BASISTAYAKE, C-J.—Fernando ». Piyadasa
1958Present:Basnayake, G.J., and de Silva, J.
FERNANDO, Appellant, and PIYADASA, Respondent
S. G. 294—D. G. Kandy, 2,030j MB.
Contract—Purpose of stifling criminal prosecution—Illegal consideration.
The defendant executed a mortgage bond in favour of the plaintiff for th6purpose of stifling a criminal prosecution of his brother-in-law for criminalbreach of trust. When the bond was put in suit, the defendant pleaded thatit was executed for an illegal consideration.
Meld, that “ all bargains tending to stifle criminal prosecution whether bysuppressing investigation of crime, or by deterring citizens from their publicduty of assisting in the detection or punishment of crime are void as againstpublic policy. ”
The fact that the same act creates a criminal liability as well as a civil obliga-tion will not render void a contract for the settlement of the civil obligationeven though a prosecution has been instituted and proceedings are pending.In such a case, however, the bond creating the civil obligation should not disguisethe true nature of the transaction ; it should contain a clear indication of thefact that it is given to secure the civil liability.
/APPEAL from a judgment of the District Court, Kandy.
M- W. Jayewardene, Q.G., with N. D. M. Samarakoon and P. Rana-singhe, for Plaintiff-Appellant.
E. B. Wikramanayake, Q.G., with P. Somatilakam, for Defendant-Respondent.
Cur. adv. milt.
March 21, 1958. Bash a yaks, C.J.—
The plaintiff-appellant (hereinafter referred to as the plaintiff) soughtto enforce a mortgage hond executed in his favour by the defendant-respondent (hereinafter referred to as the defendant) for a sum of’ Rs. 12,000. The defendant resisted the action on the ground that thebond was executed for an illegal consideration, viz. for the purpose ofstifling the criminal prosecution of his brother-in-law. The learnedDistrict Judge upheld the defendant’s plea and dismissed the plaintiff’saction. This appeal is from that judgment.
Shortly the material facts are as billows : The defendant’s cousin,one H. Francis, was in January 1954- a storekeeper of the GampolaKerosene Oil Depot of P. S. Fernando & Bros, of which firm the plaintiffwas a partner. Francis'suddenly disappeared on 10th January 1954from his place of work. The defendant was informed of Francis’s dis-appearance by the latter’s wife. He thereupon went in search of him andfound him at Mirissa. He recovered from him a sum of Rs. 2,800 and akey, the property of his employer. He then took Francis to the house ofone Aladdin Fernando, another partner of P. S. Fernando & Bros., anddelivered to him the money and. the key. Meanwhile on 25th January
BASNAYAKE, C.J.—Fernando v. Piyadasa567
1954 Juan de Silva Patabendige Samuel de Silva, the Chief Clerk ofP. S. Fernando & Bros., lodged a complaint with the Police to the effectthat Francis had committed criminal breach of trust in respect of 6,807gallons of Kerosene oil valued at Rs. 7,419/63. On lltb February1954 6. Jayasinghe, Inspector of Police, made a report to the Magistrateunder section 121 (2) of the Criminal Procedure Code intimating thathe had inquired into the complaint made on 25th January 1954 by Juande Silva Patabendige Samuel de Silva of P. S. Fernando & Bros., Kandy,to the effect that 5. Francis of Keerapane who was employed as thestorekeeper of the Kerosene Oil Depot at Gampola since 1939 had com-mitted criminal breach of trust in respect of 6,807 gallons of Kerosene oilvalued at Rs. 7,419/63, an offence punishable under section 391 of thePenal Code, and that further inquiries were being made. On the sameday Francis appeared in Court and was allowed bail in Rs. 1,000 to appearon 25th February 1954. When Francis appeared in Court on that daythe Magistrate made the following order: “ Prosecution to file plainton 11.3 ”. On that day Inspector Jayasinghe stated that the inquirieswere incomplete as a large number of account books had to be scrutinised.The case was then fixed for 24th March 1954. On that date InspectorJayasinghe stated that he was not filing a plaint. The Magistrate thenmade order discharging Francis. On 14th February 1954, three daysafter Inspector Jayasinghe made his report under section 121 (2) of theCriminal Procedure Code, the defendant executed the mortgage bond insuit for a sum of Rs. 12,000 in favour of the plaintiff. It was a secondarymortgage of certain lands which had been transferred to him by Francis’swife on 11th February 1954, the very day on which the Inspector madethe report of his investigation to the Magistrate. The bond made noreference to the circumstances under which it was given. It purportedto be a bond given to secure a loan of Rs. 12,000. The material clausesread as follows :—
cc Know all men by these presents that, I, Imbulgalagedera Piyadasaof No. 196/2 Hill Street, Dehiwela in the Island of Ceylon,' (hereinaftercalled and referred to as the said Obligor) am held and firmly boundunto Palamandadige Cyril Dervin Fernando, J.P. of “ Maveli ” GalleRoad, Moratuwa, (hereinafter called and referred to as the saidObligee) in the sum of Rupees Twelve Thousand (Rs. 12,000) of lawfulmoney of Ceylon being money borrowed and received by me the saidObligor from him the said Obligee. I therefore hereby renouncing theBeneficium non numeratae Pecuniae do engage and bind myself to payon demand unto the said Obligee or to his heirs, executors,administrators or assigns the said sum of Rupees Twelve Thousand(Rs. 12,000/-).
c; And until such repayment and in the meantime I the said Obligor ■do hereby further promise and undertake to pay interest on the saidsum of Rupees Twelve Thousand (Rs. 12,000) at and after the rate ofEight Per centum Per annum to be computed from the date hereof. ”
BAS3STAYAK"FI, C.J.—Fernando v. Piyadaaa
In the attestation clause, however, the notary who gave evidence on"behalf of the plaintiff stated—
“ No part of the consideration hereof was paid in my presence butthis Bond was executed to secure the monies said to have been due toMessrs P. S. [Fernando & Bros, from Mr H. [Francis of Gampola (cousinof the Obligor hereinnamed). ”
The defendant’s version is that the bond was given on the suggestionof Aladdin Fernando, who died after the commencement of this action,as he undertook to get the case withdrawn if it was given. The defendantsays he then satisfied himself by looking into the accounts that Francishad committed criminal breach of trust and at Francis’s instance he gavethe bond as Francis was anxious to get back his job and have the casewithdrawn. Francis also gave evidence in support of the defendant’sversion.
The plaintiff, who gave evidence, had no first-hand knowledge of whatpassed between the deceased partner Aladdin on the one side and thedefendant and Francis on the other. He says he thought the defendantexecuted the bond in order that Francis may be leniently treated by theCourt.
The learned District Judge has accepted the evidence of the defendantthat the bond was given in order to ensure the withdrawal or abandon-ment of the criminal prosecution. We are unable to say that the DistrictJudge has erred in doing so. The plaintiff has failed to call the Inspectorof Police who after making his report under section 121 (2) of the CriminalProcedure Code and after taking time to make further investigationsdecided not to file a written report under section 148 (1) (6) of the CriminalProcedure Code accusing Francis of an offence under section 391 of thePenal Code. Nor did he call his accountant Samarakoon or Juande Silva,his chief clerk, to establish the amount of his loss which he says he dis-covered after the bond was executed to be Rs. 16,000. Certainly thereare many infirmities in the plaintiff’s case. Firstly in "the complaint ofthe chief clerk Juan de Silva to the Police the amount of loss was statedto be Rs. 7,419/63 the value of 6,807 gallons of Kerosene oil. In thebond a sum of Rs. 12,000 was mentioned, and in his evidence the plaintiffstated the loss was Rs. 16,000; but even when he gave evidence theplaintiff was not certain of the exact amount Francis had taken. If thebond had been taken for the innocent purpose of securing the loss occa-sioned by Francis’s dishonesty it would not be unenforceable. For apartfrom Francis’s criminal liability for his breach of trust there was his civilliability for appropriating to his own use his employer’s property. Thefact that the same act creates a criminal liability as well as a civil obliga-tion will not render void a contract for the settlement of the civil obliga-tion even though a prosecution has been instituted and proceedings arepending [Williston Vol. 6 (1938 Edn.) Sec. 1718, pp. 4859-4860], Insuch a case, however, the bond should not disguise the true nature of thetransaction ; it should contain a clear indication of the fact that it isgiven to secure the civil liability. The bond under consideration speaksof “ money borrowed and received ” by the defendant, a completely
H. X. G-. FEKSAXDO, J.—Jayaratna v. Singcdaxa-na
untrue statement which lends colour to the defendant’s version whichhas been accepted by the learned Judge.It is settled law that a contract
for stifling a prosecution cannot he enforced. Ex turpi causa non orituractio PTo right of action arises from a disgraceful or immoral considera-tion—Trayner) is a well established maxim which has now acquired theforce of law. Agreements to compromise pending criminal prosecutionsare illegal and void (Re Campbell 14 Q. 33. D. 32, hound v. Orimwade,38 Ch. D. 605). The law on the subject is discussed at some length insection 1718 of WiUiston on Contracts (Vol. 6—1938 Edn. p. 4856).It is sufficient to quote the following passage from it:—
“ All bargains tending to stifle criminal prosecution whether bysuppressing investigation of crime, or by deterring citizens from theirpublic duty of assisting in the detection or punishment of crime arevoid as against public policy. ”
The appeal is dismissed with costs.de Silva, J.—I agree.