Baby Nona v. Dine* Silva
1978Present: Rajaratnam, J., Vythialingam, J. and
W. K. BABY NONA, Appellantand
0P. G. DON DINES SILVA, Respondent
S.C. 323/71 (F)—D.C. Tangalla 1416/L
Debt Conciliation Ordinance (Cap. 81), section 43—Amending ActNo. 5 of 1959—Conditional transfer—Settlement betweentransferor and transferee before Board—Default by transferor—K'fiht of purchaser from transferee (creditor) to maintain vindi-catory action—Whether provisions of section 43 applicable Insuch a case.
KAJARATNAM, J.—Baby Nona v. Dines Silva
Where a transferor on a conditional transfer applies to and obtainsrelief from the Debt Conciliation Board, but defaults thereafterin complying with the terms of settlement which provided thatthe right to redeem was to be at an end in the event of any default,a purchaser from the transferee gets good and valid tit.e andcan maintain an action rei vuidicatio even against the heirs ofsuch transferor. Section 43 of the Debt Conciliation Ordinancedoes not apply to the case of conditional transfers.
Cases referred' to :
Johanahamy v. SiLsiripala, 70 N.L.R. 328.
Adaicappa Chelty v. Caruppen Chetty, 22 NJL.R. 417.
A PPEAL from a judgment of the District Court, Tangalla.
S. Ruthiramoorthy, with A. P. Niles, for the defendant-appellant.
W. Jayewardene, Q.C., with N. R. M. Daluwatte and Miss
Aboosaly, for the plaintiff-respondent.
Cur. adv. vult.
July 25, 1978. Rajaratnam, J.
The plaintiff had filed this action against the defendant-appellant for a declaration of title to the land described inparagraph 3 of the plaint, for ejectment of the defendant there-from and for damages. The plaintiff by deed No. 9666 of 3.10.64had purchased from one Edirisinghe Don Davith the premisesin suit subject to the vendor’s life interest. This land was subjectto a settlement arrived at before the Debt Conciliation Boardunder s. 30 of the Ordinance, between Edirisinghe Don Davithand Malhamy the creditor and debtor, vide P3. In terms of thesettlement the debtor was to pay the creditor quarterly instal-ments of Rs. 450 each commencing on the last date of June 1962and thereafter on or before the last day of each and everysucceeding quarter until the full sum was paid off and in theevent of any default the right to redeem was to be at an end.The transaction between Edirisinghe Don Davith and Malhamywas a .conditional transfer. The defendant is the daughter ofMalhamy who died in 1970 leaving five children of whom thedefendant is one. The payment of the agreed instalments wereto be completed by 31.12.63. It is admitted that Malhamy hadnot defaulted except with regard to a sum of Rs. 150 which wasoutstanding. The account of the instalments due and the instal-ments paid are detailed in D2 which is a letter sent to Malhamyby the Proctor for the creditor Mr. A. S. de Silva on 24.12.63.By D2, Malhamy was requested to pay a balance sum of Rs. 150and get the deed of re-transfer written. On the settlement asstated in P3, if this sum was due and in default, it was agreedthat the right to redeem was to be at an end. The sum of Rs. 3,000
1! AJAltATNAM, J.—Baby Nona v. Dines Silva16s
was to be paid out at the end of every quarter and thereforebefore 31.12.63 Malhamy appears to have sent the six instalmentstotalling Its. 2,700 but on 20.12.63 she had paid only Rs. 150 andthe Proctor in all fairness had reminded her of this balance.But site appears to have not tendered this money, as her letterD3 of 8.6.65 to the Secretary, Debt Conciliation Board, reveals.This letter states that in accordance to the letter D2 of 24.12.63she paid by Money Order a sum of Rs. 150 on 16.10.64 whichclearly is outside the period stipulated in the'settlement. It alsorefers to the return of the Money Order and the Proctor refusingto accept same. By D3 she requested the Debt Conciliation Boardto get the transfer effected. The defendant’s position in Court,however, was that within 2 weeks of the letter D2 they wentto Davilh’s Proctor who refused to accept the Rs. 150 and tore-transfer the land. We are unable to disturb the finding of the1 rial Judge on the crucial and factual point whether Malhamywas in default or not. On the evidence of the defendant herselfMalhamy lost her right to redeem. The whole matter undoubtedlywas unfortunate but we are compelled td hold by the terms olthe agreement and the evidence led that Malhamy had lost heiright to redeem her property.
Learned Counsel for the defendant-appellant valiantly argued
That time was not the essence of the agreement and ir»view of the fact that the whole debt more or less has been paidwith only Rs. 150 outstanding, Malhamy could not have beensaid to have defaulted and lost her right to redeem her property
That the property had after the alleged default beentransferred by Edirisinghe Don Davith to the plaintiff by deedNo. 9666 on 3.10.64 when the former was of unsound mind andtherefore the deed was not the act of Edirisinghe Don Davith.
In any case s.43 of the Debt Conciliation Boards Ordinanceapplied with regard to the first submission, and the failure ofEdirisinghe Don Davith to go into a competent Court on thedebtor Malhamy’s default was fatal to the plaintiff’s case.
On the first submission, certainly the amount in default J»small and considering the circumstances, the equities lay withMalhamy, though technically there was a default in terms of thesettlement. On other hand we cannot ignore the followingcircumstances:
(«1 The letter D2 which in all fairness was written to Mal-hamy on 24.12.63. Her default was revealed to her wellin time.
ltAJARATNAM, J.—Baby Nona v. Dines Silva
The conduct of Malhamy not availing herself of the
opportunity given to her and her tender of the sum.only in October 1964 according to D3 and the answer
filed by the defendant.
The conduct of the defendant in stating for the first
time that Malhamy tendered the money soon after D3which the Proctor refused.
Malhamy not being vigilant even after she received D2in not making payment soon after or getting a re-transfer. She had slept over her rights if any.
The Court is reluctantly compelled to reject this submissionand is unable to hold that Malhamy was not in default.
With regard to the second submission the letter D3 sent byMalhamy on 8.6.65 does not refer to the fact that the creditorwas of unsound mind. The deed of sale No. 9666 was attested onthe 3rd of October 1964. The evidence with regard to his insanityrelates to a period in 1966. Proctor H. S. de Silva was unhelpfulto the defence. He was called by the defendant. He stated thatin May 1965 he got instructions from Edirisinghe Don Davith tofile an action M/7525. This submission top fails.
With regard to the 3rd submission, learned counsel for theappellant cited the judgment of Samerawickrema, J. in the caseOf Johanahamy v. Susirivala, 70 N.L.R. 328, and referred us tosection 43 (1) of the Debt Conciliation Ordinance which reads : —
“ Where the debtor fails to comply with the terms ofsettlement under this Ordinance, any creditor may except in
a case where a deed or instrument has been executed
apply to a Court of competent jurisdiction at any time
after the expiry of three months from the date on whichsuch settlement was countersigned by the Chairman of theBoard that a certified copy of such settlement be filed incourt and that a decree be entered in his favour in terms ofsuch settlement ”.
“ (2) If the court is satisfiedthat the petitioner
is prima facie entitled to the decree in his favour, the courtshall enter a decree nisi in his favour in terms of the settle-ment. The court shall also appoint a date for
the debtor to show cause against the decree nisi being madeabsolute. ”
, TheCourt of competent jurisdiction” has been defined topaean anv court in which the- creditor could have filed actionfor the recovery of his debt.
RAJARATNAM, J.—Baby Nona v. Dints Silva
I am mindful of the fact that when section 43 (1) came intoexistence, the term ‘ debt ’ and ‘ debtor ’ did not include a condi-tional transfer or conditional transferor but by the amending ActNo. 5 of 1959 conditional transfer and the conditional transferori were brought into the scope of the operation of the Debt Concili-ation Board Ordinance. The Privy Council in the case of Adai-cappa Chetty v. Caruppen Chetty, 22 N.L.R. 417, held that sTTofffie~Prevention of Frauds Ordinance prevented the creation ofa mortgage otherwise than by notarial/instrument duly executedaccording to law. It is not open to the transferor of a conditional^Transfer to lead evidence to show that the actual transaction wasiiT7act~a"mortgage~nor does the extended operation of the provi-sions of the Debt (Jonciliatlon'Ordinance beat the provisions of~sT92 of the Evidence Ordinance which prohibits the leading of oralevidence in such cases. It is not possible to say the law wasaltered by the amending Act No. 5 of 1959 being the mere exten-sion of the operation of the Ordinance to include conditionaltransfers. I am fortified by the view of Samerawickrema, J. inJohanahamy’s case .(70 N.L.R. at 331) which case was referredto by learned Counsel for the appellant. One of the issues raisedin the original Court in the said case which was also a casewhere the ‘ debtor ’ in a conditional transfer defaulted the termsof the settlement, was “ Ts the plaintiff entitled to maintain thisaction (a ret vindicatio action) in view of s. 43 of the DebtConciliation Board ” ? The trial Judge answered that the plaintiffwas entitled to do so', Samerawiekrpma. J. hel(^ on this point“In clause 5 (of the settlement before the Board) it further pro-vided thatJJLthere was a default in any payment the^right toredeem would be at an~end7 As the settlement itself provides that~the right to redeem would be at an end, upon the debtor commit-ting a default in payment, I do not see there can be any disabilityfor the plaintiff to bring an action upon the title that he obtainedby the deed of transfer in his favour upon the footing that therehad been a default resulting in the right to redeem having cometo an end ”. The meaning and purpose of the provisions of theOrdinance is to enable the conditional transferors in the mercifulgenerosity of the legislature to have once again a rightTthey Jhavelost to redeem the property*. This right in terms of the settlementin the present case as in Johanahamy’s case rests with thetransferor as long as he does not default, but as in Johanahamy’scase, in the present case “in the event of any default the rightto redeem is at an end” (Clause 3 of P3). Far from supportingthe submission of learned counsel for the appellant, the decisionin Johanahamy’s case cuts across his argument.
Free Lanka Trading Co. v. De Mel
The transferee had a deed in his favour, the right of the trans-feror to redeem in terms of the deed was lost. The transfereewas entitled to his property but by the operation of the provisionsof the Ordinance a settlement was arrived at which gave thedefendant’s mother, Malhamv, a conditional right to redeem it.She defaulted and the transferee therefore in terms of the settle-ment, the transferor having lost her right to redeem it, sold theland to the plaintiff as he lawfully could have. The transfereedied thereafter. Both the transferee and then the plaintiff becameowners of the property in suit, when Malhamy lost her right toredeem it.
!•» It is my view that s. 43 of the Ordinance does not apply to casesof conditional transfers and I follow the decision in Johanahamyv. Susiripala (supra).
The appeal therefore is dismissed with costs.
Vvthialingam, J.—I agree.
Shahvananda, J.—I agree.