036-SLLR-SLLR-1994-V2-W.-K.-M.-D.-PERERA-V.-PEOPLES-BANK.pdf
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W. K. M. D. PERERA
v.
PEOPLE’S BANK
COURT OF APPEAL.
S. N. SILVA, J. (P/CA) ANDR. B. RANARAJA, J.
COURT OF APPEAL REVISION APPLN. NO. 612/93.
D C, COLOMBO CASE NO. 80/DR.
AUGUST 15,1994..
Debt Recovery (Special Provisions) Act, No. 2 of 1990, Sections 6 and 25( 1) (a) -Procedure under Debt Recovery (Special Provisions) Act. No. 2 of 1990 – Oralevidence – Conditions for obtaining leave to show cause against decree nisi -Revisionary relief – Burden of proof- Civil Procedure Code, section 389.
A defendant has no status In terms of section 6 of the Debt Recovery (SpecialProvisions) Act, No. 2 of 1990 to participate in proceedings in an action institutedunder the Act until such time he obtains leave of Court. He has first to make anapplication for the purpose. If he seeks to apply for leave to appearunconditionally, he has to file an affidavit which –
deals specifically with the plaintiff's claim stated in the plaint;
sets out his own defence to the plaintiff's claim; and
states what the facts are on which he relies to support his defences.
There is no provision to lead oral evidence on any of these matters at this stage. Itis only upon court being satisfied on the material placed before it by thedefendant that there is an issue or a question in dispute which ought to be triedthat leave to appear and show cause against the decree nisi will be granted.
The respondent's substantive defence that the cheque sued upon was given assecurity is not borne out by the material before court. The burden of satisfyingcourt that the cheque was given as security and not as payment of a debt due layon the petitioner. He had to do so by producing supporting facts in the form ofdocuments. The documents produced by the petitioner prime facie neithersupport his defence nor are they sufficient to satisfy any court that there is anissue or a question in dispute which ought to be tried.
The further petition seeking to set aside the order making order nisi absolute is ineffect a final order made on default of the petitioner to appear. In thecircumstances the provisions of section 389 of the Civil Procedure Code will
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apply. The petitioner should seek his remedy under that section and not by way ofrevision.
Per Ranaraja, J. "… Equitable relief by way of revision is available only to thosewho come to court with clean hands. Section 25(1) (a) of the Debt Recovery(Special Provisions) Act makes any person who draws a cheque knowing thatthere are no funds or insufficient funds in the bank to honour a cheque drawn byhim. liable to be found guilty of that offence after summary trial… Admittedly thepetitioner has issued (the cheque) with the knowledge that there were no funds inhis account. This conduct disentitles the petitioner to revisionary relief*.
The order which the Court made in giving leave "to appear and file answer” uponpayment of Rs. 3,500,000/- was wrong. For these words, the words “to appearand show cause against the decree nisi" should be substituted.
APPLICATION for revision of the order of the Additional District Judge ofColombo.
£ D. Wickramanayake with H. R. Candappa and A. Cooray for petitioner.
S. Parathalingam with N. Kahandavilame for respondent.
Cur. adv. vult
September 9, 1994.
RANARAJA, J.
The plaintiff-respondent Bank (respondent), instituted action underthe provisions of the Debt Recovery (Special Provisions) Act, No. 2 of1990, in the District Court to recover a sum of Rs. 3,500,000/- withinterest thereon from the defendant-petitioner (petitioner). Courtentered decree nisi which was served on the petitioner. The petitionerfiled petition, affidavit and documents D1 to D15 and moved for leaveto appear and show cause against the decree nisi unconditionally.Parties filed written submissions and court delivered order giving thepetitioner leave to appear and file answer upon the deposit ofRs.: 3,500,000/- to the credit of the case on or before 1.9.93. Thepetitioner filed the present application to have the said order revised.
A defendant who wishes to obtain leave to appear and showcause in proceedings instituted under the Debt Recovery (SpecialProvisions) Act, has to comply with the provisions of section 6 of theAct which reads:
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*ln an action instituted under this Act the defendant shall notappear or show cause against the decree nisi unless he obtainsleave from the court to appear and show cause.
The court shall upon the application of the defendant giveleave to appear and show cause against the decree nisi either,-
…or
… or
upon affidavits satisfactory to court that there is an issue ora question in dispute which ought to be tried. The affidavit of thedefendant shall deal specifically with the plaintiff's claim andstate clearly and concisely what the defence is and what factsare relied on as supporting it."
Thus it is clear that a defendant has no status to participate inproceedings in an action instituted under the Act until such time heobtains leave of court. He has first to make an application for thepurpose. If he seeks to apply for leave to appear unconditionally, hehas to file affidavits which, (a) deal specifically with the plaintiff’sclaim stated in the plaint, (b) sets out his own defence to the plaintiff’sclaim and (c) states what the facts are he relies on to support hisdefence. There is no provision to lead oral evidence on any of thesematters at this stage. It is only upon court being satisfied on thematerial placed before it by the defendant that there is an issue or aquestion in dispute which ought to be tried that leave to appear andshow cause against the decree nisi will be granted.
It is the case for the respondent that it had filed two actions, nos.2300/M, 12646 MR. against Ramona Construction Co. Ltd., thepetitioner and his wife, who were the two directors of the company,for the recovery of Rs. 4,225,164/49 and 1,554,038/45 with interestrespectively. Since the petitioner was attempting to sell a propertycalled Makulgaha Kumbura while these two actions were pending,the respondent filed a further case no 3545/Sp, against the petitionerand the Registrar of lands, seeking a declaration that the petitionerhad no right to sell the said land and an injunction against theRegistrar from registering the deed of transfer. On representationsmade by the petitioner that he will personally take on the liability topay a sum of Rs. 6,500,000/- in settlement of the sums claimed, the
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W. K. M, 0. Pewra v. People's Bank (Ranaraja, J.)
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respondent had withdrawn all three cases. An agreed by the parties,the respondent had appropriated a sum of Rs. 3,060,000/- lying inthe margin account of the petitioner. The respondent had obtainedcheque no. 044417 (P5) drawn by the petitioner for a sum ofRs.3,500,000/- for the balance sum due. However, this cheque wasto be deposited upon the petitioner receiving the proceeds of thesale of the land referred to. When the cheque was presented to thebank for payment, it was returned with the endorsement 'notarranged for” on the 1st occasion and “refer to drawer" on the 2ndoccasion. Although the petitioner was given notice of dishonour, anda demand for payment was made by the respondent, the petitionerhad failed to comply.
The petitioner has admitted in his affidavit that the respondent filedthe said three actions and that they were withdrawn after discussionswith the officers of the respondent bank. It is also admitted that hismargin account was debited in a sum of Rs. 3,060,000/- followingdiscussions with the respondent. The petitioner does not dispute thefact that he issued cheque (P5). However, when answering theaverment in the plaint regarding dishonour of (PS), he blandly statedthat the cheque was not dishonoured on 24.11.92. On a perusal ofthe copy of (P5), the endorsements referred to are clear on the faceof it. The frank of the bank bears the date 23.11.92. It is therespondent's position that (P5) was received by post on 24.11.92.
The petitioner's substantive defence is that the cheque (P5) wasgiven as security until such time the accounts between RamonaConstruction Co., Ltd. and the respondent were settled and not insettlement of the debt due.
The burden of satisfying court that the cheque was given assecurity and not as payment of a debt due, lay on the petitioner. Hehad to do so by producing supporting facts, in the form ofdocuments. The petitioner has produced 15 documents. Document(D8) which has also been produced marked (P4), cuts across thedefence taken by the petitioner. This document clearly bears thestatement “that the total of Rs. 6,560,000/- be used to settle all dues".This statement is reiterated in document (D7) which is a letter written
1
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by the petitioner to an officer of the respondent bank. Besides, itadds that "it was agreed between us in writing that the total ofRs. 6,050,000/- be used to settle all our dues.” These two documentswere the earliest after withdrawal of the three actions, addressed bythe petitioner to the respondent. There is no word in them which evenvaguely suggests that (P5) was given as security.
There is a further fact which militates against accepting theassertion of the petitioner that (P5) was given as security. Thepetitioner had admittedly altered the date of the cheque from
to 10,11.92. This points more to the petitioner seekingfurther time to deposit the proceeds of the sale of his land in hisaccount, than to (P5) being given as security. The documentsproduced by the petitioner prima facie neither support his defencenor are they sufficient to satisfy any court that there is an issue or aquestion in dispute which ought to be tried.
The petitioner has filed a further petition dated 16.9.93 seeking toset aside the order of the Learned Additional District Judge dated6.9.93, whereby the order nisi was made absolute. This order is ineffect a final order on default of the petitioner to appear, in thecircumstances, the provisions of section 389 of the Civil ProcedureCode will apply. The petitioner should seek his remedy under thatsection and not by way of revision.
Finality, it is to be noted that equitable relief by way of revision isavailable only to those who come to court with clean hands. Section25{1) (a) of the Debt Recovery (Special Provisions) Act, makes anyperson who draws a cheque knowing that there are no funds orinsufficient funds in the bank to honour a cheque drawn by him, liableto be found guilty of that offence after summary trial. Uponconviction, such a person could be punished with imprisonment ofeither description for a term which may extend to one year or with afine of Rs. 10,000/- or 10% of the full value of the cheque or both.However, there is no similar liability cast under the Act, on the personwho knowingly accepts such a cheque. Admittedly, the petitioner hasissued (P5) with the knowledge that there were no funds in hisaccount. This conduct disentitles the petitioner to revisionary relief.
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It was submitted that the Learned Additional District Judge was inerror when he stated in his order the petitioner will be given leave "toappear and file answer" upon the payment of Rs. 3,500,000/-. I am inagreement with this submission. I accordingly substitute the words“to appear and show cause against the decree nisi" for the words “toappear and file answer". Subject to this variation in the order, theapplication for revision is dismissed with costs.
S. N. SILVA, J. I agree.
Revisionary relief refused.