Sri Lanka Law Reports
 1 Sri LR.
PANADURA FINANCE & ENTERPRISES LTD.
v.PERERA AND ANOTHER
COURT OF APPEALWIGNESWARAN. J„
A. NO. 821/97 CALA NO. 197/97
C. PANADURA NO. 1041/LAPRIL 30. 1998
JULY 2, 1998SEPTEMBER 1. 1998
Civil Procedure Code – S. 18 – addition of a Party – Res judicata.
Case No. 416/L was instituted by the defendant-respondent against the addeddefendant-petitioner and the plaintiff-respondent for the cancellation of AgreementNo. 420 on the ground of fraud. The case was decided Ex parte wherein theCourt dismissed the action, on the basis that repayment in terms of the Agreementwas not made.
Thereafter, the plantiff-respondent filed the present case against the defendant-respondent and the defendant-respondent moved to add the petitioner as a partywhich was allowed. It was contended that the decision in 416/L is res judicatabetween the defendant-respondent on the one hand and the plaintiff-respondentand the added defendant-petitioner on the other.
The issue in question is different from the earlier case. The questionof constructive trust and laesio enormis were not distinctly raised inissue between the same parties and determined in the earlier case 416/L Thus, on account of the causes of action being different between thetwo cases, as well as due to the added defendant petitioner not filing ananswer and not participating in the earlier suit 416/L and for the reasonthat the ground of dismissal of the earlier action 416/L in any event cannotoperate as a bar to a second action claiming the same relief.
The claim of constructive trust and claim of laesio enormis raised by thedefendant-respondent are not against the plaintiff-respondent but against the
Panadura Finance & Enterprises Ltd. v. Per era and Another
added defendant-petitioner, thus an opportunity must be given to the addeddefendant-petitioner to answer such claims.
The 1st defendant in that action who is the added defendant-petitioner inthis case, did not file an answer, the matter in issue between the defendant-respondent and the added defendant-petitioner remains unresolved upto date.
In the context of the alleged fraud remaining unresolved against the addeddefendant-petitioner it is in its best interest to be made a party to this case,to have all matters adjudicated effectually completely and finally.
APPLICATION in Revision from the Order of the District Court of Panadura.
Cases referred to:
Kumarihamy v. Dissanayake – 37 NLR 345.
The Chartered Bank v. L N. de Silva – 67 NLR 135.
Mohamed Cassim v. Sinne Lebbe Marikar et al – 12 NLR 184.
Perera v. Appuhamy – 17 NLR 112 at 113.
/. S. de Silva with Naveen Dissanayake for the added defendant-petitioner.
Raja Pieris for defendant-respondent.
Ikram Mohamed, PC with Ms. Shyama Fernando for plaintiff-respondent.
Cur. adv. vult.
April 01, 1999.
An order was made by the District Judge of Panadura dated7. 10. 1997 allowing the application of the defendant-respondent toadd Panadura Finance and Enterprises Limited of No. 60, Park Street,Colombo 2, the added-defendant-petitioner abovenamed, as a party,to these proceedings under section 18 of the Civil Procedure Code.
The added-defendant-petitioner filed Leave to appeal ApplicationNo. 197/97 and Revision Application No. 821/97 against the said order.
It was agreed that this order should apply to both applications.
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 1 Sri LR.
The grounds enumerated by the added defendant-petitioner whichwere more or less acquiesced upon by the plaintiff-respondent areas follows:
The issues in the present Case No. 104/L were alreadydecided in DC Panadura case No. 416/L and between thesame parties. The two cases being identical in person, thingand cause, they fell within the scope and ambit of the doctrineof res judicata.
Under section 18 (1) of the Civil Procedure Code a personshould be added as a party only for the purpose of completelyand effectually settling all matters in issue in an action.There is in this instance no need for the added defendant-petitioner to be added as a party since the matters inissue could be completely and effectually settled withoutadding the said Finance Company.
The plaintiff-respondent in addition made the following submissions:
Deed No. 420 was executed 10 years prior to the institutionof this action and therefore any claim based on deedNo. 420 was prescribed.
The defendant-respondent's plea of laesio enormis cannotbe maintained since the defendant-respondent was not aparty to the said deed.
At most the added-defendant-petitioner could only be anindependent witness and not a party to this case. Decisionsin Kumarihamy v. Dissanayakd' The Chartered Bank v.L. N. de Si!vaF> referred to.
All these submissions would now be examined.
Case No. 416/L was instituted on 17. 7. 1989 by the defendant-respondent against the Added defendant-petitioner and the plaintiff-respondent for the cancellation of Agreement No. 420 dated 18. 02.1985 on the ground of fraud. It was the contention of the defendant-respondant in that case that her signature was obtained on unfilled
Panadura Finance & Enterprises Ltd. v. Perera .and Another
printed forms by the officials of the Panadura Finance and EnterprisesLtd. making her believe that she was placing her signature to a setof guarantee forms for a loan of Rs. 36,000 that was to be grantedin the name of her nephew Lalith Chandrasiri Lokuge. Later, she cameto know that her signature was obtained to a deed of transfer of hersole ancestral property in favour of the Finance Company and thatthe latter on the same day entered into an agreement to sell withher nephew in respect of the said property.
She made a complaint to the Police when she came to know ofthe fraud.
On 20. 3. 1989 the agreement to sell was unilaterally cancelledby deed No. 1116, and by deed No. 1117 on the same day a deedof transfer was written in favour of the plaintiff-respondent. Theplaintiff-respondent fully aware of the fraud perpetrated on thedefendant-respondent, yet, moved to obtain possession of thesaid property by extra judicial means since the plaintiff-respondent'shusband was a retired senior police officer.
Thereafter, the parties were before the Primary Court of Kesbewain case No. 40928 and possession was granted to the defendant-respondent pending action in the District Court.
Thereafter, DC Panadura case No. 416/L was filed.
That case was decided ex parte wherein the Court dismissed thesaid action on the basis that repayment in terms of the agreementwas not made. Though Notice of Appeal against the said ex partejudgment was lodged, Petition of Appeal having not been filed thedefendant-respondent forfeited her right of appeal. It appears that thelearned District Judge in that case No. 416/L had failed to considerthe uncontradicted evidence of the plaintiff in that case and taken adecision presuming the validity of the impugned deed. Whenfraud was pleaded the Court could not have presumed the validityand applicability of the terms and provisions of the Agreement to sell.
Thereafter, taking advantage of the dismissal of case No. 416/Lthe plaintiff-respondent filed the present case No. 1041/L against thedefendant-respondent. The defendant-respondent moved to add thePanadura Finance and Enterprises Ltd. as a party under section 18
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 1 Sri LR.
of the Civil Procedure Code. This application was allowed by thelearned District Judge by his order dated 7.10.97.
The contention is that the decision in case No. 416/L is res judicatabetween defendant-respondent on the one hand and the plaintiff-respondent and the added defendant-petitioner on the other.
On an examination of the documents and submissions beforethis Court it is found that the added defendant-petitioner who wasthe 1st defendant in case No. 416/L abovesaid did not file answerin the said case. In any event the Court had fixed the case for exparte trial against the 1st and 2nd defendants in that case No. 416/L who are the added defendant-petitioner and the plaintiff-respondentrespectively, in this case No. 1041/L. Having not participated in theproceedings in the previous case No. 416/L, the added defendant-petitioner and the plaintiff-respondent are taking up the plea of resjudicata in this case.
In Mohamed Cassim v. Sinne Lebbe Marickar et aP> was held thata judgment dismissing an action for declaration of title to land on theground that the plaint disclosed no valid cause of action does notoperate as a bar to a second action for the same relief.
In Perera v. Appuham/A) at 113 it has held that an ex parte decreewhen final is res judicata only so far as the decision necessarilydecided an issue.
In the instant case the issue in question is different from the earliercase in any event. The questions of constructive trust and laesioenormis were not distinctly raised in issue between the sameparties and determined in the earlier case No. 416/L (cf. prayers setout in the answer dated 11.10.1995 filed in this case).
Thus, on account of the causes of action being different betweenthe two cases, as well as due to the added defendant-petitionernot filing an answer and not participating in the earlier actionNo. 416/L and for the reason that the ground of dismissal of the earlieraction No. 416/L in any event cannot operate as a bar to a secondaction claiming the same relief, we are unable to accept the submissionmade on res judicata.
Panadura Finance & Enterprises Ltd. v. Perera and Another
Addition under section 18 (1) of the Civil Procedure Code :
There is no doubt as stated by the learned District Judge in hisorder dated 7. 10. 1997, the added defendant-petitioner should bea necessary party to these proceedings for more than one reason.
Firstly, the claim of constructive trust and the claim of laesioenormis raised by the defendant-respondent are not against theplaintiff-respondent but against the added defendant-petitioner. Thus,an opportunity must be given to the added defendant-petitioner toanswer such claims.
Secondly, the plaintiff-respondent bases her title on a deed ex-ecuted by the added defendant-petitioner which was subject to anaction previously. The 1st defendant in that action who is the added-defendant-petitioner in this case failed to file answer. The matter inissue between the defendant-respondent and the added defendant-petitioners thus remains unresolved upto date. Without that beingresolved the plaintiff-respondent has no basis for this action. Hence,the added defendant-respondent must become a party to theseproceedings to enable the Court to effectually and completely adju-dicate upon and settle all the questions involved in the action.
Thirdly, with the added defendant-petitioner and the plaintiff-respondent joining hands as it were to keep the added defendant-petitioner out of this case, the defendant-respondent cannot expectmuch help from the added defendant-petitioner as a simple witness.
The matter under consideration is whether the added defendant-petitioner has been correctly added as a party to these proceedings.This Court is not called upon to consider the defences that may betaken up by the added defendant-petitioner. Thus, the raising of thequestion of prescription is premature at this stage.
Laesio Enormis :
The same observation set out under (iii) above applies to this too.
Sri Lanka Law Reports
(1999] 1 Sri L.R.
On the other hand the question of res judicata was consideredabove since, if the plea was accepted by this Court, it wouldhave precluded the addition of the added defendant-petitioner. But,the question of Prescription and Laesio Enormis are defences to betaken up, if so advised, after being made a party to the case.
Added defendant-petitioner at most an important witness :
Added defendant-petitioner is more than a witness in this wholeepisode. Learned District Judge had no doubt said in his order thatits evidence is very important. But, he has also said in thevery next sentence that without the added defendant-petitioner beingmade a party the matter would not be justiciable. The relevantwords in Sinhala are as follows:
JAYAWICKREMA, J. – I agree.
Thus, there is no doubt that the order dated 7.10.97 has beencorrectly made. Further, in the context of an allegation of fraudremaining unresolved against the added defendant-petitioner it is inits best interest to be made a party to this case to have all mattersadjudicated upon effectually, completely and finally.
We, therefore, confirm the order dated 7. 10. 97 of the DistrictJudge of Panadura and dismiss the Revision Application No. 821/97and refuse to grant leave in C.A.L.A. No. 197/97 and dismiss sametoo. The added defendant-petitioner and the plaintiff-respondent shalleach pay Rs.10,500 as costs of these two applications to thedefendant-respondent (in all Rs. 21,000).