002-SLLR-SLLR-1987-2-FERNANDO-v.-ILLUKKUMBURA-AND-ANOTHER.pdf
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[1987] 2 Sri LR.
FERNANDO
v.ILLUKKUMBURA AND ANOTHER
COURT OF APPEAL.
SIVA SELLIAH, J. AND ABEYWIRA, J.
C.A. No. 754/82.
NOVEMBER 21 AND 27, 1986.
Certiorari and Mandamus – Finance Act No. 11 of 1963 (amended by Act No. 16 of1973) s.71 – Refusal by People's Bank to acquire premises already sold onhypothecary decree – Stipulation by Bank that petitioner should first open a SavingsDeposit Account with it-Bank policy.
The petitioner had mortgaged the premises, the subject matter of this application, tothe 1st respondent who put the bond in suit, had them sold in execution of thehypothecary decree entered in the said suit and having bought them at the sale and
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obtained the auctioneer's conveyance, entered into possession. The petitioner thenapplied to the People’s Bank (2nd respondent) to act under s.71 of the Finance ActNo. 11 of 1963 as amended by Act No 16 of 1973 and acquire the said premises forhis (the petitioner's) benefit. The Bank called upon the petitioner to make a preliminarydeposit of Rs. 4.500 with it in a Savings Deposit Account and later requested a furtherdeposit of Rs. 10,000. The petitioner deposited the sum of Rs. 4,500 but was unableto deposit the sum of Rs. 10.000 The Bank after due inquiry refused to acquire thepremises in question. The petitioner applied for a writ of certiorari quashing the decisionnot to acquire and a writ of mandamus restraining the 1 st respondent from alienatingthe premises.
Held-
In arriving at a decision whether to acquire or not the Bank will have to address itself to3 questions
Is the land one which the Bank is vested with authority to acquire?
Does s. 71 (2) of the Finance Act restrict the right of the Bank to acquire?
Will the Bank in the exercise of its discretion acquire the land?
Section 71 (3) provides that the Bank’s determination will be final and conclusive andshall not be called in question in any Court but this immunity from judicial reviewattaches only to the third question and not to the 1 st and 2nd questions which involve aquasi-judicial process or a process closely analogous to the judicial and affect the rightsof subjects. The determination not to acquire involved the 3rd question and wasdecided in accordance with the policy of the 8ank not to proceed to acquisition wherethe interests involved are undivided shares in lands and where the applicant was not inpossession.
Firstly the Bank was authorised to acquire the premises-s. 71 (1) (a). On the 2ndquestion the petitioner had failed to place evidence that his average income for thethree years immediately preceding the date of application does not exceed Rs. 10,000.Further physical possession even before the application was made was with the 1 strespondent and this shows the petitioner had some other place of residence for himselfand his family (s. 71 (1)(c)).
The request to the petitioner to deposit Rs. 10,000 was not outside the 8ank’s legalrights. It was a matter of policy and for the Bank's security.
If the Bank determines it would acquire premises which it is not authorised to acquireunder s.71 (1), premises which it is inhibited from acquiring under s.71 (2). theconditions of s.71 (3) are not satisfied and the determination will not be final andconclusive and no immunity will attach to such a determination. The Bank can make adetermination which has the stamp of finality only in respect of premises covered bysubsections 1 and 2 of s. 71. The preliminary question as to whether the Bank isauthorised to acquire the premises in terms of s. 71 (1) or even if so authorised whetherit is prohibited from so acquiring them by the provisions of s. 71 (2) can be reviewed byCourt and such review is not barred by s. 22 of the Interpretation Ordinance as it is ajurisdictional question.
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In the instant case the decision not to acquire is one within the discretion of the Bank. Itis a purely administrative decision taken by considerations of its policy The decisionfalls under s. 71 (3) and cannot be questioned in any Court.
Cases referred to:
Perera v. The People's Bank Redemption Department and Others – [1985]1 SriL.R. 39.
Kanagasabapathy and Another v. The People's Bank and Two Others-S.C.Application No. 124/75-S.C. Minutes of 27.08.1976.
Chandralatha Wijewardena v. The People 's Bank and Two Others – S.C. AppealNo. 3/80-C.A. Application No. 597/76
APPLICATION for writs of certiorari and mandamus.
Faiz Mustapha for the petitioner.
S. Sivarasa with S. Muttukrishnan for 1 st respondent.
to-
B. Rajapaksa with P. Abeykoon for 2nd respondent.
Cur. adv. vult.
January 30, 1987.
ABEYWIRA, J.
The petitioner has filed papers in this Court by way of petition andaffidavit dated 11 th of June 1982 seeking authority to issue a writ ofcertiorari to quash the determination of the 2nd defendant, People'sBank made on the 30th of April, 1982 and accordingly notified to thepetitioner. It stated that the said Bank, has after due consideration ofthe application made by the petitioner onthe IstofJune 1978 asking itto acquire certain mortgaged premises of the petitioner from the 1 strespondent under the relevant provisions of the Finance Act No. 11 of1963 and its subsequent amendments, decided not to pursue itsapplication and has rejected the same as per the letter of 30th April,1982.
The petitioner's application to the 2nd respondent Bank was on thebasis that his mother was at one time the owner of premises No. 14situated at 10th Lane Kollupitiya, Colombo 3, and that the saidpremises, constituting land and building had been donated to him byher. The said premises is stated to be depicted as Lots 4A, 4B and482 in Plan No. 1024 prepared on the 25th of September 1968 bysurveyor A. P. Sameer (PI) and situated at Bambalapitiya within theMunicipal limits of Colombo.
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The petitioner had thereafter by mortgage bond No. 3491 of
(Y) mortgaged to the 1 st respondent for a considerationof Rs. 21,000 at 15% interest per annum the defined portion,depicted in the said Plan P1 as Lot 4B1 only, consisting of 13.12perches of soil and all buildings standing thereon subject to the termsand conditions therein. The 1 st respondent is thereafter stated tohave put the said bond in suit in the District Court of Colombo in CaseNo. 273 on the 8th of October 1974 and obtained judgment anddecree in his favour on the 3rd of December 1975 (Y1 &Y2). Thesaid premises had thereafter been put up for sale by public auction onorders of the District Court and the same had been purchased thereatby the 1st respondent on the 27th June 1977 for a sum ofRs. 32,685.11. The said sale had been confirmed by the Court by itsorder of the 2nd of September, 1977, after which the auctioneer'sconveyance No. 948 of 07.11.1977 had been issued in favour of the1 st respondent and possession given to him by the Fiscal on the 23rdof May 1978 (see Y2).
The petitioner had thereafter on the 1st of June 1978 made anapplication to the 2nd respondent Bank requesting it to acquire thesaid mortgaged premises, presently purchased and in the possessionof the 1 st respondent by virtue of the authority granted to it undersection 71 of the Finance Act No. 11 of 1963 as amended by ActNo. 16 of 1973 and the other subsequent and relevant amendmentsto the same. The Bank had after inquiry decided not to proceed withthe acquisition proceedings pertaining to the said premises and hadgiven intimation of this to the petitioner by its letter of the 30th of June1982 (P6A). Thereafter the petitioner has made the presentapplication on the 11th of June 1982 seeking a writ of certiorari asagainst the 2nd respondent to quash its decision dismissing theapplication of the petitioner and to order the 2nd respondent toinstitute and carry on its acquisition proceedings while at the sametime he wanted by way of a writ of Mandamus to restrain the 1 strespondent from alienating in any way whatsoever the premises whichwere earlier mortgaged to him by mortgage Bond No. 3491 of
(Y) and now in his possession by virtue of the decree ofthe District Court and the auctioneer's conveyance No. 948 of07.1 1.1977.
It is the contention of the petitioner that the 2nd respondent, People's Bank had the full legal authority to acquire the said premisesunder section 71 of the Finance Act No. 11 of 1963 as amended by
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No. 16 of 1973 and the other relevant sections of this Act but that thesaid Bank had for no legal or other valid reason rejected the applicationof the petitioner thereby denying the petitioner the possibility of gettingback the premises mortgaged by him to the 1st respondent. He hasalso stated that he was geared into making the application to the 2ndrespondent Bank as he had read in some newspaper advertisement inJanuary 1978 that the 1st respondent had indicated his intention tosell the said premises. Since the petitioner was himself keen tore-purchase the said premises he is stated to have instructed hisAttorney Mr. S. Mahasen to negotiate the purchase of it whereupon hecame to know that the 1 st respondent had wanted at least a sum ofRs. 8,500 for a perch of land of the said premises (vide P2). Thesefacts had made the petitioner make inquiries from the 2nd respondentBank as to how it would acquire the said premises under the powersvested in it, under section 71 of the Finance Act No. 11 of 1963 asamended by Act No. 16 of 1973 and the other relevant sections of thesaid Act.
The petitioner has stated that the 2nd respondent Bank hadinformed him that he should make an initial deposit with the Bank ofRs. 4,500 by opening a Savings Account with the Bank before anyapplication asking it to acquire the mortgage premises under theFinance Act could be considered. It is the contention of the petitionerthat he did comply with this request of the Bank and had thereaftermade his formal application to the Bank on the 1 st of June 1978 and thesame being entertained the Bank had issued notices under section71 (2a) and (b) of the Finance Act No. 11 of 1963 as amended by ActNo. 16 of 1973 both to the Registrar of Lands, Colombo and the 1 strespondent on the 2nd of June 1978 (P3) thus indicating that the saidpremises was property which may be acquired by the 2nd respondentBank under Part 8 of the Finance Act.
The application made by the petitioner to the respondent Bank issaid to have come up for consideration before the Manager, LandRedemption Branch of the 2nd respondent Bank as the Chairman andthe Board of Directors with the petitioner and the 1st respondentbeing represented by their respective Attorneys-at-law who made theiroral and written submissions and also produced documentaryevidence in support of each party's case (vide P4a to P4e).
Thereat u on the 9th of September 1980 the 2nd respondent Bank isstated to have requested the petitioner to deposit a sum ofRs. 10,000 into the Savings Account with the 2nd respondent on or
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before the 30th of September 1980 and also indicated to him that onfailure to do so, the application of the petitioner made to the Bankwould be dismissed (see P6). The petitioner has stated that due to thethen difficult financial position he was in, he was unable to comply withthis request and deposit Rs. 10,000 into his Savings Account, whileon the other hand in fact he had even had occasion to withdraw fromtime to time a part of the money already deposited into the SavingsAccount of the respondent Bank.
The petitioner states that on inquiry made by him thereafter he cameto know that the 2nd respondent Bank had sent him a letter inDecember 1981 calling upon him to deposit moneys into his SavingsAccount with the Bank so as to bring the sum in his savings accountup to Rs. 20,000 and that the same was to be done on or before the31 st of December 1981. Also that a failure to do so would cause theBank to dismiss his application made to the Bank to acquire thepremises originally mortgaged to the 1st respondent. It is thecontention of the petitioner that no such letter sent oy the Bank, was inactual fact received by him and that he came to know of this only atthe inquiry the Bank held on his application. Finally the 2nd respondentBank by its letter dated the 30th of April 1982 (P6a) had informed thepetitioner that the Bank had dismissed his application to have thepremises mortgaged to and purchased thereafter by the 1strespondent acquired by the Bank under the powers given to it by theFinance Act. The petitioner had thereafter written to the GeneralManager of the 2nd respondent Bank on the 19th of May 1982 (P7)appealing to him to reconsider ‘his decision and also indicating hiswillingness to deposit the entire sum for which the property had beenmortgaged in (3) instalments. However, the 2nd respondent Bank hadby its letters dated the 31st of May 1982 (P8) addressed to theRegistrar of Lands, Colombo and also to the 1 st respondent indicatedthat the notices sent to them earlier by the letters of the 2nd of June1978 (P3) have been cancelled as authorised by the powers given tothe Bank by the proviso to section 71 (2a) (b) of Act No. 16 of 1973.
The petitioner maintains that the said determination by the Bank todismiss his application made on 1st of June 1978 after inquiry wasinvalid and of no avail in law being contrary to all law applicable and theevidence led at the inquiry. It is also urged that the order of dismissal iscontrary to all principles of natural justice and other legal rightsavailable to the petitioners. Thus it should be set aside and the Bank
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should proceed to act under section 71 Act No. 11 of 1963, asamended by Act No. 16 of 1 973 and its other subsequentamendments in relation to the right of the Bank to acquire the saidpremises.
It is also urged that the 2nd respondent Bank had no legal rightwhatsoever to impose a condition on the petitioner that he should firstopen a Savings Account with the Bank and also have certain sums ofmoney brought into this savings account before the Bank woulddecide to inquire into the application made by the petitioner callingupon the Bank to act under section 71 of the Finance Act.
According to the petitioner the application made by him to the 2ndrespondent Bank on 1 st of June 1978 was well within the purview of theprovisions of section 71(1) (a) of Act No. 16 of 1973 and thereforethe demands made to the petitioner to open a savings account withthis Bank and to deposit certain sums of money before his applicationcould be determined is ultra vires the powers of the Bank under theFinance Act.
The petitioner therefore prays that this Court do issue a writ ofcertiorari quashing the determination or order of the 2nd defendantBank made on the 30th of April 1982 (P6A) determining the applicationmade by the petitioner to it on the 1 st of June 1978 requesting the Bankto take steps to acquire the premises mortgaged by him to the 1 strespondent and subsequently purchased by the 1 st respondent underthe mortgage decree entered in his favour. Also to have the 2ndrespondent to take all the necessary steps as provided for by theFinance Act No. 11 of 1963 as amended by Act No. 16 of 1973 andits other subsequent amendments for the acquisition by the Bank ofthe said premises.
Fie further prays for a writ of mandamus directing the 1strespondent, who is presently the legal owner of the said premises andalso in possession of the same, to refrain from alienating in any waythe said premises which is more specifically depicted in Plan No. 1024of 25.09.1968 (P1) as Lot 4B1 in extent 13.12 perches togetherwith everything thereon and the buildings.
The 1 st respondent has by his affidavit dated the 8th of August 1982requested the Court to dismiss the application of the petitioner for thereasons stated therein and specially as the decision of the 2nd
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respondent not to acquire the said premises after due inquiry underthe Finance Act is final and conclusive and not questionable in anyCourt of law (vide section 71 (3) of Act No. 11 of 1963).
The 2nd respondent People's Bank had tendered its objections tothis application of the petitioner by its petition and affidavit of the 3rd ofAugust 1982 whereby it has denied all the averments stated by thepetitioner except those which have been specifically admitted by it andhas put the petitioner to the strict proof of the rest. The 2ndrespondent accepts the averments of the petitioner that his motherMrs. Ceciliana Fernando was at one time the lawful owner of thepremises in question and that she had gifted the same to the petitionerwho had thereafter by Mortgage Bond No.3491 of 28.09.1973 (Y)mortgaged the premises depicted as Lot 4B1 in Plan No. 1024 of25.09.1968 (P1) with the buildings and everything else standingthereon to the 1st respondent for a sum of Rs. 21,000 with interestthereon at 15 per cent per annum and subject to the other conditionsstated therein. That the 1st respondent had put the said mortgagebond in suit and after obtaining decree therein, had purchased thesame for a sum of Rs. 32,685. 11 on the 27th of June 1977 at the saleby public auction authorised by Court and had thereafter obtained theauctioneer’s purchase deed No. 948 of 07.1 1.1977 and also gothimself placed in possession of the said premises by the Fiscal on23rd May 1978 is admitted. He has denied the averments inparagraphs 4,12,18,19 and 20 of the petition of the petitioner. The2nd respondent states that it did call upon the petitioner to depositRs. 7,650 into a Savings Account opened with the Bank before theapplication made by the petitioner could be formally entertained by theBank as it was the normal practice of the Bank to call upon theapplicant to deposit at least 1 /4th of the amount of compensationpayable when entertaining the application which amount would bepayable by the Bank to the 1st respondent under the Finance Act.Answering paragraphs 9 and 10 of the petition the 2nd respondentonly admits that an inquiry was held where all the parties to theapplication of the petitioner were represented by theirAttorneys-at-Law who presented their evidence in support of eachparty's claims and also made their written submissions. In reply to theaverments in paragraph 11 of the petition it is accepted that the 2ndrespondent did send the letter marked P6A intimating to the petitionerthat his application to the Bank made on the 1st of June 1978 wasdismissed. The 2nd respondent has also accepted the fact that a
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letter was sent to the petitioner to deposit Rs. 10.000 into his savingsaccount with the 2nd respondent Bank and also that he was informedby another letter sent in December 1981 to bring the amount lying tohis credit in the Savings Account up to Rs. 20.000 on or before theend of December 1981 failing which the application made to the 2ndrespondent Bank to acquire the mortgaged premises then in thepossession of the 1 st respondent would be dismissed.
The 2nd respondent maintains that after the said inquiry it wasdecided by the Bank that it will have to dismiss the application made toit by the petitioner as the latter had not complied with therequirements called upon him by the Bank to fulfil. It is further urgedthat the question whether or not the Bank is to pursue the question asto whether it should acquire any premises under the provisions isentirely one within its discretion as provided by section 71 (3) of theFinance Act No. 11 of 1963 and that its finding on this matter is finaland not questionable in any Court of law.
The 2nd respondent accordingly prays for the dismissal of thepetition filed by the petitioner in this instance.
At the inquiry before this Court the learned Attorney for thepetitioner maintained that for the reasons stated in the petition andaffidavit, the decision of the respondent Bank not to proceed with theapplication of the petitioner should be quashed and that the Bank bedirected to take due and proper steps under section 71 of Act No. 16of 1973 to see that the premises mortgaged by the petitioner to the1 st respondent and presently purchased and possessed by the 1 strespondent be acquired by the 2nd respondent Bank. It is also statedthat the 1 st respondent be ordered by a writ of mandamus issued byCourt, not to alienate the said premises.
On the main question as to whether a writ of certiorari will lie toorder the 2nd respondent Bank to pursue the application made to it bythe petitioner on the 1st of June 1978 and thus take all the due andnecessary steps under the Finance Act No. 11 of 1963 as amendedby Act No. 16 of 1973 after quashing its order of dismissal of the saidapplication by its letter dated the 30th of April 1982 (P6A) this Courtfinds that section 11 of Act of 1963 as amended by Act No. 16 of1973 contains largely all the powers granted to the Bank whether itshould proceed and act under the said section or not. On this matterwe also have the decision of this Court in the case of Perera v. The
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People's Bank Redemption Department and Others (1) for ourconsideration. In that case it was held that in arriving at its decisionunder section 71 of Act No. 11 of 1963 the Bank has to address itselfto three (3) questions, namely:
Is the land one which the Bank is authorised to acquire?
Does section 71 (2) restrict the right of the Bank to acquire?and
Will the Bank in the exercise of its discretion acquire the land?
It also stated that section 71 (3) of the Act No. 11 of 1963 providesthat the determination of the Bank shall be final and conclusive andshall not be called in question in any Court, but that this immunityattaches only to decisions on the (3rd) question and not on the 1 stand 2nd questions which involve a quasi-judicial process or a processclosely analogous to the judicial and affect the rights of subjects andare accordingly subject to judicial review. Also that the determinationnot to acquire involved the 3rd question and was decided inaccordance with the policy of the Bank not to proceed to acquisition,where the interests involved are undivided shares in lands and theapplicant is not in possession. This is a purely administrative decisionguided by considerations of policy and not subject to review bycertiorari and mandamus. Moreover the decision not to acquire hadbeen made within jurisdiction and in terms of section 71 (3) read withsection 22 of the Interpretation Ordinance and is final and conclusiveand cannot be questioned in any Court. (See also the case ofKanagasabapathy and Another v. The People's Bank and Two Others(2) and the case of Chandralatha Wijewardena v. The People's Bankand Two Others (3)).
In the present case too it could be safely concluded that thepremises mortgaged by the petitioner to the 1st respondent fallswithin the provisions of section 71 (1) (a) of the Finance Act No. 11 of1963 as amended by Act No. 16 of 1973.
The second matter for consideration is whether even if the premisesin question fall within the category of premises referred to undersection 71(1) (a) of the Finance Act, yet it would be prohibited fromacquiring the same by virtue of the provisions of section 71 (2) of thesaid Act. On this matter the 2nd respondent Bank has by its petition ofobjections stated inter alia that no evidence whatsoever has been
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given to the Bank that the petitioner is one whose average income forthe three years immediately preceding the date on which hisapplication is made does not exceed ten thousand Rupees(Rs. 10,000). Also the question as to whether the application couldhave been considered by the bank as one falling within the limits ofsection 71 (2) (c) is doubtful as the said premises have been in thephysical possession of the 1st respondent even before the applicationwas made by the petitioner to the respondent Bank for acquisitionthereby showing that the petitioner has had some other place ofresidence for himself and his family. Also the objection and criticismthat the 2nd respondent Bank had no legal right to request thepetitioner to open a Savings Account with the Bank and havedeposited into this Savings Account certain sums of moneys beforethe application of the petitioner could be considered, cannot beregarded as without any legal authority, for in its objections therespondent Bank has stated that as a matter of policy and for its ownsecurity it does call upon any petitioner to deposit at least a 1/4thamount of the compensation payable.
Thereafter section 71 (3) of Act No. 11 of 1963 goes on to statethat the question whether any premises which the Bank is authorisedto acquire under this part of this Act, shall or shall not be acquired shallbe determined by the Bank and every such determination of the Bankshall be final and conclusive and shall not be called in question in anyCourt.
Sharvananda, J. as he then was, has in the case of ChandralathaWijewardena v. The People's Bank and Two Others (supra) (3) statedthus :
"If the Bank is satisfied that subsection (1) vests it with authorityto acquire the premises and that the restrictions in sub-section (2)do not prohibit the acquisition, then the third question is whether, inthe exercise of its discretion the premises should or should not beacquired, and if the Bank decides to acquire the premises undersub-section (3) it makes a decision accordingly. It is thatdetermination that the premises which the Bank is authorised toacquire under sub-section (1) and (2) should or shall not be acquiredthat is final and conclusive and cannot be questioned in any Court.Therefore if the Bank determines that it should acquire premiseswhich it is not authorised to acquire under sub-section (1), which itis inhibited from acquiring by sub-section (2) the conditions of
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section 71 (3) are not satisfied and the determination will not befinal and conclusive and no immunity will attach to suchdetermination. The Bank can make a determination which has thestamp of finality only in respect of premises that are covered by theprovisions of subsection (1) and (2). The preliminary question as towhether the Bank is authorised to acquire the premises in terms ofsection 71 (1), or even when so authorised whether it is prohibitedfrom so acquiring by the provisions of section 71 (2) is not one forthe final decision of the Bank and can properly be canvassed in aCourt. Section 22 of the Interpretation Ordinance as amended byAct No. 18 of 1972 does not bar the agitation of that jurisdictionalquestion."
In this case the decision of the 2nd respondent Bank not to acquirethe premises in question after an inquiry into it was held by the Bank isone under section 71 (3), a decision falling within the discretion of theBank and one which is purely an administrative decision, taken byconsiderations of its policy. This decision is one falling within thepurview of section 71 (3) of the Finance Act and cannot be questionedin any Court.
In the said circumstances no writ of certiorari would be available tothe petitioner to have the determination made by the 2nd respondentBank on the 30th of April 1 982 dismissing the application made bythe petitioner on the 1st of June 1978 calling upon the Bank toproceed under the provisions of section 71 of the Finance Act andacquire the premises in question quashed, and to seek the authority ofthis Court to call upon the Bank to proceed with the acquisition of thepremises mortgaged to the 1 st respondent. Following therefrom nowrit of mandamus will lie against the 1 st respondent to this applicationalso.
For the aforesaid reasons we hold that the petitioner's applicationfor the issue of the two writs has to be dismissed with costs.
SIVA SELLIAH, J. – I agree.
Application refused.