020-SLLR-SLLR-2006-V-3-NIROSHANA-AND-ANOTHER-vs.-UNASEKERA-AND-ANOTHER.pdf
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NIROSHANA AND ANOTHERVSGUNASEKERA AND ANOTHERCOURT OF APPEAL.SRISKANDARAJAH. J.
CA 1153/2000.NOVEMBER 13,2003.JANUARY 20,2004.FEBRUARY 20, 21,2006.
Writ of Certiorari – Debt Conciliation Ordinance section 32(2), Section 54,section 54(1) – Amended by Act No. 29 of 1999 – section 5- Settlement of the
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debt – Amount not agreed – Board holding it is reasonable and granting acertificate of settlement – Application to review said order and dismissed ofsame – Refused – Legality of the orders made by the Board ?- Discretion of theBoard – "Shall" in Section 32(2) – Is it directory ?- Alternate remedy? No settlement- mandatory to dismiss application?
When the inquiry commenced before the Debt Conciliation Board, therespondent (debtor) offered to pay to the petitioner (creditor) a sum of Rs.700,000 in settlement of the debt which was Rs. 350,000. This offer wasrejected by the petitioners and they demanded Rs. 10 Million for settlement.The Board made order accepting the offer of the respondent as a reasonableoffer and granted a certificate under Section 32(2). The petitioner filed a motionunder Section 54( 1) moving for dismissal of the application of the 1 st and 2ndrespondents in terms of Section 32(2). The Board refused the said application.The petitioner contended that, the Board under Section 32 could make only anorder of dismissal of the application if there is no settlement and when there isno available settlement the Ordinance makes it mandatory to dismiss anapplication.
HELD:
When interpreting a section the entire section has to be considered toconstrue the meaning of the section and every word in the section hasto be considered and effect should be given to those words ininterpreting the section as the legislature has intentionally includedthose words for good reasons.
For the proper consideration of section 32(2) and to give a meaningand effect to all the words in that section the words “shall” has to beconstrued as directory. The Board in appropriate circumstances usingits discretion may either dismiss the application or without dismissingthe application grant the debtor a certificate.
Per Sriskandarajah. J:
“The legislature itself realizing the difficulty faced by the members of theBoard interpreting this section has thought it fit to amend Section 5.
Held further:
In any event as the petitioners have not challenged the order of theissue of the certificate of non-settlement before the Board under Section54 they cannot challenge the said order in this application as they havenot exhausted an effective alternate remedy.
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Per Srlskandarajah. J:
"If the petitioner's submission is accepted then the Board under section32(2) could only dismiss an application, where no amicable settlement isarrived at between the debtor and the creditor, even if the Board is of opinionthat, the debtor has made the creditor a fair offer which the creditor oughtreasonably to have accepted. In these circumstances, the words in section32(2)’ if it is of opinion that the debtor has made the creditor a fair offer whichthe creditor ought reasonably to have accepted, grant the debtor a certificate inthe prescribed form in respect of the debts owned by him to that creditor’becomes redundant.
APPLICATION for a Writ of Certiorari.
Cases referred to:
Obeysekera vs Albert and others – (1978-79) 2 Sri LR 220.
Baldwin and Francis Ltd. vs Patents Appeal Tribunal and others -1958-2 All ER 368 (CA).
Bhambra vs Director of Customs and others – 2002 -3 Sri LR 240.
Auchteraraer Presbytery vs Lord Kinkoull -187 -6 CH A F 646, 68.
Wallersteiner vs Moir-1 WLR 991 at 1007.
Liverpool Borough Bank vs Turner -1861 – 30 LJ ch 379 at 380.
Faiz Musthapha PC with Ms Tushani Machado and Ms F. Musthapa for petitioner.P. A. D. Samarasekera PC with Keerthi Sri Gunawardane for 2nd respondent.
Cur.adv. vult.
May 2, 2006.
SRISKANDARAJAH, J.
The petitioners in this application are husband and wife and were citedas Respondents before the Debt Conciliation Board in respect of theApplication No. 34958 which was made by the 1 st and 2nd Respondents.The 3rd to 6th Respondents (hereinafter referred to as Board) are theChairman and the members of the Debt Conciliation Board who made therelevant orders and other Respondents are the Chairman and members ofthe present Debt Conciliation Board.
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K.D. S.Gunasekara who was the husband of the 1st Respondent andthe father of the 2nd Respondent transferred premises bearing No. 77,Main Street, Kurunegala to the Petitioners by deed No. 54718 dated21.04.1988 attested by S. G. Patikiriararachchi for the consideration of350,000. The 2nd Respondent submitted that in the attestation to the saiddeed the Notary has certified that only a sum of Rs. 200,000 was paid inhis presence. It was the contention of the said Respondent that the balanceRs. 150,000 was the interest for the said Rs. 2,00,000 for the period of twoyears. On the same day by Deed No. 54719(P2) which is the next deedattested by the same Notary, the Petitioners have agreed to re-transferthe said property to the said K. D. S. Gunasekera within two years fromthe date of the said deed. K. D. S. Gunasekera died on 26.11.1989 beforethe lapse of two years mentioned in deed P2. The 1 st and 2nd Respondentsthe wife and the daughter of the said Gunasekera made an application(P5) to the Debt Conciliation Board on the basis the said two deedsconstituted a mortgage of the property and they are the sole heirs of thesaid Gunasekera. The Petitioners objected to this application by letterdated 21.04.1990 (P6) and took up the position that the 1st and 2ndRespondents have no status to have and maintain this application. TheDebt Conciliation Board issued notice on 28th August 1990 (P7) andproceeded with the inquiry on the said application. The Debt ConciliationBoard in the inquiry considered the objections of the Petitioners: namely,that in terms of the Indenture No. 54719 the 1st and 2nd Respondents hadno status to make an application to the Debt Conciliation Board, the Boardhas no jurisdiction and the said application was not one that could havebeen made under the Debt Conciliation Ordinance and rejected theobjections by its order dated 18th November, 1991 (P9). The Petitionerschallenged this order in the Court of Appeal in C. A. Application No. 1119/91 (9a) and in the Supreme Court in Special Leave to Appeal ApplicationNo. 257/96(P9b) and was unsuccessful.
The 2nd Respondent submitted that when the matter was taken upbefore the Debt Conciliation Board for settlement on 25.08.1999 theRespondent offered to pay to the petitioners a sum of Rs. 700,000 insettlement of the debt. That was double the amount mentioned on theface of the deed P1 and constituted the maximum amount which could beclaimed on a debt of Rs. 350,000. But that offer was rejected by thePetitioners who were the creditors and they demanded Rs. 10 million forsettlement. Thereupon, the Board made order dated 17.01.2000 (P11) bywhich the Board accepted the offer made by the Respondent as a
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reasonable offer and granted her a certificate under section 32(2) of theDebt Conciliation Ordinance.
The Petitioners by motion dated 21 st February, 2000 (P12) filed undersection 54(1) of the Debt Conciliation Ordinance sought to review the said.order dated 17.01.2000 by moving the Board to dismiss the application ofthe 1 st and 2nd Respondents (Applicants) in terms of section 32(2) of thesaid Ordinance. The Board by its Order dated 30.08.2000 (P14) refusedthe application made by the Petitioners by the said motion.
The petitioners in this instant application has sought a writ of certiorarito quash the order marked (P11) dated 17.01.2000 and the Order marked(P14) dated 30.08.2000.
The Order made on 30.08.2000 (P14) was made in consequence to themotion filed by the Petitioners dated 21st February, 2000 (P12) undersection 54 of the said Ordinance. In the said motion the Petitioners havestated :
“The Board having observed that the Amendment Act has noretrospective effective to this application by the Applicants, madeorder on the 17th of January, 2000 issuing a certificate of nonsettlement to the applicants on the basis that the Respondentdid not accept the reasonable offer of the applicants, but at thesame time has not dismissed the application of the applicantsunder section 32(2) of the said Debt Conciliation Ordinancealthough in terms of the said section 32(2) it is mandatory thatthe Board shall dismiss the application. In the circumstances,the Respondent respectfully moves that this Board review thesaid order dated 17th January, 2000 in terms of section 54 ofthe Debt Conciliation Ordinance and dismiss the said applicationof the said applicants under section 32(2) of the DebtConciliation Ordinance.”
Section 54 reads as follows :
54.(1) The Board may, of its own motion or on application made by anyperson interested, within three months from the making of an order by theBoard dismissing an application, or granting a certificate, or approving a
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settlement, or before the payment of the compounded debt has beencompleted, review any order passed by it and pass such other in referencethereto as it thinks fit.
(2)The Petitioners by the aforesaid motion has sought a mandatory orderfrom the Debt Conciliation Board under Section 32(2) of the said Ordinanceto dismiss the application of the 1st and 2nd Respondents (Applicants).Even though the Petitioners have invoked the Jurisdiction of the DebtConciliation Board under Section 54 of the said Ordinance to review anorder made by the Board on 17.01.2000(P11) the petitioners have notchallenged the order made on 17.01.2000 (P11) on merits in other wordsthey have not sought to review the order granting a certificate to the debtors.
In the aforesaid motion the Petitioners have not taken up the positionthat are taken up in this application namely: that the said order P11 wasmade without taking into consideration of the agreement to repurchase atthe market value, in the circumstances the Debt Conciliation Board hasno reasonable ground in fact or in law to arrive at the decision that theamount offered by the 1 st and 2nd Respondent Rs. 700,000, which amountis twice the amount of the purported debt is a reasonable settlement whenin fact it was not clear whether the actual amount paid by the Petitionersto the late Gunasekara is Rs. 350,000. Therefore the Debt ConciliationBoard had no factual or legal grounds to issue a certificate of non-settlementunder Section 32 of the Ordinance.
As the petitioners have not challenged the Order of the issue of thecertificate of non-settlement before the Debt Conciliation Board underSection 54 they cannot challenge the said order in this application as theyhave not exhausted an effective alternate remedy.
In Obeysekera vs. Albert and Other<1) Soza, J with Abdul Caderagreeing held:
"Where the right of appealing to the Commissioner of Labour isavailable to him, he cannot seek a discretionary remedy like
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certiorari.”
In the House of Lords case of Baldwin and Francis Ltd. vs. PatentsAppeal Tribunal and Others!*' Lord Denning applied this principle saying :
“I am prepared to assume that the appellants are aggrieved,but as they have another remedy, open to them, the Court inits discretion should refuse a certiorari.”
In Bhambravs. Director of Customs and Others!3' Wijeratne, J withThilakawardane, J (P/C.A.) agreeing held:
The failure of the petitioner to resort to alternative remedyprovided by law, irrespective of the reason that he is a foreignerand a sailor, precludes this court from intervention and theexercise of the discretionary powers.
As the petitioners have not challenged the order dated 17.01.2000 (P11)under Section 54 of the said Ordinance on merit and as they have notexhausted an effective alternative remedy this court is not inclined toexercise judicial review in this application on the order marked P11.Therefore this court only considers the order of the Debt Conciliation Boardmade on 30.08.2000 marked P14 in exercising judicial review under Article140 of the Constitution. This Order was made inconsequence to the motionof the Petitioners filed on 21 st February, 2000 (P12) under Section 54 ofthe said Ordinance. In this motion what was urged before the Board wasthat the Board could not have granted a certificate without first dismissingthe application.
The Petitioners challenged the aforesaid order on the basis that theBoard under Section 32 could make only an order of dismissal of theApplication if there is no settlement. The Petitioners submitted that theBoard members misdirected themselves when they have erroneouslyobserved that Section 32 has given the Board two powers, which areindependent of each other and are together joined only by the conjunction“and”, when in fact Section 32(2) should be considered in its entirety. Thesaid Section reads thus :
‘Where no amicable settlement is arrived at between the debtorand any secured creditor, the Board shall dismiss the application
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so far as it relates to the debts due to that creditor and may ifit is of opinion that the debtor has made the creditor a fair offerwhich the creditor ought reasonably to have accepted, grantthe debtor a certificate in the prescribed form in respect of thedebts owed by him to that creditor".
Therefore the Petitioners submitted that the Board was obliged to dismissthe application when section 32 of the Debt Conciliation Ordinance (priorto the amendment) makes it mandatory to dismiss an application wherethere is no amicable settlement, in as much as the said application wasmade in the year 1990 and the amendment has no retrospective effect.
When interpreting a section the entire section has to be considered toconstrue the meaning of the section and every word in the section has tobe considered and effect should be give to those words in interpreting thesection, as the legislature has intentionally included those words for goodreasons. A statute is never supposed to use words without a meaning(Auchterarder Presbytery v Lord KinnouU)w. If the Petitionerssubmission is accepted then the Board under Section 32(2) could onlydismiss an application where no amicable settlement is arrived at betweenthe debtor and the creditor, even if the Board is of opinion that the debtorhas made the creditor a fair offer which the creditor ought reasonably tohave accepted. When an application is dismissed the Board will not havejurisdiction to make any other order in relation to that application. In thesecircumstances the words in Section 32(2) “if it is of opinion that the debtorhas made the creditor a fair offer which the creditor ought reasonably tohave accepted, grant the debtor a certificate in the prescribed form inrespect of the debts owed by him to that creditor" becomes redundant.
For the proper construction of Section 32(2) and to give meaning andeffect to all the words in that section the words “shall” has to be construedas directory. The Board in appropriate circumstances using its discretioneither dismiss the application or without dismissing the application grantthe debtor a certificate.
In Wallersteinervs. Moih5) Lord Denning M. R. held :
“At the time when Mr. Moir took out his summons for judgment,
Dr. Wallersteiner was plainly in default. Twelve months has
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passed. He has not served any defence to the counter claim.According to R. S. C., Ord. 19 r 7(1):
“On .the hearing of the application the court shall give such' judgment as the plaintiff appears entitled to on his statementof claim”
Although the word “Shall” is used in that rule, it is clear fromthe authorities that it is not imperative but directory. The courtwill not enter judgment which it would afterwards set a side onproper grounds being shown.”
In Liverpool Borough Bank vs. Turner <e) at 380 Lord Campbell L. C.observed:
“No universal rule can be laid down for the construction of statutesas to whether mandatory enactments shall be considereddirectory only or obligatory with an implied nullification fordisobedience. It is the duty of courts of justice to try and get atthe real intention of the legislature by carefully attending to thewhole scope of the statute to be construed”
The legislature itself realising the difficulty faced by the members of theBoard in the interpretation of this section has thought it fit to amend thesaid section. Debt Conciliation Ordinance (Amendment) Act, No. 29 of1999 Section 5 states as follows:
“Section 32 of the principal enactment is hereby amended insub-section (2) of that section, by the repeal of all the words from“the Board shall dismiss the application" to “may, if it is” and thesubstitution therefore of the following words “the Board may, if itis”.
In the given circumstances the Board has correctly decided not todismiss the application of the debtor and to reject the application for reviewmade by the creditor. Therefore this Court dismiss this application withcosts fixed at Rs. 10,000.
Application dismissed.