040-NLR-NLR-V-52-FERNANDOPULLE-Appellant-and-PERERA-APPUHAMY-Respondent.pdf
1980Present .- Jayetlleke C.J. and Nagallngam J.FEENANDOPULLE, Appellant, and PERERA APPUHAMY,
Respondent
S. C. 172—«D. C. Negombo, 15,385
Debt Conciliation Ordinance, No. 39 of 1941—Meaning of " debtor ”—“ Mortgage "does not include “ Moratuwa mortgage ”—Matter pending before Debt Con-ciliation Board—Bar of civil actions—Sections 32, 36, 56.
Where there was a transfer of property with an undertaking to re-sell it withina specified' time, and the transferoi- continued to be in possession of theproperty—
Held, that the transaction was not in form a mortgage or charge over pro-perty and could not, therefore, be the subject-matter of proceedings before theDebt Conciliation Board. The term “ mortgage or charge ” in Ceylon cannotbe said to include transactions called “ Moratuwa mortgages ” which are thelocal equivalent of the English and Indian mortgages.
Held further, (i) that section 56 (a) (ii) of the Debt Conciliation Ordinancecould not prevent a proceeding held before the Debt Conciliation Board frombeing declared by a Court of Law as invalid for want of jurisdiction.
(ii) that the Debt Conciliation Board had no power under section 32 of theOrdinance to make an order postponing sine die the hearing of a master beforeit and thus to prevent the creditor, under section 56, from exercising the legalrights which are expressly conserved to him by section 36.
ApPEAT, from a' judgment of the District Court, Negombo.
Defendant conveyed certain property to the plaintiff for a considerationof Rs. 4,000. It was further agreed that plaintiff was to retransfer theproperty to the defendant if the defendant paid a sum of Rs. 4,000together with ; a stipulated rate of interest thereon within a period offour years. ;Defendant continued to be in possession of the propertynotwithstanding the conveyance in favour of the plaintiff. After theexpiry of the four years provided in the deed, plaintiff instituted actionto obtain possession of the property- and for ejectment of the defendanttherefrom. The learned Disti-ict Judge rejected the plaint on the groundthat the subject-matter of the suit was one that was pending beforethe Debt Conciliation Board and that the Court could not, therefore,entertain the action by virtue • of the provisions of section 56 of theDebt Conciliation Ordinance. The plaintiff, thereupon, appealed.
N. E. Weerasooria, K.C., with K. C. de Silva and E.R.S-R. Coomara-swamy, for the plaintiff appellant.
Renganathan, with Ivor Misso and R. K. Herman, for the defendantrespondent.
G.ur. adv. wit.
November 23, 1950. Nagalingam J.—
This is an appeal by the plaintiff from an order „of th© learned Distribt-Judge of Negombo rejecting the plaint filed hy him on the ground thatrfche subject-matter of the suit is one that is pending before the Debt►Conciliation Board and that the Court cannot entertain the actionhy virtue of the provisions of section 56 of the Debt ConciliationOrdinance, No. 39 of 1941.
It has been said that the transaction between the plaintiff and the•defendant# is not such as could fonja a matter for investigation or attempted-.settlement by the Debt Conciliation 4Board. It has also been arguedthat even if it be held that the matter was properly before the Debt‘Conciliation Board, nevertheless the order of the Debt ConciliationBoard made in the proceedings before it was -an order which did notprevent the Court from taking cognizance of the plaint and determining-the disputes that otherwise arose between the parties upon the pleadingspresented to Court by them.
The facts briefly are that the defendant transferred bv a deed of•conveyance certain property, the subject-matter of the suit, to theplaintiff for a consideration of Us. 4,000. It was further agreed betweenithe parties—'and that agreement is embodied 'in the deed of conveyanceitself—that the plaintiff was to retransfer to the defendant the propertyif the defendant paid him a sum of Bs. 4,000 together with 3, stipulatedn'Sbtre of interest thereon within a period of four years. It is also admitted-that the defendant has continued to be in possesion of the property.notwithstanding the execution of the deed of conveyance in favour of theplaintiff. The plaintiff institutes this action after the expiry of the period•of four years provided in the deed to obtain possession of the property;and for ejectment of the defendant therefrom. The defendant in hisanswer, apart from taking up the plea under the Debt Conciliation^Ordinance which has given rise to the present appeal, pleaded that theplaintiff held the property in trust for him. At the time of the framing•of the issues, though not pleaded, certain issues were raised as to whether-the transaction between the plaintiff and the defendant was one in themature of a mortgage.
as understood in our law. Our law of mortgage is the Boman DutchLaw, and under it, in order to effect a mortgage, a security or charge*on property is created, and nothing more. No question, as under theEnglish or Indian Law, of a transfer of the title to the property to thecreditor reserving to the transferor a right or, more properly, an equity ofredemption, is recognised by our law. It cannot therefore be saidthat when the Legislature used the term “ mortgage or charge " in theOrdinance, it intended to use that term in any sense other than that inwhich that term was understood in the law of the country. In fact, theTY^anmg of the term “ mortgage ” cafi be gathered from the use andLdefinition of the term in the Mortgage Ordinance (Cap. 74). The Mortgage-Ordinance gives full effect to the conception of a mortgage as understoodin the Boman Dutch Law, and . cannot in the slightest decree be said, toinclude transactions called “ Moratuwa mortgages ” which are the localequivalent of the* English and Indian mortgages. It seems to me thatbefore the Debt Conciliation Board can assume jurisdiction it must-satisfy itself that the transaction is not only in substance one of money-lending but that in point of form the transaction is one which under ourlaw is clothed in the proper garb of- a mortgage, whatever the name maybe that is applied to the transaction, whether a mortgage or a charge.Itwill also be easy to see that in this case the creditor claims np debt a*owns to him, and “would not come within the meaning of that termSeined in the'Ordinance, which declares that a creditor means a personto whom a debt is owing. It- is therefore extremely difficult to assent iothe view that the transaction between the plaintiff and the defendant,Which is not in form a mortgage, could be the subject of proceedingsbefore the Board.
It has, however, been pointed out that a Court cannot go into thequestion of the validity of the proceedings before the Board in view ofsection 66 (a) (u) of the Ordinance. I’do not think this contention isentitled to suooeed. For one thing, it is open to a party to impeach ajudgment or proceeding before another Court or tribunal as one enteredor had beyond the jurisdiction Of such Court or tribunal. For another,section 56 does not say that the validity of the proceedings before theBoard cannot be canvassed in a Court of Law. What it does say is thata Court cannot entertain an action in respect of the validity of any proce-dure before the Board, which is entirely a different matter. The con-tention raised relates to the want of jurisdiction of the Court, while theprovision of the Ordinance prevents the regularity or the validity of theconduct of the business before the Board being called in question.
I now pass on to the next argument. The order made by the Boardwhich has been regarded by the learned judge as barring these proceedings,is that contained in the Board's minutes dated October 6, 1949, and which
readB as follows: "Hearing postponed sine die.” The Debt Conci-liation Board it a statutory .body. It has gotmake
my 'orders dfe than' those’conferred. % The' Ordinance, Where, interms of section 32 (2) of the Ordinance, no amicable settlement has beenreached between the debtor and a secured creditor, the Board can makeone of two orders: (a) It can dismiss the application of the debtor, or
m
(b} ft may also, in a fit case, issue to the debtor a certificate* ini the pres-cribed form. The Board can make no other order. .It is clear from thejproceedings bad before the Board and evidence of which was given before■the learned Judge that the attempt at an amicable settlement completely.-faded- The Board should then have acted in terms of section 32; but'cat the other hand the Board purported to make an order “ Hearing-postponed sine die '*—
The order of the Board, as I indicated earlier, is one which has not thesanction of law. The reason fdr not, investing the Board with sueh^powers is fairly obvious, for so long as the matter is pending before theBoard no civil Court can, by reasqp of the provisions of Section 66 (a){i) entertain an action in respect of the same matter. It certainly cannotbe said that it was the intention of the Legislature that the right of a'person to institute an action to obtain redress by seeking the aid of a■Court of Law was to be for ever denied to him because of the Board makingan order postponing the hearing sine die and never • perhaps taking the•matter up. The Board has exercised the amplitude of the powers vestedin it in regard to the dispute, and tine dispute has reached the stage When'nothing further can be done by the Board. The Board cannot, by making-an order ** hearing postponed sine die ” prevent the creditor, assumingthat the plaintiff is a creditor within the meaning of the Ordinance, 'fo®3®-exercising the legal rights which are expressly conserved to him' by section36 of the Ordinance. The order of the Board must therefore be cons-trued as having no greater effect than that the application, of the <tefen-. dant before it had been dismissed. I think it is proper to observe thatjElOt only is the order made by the Board that it postponed the hearing^Mne die ultra vires of its'^larltaaiianl cST^he,
-defendant's "application In regard to a transaction which is not in form«riaa®*tgagei
The order of the learned Bistriet Judge cannot therefore he sustained."In the result I set it aside and direct that the case be tried on the otherissues framed. The appellant will be entitled to the costs of this appealand of the proceedings had in the lower Court.
-Jayetiuske C.J.—I agree.