Court, item (1) would have been more specific or there wouldhave been another item similar to items (2) or (3) to the first schedule.
Learned President's Counsel highlighted the fact that the firstschedule contains specific reference to the Companies Act and theIntellectual Property Act.
It is apparent that in this action the substituted plaintiff-respondentwhich is a licensed Commercial Bank had sought to recover fromthe defendant the monies which it alleged were due to it from thedefendant as being monies advanced to it in the ordinary course ofits banking business on the security of a mortgage of immovableproperty, together with the interest thereon. This position is reflectedin paragraphs 1 (a), 3, 4, 5, 8 and 9 of the plaint. The first prayerto the plaint was – "for judgment against the defendant in the saidaggregate sum of Rs. 3,575,000 with interest . . . till the date ofpayment in full . . . “.
The cause of action pleaded by the plaintiff-respondent consistedpurely a claim that the defendant had failed to repay the amountof money advanced to it in the course of its banking business and
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hence the plaintiff-respondent was entitled to the recovery of the sameand to have the property mortgaged sold in execution to realise thesaid sum. Thus, the mortgage referred to above had been executedto secure the repayment of a commercial loan given by a CommercialBank to a company for the purpose of its business.
The Mortgage Act prescribes both the substantive law and theprocedure relating to actions based on mortgage bonds and theenforcement thereof.
The High Court of Provinces (Special Provisions) Act No. 10 of1996 does not prescribe substantive law or procedure in respect ofactions for the enforcement of mortgage bonds or any action of anynature whatsoever.
The said Act merely vests jurisdiction in the CommercialHigh Court to hear and determine certain civil actions which arespecified therein. Since the High Court is vested with jurisdiction tohear and determine any civil action in terms of the said Act, suchexisting substantive and procedural laws as are relevant to suchaction would apply whether they seek for the enforcement of amortgage bond or any other action, as the case may be.
Item (1) of the first schedule referred to earlier manifestlyembraces within its fold all banking transactions and the provisowhich excludes actions instituted under the Debt Recovery (SpecialProvisions) Act No. 2 of 1990 is a clear pointer to this. The inclusionof the said proviso clearly indicates that but for the said provisoany action instituted by a bank in terms of the Debt Recovery (SpecialProvisions) Act No. 2 of 1990 would have stood removed to theHigh Court. It is therefore clear that the proviso precludes the HighCourt from entertaining actions instituted in terms of Debt Recovery(Special Provisions) Act. Thus, it would be seen that any action arisingout of a money lending transaction engaged in by a bank falls withinthe ambit of item (1) of first schedule. The absence of a provisosimilar to item (1) relating to an action instituted in terms of MortgageAct makes it evident that any action in which a bank seeks to recovermoney loaned to another upon the security of a mortgage and claimto sell such security by way of mortgage to recover such sum,falls within the ambit of item (1) in the first schedule referred to above.
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It is relevant to note that mortgage bonds are often executed inrespect of personal transactions and at times they are executed tosecure interest free loans. There would be no need to specifically referto any action on a mortgage bond executed to secure commercialloans given on interest in which debt, damage or demand inclusiveof interest exceeded Rs. 3 Million, as such transactions clearlyfalls within the ambit of item (1) of first schedule. It is to benoted that reference in items (2) and (3) of the first schedule toapplications and proceedings under sections 31, 51, 131, 210 and211 of the Companies Act and to proceedings under the Code ofIntellectual Property Act were necessary since such applications andproceedings do not fall within the ambit of item (1).
In the case of Lowe v. Fernanda at page 404 De Sampayo, J.observed that –
". . . the expression 'cause of action' generally imports twothings, viz a right in the plaintiff and a violation of it by thedefendant, and “ 'cause of action' means the whole cause of action,ie all the facts which together constitute the plaintiffs right tomaintain the action", (Dicey's Parties to an action, chapter XI,section A) or as it has been otherwise put, 'the media upon whichthe plaintiff asks the Court to arrive at a conclusion in his favour'."
In Samichi v. Peirist21 which was a full Court decision the expression'cause of action' occurring in section 207 of the Civil Procedure Code,was given its primary meaning so as to include the right in virtueof which the claim is made. In section 5 of the Civil Procedure Codecause of action is defined as the wrong for the redress of which anaction may be brought. The 'wrong' is the combination of the rightand its violation and so the cause of action is the 'wrong' in the broadsense referred to.
In the present actioh, "the media" upon which the plaintiff hasinstituted action was a commercial transaction and therefore, actionmust necessarily stand removed to the High Court.
For the foregoing reasons, I set aside the order of the District Judgedated 31.03.1997. This application is allowed with costs.
DE SILVA, J. – I agree.
Application allowed.