008-SLLR-SLLR-2000-V-1-CORNEL-COMPANY-LIMITED-v.-MITSUI-AND-COMPANY-LIMITED-AND-OTHERS.pdf
CORNEL & COMPANY LIMITED
MITSUI AND COMPANY LIMITED AND OTHERS
SUPREME COURTFERNANDO. J.WADUGODAPITIYA, J. ANDBANDARANAYAKE, J.
SC APPEAL NO. 36/98SC (HC) L/A 21/98HC (Civil) No. 1/98 (2)
24lh JUNE. 1999
Jurisdiction of the High Court in respect of commercial transactions ■Section 2(1) of the High Court of the Provinces (Special Provisions) Act, No.10 of 1996 read with item (1) of the First Schedule to the Act – Whetherreference to “actions" in item (1) includes not only actions for recovery ofa debt but also actions for annulment or denial of a debt – Sections 7 to 9of the Act – Inconsistency between Sinhala and English texts of item (1) -The right of a litigant to canvass in appeal an interlocutory order notdirectly challenged when made.
The plaintiff-appellant instituted action in the High Court of the WesternProvince as a share-holder of the 5,h defendant – respondent company,praying inter alia, for a declaration that four agreements entered into bythe 5lh defendant – respondent with Mitsui Company Ltd.. Japan, TaiserCorporation of Japan and one Amarasekera (the lsl, 2nd and 4th defend-ants – respondents) for the payment of certain monies to the 5lh defendant- respondent were null and void, not binding and were unenforceableagainst the 5lh defendant – respondent. In filing the said action theplaintiff invoked the jurisdiction conferred upon the High Court bysection 2(1) of the High Court of the Provinces (Special Provisions) Act.No. 10 of 1996 read with item (1) of the First Schedule to the Act.
The High Court Judge granted enjoining orders which were also soughtby the plaintiff, but on 31.3.98 refused the plaintiffs application forinterim injections, holding that he had no jurisdiction in respect of theaction: but he did not dismiss the action. Having realised it the judgeproceeded ex mero motu to dismiss the plaint on 27.8.98. The plaintiff
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challenged both orders in two separate proceedings (i) a leave to appealapplication in the Supreme Court (ii) a notice of appeal in the High Courtfollowed by a petition of appeal to the Supreme Court. Counsel for the1sl and 2n<l defendants took a preliminary objection that the plain tifTcouldnot proceed with both matters but must first opt which one he wished topursue and abandon the other.
Held :
Taking into consideration the Sinhala text of Item (1) of the First.Schedule to the Act which must prevail over the English text in view ofan inconsistency and the provisions of sections. 7. 8. and 9, a widerconstruction should be given to Item (1). Accordingly, it is not limited toactions for the recovery of a debt exceeding the prescribed amount butincludes an action which "relates to" or "involves" such a debt. Therefore,the plaintiffs action which is for the annulment or denial of a debt iswithin the jurisdiction of the High Court, conferred by Item (1).
Per Fernando, J.
"Even if there had been some ambiguitythe wider interpreta-
tion must be preferred"
Sections 7 to 9 indicate that the jurisdiction of the High Court (a) isnot exclusive in some respects, and (b) is wider than section 2(1) and theFirst Schedule suggest.
Per Fernando.J.
"Accordingly, section 8 gives the District Court competence to dispose ofany claim in reconvention even though it involves a matter beyond itsjurisdiction."
Per Fernando. J.
"Where an action, which should have been filed in the High Court, isfiled in the District Court, section 9 compels transfer to the correct
court But the 1996 Act makes no provision for the
converse case, where an action that should have been filed in the DistrictCourt is filed in the High Court; expressio unius, exclusio alterius, andso the inference would be that the transfer to the District Court was notpermissible"
sc
Cornel & Company Ltd. u. Mitsui and Company Ltd. and Others
59
Section 7. considered in the context of section 9 impliedly confers onthe High Court jurisdiction to entertain and determine certain actionswhich otherwise would have been within the exclusive jurisdiction of theDistrict Court subject to the power to deny the successful plaintiff hiscosts, unless the court chose to exercise its discretion in his favour.
On the preliminary objection :
Per Fernando, J.
"it has long been recognised that it is the clear right of
every litigant to invite the Appeal Court to consider on a final appeal anyinterlocutory decree (or order) even if he does not directly challenge it atthe time when it was made"
Cases referred to :
Shannon Realties Ltd. v. Ville de St. Michel (1924) AC 185, 192-3
Nagan v. Rodrigo (1914) 7 NLR 348
Werthelis v. Daniel Appuhamy (1909) 12 NLR 196
James u. Medduma Kumarihamy (1957) 58 NLR 560
Ponnambalam u. Paramanayagam (1905) 9 NLR 282
Don Siman u. Johanis (1898) 4 NLR 343
Abubakker v. Ismail Lebbe (1908) 11 NLR 309, 313
Perera v. Battaglia (1956) 58 NLR 447, 449
APPEAL from the judgement of the High Court of the Western Province.
S.Siuarcisa. PC. with S. L: Gunasekera, S. Mahenthiran and N. R.Sivendran for the plaintiff-appellant.
M. A. Sumanthiran for the lsl and 2nddefendants-respondents.
NihalJayawardena. SSC. with Milinda Gunethilaka for the 3rd defendant-respondent.
/. S. de Silva, PC with N. Bartholomeusz for the 4lh to 9th defendants-respondents.
Harsha Cabraal with M. A. Sumanthiran for the 10lh and 11th defendants-respondents.
Cur. adv. vult
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December 16. 1999FERNANDO, J.
The Plaintiff-Appellant in SC Appeal 36/98 (which is alsothe Plaintiff-Petitioner in SC (HC) Leave to Appeal Application21/98), instituted action, on 27.3.98, in the High Court of theWestern Province against the ten Defendants-Respondents. 1will refer to them as “the Plaintiff and “the Defendants",respectively. The principal question 1 have to decide is whetheror not the High Court had jurisdiction in respect of that action,under and by virtue of the High Court of the Provinces (SpecialProvisions) Act, No. lOof 1996 (which 1 will refer to as “the 1996Act") – particularly, by virtue of section 2(1) read with item (1)of the First Schedule thereto.
Although this is one of a series of actions, some of whichhave resulted in proceedings in the Court of Appeal and in thisCourt, the facts relevant for. the purpose of deciding thatquestion of jurisdiction are few. The Plaintiff filed this actionas a shareholder of the 5lh Defendant-Company. On behalf ofthe Plaintiff, Mr. Sivarasa, PC, relied on just one aspect of thePlaintiff s claim, and the pleadings relevant to that aspect maybe summarized as follows.
The 5th Defendant-Company had entered into fourAgreements (P36 to P39) with Mitsui & Company Ltd ofJapan, Taisei Corporation of Japan, and one Nihal SrinathAmeresekera (the Is'. 2nd and 4th Defendants). While submit-ting that the four Agreements were inter-related and inter-connected, Mr. Sivarasa relied mainly on the first of thoseAgreements (P36). According to clause 4 of that Agreement therescheduled balance due to the 1st and 2nd Defendants (fromthe 5th Defendant) was Japanese Yen 7.834 billion, and was tobe repaid in 15 equal annual instalments of Japanese Yen 522million (together with interest thereon), commencing 1.7.96;details were set out in Annexure “A”. The next instalment fallsdue on 1.7.2000.
sc
Cornel & Company Ltd., v. Mitsui and Company Ltd.
and Others (Fernando. J.)
61
Clause 5(b) of P36 stipulated that for the purpose ofmaking such payments to the 1st and 2nd Defendants, the 5thDefendant shall open a separate bank account in the name ofthe Secretary to the Treasury, and shall deposit in thataccount in Japanese Yen, from time to time, such sums as willenable it to meet its obligations.
The reliefs which the Plaintiff prayed for included-declarations that the four Agreements were null and void, werenot binding, and were of no force or avail in law, and thatthey were not binding and were unenforceable against the5th Defendant; an order that the 5th Defendant was not obligedto comply with them; permanent injunctions restrainingthe Government of Sri Lanka, its agents the Secretary to theTreasury and its nominee directors on the board of the 5,hDefendant), and the 5th Defendant (and its directors etc), fromimplementing and/or giving effect to the terms and provisionsof those Agreements; and interim injunctions and enjoiningorders to the like effect.
The learned High Court Judge granted enjoining orders,ex parte, on 31.8.98, and issued notice of interim injunction.After inquiry, on 13.8.98, he refused the Plaintiffs applicationfor interim injunctions, holding that he had no jurisdiction inrespect of the action; but he did not dismiss the action on
he noted that he had already determined that he hadno jurisdiction, but that he had not then dismissed the action- for the reason that the plaint had already been accepted andany subsequent order made in respect of such a plaint wassubject to appeal. Observing that during the preceding twoweeks no appeals had been filed against the order made on
and that it was necessary to prevent an abuse of theprocess of the Court, he proceeded, ex mero motu, to "dismissthe plaint acting under section 839" of the Civil ProcedureCode.
The Plaintiff challenged both orders in two separateproceedings : on 31.8.98 he filed SC (HC) Leave to Appealapplication No. 21/98 in this Court.
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When SC (HC) LA- application No 21 /98 was supported inthis Court, on 10.9.98, Counsel for the Defendants took apreliminary objection that this Court had no jurisdiction togrant leave to appeal. Mr. Sivarasa stated that the petition ofappeal, in respect of the connected appeal, would be filedwithin a week. The Court directed that the application for leaveto appeal b taken up together with the appeal.
The Plaintiff then filed a petition of appeal, on or about
and that appeal was numbered as SC Appeal No.36/98.
When these two matters were taken up in this Court, on
Mr. Sumanthiran, on behalf of the 1st and 2ndDefendants, took a preliminary objection, that the Plaintiffcould not proceed with both matters but must first opt whichone he wished to pursue, and abandon the other.
If a party aggrieved by an order is uncertain whether in lawit is a final order or not, obviously he would not know whetherthe correct remedy is an appeal or an application for leaveto appeal. It seemed to us, at first sight, that it is notunreasonable for a party in that situation to invoke bothremedies, so that he might avoid procedural obstacles, andensure that his substantive grievance would be determined onthe merits. However, as Counsel desired to press that point,we directed that written submissions be filed on that point,and confined the oral hearing to the substantive issue ofjurisdiction.
Exhaustive written submissions were filed by all theparties the last being on 30.9.99 and that has contributed tothe delay in preparing this judgment.
JURISDICTION OF THE HIGH COURTSection 1^ of the Judicature Act, No 2 of 1978, asamended, provides that :
sc
Cornel & Company Ltd. v. Mitsui and Company Ltd.
and Others (Fernando. J.)
63
"Every District Court shall be a court of record and shallwithin its district have unlimited original jurisdictionin all civil, revenue, trust, matrimonial, insolvency andtestamentary matters saue and except such of theaforesaid matters as are by or under this Act or by virtueof the provisions of any other enactment exclusivelyassigned by way of original jurisdiction to any other courtor vested in any other authority . . .’’.[emphasis addedthroughout]
That Act conferred no civil jurisdiction on the High Court(other than Admiralty jurisdiction).
Section 2(1) of the 1996 Act provides:
"Every High Court. . . shall, with effect from such date asthe Minister may . . . appoint, have exclusive jurisdictionand shall have cognizance of and full power to hear anddetermine, in the manner provided for by written law, allactions, applications and proceedings specified in theFirst Schedule to this Act, if the party or parties defendantto such action resides or reside, or.. . within the Provincefor which such High Court is established”.
The dispute in this case is mainly about the meaning ofitem (1) of the First Schedule (“item (1)”) :
“(1) All actions where the cause of action has arisen outof commercial transactions (including causes of actionrelating to banking, the export or import of merchandise,services, affreightment, insurance, mercantile agency,mercantile usage, or the construction of any mercantiledocument) is [sic] which the debt, damage or demand isfor a sum exceeding on [sicj million rupees or such otheramount as may be fixed by the Minister from time totime, by Notification published in the Gazette, otherthan actions instituted under the Debt Recovery (SpecialProvisions) Act, No. 2 of 1990.”
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Reference to the Bill confirms that "is" and "on” aremisprints for “in" and “one”, respectively.
We were informed that before this action was institutedthe Minister had fixed “three million rupees” in place of “onemillion rupees”.
In the course of the hearing reference was made to theoriginal Sinhala text of the 1996 Act, as printed. As thereappeared to be an ambiguity in the Sinhala text of item (1). aswell as inconsistencies between the Sinhala and English texts,we obtained from the Secretary-General of Parliament photo-copies of the original Bill, as enacted by Parliament andcertified by the Speaker.
There is no inconsistency – relevant to the question nowbefore us – between the Sinhala and English texts in regardto section 2(1), and I do not need to refer to the Sinhala textof that section. The Sinhala text of item (1), which givesrise to a difficult question of interpretation, is as follows :
19902 «&cs qaeg ccs(Ssatf® 339Qd»)) osibi oOesf oO<5d og
<5jQoc* <£rsf ©Qcssxszsf ©arfog&i o© zsx5zn©Ssri <?©ds>»0(5cm
QBztf ZsBfff 2SC ste®e5)S"> ©€>5)25* <4© g^Ctsf <52sf®0s> <3©9®3«£>OZS €6o §^0=^
qeo&cszsS ©®j©©ScfQeaef Ozrtooa>Ogz$, ©Oe^q; 5>g cobiusxj
3ozdc3J5)c3, ©dOo,z§8. (5sJ®-e£o, ©0©£q &©c3:fa»zsf£>c3, ©Oe©q 0»0cd3<5c3 C3» o© ©0©£<;
@ca3cfcsf gtfO0 s>g £>&>& <; $^©0, OaBod g5q©«;q S3© 08s* c<fGDa>02rf?Jtt
g rig8dd ©©ScJQoocf g<; Sag 2ng.’
Item (1) of First ScheduleMr. Sivarasa conceded that the Plaintiff s claim was not forthe recovery of a sum (exceeding three million rupees) basedon a debt, damage, or demand. However, he contended thatthe phrase “actions … in which the debt, damage or demandis for a sum exceeding (three] million rupees" includes not onlyactions for the recovery of a debt, but also actions for theannulment or denial of a debt exceeding three million rupees- and that, he argued, was the substance of the Plaintiffsclaim.
sc
Cornel & Company Ltd. v. Mitsui and Company Ltd.
and Others (Fernando. J.)
65
All four Counsel appearing for the Defendants submitted,however, that this phrase only covers actions in which recov-ery is sought of a sum of money, exceeding three millionrupees, by way of debt, damage, or demand.
Mr. I. S. de Silva. PC, submitted further that the intentionof Parliament in enacting the 1996 Act was to provide for thespeedy disposal of cases of a commercial nature, avoiding thelong delays in litigation in the District Court.
According to the English text of the 1996Act, item (1) givesthe High Court jurisdiction in respect of an action only if twoconditions are satisfied: (a) that the action is one “in which thedebt, damage or demand isjbr a sum exceeding (threel millionrupees”, and (b) that the cause of action had arisen from acommercial transaction.
(Although the question arose during the oral hearingwhether according to the Sinhala text the High Court hasjurisdiction even if only one of those conditions was satisfied,on further consideration I think that the better view is thatboth conditions must be fulfilled.)
If the English text prevails, there is much to be said for theDefendants’ contention that in order to satisfy the first condi-tion an action must be for the recovery of a sum (exceedingthree million rupees) in respect of or arising from a debt,damage or demand. Counsel also cited several decisionsinterpreting the very similar language used in the CourtsOrdinance (1956 Revision) when conferringjurisdiction on theCourt of Requests :
“75. Every Court of Requests shall be a court of record andshall have original jurisdiction, and shall have cognizanceof and full power to hear and determine all actions inwhich the debt, damage, or demand shall not exceed threehundred rupees, and in which the party or parties defend-ant shall be resident within the jurisdiction of such court,or in which the cause of action shall have arisen withinsuch jurisdiction, . . .”
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The English text of item (1) has. besides the phrase "debt,damage or demand", the additional words “is for a sum". Thattext does not easily lend itself to an interpretation whichincludes an action to annul or to deny, or which "relates to",a debt, damage or demand, exceeding three million rupees.Such an action can hardly be described as "an action … inwhich the debt [etc] is for a sum exceeding three millionrupees", and therefore would not satisfy the first condition.Further, that condition is not satisfied by the mere fact that thevalue of the commercial transaction, from which the cause ofaction or the debt arises, exceeds three million rupees.
However, the Sinhala text – which must prevail in theevent of inconsistency – is significantly different. In describingthe required link between an action and the relevant debt,damage or demand, the word used is "e^ajrfOeozrT. Counselfor the Defendants did not come to grips with this aspect intheir submissions, oral or written.
In the context, that word only requires that the action“relates to”, or is “connected with", or “involves", a debt,damage or demand (exceeding the prescribed amount); andthat is consistent with its dictionary meanings. It is unneces-sary for me to try to determine the exact English equivalent ofthat word. For the purpose of the question of interpretationthat arises in this case, it is enough to note that Parliament hasused that word repeatedly in the Sinhala text of the 1996 Actin a wider sense. In particular, it has used that word twice insection B (quoted later in this judgment) – in the wider sense- and I find that the English text of that section translates it as“involves” and “relates to”. There is no reason to think that initem (1) Parliament used the same word in any different ornarrower sense.
Accordingly, the first condition is much wider than theEnglish text suggests, and is satisfied even if the action only“relates to” or “involves” a debt, damage or demand in a sumwhich exceeds three million rupees (although it does not seek
sc
Cornel & Company Ltd. u. Mitsui and Company Ltd.
and Others (Fernando. J.)
67
to recover such a sum). Turning to the plaint, I find that thePlaintiff seeks declarations that certain agreements are nulland void, etc: so the action “relates to", or “involves”, thoseagreements. Those agreements are alleged to create or to giverise to a debt which exceeds three million rupees: therefore theaction also “relates to", or “involves”, a debt (and not just atransaction) exceeding in value the prescribed amount. I hold,therefore, that the Plaintiffs action is within the jurisdiction ofthe High Court, conferred by item (1).
This interpretation must be preferred for two other rea-sons. Not only does it tend to avoid anomalies, and to reducethe inconvenience, expense and delays of litigation, but otherprovisions of the 1996 Act converge to compel a wider ratherthan a narrower interpretation of item (1).
Consequences of the Defendants’ interpretationAn illustration is useful. A "creditor” may claim that he isentitled to a sum exceeding three million rupees by virtue of acommercial transaction, which is founded on an agreement(or instrument). The “debtor” may allege that the agreementis null and void (or should be annulled, or declared unenforce-able) – on the ground of fraud, forgery, duress, ultra vires, orotherwise. That dispute may give rise to litigation.
The "creditor” may be the first to institute action, torecover the sum claimed. If he files that action in the HighCourt (because it has “exclusive jurisdiction”), the “debtor”would resist the claim. Apart from other defences, he wouldwish to make a claim in reconvention to have the agreementdeclared void (etc). But if the Defendants’ interpretation isright, such a claim in reconvention would be outside thejurisdiction of the High Court, and can only be made in theDistrict Court. Thus one claim will be dealt with by the HighCourt (with a single appeal to the Supreme Court), while theother, arising out of the same transaction, will be determinedby the District Court (with appeals first to the Court of Appeal,
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and thereafter to this Court). There will then be not only amultiplicity of proceedings in the original courts, but also inappeal. Further, unacceptable conflicts of jurisdiction mayresult: the District Court may decide that the "agreement”is null and void, but the High Court may give judgment forthe “creditor" without considering the “debtor’s” position thatthe “agreement" is a nullity on the ground that it has nojurisdiction over that claim. Although the High Court is higherin the hierarchy of courts, yet on principle, the decree of theDistrict Court that the “agreement" is null and void mustprevail: because a Court should not permit the enforcementof an agreement which is a nullity. In any event, can thedecree of the High Court be executed? Obviously, justiceand convenience, and the elimination of anomalies, delayand expense, demand that both claims should be considered- as far as possible – by the same Court and in the sameproceedings. Thus accepting the Defendants' interpretationwould defeat the objectives of "speedy disposal of cases ofa commercial nature, avoiding the long delays in litigation inthe District Court”, while the Plaintiffs interpretation wouldnot.
On the other hand, the “debtor” may file action first, in thehope of having the agreement speedily declared void. On theDefendants’ interpretation, that action can only be institutedin the District Court. The “creditor” would be free to make hisclaim in the High Court. Indeed – if only item (1) is considered- the jurisdiction of the High Court would be exclusive, and the“creditor” would have no choice but to make that claim in theHigh Court: giving rise to two distinct and parallel proceedings,and consequent inconvenience, delay and expense.
As observed in Shannon Realties Ltd. u. VilledeSt. Michel",
“Where alternative constructions are equally open, thatalternative is to be chosen which will be consistent withthe smooth working of the system which the statute
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Cornel & Company Ltd. v. Mitsui and Company Ltd.
and Others (Fernando. J.)
69
purports to be regulating; and that alternative is to berejected which will introduce uncertainty, friction orconfusion into the working of the system."
I therefore hold that even if there had been some ambiguityas to the meaning of “esSastQecszrT, the wider interpretationmust be preferred.
Sections 7 to 9Furthermore, in their written submissions Counsel havereferred to other sections of the 1996 Act. These provisionsindicate that the jurisdiction of the High Court (a) is notexclusive in some respects, and (b) is wider than section 2(1)and the First Schedule suggest.
I will deal first with section 8:
“8. Where in any proceeding before any District Court anydefence or claim in reconvention of the defendant involvesa matter beyond the jurisdiction of the Court; suchdefence or claim in reconvention shall not affect thecompetence or duty of the Court to dispose of the matterin controversy in so far as it relates to the demand of theplaintiff and the defence thereto, and the claim inreconvention.
Provided that
Accordingly, section 8 gives the District Court competenceto dispose of any claim in reconvention even though it involvesa matter beyond its jurisdiction.
Thus in the illustration I have taken, if the “creditor"institutes action in the “higher" Court, that Court lacksjurisdiction to entertain the “debtor’s” claim in reconvention;but if the “debtor” institutes action in the “lower” Court,that Court would nevertheless have jurisdiction over the“creditor's” claim in reconvention (despite section 2(1) having
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conferred “exclusive jurisdiction" on the High Court). Thewider interpretation of item (1). which commends itself to me.has the advantage of reducing that anomaly.
Section 8 is virtually a re-enactment of section 79 of theCourts Ordinance (1956 Revision) :
"79. Where in any proceeding before any Court ofRequests any defence or claim' in reconvention of thedefendant involves matter beyond the jurisdiction of thecourt, such defence or claim in reconvention shallnot affect the competence or duty of the court to disposeof the matter in controversy so far as relates to the demandof the plaintiff and the defence thereto, but no reliefexceeding that which the court has jurisdiction toadminister shall he given to the defendant upon anysuch claim in reconvention :
Provided always that . . . .“
It appears, at first sight, that section 79 created a similaranomaly, in that it did not expressly provide that the DistrictCourt could likewise determine a claim in reconvention whichwas within thejurisdictionoftheCourtofRequests. Butin factthere was no anomaly. Section 62 of the Courts Ordinancegave the District Court general civil jurisdiction: and section75 gave the Court of Requests jurisdiction (but not exclusivejurisdiction) over certain small claims. Hence an expressgrant, to the District Court, of jurisdiction in respect of claimsin reconvention was superfluous.
What is more, the jurisdiction given to the Court ofRequests was restricted: its power to give relief was subject tothe same limit as its jurisdiction.
Under the Courts Ordinance there was no anomaly of the“lower” Court being able to determine a claim in reconventionwhich was beyond its jurisdiction, but the “higher” Court beingunable to entertain a claim which was beneath its jurisdiction.
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Cornel & Company Ltd. u. Mitsui and Company Ltd.
and Others (Fernando. J.)
71
The Courts Ordinance, the Judicature Act and the 1996Act are statutes in pari materia. In enacting section 8,Parliament departed from the scheme of section 79 of theCourts Ordinance, and gave the District Court jurisdiction todeal with all claims in reconvention, whether or not they arosefrom commercial transactions, and regardless of their value;and omitted – and it must be presumed, deliberately – thelimitation as to value imposed by section 79. While giving the“lower” Court jurisdiction over a claim which would otherwisebe within the exclusive jurisdiction of the “higher” Court,Parliament refrained from making a similar provision givingthe “higher” Court a similar jurisdiction over a claim which waswithin the jurisdiction of the “lower” Court.
This Court cannot, under the guise of interpretation, curethat anomaly by holding that the High Court has jurisdictionover all such claims. However, adopting the wider, rather thanthe narrower, interpretation of item (1), has the virtue ofreducing the extent of that anomaly.
There is another implication of section 8. Since section 8expressly confers on the District Court a jurisdication inderogation of the exclusive jurisdiction which section 2(1)(read with item (1)) purports to confer on the High Court, itfollows that the ambit of the jurisdiction of the High Courtcannot be determined solely by reference to section 2(1) – it issubject to express and implied provisions elsewhere in the1996 Act.
I turn now to section 7, which in my view enlarges, bynecessary implication, the jurisdiction conferred by section2(1). Section 7 provides:
If any action or proceeding is commenced inObjecuon any High Court established by Article 154P oftothe Constitution for any debt, demand or dam-
junsdicuon age which might have been recovered in aDistrict Court, the plaintiff in such action or
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proceeding shall not be entitled to any costswhatever but it shall be competent for the judgeto make such order as to costs as justice mayrequire.
(The marginal note is clearly misleading. The section doesnot deal with objection to jurisdiction, but with the deprivationof costs. 1 will come back to this later. The wider term“esSSjrfOscssT used in the Sinhala text has been translatedas “for” and “as to" in the English text).
Let me consider those provisions, taking another illustra-tion. A claim of, say, one million rupees (arising from acommercial transaction) does not come within the scope ofitem (1). If the creditor nevertheless institutes action in theHigh Court, does section 7 impliedly grant that Court jurisdic-tion to entertain and decide that action?
Undoubtedly, section 7 does not expressly empower orrequire the High Court either to hear such an action or torefuse to entertain it.
One possible interpretation is that section 7 impliedlyrequires the High Court to refuse to hear such an action. Ifthat is correct, then the Court must dismiss the action (subjectto section 47 of the Civil Procedure Code). The plaintiffwould not be entitled to costs, but the Court would have adiscretion to award costs (and that can only be to the defend-ant). But even if section 7 had been omitted, that would havebeen the legal position. This interpretation makes section7 superfluous.
The other interpretation is that it is implicit in section 7that the High Court can entertain and determine the action,even though it is outside the scope of item (1), and that its effectis only to penalize the successful plaintiff for having institutedproceedings in the “higher” Court, by denying his entitlementto costs, unless the Court chose to exercise its discretion in his
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Cornel & Company Ltd. u. Mitsui and Company Ltd.
and Others (Fernando. J.)
73
favour. This interpretation gives some meaning to section 7,and is therefore preferable.
Further, section 7 must be considered in the context ofsection 9, which provides :
"9. Where there is evidence that the value [sic] of anyaction filed in any District Court is one that should havebeen filed in a High Court established by Article 154P ofthe Constitution exercising jurisdiction under section 2,the Judge shall record such fact and make order accord-ingly and thereupon the action shall stand removed to theappropriate Court."
(The first clause -. . evidence that the value of any action
. . . is one that should have been filed …” – is clearlyungrammatical. What seems to have been intended is that ifby reason of its value, an action is one which should have beeninstituted in any High Court, it shall stand removed to theappropriate Court. The Sinhala text adds to the confusion byomitting any word equivalent to “appropriate”).
Where an action, which should have been filed in the HighCourt, is filed in the District Court, section 9 compels transferto the correct Court; it does not require or permit dismissal ofthe action on that ground. But the 1996 Act makes noprovision for the converse case, where an action that shouldhave been filed in the District Court is filed in the High Court:expressio urtius. exclusio alterius, and so the inference wouldbe that transfer to the District Court was not permissible. Thatseems even to exclude the principle recognised in section 47of the Civil Procedure Code :
“In every case where an action has been instituted in acourt not having jurisdiction by reason of the amount orvalue involved, or by reason of the conditions madenecessary to the institution of an action in any particularcourt by section 9 not being present, the plaint shall bereturned to be presented to the proper court."
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Section 47 has been applied even at the stage of appeal:Nagan v Rodrigd2>. (1914) 7 NLR 348; Werthelis v DanielAppuhami/3>, (1909) 12 NLR 196.
I have again to choose between two interpretations: first,that although an action wrongly instituted in the “lower” Courtshall stand removed to the “higher” Court, an action wronglyinstituted in the “higher” Court, an action wrongly institutedin the “higher” Court mqst be dismissed: second, that Parlia-ment proceeded on the basis that section 7, by necessaryimplication, gave the “higher" Court jurisdiction'over such anaction, and therefore that a provision for transfer was unnec-essary.
I think this Court must lean in favour of the latter view,because Parliament must be assumed to have intended thatCourts should hear and decide on their merits, rather thandismiss them on grounds unrelated to the merits.
I therefore hold that section 7 impliedly confers on theHigh Court jurisdiction to entertain and determine certainactions which otherwise would have been within the exclusivejurisdiction of the District Court.
Reference to the legislative history of section 7 confirmsthat view. Section 7 is virtually a re-enactment of section 72of the Courts Ordinance (1956 Revision), except for the portion
underlined:
Penalty for' proceedingin DistrictCourt wherecase
cognizableby Courtof Requests
72. If any action or suit shall be commencedin any District Court for any debt or demandwhich might have been recovered in someCourt of Requests, the plaintiff or plaintiffsin any such action or suit shall not by reasonof any judgement for him or them, or other-wise, have or be entitled to any costs what-ever, but it shall be competent for the judgeto make such order as to costs as justicemay require.
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This section has been interpreted (e.g. James v MeddumaKumarihamy,4>, Pormambalam u Parcunanayagard5), Don SimonvJohanis<6) as recognising the jurisdiction of the District Courtto entertain an action which was within the jurisdiction of theCourt of Requests, subject to the power of the Court to deprivea successful plaintiff of the whole or part of his costs – as apenalty for having instituted action in the “higher” Court. Thatassumption was unquestionably justified- under the CourtsOrdinance, because (as I have already noted) the District Courtdid have concurrent jurisdiction. The 1996 Act has enacted asimilar provision, on a similar assumption that the High Courthas jurisdiction.
Section 9 also throws light on the scope of item (1). Itshows that the factor which determines whether an actionshould have been instituted in the High Court is not the “debt,damage or demand” for the recovery of which the action isbrought, but “the value” of the action – which is plainlyconsistent with the wider interpretation of item (1).
I must add that needless confusion has been caused bythe marginal note to section 7 – “objection to jurisdiction”.Section 7 does not provide for any such “objection”. Section 72of the Courts Ordinance contained the appropriate marginalnote: “penalty for proceeding in District Court when casecognizable by Court of Requests". “Objection to jurisdiction”was the marginal note to section 71, which actually dealt withsuch objections and their waiver. The 1996 Act has inadvert-ently combined the marginal note to section 71 with thesubstance of section 72.
I hold that section 7 only imposes a penalty for institutingan action in the High Court, and impliedly recognizes that theHigh Court nevertheless has jurisdiction over such an action.
For all these reasons I hold that the High Court did havejurisdiction over the Plaintiffs action, and should not havedismissed it.
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PRELIMINARY OBJECTIONSThe Defendants' submissions are as follows. Since thePlaintiff s action had been dismissed on 27.8.98, thereby fullydisposing of the Plaintiff s claims, it was only a regular appealthat could have been filed; leave to appeal was not available.The notice of appeal was bad in law as it also sought tochallenge the first order made on 13.8.98. The petition ofappeal “contains the number SC Appeal (HC) 21 /98". which isthe number of the leave to appeal application, and wastherefore defective and should be rejected.
It is unnecessary to decide whether the first order was afinal order or not. If it was, there can be no objection to a noticeof appeal being lodged in respect thereof. If it was not.nevertheless it has long been recognised that it is "the clearright of every litigant to invite the Appeal Court to consider ona final appeal any interlocutory decree [or order] even if he didnot directly challenge it at the time when it was made":Abubakker v Ismail Lebbe*71, cited with approval in Perera vBattaglia16'.
In any event, however defective the notice of appeal mighthave been in relation to the first order, it was valid in regardto the second.
As for the error in regard to the number of the appeal, thatis a mere misdescription.
The preliminary objection must therefore fail in regard tothe appeal, and it is unnecessary to consider either thepreliminary objection to the application for leave to appeal orthat application itself – which is, proforma, dismissed.
ORDERI hold that the High Court had jurisdiction over thePlaintiffs action. I allow the Plaintiffs appeal, and set aside theorders dated 13.8.98 and 27.8.98 in relation to the question of
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jurisdiction. The Defendants will file answer on or before21.1.2000, and the High Court will make every endeavour toconclude the hearing of the action before 1.6.2000. Since thenext instalment falls due on 1.7.2000, it is unnecessary tomake any order for interim relief at this stage.
Having regard to all the circumstances, I make no order inregard to costs.
WADUGODAPITIYA, J.1 agree.BANDARANAYAKE, J.1 agree.
Appeal allowed.