Satchithanandasivam v People’s Bank
(Udalaoama. J.)
C.A. NO. 655/2003NOVEMBER 4, 2003JANUARY 30, 2004
■ People’s Bank Act, No. 2 of 1961 — section 290 — Parate execution —Finality clause — Does writ lie? — Mortgage bond — Does it secure futureloan facilities only? — Interpretation Ordinance, section 22 — CourtsOrdinance, section 42 — Constitution, Article 140
On a perusal of the Mortgage bonds it is apparent that the bonds werevalid as security for all loan facilities past and future.
Sri Lanka Law Reports
[2004] 2 Sri L.R
Per Udalagama, J.
“In the exercise of the writ jurisdiction of the Court of Appeal a resolution of arespondent bank could not be challenged unless it was ex facie apparent onthe application that the body or authority who made the direction or order hadacted ultra vires the powers that had been conferred upon such body or wasacting contrary to rules of natural justice or had not complied with the manda-tory provision of the law.”
APPLICATION for writs, of certiorari and prohibition.
Case referred to:
Wettesinghe v People’s Bank – CA 981/2002 – CAM 3.11.2003.
A.R. Surendran for petitionersNavin Marapana for respondents
February 25, 2004UDALAGAMA, J. (P/CA)
Admittedly the 1st respondent-Bank granted loan facilities to thepetitioners purportedly to expand the business of the latter in pur-chase, storing and selling of paddy. Also admittedly the said loanswere secured by the stocks of paddy held by the petitioners up tothe time of rescheduling of the loan at which time security by wayof a mortgage specifically by mortgage bonds, bearing Nos. 197and 198 dated 21.5.2002 had been tendered by the petitioners andaccepted by the 1st respondent-Bank.
In default of payment by letter dated 11.12.2002 (P11) the 1strespondent-Bank appears to have informed the petitioners of a res-olution passed by the Directorate of the Bank authorizing the auc-tioning of the mortgaged property to recover sums owing to thebank. It is observed that a copy of the aforesaid resolution (Pi 1)had been sent to the petitioners and the said resolution admittedlypublished in the Ceylon Daily News of 04.01.2003 and theDinakaran of 03.01.2003.
Satchithanandasivam v People's Bank
(Udalaaama. J.)
It is the submission of the learned Counsel for the petitionersthat th6 1 st respondent-Bank is not entitled in law to parate execu-tion in respect of the properties the subject matter of the aforesaidmortgages and morefully described in the 1st and 2nd schedules tothe petition.
The petitioners seek inter alia by this application a writ in thenature of certiorari to quash the aforesaid resolution and a writ inthe nature of prohibition restraining the 12th respondent from auc-tioning the aforesaid properties morefully described in schedules 1and 2 of the petition.
Learned Counsel for the 1st respondent-Bank at the out setraised a preliminary objection that this court has no jurisdiction tohear and determine this matter in view of the provisions of section29D of the People’s Bank Act, No. 29 of 1961 as amended.
Importantly’and significantly the petitioners have admitted boththe mortgage bonds referred to above tendered as security formonies lent or to be lent on a future date. Contrary to the submis-sions on behalf of the petitioners clause (c) of both mortgage bonds197 and 198 referred to above specifically refer to monies lent or tobe lent rendering nugatory the argument by the learned Counsel forthe petitioners that the mortgage bonds were valid as security onlyfor future loan facilities.
Clause (c) of the aforesaid mortgage bonds by which the petition-ers are legally bound to the 1st respondent-Bank unequivocally refersto all loan facilities past and future as stated above thereby renderinginvalid the argument on behalf of the petitioners that the 1st respon-dent-Bank acted ultra vires to the powers of the Bank.
Learned Counsel for the respondent-Bank had referred thiscourt to a judgment of this court decided on 03.11.2003 in the caseof Wettesinghe v People’s BankP) C.A. 981/2003 where in identicalcircumstances this court held that the respondent-Bank in that casetoo had the jurisdiction to pass such resolutions relevant to parateexecution.
This court in the case cited above dealt with the provision of sec-tion 22 of the Interpretation Ordinance together with the provisionsof section 42 of the Courts Ordinance and held inter alia that in the
Sri Lanka Law Reports
12004] 2 Sri L.R
exercise of the writ jurisdiction of the Court of Appeal a resolutionof a respondent-Bank could not be challenged unless it was exfacie apparent on the application that the body or Authority whomade the direction or order had acted ultra vires the powers thathad been conferred upon such body or was acting contrary to rulesof natural justice or had not complied with the mandatory provisionsof law.
Whilst concurring with the dicta of this court as stated above and soapplying criteria appearing in that case to the present application itis apparent to this court that the petitioners in this application admit-tedly owes the Bank a sum as stated in the resolution referred toabove.
There is not even a suggestion in the averments of the petition-ers that the respondent-Bank had violated any rule of natural jus-tice.
am inclined to the view in the absence ex facie of even an alle-gation of non conformity to the mandatory provisions of law by therespondent-Bank or any violation of natural justice or for that mat- 70ter the Bank had acted in excess of its powers specifically consid-ering the manner the petitioners bound themselves to the Bankvide the covenants in Mortgage Bonds Nos. 197 and 198, that thepetitioners are not entitled to the relief claimed in this application.
For the aforesaid reasons the petitioners are also denied reliefunder the provisions of Article 140 of the Constitution.
In the aforesaid circumstances the petitioners are not entitled torelief by way of prerogative writ and this appeal is dismissed.
Application dismissed.