029-NLR-NLR-V-41-MUTUAL-LOAN-AGENCY,-LTD.-v.-DHARMASENA.pdf
Mutual Loan Agency, Ltd. v. Dharmasena.
117
1939
Present: Soertsz A. C. J.
MUTUAL LOAN AGENCY, LTD. v. DHARMASENA.
213—C. R. Kandy, 24,156.
Cheetu—Cheetu existing at the time of enactment of Ordinance—Failure toobtain exemption—Ordinance No. 61 of 1935 (Cap. 128), s. 46 (.4).
Section 5 (2) of the Cheetus Ordinance bars an action for the recoveryof money due on a cheetu which was being conducted when the Ordinancecame into operation but which was not exempted under section 46 (4) ofthe Ordinance.
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SOERTSZ A.C.J.—Mutual Loan Agency, Ltd. v. Dharmasena.
A
PPEAL from a judgment of the Commissioner of Requests ofKandy.
J.E. M. Obeyesekere (with him M. M. Kumarakulasingham), for theplaintiff, appellant.
E. B. Wikremanayake, for the second defendant, respondent.
Cur. adv. vult.
June 9, 1939. Soertsz A.C.J.—
The Cheetus Ordinance is by no means easy to interpret and apply. Ithas the teasing quality of a cross-word puzzle. It arises for examinationin this case in the following circumstances. The plaintiffs who are a dulyincorporated company, limited in liability, carried on a business ofauctioning cheetu among its subscribers on the condition inter alia thateach subscriber could buy the cheetu only once. The cheetu was sold tothe subscriber who offered the largest discount. The first defendant whowas a subscriber bought the cheetu that was auctioned on September 5,1936, and in respect of the liability she incurred on that occasion, she andthe second defendant gave a joint and several promissory note. Shemade payments amounting to Rs. 117.28, and then defaulted.
The plaintiffs, thereupon, instituted this action against both defendantsand claimed the balance sum of Rs. 82.72 and interest. They did nothowever, proceed with their claim against the first defendant. They didnot even take summons on her, and on August 31, 1938, they stated thatthey were not going on with the case against her.
On April 1, 1937, the Cheetus Ordinance came into operation, and inview of section 5 (2) of that Ordinance, the learned Commissionerdismissed the plaintiffs’ case holding the claim unenforceable.
Section 5 (2) enacts that “ no right or claim under any scheme orarrangement which only partakes of the nature of a cheetu within themeaning of section 4 shall be enforceable by action in any Court or VillageTribunal in this Island ”.
On this finding of the Commissioner, two questions were raised onappeal, namely, (1) whether the plaintiffs’ scheme or arrangement waswithin section 4; (2) if so, whether the plaintiffs can enforce their claimon the ground that section 5 (2) did not apply to transactions entered intobefore the Cheetus Ordinance came into operation in cases in which, thecheetu out of which the transaction arose, was abandoned after theOrdinance was proclaimed. It was said that that was the case here, andthat the plaintiffs were doing no more than trying to collect debts thatsubscribers had incurred prior to April 1, 1937.
In regard to the first of these questions, there does not seem to be roomfor doubt. The evidence of the plaintiffs’ secretary clearly shows thattheir scheme or arrangement was not a cheetu in the meaning given tothat word by section 3 of the Ordinance. It is inconsistent with some,at least, of the essential terms and conditions postulated by section 3.But although the plaintiffs’ scheme did not reach the stature of theLegislative cheetu, it did not fall entirely outside the Ordinance. The
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Legislature had taken steps to prevent that by providing in section 4 that"every scheme or arrangement which, notwithstanding that it purportsto be a cheetu, is not based wholly on the essential terms and conditionsset out in section 3 or which is based on terms and conditions inconsistentwholly or in part with those essential terms and conditions, shall for thepurpose of this Ordinance be deemed only to partake of the nature of acheetu In this way, the Legislature brought within the scope of theOrdinance the cheetus it would allow in order that they might becontrolled by the Ordinance, as well as those cheetus which had flourishedin the Island but were considered objectionable, in order to suppressthem. For section 4 is followed by a section that, read with section 45,enacts that it shall be an offence to promote or conduct a scheme that" only partakes ” of the nature of a cheetu, and that no right or claimunder such a scheme, shall be enforceable in any Court.
In regard to the second question raised on appeal, I am just as clearlyof opinion that section 5 (2) catches up this transaction and renders theclaim unenforceable. Section 46 (1) requires that “ within one monthafter the date on which this Ordinance comes into operation, the managerof every cheetu. … which is actually being conducted at that
date, shall furnish to the Registrar of Lands …. a statementverified by affidavit and containing the terms and conditions of, and thefollowing particularsIn this context, it is obvious that
the word cheetu is used to cover not only cheetus as understood in section3, but all such schemes and arrangements as purported to be cheetus aspopularly understood. Section 46 (2) enables the Registrar to call forfurther information or explanation, and 46 (3) requires the Registrarto register a cheetu in respect of which there was compliance with 46 (1)and 46 (2), as an existing cheetu. Then comes section 46 (4) to enablethe Registrar-General to exempt any cheetu registered under 46 (3) fromany or all of the other provisions of the Ordinance conditionally orunconditionally. It is manifest that this cheetu was being conducted atthe time the Ordinance came into operation. The secretary says that itwas discontinued in August, 1937. There is evidence to show that therewas partial compliance with section 46 (1), but no evidence to show thatit was registered under 46 (3). It is admitted that there has been noexemption obtained under 46 (4). The inevitable result is that section5 (2) applies and makes this claim unenforceable.
In passing, I wish to comment on the case of Paramsothy v. Suppra-maniamwhich was cited to us in the course of the argument. I cannotquite follow the concluding part of that judgment. Maartensz J. referringto section 46 (4) says: “ Now the usual phrase in an exempting clause isthat the exempting authority shall have power to exempt from ‘ all orany of the sections’ of a Statute. Is there any significance in theintroduction of the word * other ’ before the word ‘ sections ’ in sub-section 4? Was the word ‘ other ’ used to limit the applicability of theOrdinance to existing cheetus to sections which cast a duty upon themanager?” It seems obvious that the word .“other” was inevitablewhere it occurs, for if it was not inserted there, the Registrar-General
1 39 N. L. R. 529.
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would have the power to exempt parties from the duties imposed by-section 46 itself, and that would have defeated the very object of theLegislature which appears to be to bring existing cheetus in line with thecheetus that the Ordinance creates and to control their future dealings.
Quite apart from sections 46 and 5 (2) of the Ordinance, this claim doesnot seem to be enforceable because it arises out of a transaction prohibitedby section 5 (1) and penalized by section 45. It is true that the trans-action was lawful at the time it was entered into and was rendered unlawfulonly by this Ordinance. But that, I think, does not matter. The lawappears to be that if the contract was lawful when it was made, whateverhas been done under the contract remains unaffected. But if theLegislature alters the law so that the contract thereafter becomes illegal,no further lawful acts can be done under it, and no action brought on it inthe absence of special provision for that .purpose.
For these reasons, I am of opinion that this appeal fails and I dismiss itwith costs.
Appeal dismissed.