SRI LANKA INSURANCE CORPORATION LTD v. SHANMUGAM AND ANOTHER

007-SLLR-SLLR-1995-V-1-SRI-LANKA-INSURANCE-CORPORATION-LTD-v.-SHANMUGAM-AND-ANOTHER.pdf


SRI LANKA INSURANCE CORPORATION LTD.
v.SHANMUGAM AND ANOTHER
COURT OF APPEAL.
S.N. SILVA, J. (P/CA) ANDRANARAJA, J.
A. 532/94
C. COLOMBO 13579/MRNOVEMBER 29, 1994.
Restitutio in integrum – Requirements – Procedure – Definition of fraud – Article138(1) of the Constitution – Court of Appeal (Appellate Procedure) Rules 1990.
The Respondents sued the petitioner (Sri Lanka Insurance Corporation Ltd.)claiming Rs. 5 million with interest on three causes of action arising from liabilityon three separate insurance policies. The petitioner appeared in court onsummons, filed proxy and being allowed time to file answer, failed to file answeron the final date fixed for answer. An application for a further date for answer wasrefused and the case was fixed for ex parte trial, after ex parte trial decree wesentered and on being served with the copy of the decree the petitioner filedpetition and affidavit and sought to have the ex parte decree set aside. Afterinquiry the District Judge rejected the application to set aside the decree.
In the meantime the 1st respondent moved for writ for execution of decree. Ofconsent the application for execution was stayed until after disposal of theapplication to vacate decree. In this situation the petitioner filed application forrestitutio in integrum.
Held:
Article 138(1) of the Constitution has vested in the Court of Appeal sole andexclusive jurisdiction to grant relief by way of restitutio in integrum. The power ofthe Court to grant such relief is a matter of grace and descretion.
Restitution reinstates a party to his original legal condition which he has beendeprived of by the operation of law. It is an extraordinary remedy and will begranted under exceptional circumstances. The remedy can be availed of only byone who is actually a party to the legal proceeding. He cannot claim damagesbut he should have suffered damages. A party seeking restitution must act withthe utmost promptitude. The court will not relieve parties of the consequences oftheir own folly, negligence or laches.
The procedure for making an application for restitution has been laid down in theCourt of Appeal (Appellate Procedure) Rules of 1990. The application must be bypetition and affidavit and accompanied by originals or certified copies of therelevant documents and proceedings of the original court. The application onceregistered is listed for support within two weeks. Where the court orders notice toissue, dates within stipulated periods are given for tendering of notices for serviceon the respondents, their objections and counter affidavits of the petitioner if any.Thereafter the matter is listed for hearing.
Relief by way of restitutio in integrum in respect of judgments of original courtsmay be sought:
where judgments have been obtained by fraud by the production of falseevidence, non-disclosure of material facts or by force; or
where fresh evidence has cropped up since judgments, which was unknownearlier to the parties relying on it or which no diligence could have helped todisclose earlier, or
where judgments have been pronounced by mistake and decrees enteredthereon provided of course it is an error which connotes a reasonable and
"excusable error.
The remedy could therefore be availed of where an attorney-at-law has bymistake consented to judgment contrary to express instructions of his client, for insuch cases it could be said that there was in reality no consent but not where theattorney-at-law has been given a general authority to settle or compromise acase.
The petitioner in the instant case sought restitutio in integrum on the ground thatthe respondents had obtained judgment by fraud and deceit. The petitioner hadpaid of 4,000,436/- and an appeal for further payment on which the petitioner tookno action the case was lodged. The receipts for payments endorsed a 'in full andfinal settlement’ were in practice not treated as such. Non-disclosure that the 2ndrespondent had left the partnership was inconsequential because it was losscaused by fire to Ratgama Stores that gave rise to the suit.
Fraud means “any craft, deceit or contrivance employed with a view tocircumvent, deceive or ensnare another person.” The facts did not disclose fraudin this.
The principle on which the Court has to act is not whether the Court that gavejudgment was tricked into it, but whether one party to the action was deceived bythe conduct of the opposing party. It was entirely due to lack of due diligence thatpetitioner failed to file answer.
Restitution is granted only if no other remedy is available to the party aggrieved.The petitioner has filed an application in revision and also a final appeal.
Cases referred to:
Abeysekera v. Haramanis Appu 14 NLR 353.
Phipps v. Bracegyrdle 35 NLR 302.
Dember v. Abdul Hafeel 49 NLR 62.
Usoof v. Nadarajah Chettiar, 61, NLR 173.
Perera v. Wijewickrama 15 NLR 411.
Menchinahamy v. Munaweera 52 NLR 409.
Mapalathan v. Elayavan 41 NLR 115.
Babun Appu v. Simon Appu 11 NLR 115.
Sinnethamby v. Nallathamby 7 NLR 139.
Wickramasooriya v. Abeywardena 15 NLR 472
Don Lewis v. Dissanayake 70 NLR 8.
Buyzer v. Eckert 13 NLR 371.
Perera v. Ekanaike 3 N LR 21.
Gunaratne v. Dingiri Banda 4 NLR 249.
Jayasuriya v. Kotalawela 23 NLR 511.
Perera v. Don Simon 62 NLR 118.
Narayan Chetty v. Azeez 23 NLR 477.
Silva v. Fonseka 23 NLR 447.
APPLICATION for restitutio in integrum in respect of order and judgment of theDistrict Court of Colombo.
Faiz Mustapha, P.C. with H. Withanachchitor defendant-petitioner.
Romesh de Silva, P.C. with G. Goonewardena for plaintiffs-respondents.
Cur. adv. vult.
January 10,1995.
RANARAJA, J.
The plaintiffs-respondents (respondents) instituted this actionagainst the defendant-petitioner (petitioner) claiming a sum ofRs. 5,000,000/- with interest thereon on three causes of action arisingfrom liability on three separate insurance policies. The petitionerappeared in court on summons, filed its proxy and moved for a dateto file answer. On the final date for answer, namely 21.1.94, thepetitioner moved for further time to do so. This application wasrefused by court. The matter was fixed for ex parte trial and decreewas entered upon judgment entered after trial. A copy of the decreewas served on the petitioner on 28.3.94. Petition and affidavit seekingto set aside the ex parte decree were filed by the petitioner on 2.5.94.The learned District Judge after inquiry rejected the petitioner'sapplication as it had failed to comply with the provisions of section86(2) of the Civil Procedure Code.
In the meantime, an application by the 1st respondent for writ ofexecution of the decree was allowed on 3.4.94. However, it wasstayed of consent of parties till the order on the application for thevacation of the ex parte decree was delivered. The petitioner has nowsought relief from this court by way of restitutio in integrum, which insubstance is for an order remitting the case, after setting aside theorders of 3.5.94 and 24.6.94 for a fresh inter partes trial by affordingthe petitioner an opportunity to file answer.
Under Roman Law, the remedy of restitutio in integrum was theremoval of a disadvantage in law which had legally occurred. It was aprotection against injustice (as distinguished from an action againstinjustice) which was rendered necessary on account of practicalimpossibility of taking legally, in advance, all the circumstances thatin reality may occur. The remedy was granted by the Praetor whohimself conducted the proceeding in which judicium rescindensmight ultimately be granted. Abeysekera v. Haramanis Appu 0). Theremedy was received into Roman Dutch Law in wider form, whererestitutio in integrum was primarily intended for relief from contractson the ground of minority, error, fraud and duress. Relief by way ofrestitutio in integrum was also granted from the effect of an order injudicial proceedings. Phipps v. Bracegyrdle(2). Vander Linden groupscases when relief could be obtained under two heads, (a) Reliefrelating to the original matter itself (substantial relief); relieving a partyfrom any act or contract and replacing him in his former situation onthe ground of his having been induced through fear, fraud, minority,error, absence or other sufficient reasons to do the act against whichhe prays relief, (b) Relief relating merely to some omission or error inthe process of pleading, (judicial relief). A judgment, according toGrotius, had the power of a final and definite sentence when it doesnot admit of appeal or reformation or when the time for such appeal
or reformation had passed, unless it is altered by revision. Ajudgment may however be rescinded by restitutio in integrum, so asto lose all effect of res judicata and the cause is heard de novo.Dember v. Abdul Hafeel(3>.
In this country the remedy of restitutio in integrum was recognisedas a mode of relief as far back as the time of Sir Charles Marshall,and has taken deep root in the practice and procedure of our courts.(Abeysekera – supra). At present, Article 138(1) of the Constitutionhas vested this court with sole and exclusive jurisdiction to grantrelief by way of restitutio in integrum. This remedy cannot, unlike anappeal, be claimed by a party as of right. The power of this court togrant such relief is a matter of grace and discretion.Usoof v.Nandarajah Chettiar (4). The power of restitution differs fromrevisionary power of this court in that the latter is exercised where thelegality or propriety of any order or proceedings of a lower court isquestioned. Restitution reinstates a party to his original legalcondition which he has been deprived of by the operation of law.Thus it follows, the remedy can be availed of only by one who isactually a party to the legal proceeding in respect of which restitution isdesired. (Perera v. Wijewickrema(5), Menchinahamy v. Munaweera(6)).A party seeking restitution must also show that he has suffered actualdamage, (Phipps-supra), although damages cannot be claimed in anapplication for restitution. (Dember-supra). Restitutio in integrumbeing an extraordinary remedy, it is not to be given for the mereasking or where there is some other remedy available, Mapalathan v.Elayavan (7). It is a remedy which is granted under exceptionalcircumstances and the power of court should be most cautiously andsparingly exercised, (Perera-supra). A party seeking restitution mustact with utmost promptitude, Babun Appu v. Simon Appum,(Menchinahamy – supra), and before a change has taken place inthe position of the parties, (Sinnethamby v. Nallathamby)(9). Wherethere has been negligence on the part of the applicant seeking reliefor his attorney-at-law, restitution will not be granted, (Wickremasooriyav. Abeywardene) (10>. The party invoking the extraordinary powers ofthis court must display honesty and frankness. Thus where a party byits own conduct has acquiesced in or approbated the defectiveproceedings, court will not exercise its discretion to set aside theimpugned proceedings. For it is not the function of court in theexercise of its jurisdiction in restitution to relieve the parties of theconsequences of their own folly, negligence or laches, (Don Lewis v.Dissanayake
The procedure in making an application for restitution has beenlaid down in the Court of Appeal (Appellate Procedure) Rules of1990. Every such application has to be by way of petition andaffidavit in support. The application must be accompanied byoriginals or certified copies of the relevant documents andproceedings in the original court. The application once registered islisted for support within two weeks. Where court orders notice toissue, dates within the stipulated periods are given for tendering ofnotices for service on the respondents, their objections and counteraffidavits of the petitioner if any. Thereafter the matter is fixed forhearing.
The remedy of restitutio in integrum is in effect the restoration ofthe applicant to his original legal condition. The Court of Appeal, inth^ exercise of its powers of restitution may achieve this end byreversing, modifying any order, judgment or decree of the lower courtor by giving directions or ordering a trial de novo as the justice of thecase may require, (Article 139(1) & (2) of the Constitution). An ordergranting or refusing an application for restitutio in integrum is not afinal judgment of this court from which leave to appeal as of right canbe claimed, (Usoof-supra).
Superior courts of this country have held that relief by way ofrestitutio in integrum in respect of judgments of original courts maybe sought where (a) the judgments have been obtained by fraud,(Abeysekera-supra), by the production of false evidence, (Buyzer v.Eckert) °2), or non-disclosure of material facts, (Perera v. Ekanaike)<13),or where judgment has been obtained by force or fraud, (Gunaratne v.Dingiri Banda ('4), Jayasuriya v. Kotelawela) <15). (b) Where freshevidence has cropped up since judgment which was unknown earlierto the parties relying on it, (Sinnethamby-supra), and fresh evidencewhich no reasonable diligence could have helped to disclose earlier,(Mapalathan-supra). (c) Where judgments have been pronounced bymistake and decrees entered thereon, (Sinnethamby-supra),provided of course that it is an error which connotes a reasonable orexcusable error, (Perera v. Don Simon) <,6). The remedy couldtherefore be availed of where an Attorney-at-Law has by mistakeconsented to judgment contrary to express instructions of his client,for in such cases it could be said that there was in reality no consent,(Phipps-supra, Narayan Chetty v. Azeez) (17), but not where theAttorney-at-Law has been given a general authority to settle orcompromise a case, (Silva v. Fonseka<1B)).
The petitioner seeks relief by way of restitutio in integrum on theground that the respondents have obtained judgment by fraud anddeceit. The plaint filed by the respondents discloses the payment bythe petitioner of an aggregate of Rs. 4,000,436/- on two occasions,on the three insurance policies on which the claims were made. Therespondents have made an appeal for further compensation thereonfrom the petitioner. The present action was based on the inaction onthe part of the petitioner in considering that appeal. The petitionersubmits that by letter X3A the respondents have accepted theaforesaid sum “in full and final settlement" of all claims on thepolicies, but had suppressed this fact from court. The respondentsdeny having signed X3A. A comparison of the signature on X3A dhdthe other documents marked X3B and X3C does in fact show adifference in the signature on the two sets of documents. Howeverwhat is of relevance is that both X3B and X3C also carry the words“in full and final settlement" of all claims. Despite which, the petitionerhad considered the first appeal of the respondents after payment onX3B and paid them a further sum of Rs. 2,483,777/- on X3C. Hence,the petitioner cannot be serious in placing such weight on the words“in full and final settlement” in X3A, to prove fraud and deceit on thepart of the respondents.
It is submitted that the 1st respondent has suppressed the factthat the business of Ratgama Stores, which was carried on by bothrespondents in partnership at an earlier date, had ceased to exist, bythe 2nd respondent giving up all connections with it. It is surprisingthat the 2nd respondent has cooperated with the petitioner byswearing the affidavit X12A to that effect and also handing over letterX12B to him. Quite apart from the propriety of the conduct of both thepetitioner and the 2nd respondent in this exercise, the insured onpolicy No. MF 106767 (P1) is the 1st respondent, trading in the nameof Ratgama Stores. The insured on policy No. MF 82753 (P3), is
Ratgama Stores. The third policy has not been produced by eitherparty. However all three claims are in respect of damage by fire to thestocks of Ratgama Stores. Thus, even if the 2nd respondent hasceased to be a partner of the business, the 1st respondent couldhave pursued the claim as sole proprietor.
It is further submitted that the 1st respondent has falselyrepresented that letter P2 dated 1.11.91 was written by the“defendant” acknowledging the further appeal by the respondents forcompensation, when in fact the petitioner, Sri Lanka InsuranceCorporation Ltd., came into existence subsequently. P2 has beenwritten by the Insurance Corporation of Sri Lanka, the predecessor ofthe petitioner. Whether the liabilities of the latter were taken over bythe petitioner was a question of law, which should have been arguedat the trial. The description of the writer of P2 as the "defendant" istherefore a mere technicality and not a deceitful attempt by therespondents to mislead court.
•Fraud" is defined by Labeo as “any craft, deceit or contrivanceemployed with a view to circumvent, deceive or ensnare anotherperson. (Lee-Introduction to Roman Dutch Law 5th Ed. p225).Learned President’s Counsel endeavoured to convince this court thatthe respondents had deceived the original court into giving anex parte judgment on the suppression of evidence andmisrepresentations referred to. Clearly, the grounds relied on by thepetitioner to prove fraud do not fall within Labeo's definition of fraud.
The principle on which this court has to act is not whether thecourt that gave judgment was tricked into it, but whether one party toaction was deceived by the conduct of the opposing party. Clearly itwas not the case in this instance. It was entirely due to the lack ofdue diligence on the part of the petitioner that it took no steps to fileanswer. Thereafter it failed to file the necessary papers within thestipulated period to have the decree set aside. Had the petitionerfiled its answer at the proper time, it could have taken up all thedefences which it claims would have deprived the respondents of thejudgment obtained in their favour. Thus, it cannot now complain of adenial of justice. It has failed to avail itself of the opportunity offeredto present its case, not once but twice. When court or the provisions
of any law requires a party to adhere to specific mandatory timelimits, they should be complied with if due administration of justice isto be ensured. Those who choose to ignore the time limits imposed,do so at their peril. They cannot be heard to complain of injusticelater. The remedy of restitutio in integrum is not available to a partythat has been guilty of a blatant lack of due diligence.
There is another reason why this application should be refused.Restitution is granted only if no other remedy is available to the partyaggrieved. The petitioner has made two applications in revision andalso filed a final appeal against the orders complained of. Further,these orders have now been superceded by a further order of theoriginal court dated 13.7.94, by which the petitioner's application toset aside the order issuing writ for the execution of the decree wasrefused. For the reasons stated, we are of the view that thisapplication is without merit. It is accordingly dismissed with costs.
S. N. SILVA, J. -1 agree.
Application for restitutio dismissed.