THE FINANCE COMPANY PLC v. PRIYANTHA CHANDANA AND 5 OTHERS

017-SLLR-SLLR-2010-V-2-THE-FINANCE-COMPANY-PLC-v.-PRIYANTHA-CHANDANA-AND-5-OTHERS.pdf


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THE FINANCE COMPANY PLC V. PRIYANTHA CHANDANAAND 5 OTHERSSUPREME COURT,
DR. SHIRANI A. BANDARANAYAKE, J.
AMARATUNGA, J. ANDEKANAYAKE, J.
S. C. APPEAL NO. 105A/2008
S.C. (SPL.) L. A. NO. 166/2008
H. C. A. NO. 131/2005 – HAMBANTOTA
M. C. NO. 61770
JULY 2nd, 2009
Forests Ordinance – section 24 fl) b – Prohibit the transport oftimber without a permit from a forest officer duly authorized toissue the same – Section 25(2)-transport oftimber in Contraventionof any regulation made under Section 24(1) . – Section 25(1) -penalties for the breach of any provision of or regulation madeunder the Chapter (V) of the Forest Ordinance – Section 40, asamended – power of Court to confiscate timber, forest produce,vehicles used in committing such offences etc. under theOrdinance.
At the request of the 1st respondent, the appellant, a registered FinanceCompany, had purchased and provided on lease the vehicle (used bythe 1“ respondent to transport illicit timber) to the 1st respondent.Unknown to the appellant, the Beliatta Police had arrested the 3rd, 4Uand 5th respondent for transporting timber without a lawful permit, interms of Section 24(l)(b) and Section 25(2) of the Forest ordinance. TheBeliatta Police also seized the said vehicle which had been used by the3rd, 4th and/or 5th respondents to transport the said illicit timber. TheBeliatta Police filed action against the 3rd, 4th and 5th respondents. The3rd respondent pleaded guilty and the case was fixed for trial against 4thand 5th respondents.
A confiscation inquiry had been held regarding the lorry under theCode of Criminal Procedure Act. After inquiry the learned Magistratemade order to confiscate the said lorry used for the transport of illicittimber. The appellant being the absolute owner of the lorry filed anappeal against the Magistrate’s order. The Learned Judge of the HighCourt after hearing the appeal dismissed the same.
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The Supreme Court granted special leave to appeal against the
order made by the Provincial High Court in the exercise of its appellate
jurisdiction.
Held:
It would be necessary for the owner of the vehicle to establish thatthe vehicle that had been used for the commission of the offencehad been so used without his knowledge and that the owner hadtaken all precautions available to prevent the use of the vehicle forthe commission of such offence. The owner has to establish theaforesaid matters on a balance of probability.
Both the absolute owner and the registered owner should betreated equally and there cannot be any type of privileges offeredto an absolute owner, such as a Finance Company in terms of theapplicable law in the country.
It would be necessary for the absolute owner to show the steps hehad taken to prevent the use of the vehicle for the commission ofthe offence and that the said offence had been committed withouthis knowledge.
The Learned magistrate had not erred when he held that theappellant had not satisfied Court that he had taken every possiblestep to prevent the Commission of the offence.
Cases referred to:
Manawadu v. Attorney General – (1987) 2 SLR 30
Inspector Fernando v. Marther- (1932) 1 CLW 249
Sinnetamby v. Ramalingam – (1924) 26 NLR 371
Mudunkotuwa v. Attorney General – (1996) 2 SLR 77
Nizer v. I.P. Wattegama (1978-79) SLR 304
Faris v. OIC, Police station, Galenbindunuwewa (1992) 1 SLR 167
Rasiah v. Thambirak (1951) 53 NLR 574
Mercantile Investments Ltd v. Mohamed Mauloom and others (1998)3 SLR 32
APPEAL from an Order of the High Court of Hambantota.
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I.S. de Silva with Suren de Silva for Claimant-Appellant-Appellant.Riyaz Hamza, SSC, for the 6th Respondent.
Cur.adv.vult.
September 30th 2010
DR. SHIRANI A. BANDARANAYAKE, J.This is an appeal from the order of the High Court dated30.06.2008. By that order the High Court had dismissedthe appeal instituted by the claimant-appellant-appellant(hereinafter referred to as the appellant) and had affirmed theorder of the learned Magistrate dated 25.08.2005.
The appellant came before this Court against the order ofthe High Court on which special leave to appeal was grantedon the following question:
“Has the learned High Court Judge misdirected himselfin fact and in law in failing to appreciate that in viewof the fact that there was no dispute between theparties that the appellant was the absolute owner of thevehicle bearing registration No. 227-8130, the scope of theinquiry in terms of Chapter XXXVIII of the Code of CriminalProcedure Act before the Magistrate’s Court, was limitedto ascertain whether or not the appellant was aware orthat the said vehicle has been used in connection with orparticipated in the commission of the offence.”
The facts of this appeal, as submitted by the appellant,albeit brief, are as follows:
The appellant is a Registered Finance Company and isinter alia involved in providing leasing facilities in connectionwith motor vehicles at the request of its customers. Theappellant is the registered absolute owner of the vehicle bearing
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registration No. 227-8130, which forms the subject matterof this appeal.
On 12.06.2000 at the request of the 1st respondent-respondent-respondent (hereinafter referred to as the 1strespondent) the appellant had purchased and provided onlease the vehicle, bearing registration No. 227-8130 to the1st respondent. Unknown to the appellant, on 20.08.2000,the Beliatta Police had arrested the 3rd and-/or 4th and/or 5threspondents-resporidents-respondents (hereinafter referredto as the 3rd and/or 4th and/or 5th respondent) for transportingtimber without a lawful permit, in terms of section 24(1)(b) and section 25(2) of the Forest Ordinance. The BeliattaPolice also seized the said vehicle bearing registrationNo. 227-8130, which had been used by the 3rd and/or 4th and/or 5th respondent to transport the said timber. Thereafter the2nd respondent-respondent-respondent (hereinafter referredto as the 2nd respondent), had filed action in the Magistrate’sCourt, Tangalle against the 3rd, 4th and 5th respondents inconnection with the said offence. The 3rd respondent hadpleaded guilty to the charges, where the 4th and 5th respon-dents had pleaded not guilty and the case was fixed for trialagainst the 4th and 5th respondents.
On 16.08.2001 the 1st respondent, as the registeredowner of the vehicle in question had made an application forthe release of the said vehicle to the 1st respondent pendingthe final determination of the trial. The appellant, beingthe absolute owner, agreed to the said application of the 1strespondent in view of the undertaking by the 1st respondentto pay a sum of Rs. 150,000/- to the appellant in respect ofthe rentals outstanding under the Lease Agreement. The saidvehicle was released to the 1st respondent on the undertakinggiven by him to pay the appellant Rs. 150,000/- on or before25.08.2001.
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The 1st respondent had failed to pay the said sum. ofRs. 150,000/- and on 22.11.2001, pursuant to the appellantbringing the said matter before the Magistrate’s Court, learnedMagistrate had directed the 1st respondent to handoverpossession of the vehicle in question to the appellant, subjectto certain terms and conditions. The vehicle in question wasaccordingly handed over to the appellant and the said vehicleremains in the custody of the appellant.
A confiscation inquiry had been held regarding the lorrybearing registration No. 227-8130 in terms of Chapter XXX-VIII of the Code of Criminal Procedure Act and after inquiry,by his order dated 25.08.2005, learned Magistrate hadordered the confiscation of the said lorry. Aggrieved by thisorder, the appellant filed an application in revision (HCA/113/2005) in the High Court of the Southern Province,holden in Hambantota. The appellant had also filed anappeal in the High Court of Hambantota (HCA 131/2005).On 30.06.2008, learned Judge of the High Court made orderdismissing the revision application (HCA/113/2005) andaffirmed the order of the learned Magistrate dated 25.08.2005.The learned Judge of the High Court also made order dismissingthe appeal (HCA/131/2005) for the same reasons given inthe order made on the Revision application. Being aggrievedby the order made by the learned Judge of the High Courtof Hambantota in the appeal (HCA/131 /2005), the appellantcame before this Court whereas with regard to the revisionapplication he had filed an appeal in the Court of Appeal,simultaneously.
When the application for special leave to appeal came upfor support before this Court on 03.12.2008, this Court hadtaken into consideration that there were two orders madeby the High Court of the Provinces, in the exercise of itsappellate jurisdiction and its revisionary jurisdiction.
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The Court also took notice of the fact that the appellant hadfiled applications before the Court of Appeal regarding theorder made in the revisionary application and before thisCourt on the basis of the High Court in the exercise of itsappellate jurisdiction. At that stage, learned Senior StateCounsel had brought to the notice of this Court the necessityto avoid multiplication of proceedings, as the appeal beforethe Court, of Appeal could also come up for.consideration inthe Supreme Court by way of appeal. Accordingly, learnedCounsel for the appellant had given an undertaking towithdraw the application filed in the Court of Appeal regard-ing the order of the Provincial High Court on the basis of therevision application (HCA/113/2005).
Thereafter special leave to appeal had been granted bythis Court on the basis of the order made by the ProvincialHigh Court in the exercise of its appellate jurisdiction(HCA/131/2005).
The facts of this appeal were not disputed and it wascommon ground that the Beliatta Police had institutedproceedings in the Magistrate’s Court of Tangalle againstthe 3rd, 4th and 5th respondents for transporting 63 logs ofsatinwood timber (Burutha) valued at Rs. 39,691.65 on05.08.2001 without a lawful permit and thereby committingan offence punishable in terms of section 24(1 )b read withsections 25(2) and 40 of the Forest Ordinance, No. 16 of 1907,as amended.
Section 40 of the Forest Ordinance, as amended by ActNos. 13 of 1966, 56 of 1979, 13 of 1982 and 23 of 1955 statesas follows:
"(1) Upon the conviction of any person for a forest offence
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fa) all timber or forest produce which is not the prop-erty of the State in respect of which such offencehas been committed; and
all tools, boats, carts, cattle and motor vehicles,trailers, rafts, tugs or any other mode of transportmotorised or otherwise and all implements andmachines used in committing such offence whethersuch tools, boats, carts, cattle, motor vehicles,trailers, rafts, tugs, or other modes of transportmotorized or otherwise are owned by such personor not.
shall, by reason of such comnction be forfeited to theState.
(2) Any property forfeited to the State under sub-section
(1) shall-
if no appeal has been preferred to the Court ofAppeal against the relevant conviction, vestabsolutely in the State with effect from the dateon which the period prescribed for preferring anappeal against such conviction expires;
if an appeal has been preferred to the Court ofappeal against the relevant conviction, vestabsolutely in the State with effect from the date onwhich such conviction is affirmed on appeal.
In this sub-section ‘relevant conviction’ means thecomnction in consequence of which any property isforfeited to the State under sub-section (1)”.
Learned Magistrate had considered the provisions laiddown in section 40 of the Forest Ordinance as amended and
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had come to the conclusion that the Court has a discretionto confiscate a vehicle after an inquiry, on the basis that theregistered owner had given his consent for the offence whichhad been committed and that the registered owner had theknowledge of such an offence. In considering the provisionsof section 40 of the Forest Ordinance and the decided cases,the learned Magistrate had been of the view that the absoluteowner had not been able to take every possible step toprevent the committing of the offence in question.
It is common ground that the absolute owner is a FinanceCompany and that the registered owner had purchased thelorry in question on a Hire Purchase Scheme.
In Manawadu v. Attorney – General11 Sharvananda,CJ., had considered the applicability of sections 24(l)(b),25(1) and section 40 of the Forest Ordinance, in a matterwhere a load of rubber timber was transported in a lorrywithout a permit from an authorized officer. After sentencingthe accused, who had pleaded guilty, the learned Magistratein that matter had ordered the confiscation of the lorry inwhich the timber was alleged to have been transported.In considering the confiscation of the said lorry used forthe transport of illicit timber, in view of section 7 of the Act,No. 13 of 1982, by which section 40 of the Forest Ordinancewas amended, Sharvananda, CJ., in Manawadu v. Attorney -General (supra) had held that,
“By section 7 of Act No. 13 of 1982 it was not intendedto deprive an owner of his vehicle used by the offenderin committing a “forest offence’ without his (owner’s)knowledge and without his participation. The word“forfeited’ must be given the meaning “liable to be forfeited’so as to avoid the injustice that would flow on theconstruction that forfeiture of the vehicle is automatic
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on the conviction of the accused. The amended sub-section 40 does not exclude by necessary implication therule of ‘audi alteram partem’ The owner of the lorry not aparty to the case is entitled to be heard on the questionof forfeiture of the lorry, if he satisfies the court that theaccused committed the offence without his knowledge orparticipation, his lorry will not be liable to forfeiture.
The Magistrate must hear the owner of the lorry on thequestion of showing cause why the lorry is not liable tobe forfeited. If the Magistrate is satisfied with the causeshown, he must restore the lorry to the owner. TheMagistrate may consider the question of releasing thelorry to the owner pending inquiry, on his entering intoa bond with sufficient security to abide by the order thatmay ultimately be binding on him.”
Sharvananda, C.J., in Manawadu v. Attorney-General(supra) had considered several decisions pertainingto the matter in question. Reference was made to thedecision in Inspector Fernando v. Marthet*7 whereAkbar, J., in construing section 51 of the Excise Ordinancethat corresponds to section 40 of the Forest Ordinancehad quoted with approval a statement by Schneider, J., inSinnetamby v. RamalingarrP], which was in the followingterms:
“Where an offence has been committed under theExcise Ordinance, no order of confiscation should be madeunder section 51 of the Ordinance as regards the convey-ance used to commit the offence, e.g. a boat or motor carunless two things occur.
(1) That the owner should be given an opportunity ofbeing heard against it; and
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(2) Where the owner himself is not covicted of the offence,no order should be made against the owner, unlesshe is implicated in the offence which render the thingliable to confiscation.
In Inspector Fernando v. Marther (supra) the vehicle inquestion did not belong to the accused, but was a vehicle,which was hired under a Hire Purchase Agreement. It washeld by Akbar, J., in Inspector Fernando v. Marther (supra)that since the registered owner was not implicated in thecommission of the offence, no order confiscating the car couldbe made.
In Mudankotuwa v. Attorney-General4) the Courtof Appeal had referred to the decision in Manawadu v.Attorney-General (supra) with approval and had stated thatthe owner of the vehicle, who is not a party to the case isentitled to be heard on the question of forfeiture of thevehicle and if he satisfies the Court that the accused committedthe offence without his knowledge or participation, then hisvehicle will not be liable to forfeiture. Refemce was also madein Mudankotuwa v. Attorney-General (supra) to the decisionin Nizer v. I.P. Wattegama (5> and Faris v. OIC, Police Station,Galenbindunuwewa(6).
In Nizer v. I.P. Wattegama (supra) Vythyalingam, J.,considered the implications of the proviso to section 3A of theAnimals Act, No. 29 of 1958 as amended. Section 3A of theAnimals Act states of follows:
“Where any person is convicted of an offence underthis Part or any regulations made there under, anyvehicle used in the commission of such offence shall, inaddition to any other punishment prescribed for suchoffence, be liable, by order of the competing Magistrate, toconfiscation:
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Provided however, that in any case where the owner of thevehicle is a third party, no order of confiscation shall bemade, if the owner proves to the satisfaction of the Courtthat he has taken all precautions to prevent the use ofsuch vehicle or that the vehicle has been used without hisknowledge for the commission of the offence. ”
Vythyalingam, J., had observed that in view of theproviso, an order for confiscation could be made only if theowner was present at the time of the detection or there wasevidence suggesting that the owner was privy to the saidoffence. This decision was referred to with approval in Fansv. OIC, Police Station, Galenbindunuwewa (supra), where itwas stated that in terms of the proviso to section 3A of theAnimals Act, an order for confiscation cannot be made if theowner establishes one of the following:
that he has taken all precautions to prevent the useof the vehicle for the commission of the offence;
that the vehicle had been used for the commission ofthe offence without his knowledge.
It is also worthy of note that in Faris, it wascategorically stated that, in terms of the proviso to section3A of the Animals Act, if the owner established any one ofthe above matters on a balance of probability, an order forconfiscation should not be made.
In Rasiah v. Thambiraf7], the Court had consid-ered the applicability of section 40 of the Forest Ordi-nance with regard to an order made by a Magistratein the confiscation of a cart. Referring to the issue of confis-cation, Nagalingam, J., in Rasiah v. Thambiraj (supra) hadstated thus:
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“In these cases where the accused person convicted of theoffence is not himself the owner of the property seized, anorder of confiscation without the previous inquiry wouldbe tantamount to depriving the person of his propertywithout an opportunity being given to him to show causeagainst the order being made.”
In Manawadu v. Attorney-General (Supra), Sharvanda,C.J., referring to the decisions by Justice Akbar and JusticeNagalingam in Fernando v. Marther (supra) and Rasiah v.Thambiraj (supra) respectively, had come to the conclusionthat the owner of the vehicle would only have to show that theoffence was committed without his knowledge and withouthis participation.
“Justice Akbar and Justice Nagalingam founded theirdecision on fundamental principles of constitutionalimportance and not on the narrow ground ‘shall beliable to confiscation’. They emphasised that wherethe owner can show that the offence was committedwithout his knowledge and without his participationin the slightest degree, justice demanded that heshould be restored his property” (eirphasis added).
Sharvananda, C.J., in Manawadu v Attorney-General(supra) had finally expressed the view that,
“But if the owner had no role to pl;r, in the commis-sion of the offence and is innocent, the i forfeiture of hisvehicle will not be penalty, but would an ount to arbitraryexpropriation since he was not a party ti the commissionof any offence.”
The appellant, as referred to earlier, is th absolute ownerof the vehicle in question. The appellant hat leased it to the1st respondent on a Hire Purchase Agreemen . Section 433A
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of the Code of Criminal Procedure Act, as amended, dealswith possession of property, which is the subject of a HirePurchase Agreement. This section reads as follows:
“(1) In the case of a vehicle let under a hire purchaseor leasing agreement, the person registered as theabsolute owner of such vehicle under the MotorTraffic Act shall be deemed to be the person entitledto possession of such vehicle for the purpose of thisChapter.
(2) In the event of more than one person being registeredas the absolute owner of any vehicle referred to insub-section (1), the person who has been so registeredfirst in point of time in respect of such vehicle shall bedeemed to be the person entitled to possession of suchvehicle for the purposes of this Chapter.”
The scope of section 433A of the Code of CriminalProcedure Act was considered in Mercantile InvestmentsLtd. v. Mohamed Mauloom and othersf8), where it wasstated that in terms of the said section 433A, anabsolute owner is entitled to possession of the vehicle, eventhough the respondent had been given its possession on theLease Agreement.
On a consideration of the ratio decidendi of all theaforementioned decisions, it is abundantly clear that interms of section 40 of the Forest Ordinance, as amended,if the owner of the vehicle in question was a third party,no order of confiscation shall be made if that owner hadproved to the satisfaction of the Court that he had taken allprecautions to prevent the use of the said vehicle for thecommission of the offence. The ratio decidendi of all theaforementioned decisions also show that the owner has toestablish the said matter on a balance of probability.
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It is common ground that the learned Magistrate hadheld a confiscation inquiry in respect of the lorry in questionin terms of Chapter XXXVIII of the Code of CriminalProcedure Act. It is also common ground that the learnedMagistrate had given an opportunity for the representa-tion of the appellant, being the absolute owner, to giveevidence at the said inquiry and to tender to Court any relevantdocuments. At that inquiry, although the representativeof the appellant had taken the position that the vehicle inquestion was given to the 1st respondent on a Hire PurchaseAgreement, he had not tendered the said agreement to Court.Accordingly no steps were taken to mark the said document.
Learned Counsel for the appellant contended that theappellant, being the absolute owner had neither participatednor had any knowledge of the commission of the offence inwhich the vehicle was confiscated. Learned Counsel for theappellant referred to the evidence given by witness PercyWeeraratne, Assistant Manager (Matara Branch) of theappellant Company. The said Assistant Manager had statedthat the appellant Company had no knowledge of the use ofthe vehicle and that the vehicle was in the Urubokka areaand not within the control of the appellant.

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Considering the provisions laid down in section 40(a)read with section 25(2) of the Forest Ordinance, would it besufficient to merely state that the vehicle in question was notunder the control of the representative of the appellant? Theanswer to this question is purely in the negative for severalreasons.
As has been clearly illustrated by several decisionsreferred to above, it would be necessary for the ownerof the vehicle to establish that the vehicle that had beenused for the commission of the offence had been so usedwithout his knowledge and that the owner had takenall precautions available to prevent the use of thevehicle for the commission of such an offence.
Several measures could have been taken in this regard.For instance, there could have been a clause to that effect inthe agreement between the appellant and the 1st respondent.Similarly if the 1st respondent had authorised others to usethe said vehicle, he too could have had a written agreementinclusive of specified conditions. It is therefore quite clear thatit would be necessary for the owner to show that he has takenall possible precautions to prevent the use of the vehicle forthe commission of the offence.
Learned Counsel for the appellant submitted that theburden is only on the registered owner to satisfy Courtthat the accused has committed the offence without hisknowledge or participation and this will not be applicable toan absolute owner.
As stated earlier, in Mercantile Investments Ltd. v.Mohamed Mauloom and others (supra), consideration wasgiven to the rights of the absolute owner as well as theregistered owner. In that matter the learned Magistrate had
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not given an opportunity to the absolute owner to show causebefore he made the order to confiscate the vehicle. On aconsideration of the said question, the Court of Appeal hadheld that it is not only the registered owner, but the absoluteowner also should be given notice on the inquiry in relationto the confiscation of the vehicle.
It is therefore apparent that both the absolute owner andthe registered owner should be treated equally and there can-not be any type of privileges offered to an absolute owner,such as a Finance Company in terms of the applicable lawin the country. Accordingly, it would be necessary for theabsolute owner to show the steps he had taken to prevent theuse of the vehicle for the commission of the offence and thatthe said offence had been committed without his knowledge
On a consideration of the aforementioned it is evidentthat the learned Magistrate had not erred when he held thatthe appellant had not satisfied Court that he had taken everypossible step to prevent the commission of the offence. Asstated earlier, the High Court had affirmed the order made bythe learned Magistrate.
For the reasons aforesaid the question on which specialleave to appeal was granted is answered in the negative.
The judgement of the High Court dated 30.06.2008 istherefore affirmed. This appeal is accordingly dismissed.
I make no order as to costs.
AMARATUNGA, J. -1 agreeEKANAYAKE, J. – I agree.appeal dismised.