019-SLLR-SLLR-2005-V-2-EKANAYAKE-AND-OTHERS-vs-PEOPLES-BANK.pdf
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EKANAYAKE AND OTHERSvsPEOPLES BANKCOURT OF APPEALWIJAYARATNE, J.
SRISKANDARAJAH J.
C. A./WRIT/APP. NO. 1655/2002 (WRIT)
JULY 23, 2004
Peoples Bank Act 29 of 1961 – amended by Act 32 of 1986 – Sections 5, 29D,29M – Quantum recoverable challenged – Does the error on the calculation ofquantum affect the jurisdiction of the Bank to act under Section 29D?
The Respondent Bank sought to parate execute the property mortgaged. ThePetitioner disputed the quantum recoverable and sought to quash the Resolu-tion of the Bank to auction the property mortgaged on that ground.
HELD:
(i) The facts disputed are on the quantum recoverable. The error on thecalculation of quantum will not affect the jurisdiction of the Bank to actunder Section 29D.
per Sriskandaraja, J.,
“The calculation of the sum recoverable by the Respondent Bank fromthe Petitioners is a matter of fact. In these proceedings the Court cannotascertain the correctness of the sum recoverable from the Petitionerswithout evidence."
ii. Under Section 29M the Respondent Bank is only entitled to recover thesums of money that is legally due and should return to the petitionersthe balance of the proceeds of Sale.
APPLICATION for a Writ of Certiorari.
Cases referred to :
R vs Fulham etc., Rent Tribunal exp. Zerek – 1951 2 KB 1
R vs Home Secretary exp. Zamir – 1980 AC 930 at 949
CA
Ekanayake and Others
vs Peoples Bank (Sriskandarajah J.)
95
G. I. T. Alagaratnam with M. Adamaly for Petitioners.
Ronald Perera with Chandimal Mendis for the Respondent.
March 28, 2005.
SRISKANDARAJAH J.The 1st Petitioner is the owner of the land that was mortgaged to theRespondent bank, the 2nd Petitioner is the wife of the 1st Petitioner. The3rd Petitioner is the mother of the 1 st Petitioner who has a life interest inthe property owned by the 1st Petitioner that was mortgaged to theRespondent bank. The Petitioners by this application are seeking a Writof Certiorari to quash the resolution of the’ Board of Directors" of theRespondent bank dated 29.11.2001 marked 24B to auction the propertybelonging to the 1 st Petitioner under the powers of Parate Execution, forthe recovery of a sum of Rs. 2,437,000 and interest thereon.. Thjs decisionwas communicated to the 1st Respondent by letter dated 20.12.2001marked P24A. The 1 st Petitioner in his affidavit attached to the petitionadmitted that as indicated jn the said letter dated 20.12.2002 he alongwith one Mr. Bandara has met the Assistant Genera) Manager of theKurunegala branch qf the Respondent bank and had discussed the matterwith him in the presence of thq Regional Manager and the AssistantRegional Manager. At this discussion, the 1 st Petitioner admitted that hehad informed them that he was prepared to pay the sum of Rs. 1.5 Millionas full and final settlement. The 1st Petitioner stated that ignoring thisoffer the Respondent bank has published the resolution passed by theBoard of Directors to auction the property which belongs to the petitionersin the Government Gazette dated 31.5.2002.
The Petitioner further submitted that the alleged loan of Rupees. 1.65million sought to be recovered by the Respondent bank was never given tothe petitioners and was a mere book adjustment by the Respondent bankfor its own convenience. The Petitioners further submitted that the recordsand, correspondence of the Respondent bank established glaringcontradictions in the sums claimed to be due and owing form the petitionerthus establishing the Petitioners' claim that there has been somemisappropriation by the Respondent in respect of his account. ThePetitioner’s position’is that the sum claimed in any event is not due in asmuch as the auditors of the Respondent bank themselves has confirmedthat the outstanding debit balance in the 1 st and 2nd Petitioners currentaccount and loan account as being only Rs. 767,048.60 on 31.12.2000.The Petitioners also submitted that the Respondent bank is clearly guilty
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at the very least for commercial unreasonableness in purporting tocompound interest with capital.
The Respondents position is that the 1st and 2nd Petitioners maintainedcurrent account No. 4069 at the Kuliyapitiya branch of the Respondentbank since 24.2.1998. The Petitioners requested a loan facility amountingto Rs. 1,650,000. This is borne out by documents marked R2, R2{a),R2(b), R4, R5 and R5(a). The Respondents further submitted that theseloan facilities were granted in two stages and separate mortgage bondswere executed with regard to the same facility. The 3rd Petitioner hassigned all the said mortgage bonds as the life interest holder of the saidproperty. The Respondents submitted that the Petitioners have admittedthat they have received the facilities and that they have failed and neglectedto pay the said amounts granted by the Respondent bank. The Petitionerswere granted several opportunities to repay the said facilities and sincethey continually failed and neglected to repay the said amount, the Boardof Directors of the Respondent Bank passed the resolution dated
to auction the property by Parate Execution. The Respondentalso took up the position that the decision of the Board of Directors to sellthe property of the Petitioners by Parate Execution is not amenable toWrit Jurisdiction.
It is an admitted fact that the petitioners mortgaged the properties thatare mentioned in the resolution marked as P24B to the Respondent bank.The Respondent is a statutory body incorporated as a Bank by the People’sBank Act No. 29 of 1961. The powers and functions of the RespondentBank are stipulated in Section 5 of the said Act. This section enables theRespondent to inter alia carry out commercial banking activities. By thePeople’s Bank Amendment Act No. 32 of 1986 the Respondent Bank wasempowered with the right of Parate Execution of mortgaged property, tofacilitate the recovery of moneys in default in circumstances where loans/overdrafts are secured against the mortgage of property.
Section 29D provides;
“Subject to the provisions of section 29E, the Board may by resolutionto be recorded in writing authorize any person specified in the resolutionto sell by public auction any immovable or movable properly mortgagedto the bank as security for any loan in respect of which default hasbeen made in order to recover the whole of the unpaid portion of such
CA
Ekanayake and Others
vs Peoples Bank (Sriskandarajah J.)
97
loan, and the interest due thereon up to the date of the sale together
with the moneys and costs recoverable under Section 29L”
Under the above provision, the Respondent bank is legally entitled topass a resolution to sell a property that was mortgaged to the bank assecurity to recover the unpaid portion of the loan. '
It is an admitted fact that the Petitioner obtained an over draft facility ofRs. 750,000 secured by mortgage bond No. 7082 marked P3, a loanfacility of Rs. 900,000 secured by a mortgage bond No. 7190 marked P4,an overdraft facility of Rs. 500,000 secured by mortgage bond 8180 markedP 7 and overdraft facility of Rs. 60,000 secured by mortgage bond No. 950marked P9. The dispute between the Petitioners and the Respondent is inthe quantum of the sum of money due to the bank that was secured bythese mortgage bonds. Even though the Petitioner took up the positionthat the alleged loan of Rs. 1,650,000 sought to be recovered by the. Respondent bank was never given to the Petitioner and was a mere bookadjustment by the Responded bank for its own convenience.
The Petitioner admitted that the auditors of the Respondent bankconfirmed an outstanding debit balance in the 1st and 2nd Petitioner’scurrent account and the loan account as being" Rs. 767,048.60 on31.12.2000. The Petitioner has also informed the Respondents as borneout in the affidavit of the 1 st Petitioner that they are prepared to pay a sumof Rs. 1.5 million as full and final settlement. The Respondents submitsthat as the Petitioners have failed and neglected to make payments asundertaken by them in the loan agreement, the said facilities were transferredas past dues, penal interest was calculated and resolution was passed torecover the total sum due from the petitioners.
The facts disputed in this case are on the quantum recoverable. Theerror on the calculation of quantum will not affect the jurisdiction of thebank to act under Section 29D of the People’s Bank Amendment Act. Asthere is material to show that the property of the Petitioner was mortgagedto the Respondent bank as security for loan and default has been madeby the petitioner to settle the loan the Respondent Bank is empowered torecourse to Parate Execution under Section 29D.
The calculation of the sum recoverable by the Respondent Bank fromthe Petitioners is a matter of fact. In these proceedings, the Court cannot
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ascertain the correctness of the sum recoverable from the Petitioners without evidence.
Administrative Law by H. W. R. Wade and C. E. Forsyth, (Ninth Editionat page 260) the authors states as follows :
"Although the contrast between questions which do and do not go tojurisdiction was in principle clear-cut, it was softened by the court'sunwillingness to enter upon disputed questions of fact in proceedingsfor judicial review. Evidence of facts is normally given on affidavit: andalthough the rules of court made provision for cross examination,interrogatories, and discovery of documents, and for the trial of issuesof fact, the court did not often order them. The procedure was welladapted for trying disputed facts. If the inferior tribunal had it self triedthem, ‘the court will not interfere except upon very strong grounds.There has to be a clear excess of jurisdiction’ with out the trial ofdisputed facts de novo. The questions of law and questions of factswere therefore to be distinguished, as was explained by Devilin J. {R. vFulham etc. Rent Tribunal exp. Zerek'.
Where the question of jurisdiction turns solely on a disputed point oflaw, it is obviously convenient that the court should determine it then andthere. But where the dispute turns to a question of fact, about which thereis a conflict of evidence, the court will generally decline to interfere.
Lord Wilberforce (R v Home Secretary exp Zamir(2) similarly describedthe position of the court, which hears applications for judicial review :
It considers the case on affidavit evidence, as to which cross-examination, though allowable does not take place in practice. It is, asthis case will exemplify, not in a position to find out the truth betweenconflicting statements.
In case of conflict of evidence, the court will not interfere in the decision,where there is evidence to justify a reasonable tribunal reaching the sameconclusion.”
In any event under Section 29M of the People’s Bank (Amendment)Act the Respondent bank is only entitled to recover the sums of moneythat is legally due to the respondent and should return to the Petitionersthe balance of the proceeds of the sale. The dispute is in relation to thequantum of the sum recoverable from the Respondents on the mortgage
CA
Selvamani vs Dr. Kumaravelupillai and Others Sisira de Abrew J.
99
bonds executed and as this is a question of fact this Court is not inclinedto interfere with the decision of the Board of Directors of the RespondentBank. Therefore this application is dismissed without costs.
WIJAYARATNE, J.-1 agree.Application dismissed.