Settlement Of Debts Law

(1) This Law shall come into operation on such date as the Minister may by Order published in the Gazette appoint, hereinafter in this Law referred to as the ” appointed date “.

(2) With effect from the appointed date, this Law shall be operative in every Conciliation Board area other than a Conciliation Board area situated within the administrative limits of any Municipal Council, Urban Council or Town Council.

(3) Subject to the provisions of subsection (2), ” Conciliation Board area ” has in this Law the same meaning as in subsection (1) of section 3 of the Conciliation Boards Act.

(1) Subject to the provisions of section 4, every creditor to whom any liquidated sum of money is due on a debt incurred or outstanding in whole or part prior to the appointed date shall, within twelve months of such date, make an application in the prescribed form to the Chairman of the Panel of Conciliators of the Conciliation Board area in which the debtor or any of the debtors resides, for settlement or determination of such debt in accordance with the provisions of this Law.

(2) For the purposes of this Law, a debt means a debt incurred or outstanding in whole or part prior to the appointment date and includes any debt, whether secured or unsecured, incurred jointly or severally but not jointly end severally, of or by way of a bill, of exchange, promissory note, cheque mortgage, conditional transfer of immovable property, shop bill or book debt or otherwise.

(3) In the case of a conditional transfer of immovable property referred to in subsection (2)-

(4) Where any debtor-

he shall, for the purposes of subsection (1), be deemed to reside in that Conciliation Board area.

(5) Every application under section 6 of the Conciliation Boards Act by a creditor in respect of any debt to which this Law applies, made to a Conciliation Board prior to the appointed date and pending before that Board on the said date, shall be deemed to be an application made under subsection (1), and accordingly the provisions of this Law shall apply in all matters relating to the disposal of such application.

(6) Every application made or deemed to be made under this section shall be referred for settlement or determination by the Chairman of the Panel of Conciliators to a Conciliation Board constituted from that Panel.

(7) Where any creditor referred to in subsection (1) fails to make an application for the settlement of a debt in accordance with the provisions of that subsection, then-

for the recovery or settlement of that debt, and Where such creditor is a transferee of immovable property on a conditional transfer, such transfer shall be null and void.

(8) Any novation created on or after the appointed date of an obligation to pay a liquidated sum of money arising from a debt subsisting on the said date, shall be null and void.

(9) Any person who is a party to the novation, in fraud of this Law, of an obligation arising from a debt referred to in subsection (8) shall be guilty of an offence and shall, on conviction after trial by a Magistrate, be ‘liable to a fine not exceeding one hundred rupees.

(a) the creditor to whom any liquidated sum of money is due on a debt referred to in section 3(1) is a banking institution, an approved credit agency, any body of persons (whether corporate or unincorporate- ) which is engaged wholly or partly in the bigness of lending money, an approved provident, a public corporation or the State ; or

(b) in respect of such debt, an action has been instituted in any court or an application has been made to the Debt Conciliation Board prior to the appointed date ; or

(c) the debt or the balance of the debt outstanding : on the appointed date, excluding the interest due thereon exceeds five thousand rupees.

(1) Where any application is referred for settlement or determination to a Conciliation Board under this Law it shall, be the duty of the Board to summon the parties named in the application to appear before the Board and after a preliminary inquiry to make every effort to induce the parties to come to an amicable settlement.

(2) Where the parties fail to come to an amicable settlement, the Board shall after receiving such evidence, both written and oral, as may be adduced by the parties, and such other evidence as the Board thinks necessary, make a determination on such application.

(3) For the purpose of making a. determination under subsection (2), the Board shall take into consideration ail or any of the following matters, as may be applicable, that Is to say-

(4) The terms of settlement between the parties or the determination of the Board on any application, as the case may be, shall-

(5) Where default is made in the payment of any instalment payable in accordance with the settlement or the determination of the Board, default shall be deemed to have been made in respect of the whole of the unpaid amount due on such settlement or determination.

(1) Where any debtor fails to make payment in accordance with the terms of settlement or the determination as -set out in the .certificate, the creditor may produce a certified copy of such certificate before the appropriate court within the jurisdiction of which such debtor resides and apply for execution.

(2) Immediately upon the production before the District Court or the Magistrate’s Court, as the case may be, of the certified copy of the certificate referred to in subsection (1), the District Judge or the Magistrate of that Court shall cause such copy to be filed of record in such Court. Such certificate shall, with effect from the date of such filing, be deemed to be a decree of that Court, and such of the provisions of Chapter VI of the Administration of Justice Law, No, 44 of 1973, as relate to the execution of decrees shall, as far as may be practicable, apply, mutatis mutandis, to and in relation to such certificate which is deemed to be a decree.

(a) where there is more than one debtor, to settle or determine, notwithstanding anything to the contrary in the Conciliation Boards Act, such debt in relation to any debtor resident in any area outside the Conciliation Board area or which such Board is constituted ;

(b) in addition to the evidence added by the parties, to procure and receive all such other written or oral evidence as the Board may think it necessary or desirable to procure or examine.

(c) to summon any person residing in Sri Lanka to attend any meeting of the Board to give evidence or produce any document or other thing in his possession, and to examine him as a witness or debtor or require him to produce any document or other thing in his possession; and

(d) notwithstanding any of the provisions! of the Evidence Ordinance, to admit any written or oral evidence which might be inadmissible in civil proceedings.

(a) no action shall be instituted in, or entertained by, any court ;

(b) no application shall be entertained by the Debt Conciliation Board ; and

(c) no application shall be entertained by the Chairman of a Panel of Conciliator under section 6 of the Conciliation Boards Act,

(1) The Minister may make regulations to give effect to the principles and provisions of this Law.

(2) No regulation made under subsection (1) shall have effect until it is approved by the National State Assembly and notice of such approval is published in the Gazette and one daily newspaper.