Sri Lanka Law Reports
(2005) 2 Sri L. R.
COURT OF APPEAL,AMARATUNGAJ,WIMALACHANDRA J,CALA 408/2002 (LG),D.C. NEGOMBO 290/SM,MARCH 23.2004,
JUNE 24, 26, 2004.
Civil Procedure Code – Cap. 53-Section 704-Summary Procedure-Leave toAppear and defend-Doubt exists as to the – Security to be Ordered – Notaverred for what valuable consideration the cheques were issued-Acceptabil-ity – sustainable defence.
The Plaintiff Respondent instituted action against the Defendant Petitionerunder Cap. 53 of the Civil Procedure Code for the recovery of a certain sum ofmoney due on 5 cheques. The defendant moved to file Answer unconditionally.The trial Judge refused the application for unconditional leave and allowed thePetitioner to appear and defend upon depositing the entire amount claimed.
The Defendant sought leave to appeal with leave being granted it wascontended that—
the Plaintiff had failed to disclose the circumstances in which the saidcheques were issued.
That although the Plaintiff has stated that the said cheques weregiven for valuable consideration he has not stated what the said consideration was.
Although the Plaintiff has not averred in the plaint for what consider-ation the cheques were issued, the Plaintiff has stated that thecheques were given for valuable consideration. He may prove this atthe trial by establishing that value has been given for the cheques. 2
2.Defence raised by the Defendants cannot be believed. No credibilitycan be attached to it. Even where there appears to be a defence, if
Chandraratne vs Wijetilake
court is doubtful of its genuineess, the defendant may be ordered togive security.
APPLICATION for Leave to appeal; with leave being granted from anorder of the District Court of Negombo.
Cases referred to :
C. W. Mackie and Co. Ltd., Vs. Translanka Investments Ltd., 19952 Sri LR 6
De Silva vs De Silva – 49 NLR 219
' Walling Ford vs The Mutual Society – 1880 5 App. Cap. 704Sunil A Corray for Degendant Petitioner.
Chandradasa Mahanama for Plaintiff Respondent.
September 10, 2004Wimalacharxfra J.
AM AR ATUNG A J.I agree.
L. K. WIMALACHANDRA J.The plaintiff-respondent (hereinafter referred to as the plaintiff) institutedaction aginst the defendant-petitioner (hereinafter referred to as the defen-dant) in the District Court of Negombo under chapter 53 of the Civil Proce-dure Code for the recovery of a sum of Rs. 200,000 due on five chequesmarked 'XT, ‘X2 ‘X3’, ‘X4 and ‘X5’ annexed to the plaint, each to thevalue of Rs. 40,000. The petitioner moved to file answer unconditionally.
After inquiring, the learned District Judge on 01.10.2002 made orderrefusing the petitioner’s application for unconditional leave and allowed thepetitioner to appear and defend upon depositing Rs. 200,000 which is theentire amount climed by the respondent upon the aforesaid five cheques.It is against this order the petitioner has filed this leave to appeal applica-tion.
Sri Lanka Law Repons
(2005) 2 Sri L. R.
When this application was taken up for inquiry on 23.03.2000, it wasagreed between the parties that proforma leave to appeal be granted andthe appeal be decided on the written submissions and documents thatwould be filed by the parties. Accordingly both parties tendered writtensubmissions.
The defendant filed a petition and affidavit dated 12.03.2002 to obtainleave to appear and defend. The Court is required by Section 704 of theCivil Procedure Code, to consider the petition and affidavit with any docu-ments filed, and decide whether the defendant has a prima facie sustain-able defence or a reasonable doubt exist as to the bona fide of .the de-fence. If the Court is of the opinion that a reasonable doubt exists as to itsgood faith, the defendant may be ordered to give security before beingallowed to appear and defend.
It must be noted that, at this stage the Court is not called upon toinquire into the merits of the case of either party.
By his affadavit the defendant admits that he issued the said five chequesto the plaintiff, but states that the said five cheques were issued to meetcertain urgent financial requirements of the plaintiff (vide paragraphs 15and 16 of the affidavit). The defendant states that he owes nothing, asthose cheques were issued on the condition that they were never to be en-cashed (paragraph 16 of the affidavit). Then in several paragraphs he averredabout a cheetu transaction and stated that the only money that was dueto the plaintiff was under a cheetu transaction. In any event it appears thatthe cheetu transactions referred to in the affidavit were separate transac-tions which had no connecton to the issue of the five cheques to theplaintiff.
This defence raised by the defendant cannot be believed. No credibilitycan be attached to it.
In the case of C. W. Mackie and Co. Ltd. V. Translanka InvestmentsLtd.(1) ‘it was held that even where there appears to be a defence, if Courtis doubtful of its genuieness, the defendant may be ordered to give secu-rity. Ranaraja, J. at page 11 said ;
“Where Court feels a reasonable doubt exists as to the hon-esty of the defence, it is entitled to order a defendant to appearand defend, only on condition of depositing in Court the sum ofmoney for which he is being sued. Howard, CJ. in De Silva, Vs.
Chandraratne vs Wijetilake
De Silva quotes*21 Lord Blackburn, (in Wallingford V. The MutualSociety(3) where he explains thus –
“It is not enough to say ‘I owe nothing’, he must satisfy theJudge that there is reasonable ground for saying so. It is difficultto define it, but you must give such an extent of definite
factsas to satisfy the Judge there are facts which make it
reasonable that you should be able to raise that defence”
The learned counsel for the defendant submitted that the plaintiff hasfailed to disclose the circumstances in which the said cheques were given.Although the plaintiff has stated that the said cheques were given for valu-able consideration, he has not stated what the said valuable considerationwas.
Bytes on Bills of Exchange, 21st edition, at page 132 states thus ;
“If a man seeks to enforce a simple contract, he must in plead-ing, aver that it was made on good consideration, and must sub-stantiate that allegation by proof. But to this rule bills or notesare an exception. It is never necessary to aver consideration forany engagement on a bill or note or to prove the existance of
such considerationIn the case of other simple contracts,
the law presumes that there was no consideraton till a consider-ation appears ; in the case of contracts on bills or notes, a con-sideration is presumed till the contraty appears or at least ap-pears probable”
As regards the nature of the consideration for a bill, the Bills of Ex-change Ordinance 1927, section 27, states that valuable consideraton fora bill may be constituted by-
any consideration which by the law of England is sufficient tosupport a simple contract;
an antecedent debt or liability. Such a debt or liability is deemedvaluable consideration whetherthe bill is payable on demand orat a future time.
Weeramantry in his Treatise on the Law of Contract Valume 1 at page225, states as follows :
Sri Lanka Law Reports
(2005) 2 Sri L. R.
“It will be observed that the expression, antecedent debt orliability’ covers past consideration, so that, for example, a plain-tiff suing upon a negotiable instrument may prove valuable con-sideration by showing that value had once been given for it. Heis under no obligation to prove that he himself has again fur-nished consideration for it.”
In the circumstances there is no merit in the submission made by thelearned counsel for the defendant that the plaintiff has not averred in theplaint for what valuable consideration the said five cheques were issued,though the plaintiff has states that the said cheques were given for valu-able consideration. However, he may prove this at the trial by establishingthat value has been given for the said cheques.
It is to be noted that the Court has to decide whether the defendant hasa sustainable defence by perusing his affidavit. On an examination of theaffidavit we cannot see any triable issue or a sustainable defence. Thelearned Judge had correctly addressed his mind when he held that therewas no sustainable defence.
It is also to be noted that the defendant has drawn the said chequesafter the account had been closed, as such he knew at the time thecheques were issued the bank would not honour them. It appears that thedefendant has committed a fraud on the plaintiff by issuing the said chequesafter he closed his account in the Bank.
In these circumstances, it is our considerd view that the order of thelearned District Judge should not be disturbed.
For the reasons stated in this judgement we dismiss the appeal withcosts fixed at Rs. 5,000.
Judge of the Court of Appeal
GAMINIAMARATUNGE J, -1 agree
Judge of the Court of Appeal.
CHANDRARATNE V WIJETILLAKE