039-SLLR-SLLR-2008-V-1-MOHAMED-AZWAR-HASSIM-v.-SAMPATH-BANK-LIMITED.pdf
Mohamed Azwar Hassim v
SCSampath Bank Limited395
MOHAMED AZWAR HASSIMv
SAMPATH BANK LIMITEDSUPREME COURT
DR. SHIRANI BANDARANAYAKE, J.
FERNANDO, J. ANDAMARATUNGA, J.
S.C. (C.H.C.) APPEAL NO. 17/2000H.C. (CIVIL) 176/96(1)
MARCH 13, 2007
Mortgage Act – Section 85( 1)-A credit agency could sell any of the movablesin the possession and custody of such agency – Section 85(2) and 85(3) -Restrictions that should be taken into consideration prior to such sale -Section 86 – Notice of demand of payment prior to the exercise of power ofsale.
The respondent-Bank filed action in the High Court (Civil) against the appellantfor the recovery of a sum of Rs. 3,280,209/80 together with interest untilpayment in full and a sum of Rs. 445,366/65 together with interest thereonbeing the amounts claimed to be due to the respondent-Bank from theAppellants respectively on account allegedly of a pledge loan granted to theappellants and an overdrawn balance in the current account of the appellants.
The High Court held in favour of the respondent-Bank and granted therespondent Bank the reliefs prayed for and dismissed the defendant-appellants claim in reconvention.
When this matter was taken up for hearing it was agreed that the appeal wouldbe considered on the following ground:-
"Was the learned judge of the High Court right in holding that therespondent-Bank was acting in compliance with the provisions ofsection 85(2) of the Mortgage Act, in not proceeding to sell thepledged goods and seeking an order of Court to sell, withoutconsidering the effect of clause 11 of the "Pledge Agreement"which confers on the respondent-Bank the right to sell the pledgedproperty.".
396Sri Lanka Law Reports[2008] 1 Sri L.R
Held:
According to section 85{1) of the Mortgage Act, it is apparent that, a creditagency could sell any of the movables in the possession and custody ofsuch agency. The restrictions that should be taken into consideration, priorto such a sale have been referred to in sections 85(2) and 85(3) of the Act.
On an examination of sections 85(1), 85(2) and 85(3) of the Mortgage Act,it is quite clear that mortgagee, if it is an approved credit agency could sellproperty which is in its possession, if provision is contained in theinstrument of mortgage or in an agreement between the parties, whichrefers to section 85(2) of the Mortgage Act and empowers the agency toexercise the power of sale.
The basic requirement in terms of section 85 of the Mortgage Act is theavailability of the instrument of mortgage or an agreement between theparties with reference to section 85(2) of the Mortgage Act and due noticebeing given to the mortgagor by way of a notice of demand granting himone month time to make a payment to the relevant credit agency.
It is the duty of the party, who is entitled to claim damages to take allreasonable steps to minimise the loss consequent to breach of contract.
Cases referred to:
Compania Naveira Maropan S.A.v Bowaters Lloyd Pulp and Paper MillsLtd. (1955) 2 Q.B. 68 at 98-99.
British Westinghouse Electric Co. v Underground Electric Railways (1912)A.C. 673).
Noorbhai and Co. v Karuppan Chetty (1924) 26 NLR 161.
Wimalasekera v Parakrama Sundra Co-operative Agricultural Productionand Sales Society Ltd. (1955) 58 NLR 298.
Town Council, Chavakachcheri v Devabalan (1962) 68 NLR 10.
APPEAL from the judgment of the Provincial High Court of the WesternProvince holden in Colombo.
Faiz Musthapha, P.C. with N.M. Saheid and Faizer Markar for defendant-appellants.
Chanaka de Silva for plaintiff-respondent.
Cur.adv.vult.
July 28, 2008
DR. SHIRANI BANDARANAYAKE, J.This is an appeal from the judgment of the Provincial High Courtof the Western Province holden in Colombo (hereinafter referred toas the High Court) dated 22.09.2000. By that judgment learnedJudge of the High Court held in favour of the plaintiff-respondent
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake, J.)397
(hereinafter referred to as the respondent) and granted therespondent the reliefs prayed for and dismissed the defendants-appellants (hereinafter referred to as the appellants) claim inreconvention. The appellants appealed to this Court.
The facts of this appeal as submitted by the appellants, albeitbrief, are as follows:
The respondent filed action in the High Court against theappellants for the recovery of,
a sum of Rs. 3,280,289/58 together with interest on thecapital sum of Rs. 2,582,406/- at 28% per annum from01.09.1993 until payment in full and turnover tax and defencelevy on such interest at 5% and,
a sum of Rs. 445,366/65 together with interest thereon at28% per annum for 01.09.1993 until payment in full andturnover tax and defence levy on such interest at 5%,
being the amounts claimed to be due to the respondent from theappellants respectively on account allegedly of a pledge loangranted to the appellants and an overdrawn balance in the currentaccount of the appellants.
The appellants in their answer prayed for a dismissal of therespondent’s action and claimed in reconvention a sum ofRs.222,351/- with legal interest. The position taken up by theappellants were that,
by reason of the fact that the goods imported are pledgedwith the respondent and the respondent is in possessionthereof, the respondent cannot have and maintain this action;
the respondent has wrongly paid an additional sumexceeding Rs. 300,000/- to the Sri Lanka Customs withoutreference to the appellants.
When this matter was taken up for hearing, it was agreed thatthe appeal would be considered mainly on the following grounds:
"Was the learned Judge of the High Court right in holdingthat the respondent was acting in compliance with theprovisions of Section 85(2) of the Mortgage Act, in notproceeding to sell the pledged goods and seeking anorder of Court to sell, without considering the effect of
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clause 11 of the Pledge Agreement (P4) which confer onthe respondent the right to sell the pledged property?"
The contention of the learned President’s Counsel for theappellants was that the High Court had failed to understand andappreciate the scope and ambit of Section 85(2) of the MortgageAct and the respondent had acted unreasonably and/or negligentlyand/or contrary to law in not selling the goods pledged to it by theappellants even though such goods were in the custody andpossession of the respondent and that the respondent was entitledin law to sell the goods and set off the proceeds against theamounts due.
Learned Counsel for the respondent submitted that there areonly two considerations for the Court to decide on the defencetaken up by the appellants. Those defences included the following:
whether the respondent was under an obligation to immediatelysell the goods and mitigate losses; and
whether the respondent has the right to recover the sums paid asrevalued customs duty since the respondent did not obtain thespecific approval of the appellants to make such payments.
Learned Counsel for the respondent therefore submitted thatboth these defences would fail on the basis of the overwhelmingevidence and material before this Court.
Having stated the contentions of both learned President’sCounsel for the appellants and the learned Counsel for therespondent, I would now turn to examine the question that hasbeen raised before this Court.
The following facts were undisputed and agreed upon by theappellants and the respondent:
the appellants had applied for certain facilities from therespondent;
upon the application, the respondent entered into a PledgeFacility Agreement (P2) with the appellant for a sum ofRs. 2,500,000/- which was disbursed to the appellants;
under and in terms of the said Pledge Facility Agreement, theappellants executed a Promissory Note (P3) and the pledgedocument (P4);
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake. J.)399
The respondent bank took steps to clear the consigned goods,incurring related expenses;
the respondent bank has granted to the appellants credit facilitiesamounting to Rs. 2,582,406/52;
the respondent bank in fact expended the amounts set out in theplaint on account of the facilities granted to the appellants; and
the statement of accounts produced by the respondent bank inthe action filed in the original Court is correct and accurate.
Accordingly, the only question that has to be considered would be asto whether the respondent was entitled in law, to sell the goods in termsof the Mortgage Act and the agreement entered into between theappellants and the respondent.
Section 85(1) is contained in Part V of the Mortgage Act, which dealswith mortgages of movables and reads as follows:
"Where a mortgage of any corporeal movables is createdin favour of an approved credit agency, it shall be lawfulfor the agency, subject to the provisions of sub-sections(2) and (3), to sell any of the movables subject to themortgage which may for the time being be actually in thepossession and custody of the agency.
On a plain reading of Section 85(1) of the Mortgage Act. it isapparent that, a credit agency could sell any of the movables in thepossession and custody of such agency. The restrictions that should betaken into consideration, prior to such a sale have been referred to inSections 85(2) and 85(3) of the Act. These two Sub-sections are asfollows:
"85(2) The power conferred on the agency by Sub-section (1) to sell any movables shall be exercised only ifthe instrument of mortgage or an agreement between theparties contains provision referring to this section andempowering the agency to exercise the power of saleconferred thereby, and if either of the following conditionsis fulfilled.
' that is to say –
(a) where the mortgage is created as security for thepayment of any moneys stated to be payable on
400Sri Lanka Law Reports[2008] 1 Sri L.R
demand, if the mortgagor fails to make payment ofthe moneys due and payable under the mortgagewithin one month of the issue to him by the agency ofa notice of demand in accordance with the provisionsof section 86; or
(b) where the mortgage is created as security for thepayment of any moneys stated to be payable on aspecified or ascertainable date, if the mortgagor fails tomake payment of the moneys due and payable underthe mortgage within one month of the issue to him bythe agency, after that date, of a notice of demand inaccordance with the provisions of section 86.
Every sale in exercise of the power conferred bysubsection (1) shall be by public auction, and it shallbe the duty of the agency to take such steps as arenecessary to ensure –
that a notice containing a description of the movablesto be sold and specifying the date fixed for the sale,is published in two issues of a daily newspapercirculating in Sri Lanka at least one week before thedate fixed for the sale, and
that the sale takes place on the date so specified, orif the sale is postponed, that a further noticecontaining the particulars specified in sub-paragraph(a) is published at least one week before the date towhich the sale is postponed."
Section 86 of the Mortgage Act, refers to the notice of demandof payment prior to the exercise of power of sale and reads asfollows:
"86(1) The power of sale conferred by section 85 shall notbe exercised unless the instrument of mortgage containsan address to which notice of demand of payment maybe sent to the mortgagor by the agency; or where there isno such instrument unless the mortgagor has in writingsigned by him furnished an address as aforesaid to themortgagee:
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake. J.)401
Provided, however that upon any change of address,the mortgagor may notify his new address to the agency,and such new address, if acknowledged in writing by theagency, shall for the purposes of section 85 be theaddress to which a notice of demand of payment may besent.
. (2) Every such notice of demand of payment shall besent by registered post in a letter to the address of themortgagor as stated in the instrument of mortgage or thewriting referred to in subsection (1), or to such newaddress as may, for the time being have been notifiedand acknowledged as provided by that subsection."
On an examination of Sections 85(1), 85(2) and 85(3) of theMortgage Act, it is quite clear that a mortgagee, if it is an approvedcredit agency could sell the property, which is in its possession, ifprovision is contained in the instrument of mortgage or in anagreement between the parties, which refers to Section 85(2) of theMortgage Act and empowers the agency to exercise the power ofsale.
It is common ground that the appellants and the respondent hadentered into a Pledge Agreement (P4) on 03.08.1992. LearnedJudge of the High Court while referring to the said PledgeAgreement had held that the said ‘instrument does not containprovisions empowering the agency (the respondent) to exercise thepower of sale conferred’. Learned Judge of the High Court had alsoreferred to the relevant requirement in Section 85(2) of theMortgage Act and had stated that, Section 85(2) does not empowerthe respondent to sell the pledged goods by itself without firstobtaining a judgment from a competent Court.
Accordingly, the important question that has to be examined iswhether there is provision contained in the Pledge Agreement (P4)regarding a sale in the event of non-payment and whether Section85(2) of the Mortgage Act empowers the respondent to carry outsuch a sale and if so whether there is a necessity to first obtain anorder from a competent Court.
On an examination of the Pledge Agreement (P4), it is evidentthat clause 11 of the said Agreement refers to Sections 85(1), (2)
402Sri Lanka Law Reports[2008] 1 Sri L.R
and (3) of the Mortgage Act and therefore it would not be correctto state that the Pledge Agreement 'does not contain provisionsempowering the respondent to exercise the power of saleconferred'. The said clause 11 clearly empowers the respondent toexercise the statutory power of sale conferred by Sub-section 1 ofSection 85 of the Mortgage Act, with regard to the securities heldby the respondent subject to the observance of the provisions ofSub-sections 2 and 3 of the Mortgage Act. Clause 11 reads asfollows:
"That upon the moneys due to the Bank upon the saidCash Credit Account becoming payable (whether underthe provisions of the 9th or 10th clauses of this
■Agreement) it shall be lawful for the Bank to exercise thestatutory power of sale conferred by Sub-section 1 ofsection 85 of the Mortgage Act in respect of the Securitiesheld by the Bank subject to the observance of theprovisions of Sub-sections 2 and 3 or if the Bank shallthink fit so to do forthwith or at anytime thereafter andwithout any notice to the Borrowers to sell or otherwisedispose of all or any of the Securities either by publicauction or by private contract and subject to suchconditions as the Bank shall think fit under the expressauthority to do so which the Borrowers hereby give theBank. The nett proceeds of such sale (whether made inexercise of the statutory power conferred by Section 85of the Mortgage Act or of the contractual power herebyconferred) shall be applied in liquidation of the balancethen due to the Bank upon the said Cash Credit Account."
In the event, if after executing the respondent's right of sale,there is insufficient funds from the nett sum realized by the sale tocover the balance due, clause 12 would permit the respondent toapply any other money in the hands of the Bank standing to thecredit of the appellant. If there is any surplus of the nett proceedsof sale after payment of all principal and interest due by theappellants, in terms of clause 14 of the Agreement such amount isdirected to be paid to the appellants.
Section 85(1) of the Mortgage Act, referred to above, stipulates,quite clearly that the mortgagee could sell the subject that has been
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake, J.)403
*
pledged. This is however subject to conditions, which are stated inSections 85(2) and 85(3) of the Mortgage Act. On an examinationof all three (3) Sections, the conditions stipulated by the relevantprovisions for a sale stated in Section 85(1) of the Mortgage Actcould be summarised as follows:
the pledged property must be corporeal movables;
mortgage should be in favour of an approved credit agency;
such property at the time material, must be in thepossession and custody of the approved credit agency;
the instrument of mortgage or the agreement between theparties in regard to the mortgage should contain provisionreferring to Section 85(2) pf the Mortgage Act and empowerthe credit agency to exercise the power of sale conferred;and either of the following condition should be fulfilled –
the mortgage is created as security for the payment ofmoney stated to be payable on demand and if themortgagor had failed to make payment within one monthof the issuance of a notice of demand by the agency interms of Section 86 of the Mortgage Act;
or
Where the mortgage is created as security for the pay-ment of any money to be paid on a specified orascertainable date and if the mortgagor had failed tomake payment within one month of the issuance of anotice of demand by the agency in terms of Section 86of the Mortgage Act;
Section 86 of the Mortgage Act specifies the need of havingan address contained in the instrument of mortgage towhich notice of demand of payment may be sent to themortgagor by the agency and the process in which suchdemand should be sent and the steps that must be taken inthe event of any change of address.
Accordingly it is apparent that none of these provisions refer tothe requirement of first obtaining an order from a competent Courtas stated by the learned Judge of the High Court. The basicrequirement in terms of Section 85 of the Mortgage Act is that theavailability of the instrument of mortgage or an agreement between
404Sri Lanka Law Reports[2008] 1 Sn L.P
the parties with reference to Section 85(2) of the Mortgage Act anddue notice being given to the mortgagor by way of a notice ofdemand granting him one months time to make a payment to therelevant credit agency.
It is not disputed that the pledged property, comes within thecategory of movables and that the mortgage was in favour of anapproved credit agency. It was also common ground that theproperty in question was in the possession and custody of therespondent. As stated earlier, the instrument of mortgage being thePledge Agreement, had referred to Section 85(2) of the MortgageAct. Accordingly it is apparent that considering the provisionscontained in Section 85 of the Mortgage Act and the contents of thisappeal, the respondent was empowered to exercise the power ofsale conferred to it and the only issue that has to be examined iswhether due notice in terms of Section 85(3) had been issued.
On a perusal of the documents filed by both the appellants andthe respondent, it is evident that several reminders from therespondent about the payment and the requests from theappellants to grant further time had been made during the period ofOctober 1992 and November 1993. Thereafter on 11.11.1993, therespondent had issued the notice of demand to the appellants(P16), which clearly stated, inter alia, that,
"…. Accordingly I have been advised by my client todemand Rs. 3,725,656/23 being the total amountoutstanding from the Pledge Loan Facility and theOverdraft Facility as at 31/08/93 together with interestthereon from 01/09.93.
Therefore I do hereby demand that you pay my client thesaid sum of Rs. 3,725,656/23 along with the interestthereon and Rs. 315/- being the Letter of Demandcharges on or before 14.12.93…."
The Letter of Demand had been sent under Registered Post tothe address of the appellants as stated in the Pledge Agreement interms of Section 86(2) of the Mortgage Act.
It is therefore apparent that statutorily as well as contractually,the respondent had the authority to sell the pledged goods anddepending on the amount realized by the sale the respondent
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake, J.)405
should have taken steps as provided by clauses 12 and/or 14 of thePledge Agreement.
Notwithstanding the above, the material placed before this Courton the basis of the evidence that was before the High Court furtherstrengthens the position that the respondent had the authority tosell the pledged goods, in terms of the Mortgage Act and in termsof the Pledge Agreement.
The witness of the respondent, one Mr. W.A. Don Keerthithilake,who was a Senior Manager in his evidence given on 15.09.1999had clearly testified to this effect,
"Q :If not settled in three months what would you have
done?
A : We would have sold the goods.
Q : That is the basic concept in a pledged facility?
A : Yes.
Q : You were keeping the goods and you were seeking torecover the money given to the defendants?
A : Yes.
Q :For almost eight years you have not sold the goods?
A :Yes.
Q : The pledged facility you gave him was Rs. 2.5 million?A :Yes.
Q :You are now seeking to recover Rs. 2.5 million with
interests for eight years and also keeping the goods?
A : Yes.
Q :As a prudent Banker can you do that – can you keep
the goods with you and also at the same time recoverthe money you have been given as the pledged loan?A :No.
Q : That is what you have done in this case."
A . Yes."
Further to the aforementioned, it is to be noted that theappellants had not objected, when the respondent made anapplication to sell the pledged goods, to the High Court on20.03.1997, provided the sale proceeds were set off against theamounts claimed by the respondent.
406Sri Lanka Law Reports[2008] 1 Sri L.R
The proceedings of 20.03.1997, which is re-produced below,clearly supports the aforementioned position:
Irrespective of the fact that the respondent was given time totake steps and report, the respondent had failed to file a report,when the case was called on 13.06.1997. No steps to that effectwere taken even thereafter. It is not disputed that the goods thatwere imported under the Pledge Agreement remained in the
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake, J.)407
custody and possession of the respondent and was not handedover to the appellants.
Considering all the aforementioned circumstances it isabundantly clear, as stated earlier, that in addition to the authoritygranted to the respondent under and in terms of the clause 11 ofthe Pledge Agreement (P4) and Sections 85 (1), (2) and (3) of theMortgage Act, the appellants also had not objected to the sale ofthe pledged goods.
Accordingly it is evident that the learned Judge of the High Courthad erred when he considered the applicability of Section 85(2) ofthe Mortgage Act and the effect of clause 11 of the PledgeAgreement and therefore I answer the question on which thisappeal was considered in the negative.
There is one other matter that I have to consider, before I partwith this judgment.
Learned President's Counsel for the appellants also contendedthat the customs surcharge paid by the respondent cannot beclaimed from the appellants.
The contention of the learned President's Counsel for theappellants was that the respondent claimed a sum ofRs. 445,366/65 on the basis of an additional payment by way ofcustoms surcharge, This payment had been made by the respondenton a revaluation of the said goods by the Sri Lanka Customs.
Learned Counsel for the respondent however took up theposition that the appellants had not protested about the payment ofcustoms duty by the respondent Bank. Learned Counsel for therespondent had referred to the document marked P10 in support ofhis contention.
The letter marked P10 is a document sent by the 1st appellantto the respondent. It was addressed to Mr. W.A.D. Keerthithilakeand the relevant paragraphs reads as follows:
it
» • • •
2 Regarding your additional payment of Rs. 320.228/-you are aware that you made the Payment withoutconsulting us. In fact we were informed about the
408Sri Lanka Law Reports[2008] 1 Sri L.R
payment only after it was made.11
n
» • • •
It is therefore evident that the appellants had not been aware ofthe said payment by the respondent. Moreover the proceedings of15.09.1999 further strengthens the contention of the learnedPresident's Counsel for the appellants that they had not agreed topay the additional amount.
"Q :Did you inform your client before you were going to pay
the additional customs duty?
A :No.
Q :If you informed the defendants he would have objected
to the payment of additional customs duty?
A :Yes.
Q :You only informed the defendants after your payment
of additional customs duty.
A :Yes.
Q :Youadmit that payment was outside the agreement
regarding the pledged facility you gave the defendants.
A :Yes.
It is therefore abundantly clear that the additional payment madeby respondent was not only outside the purview of the PledgeAgreement, but also had been paid without any prior authority fromthe appellants. Moreover, as conceded by the respondent it had nottaken any steps to mitigate the damages as the officer, whorepresented the respondent had categorically stated that if theyhad sold the pledged goods in 1994, the outstanding dues wouldhave been considerably less. The question that has to be examinedtherefore is that whether the respondent is responsible for nottaking steps to minimize the loss.
Admittedly, the respondent had claimed an additional sum ofmoney. It is also clear on an evaluation of the evidence of therepresentative of the respondent that the damages could havebeen minimized if the respondent in terms of the accepted bankingpractice had taken action to sell the goods, which were in itscustody in terms of the provisions of the Mortgage Act, the Pledge
Mohamed Azwar Hassim v
SCSampath Bank Limited (Dr. Shirani Bandaranayake. J.)409
Agreement and moreover as the appellants had no objection insuch action.
Learned President's Counsel for the appellants relied on severalauthorities in Support of his contention that it is the duty of a partyclaiming damages to take all steps to minimize loss consequent toa breach of contract.
Cheshire and Fifoot (Law of Contract, 13th Edition, pg. 632)clearly refer to the consequences when acting unreasonably ingiven circumstances and had stated that,
"Alike in contract and in tort a plaintiff may claimcompensation only for the loss caused by the defendant'swrongful act; any loss created by his own unreasonableconduct he must bear himself. In a case in 1955,Hodson LJ. had to consider the question,
"Whether the damages flow from the breach inaccordance with the ordinary law of damages forbreach of contract. Were they the natural and probableconsequences of the breach? If not, they are tooremote …. The question is one of causation. If themaster, by acting as he did, either caused the damageby acting unreasonably in the circumstances in whichhe was placed, or failed to mitigate the damage, the[defendants] would be relieved, accordingly from theliability, which would otherwise have fallen upon them.'[Compania Naveira Maropan S.A. v Bowaters LloydPulp and Paper Mills Ltd.d) at 98-99]"
Prof. C.G. Weeramantry (The Law of Contracts, Vol. II, pg. 906)has also taken the view that regarding mitigation of damages that'it is the duty of a party claiming damages to take all steps tominimise the loss consequent to a breach of contract'. ProfessorWeeramantry had referred to the decision of Lord Haldane inBritish Westinghouse Electric Co. v Underground ElectricRailways<2), where it was stated that,
"There are certain broad principles which are quite wellsettled. The first is that, as far as possible, he who hasproved a breach of a bargain …. is to be placed, as far as
410Sri Lanka Law Reports[2008} 1 Sri L.R
money can do it, in as good a situation as if the contracthas been performed …. but this first principle is qualifiedby a second, which impose on a plaintiff the duty of takingall reasonable steps to mitigate the loss consequent onthe breach, and debars him from claiming any part of thedamage which is due to his neglect to take such steps."
This position had been considered by our Courts in severalcases. For instances in Noorbhai and Co. v. Karuppan Chetty&>,Jayewardene, A.J. had held that,
"But the law casts on the seller in such a case the duty ofminimizing the damages resulting from a breach ofcontract to purchase."
Again in the cases of Wimalasekera v Parakrama Samudra Co-operative Agricultural Production and Sales Society LtdMK andTown Council, Chavakachcheri v Devabalan^), the Supreme Courthad held that it is the duty of a party, who is entitled to claimdamages to take all reasonable steps to minimise the damages.
The appellants' position was that if the respondent had takensteps to sell the pledged goods at the time the question arose andespecially at the time the High Court had sanctioned the sale, thedamages could have been minimised.
The appellants had made a claim in reconvention stating that asum of Rs. 222,351/-, which amount was advanced to therespondent had been lost due to the respondent's failure to sell thepledged goods.
Learned Judge of the High Court had held that the appellantshad not adduced evidence in support of their claim in reconventionand dismissed the application for the claim in reconvention.
The proceedings of 15.09.1999 referred to the respondent'sevidence stating that a sum of Rs. 222,351/- had been paid to therespondent by the appellants as the 10% margin of the letter ofcredit and other statutory charges. After the High Court had statedthat no evidence had been adduced by the appellants in support ofthe contention, it is not disputed that one of the admissions of thismatter is that the appellants had paid the respondent a sum ofRs.222.351/-. The proceedings of 16.01.1997 clearly indicated that
Sri Lanka Insurance Corporation Ltd. v
SCJayathilake411
the appellants had adduced sufficient evidence in support of theirclaim in reconvention.
For the reasons aforesaid this appeal including the claim inreconvention is allowed and the judgment of the High Court dated22.07.2000 is set aside.
I make no order as to costs.
RAJA FERNANDO, J. – I agree.
AMARATUNGA, J. – I agree.
Appeal and the claim in reconvention allowed.
The judgment of the High Court set aside.