026-SLLR-SLLR-2006-V-2-PEEOPLES-BANK-vs.-WEERASINGHE.pdf
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People’s Bank vs Weerasinghe
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PEOPLE’S BANKVSWEERASINGHECOURT OF APPEALSOMAWANSA, J. (P/CA).
WIMALACHANDRA, J.
CALA 271/2004.
DC GAMPAHA 767/M.
JULY 27, 2006.
Provincial High Court (Special Provisions) Act, No. 10 of 1996, sections 2 and9 – Constitution, Article 154(3) – Cause of action – Commercial transaction ? -Exceeding 3 Million – District Court lacks jurisdiction – Transfer to CommercialHigh Court by operation of law – Patent or latent lack of jurisdiction ?.
The plaintiff respondent instituted action against the defendant-respondentBank claiming a sum of Rs. 17.5 million from the Bank being the loss causedto him due to certain negligent acts of the Bank officials. The defendant -.petitioner Bank in its answer did not take up the position that the District Courthas no jurisdiction to try and determine the action. When the case was takenup for further trial the petitioner Bank took up the position that the cause ofaction arises from a commercial transaction and that as the claim being overthree Million the Commercial High Court has exclusive jurisdiction and hencethe District Court lacks jurisdiction to hear the case. The trial Judge dismissedthe objection, On leave being sought, it was contended by the respondent thatthe petitioner Bank has pleaded to the jurisdiction without any specific denialon any ground and proceeded to trial without even an issue relating to jurisdictionand that the claim is not a commercial transaction.
HELD:
The wrong or the cause of action in the instant action is not constituted bynegligence or contrary banking practice which in isolation does notconstitute any wrong or give rise to any cause of action. The wrong or thecause of action is constituted by the transfer of funds from one Bankaccount to another Bank account which per-se is manifestly a Bankingtransaction and arising out of a Banking transaction, it is a commercialtransaction.
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If the want of jurisdiction is patent and not latent, objection can be takenat any time. In such a case it is the duty of court ex mero moto to raise thepoint even if the parties fail to do so.
As provided for in section 9 of Act No. 10 of 1996 the matter shall standremoved to the High Court by operation law.
APPLICATION for leave to appeal from an order of the District Court of Gampaha.
Cases referred to:Lowe vs Fernando 16 NLR 298
Brunswick Exports Ltd vs. Hatton National Bank Ltd 1999 1 Sri LR219
Baby vs Bandon 1999 3 Sri LR 416
Kolitha Dharmawardane for defendant-petitioner.
M. H. B. Morais for plaintiff-respondent.
Cur.adv. vult.
January 27,2006
ANDREW SOMAWANSA, J. (P/CA)This is an application seeking leave to appeal from the order of the learnedDistrict Judge of Gampaha dated 13.07.2004 dismissing an application,made to the said Court to transfer the instant action No. 767/M to theCommercial High Court on the basis that the action instituted by the plaintiff-respondent arises out of a commercial transaction as contemplated bythe Provincial High Court (Special Provisions) Act, No. 10 of 1996 and ifleave is granted to set aside and vacate the aforesaid impugned orderdated 13.07.2004 and make order that the instant case being within thesole and exclusive jurisdiction of the High Court be transferred to be heardand disposed by the Commercial High Court established by the aforesaidAct, No. 10 of 1996. Also for a direction to the learned District Judge totransfer the instant action to the Commercial High Court of Colombo. Thedefendant-petitioner also supported and obtained an interim relief whichhas been extended from time to time.
At the inquiry both counsel made oral submissions and have alsotendered written submissions on the question of leave as well as the main
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People’s Bank vs Weerasinghe (Andrew Somawansa, J. (P/CA))
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appeal. The only matter for determination by this Court is whether thecause of action in the instant action has arisen out of a commercialtransaction as contemplated in the aforesaid Act, No. 10 of 1996.
The relevant facts are the plaintiff-respondent (hereinafter called therespondent) instituted the instant action pleading:
that on or about 06.11.1998 the respondent and D. M. Periesopened a Joint account bearing No. 00262071327831 at the“Gampaha Branch” of the defendant-petitioner Bank (hereinaftercalled the petitioner Bank) by depositing a sum of Rs. 54,000,000.
that on or about 16.11.1998 and 09.12.1998, the respondent andD. M. Peries withdrew a sum of Rs. 5,000,000 and Rs. 7,500,000respectively.
on or about 30.12.2000 D. M. Peries died.
that on or about 07.01.1999 an employee of the petitioner Bankinformed the respondent that the petitioner Bank has received aletter from D. M. Peries requesting to withdraw a sum ofRs. 20,000,000 from the said Joint Account.
that immediately after receiving the information, the respondentmet the Manager of “Gampaha Branch” of the petitioner Bank andthe petitioner informed the respondent that upon the request madeby D. M. Peries, by letter dated 15.11.1998, the petitioner Banktransferred a sum of Rs. 17,500,000 to an account maintained by
M. Peries at the Head office of the petitioner Bank.
(/) that D. M. Peries did not open an account at the Head Office ofthe petitioner Bank prior to his death and D. M. Peries by a letterdated 08.01.1999 had informed the petitioner the same.
that by letters dated 26.02.1999 and 28.02.2001 the petitionerBank informed the respondent that the respondent’s query is beinginvestigated and the respondent will duly be informed of the resultof the said investigation.
on or about 13.01.1999 the respondent lodged a complaint at theCriminal Investigation Department and upon the said complaint
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the Criminal Investigation Department instituted criminal actionbearing No. 54871/B in the Magistrate’s Court of Qampaha.
(/) that on or about 14.07.1999 the learned Magistrate directed theExaminer of Questioned Documents to examine the signature ofD. M. Peries on the documents pertaining to a similar incident, inrespect of an account held by D. M. Peries at Hong Kong andShanghai Banking Corporation (HSBC).
(/) that in terms of the Examiner of Questioned Documents Reportdated 30.11.1999, the signatures on the letters dated 15.11.1998and 07.01.1999 differed to the signature of D. M. Peries.
(A) that the petitioner has acted unsatisfactorily, against the Bankingprocedures, practices and principles and acted negligently bytransferring the said sum of Rupees 17.5 million.
that D. M. Peries’s name is not disclosed in the pass book of thesaid account held at the “Head Office” of the petitioner Bank andthe respondent is unaware that D. M. Peries maintained such anaccount.
(m)that the respondent has acted in violation of the normal bankingprocedure and regulations in opening the said account held at the“Head Office” of the petitioner Bank.
(n)that the procedure adopted by the petitioner whilst crediting Rs.17.5 Million to the account said to the opened by the deceasedD. M. Peries was unsatisfactory, negligent and inconsistent withestablished banking practices and as a result a cause of actionhas accrued to the respondent to file action in respect of the lossof Rs. 17.5 million to him.
In the premise he prayed fora decree that directs the defendant Bankto pay a sum of Rs. 17.5 million and the accrued interest to the JointSavings account of the respondent.
The petitioner Bank in his answer did not take up the position that theDistrict Court has no jurisdiction to try and determine the instant action.
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People’s Bank vs Weerasinghe (Andrew Somawansa, J. (P/CA))
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The case proceeded to trial and on 26.05.2004 when the case wastaken up for further trial the petitioner Bank took up the position that thecause of action in the instant action arises from a commercial transactionand that the claim being over three million the High Court has exclusivejurisdiction and hence the District Court lacks jurisdiction to hear anddetermine this instant action. The learned District Judge having inquiredinto this objection made the aforesaid order dismissing the objection tojurisdiction taken by the petitioner Bank. It is from this order that thepetitioner Bank seeks leave to appeal.
Counsel for the respondent submits that the petitioner Bank havingpleaded to the jurisdiction without any specific denial on any groundproceeded to trial without even an issue relating to jurisdiction.Respondent’s claim is for a sum of Rs. 17.5 million with interest andtherefore this is not a matter that arose in the course of the trial or onrespondent’s evidence. He submits that in any event the cause of actionon which the claim is based is not a commercial transaction within themeaning of section 2 and falling within the 1st Schedule in Act, No.10 of1996. He further submits that the transaction complained of is based asaverred in his pleadings on a negligent, fraudulent or dishonest act or actsbetween the Bank and those who withdrew money forging the depositor’ssignature causing loss to the depositor and it is from this fraud or wrongfulwithdrawal to which the respondent is not a party that the cause of actionsprings or arises. Therefore there is no transaction between the respondentand the petitioner Bank from which the cause of action has arisen. Healso submits that the dishonest withdrawal in no way can be called a ,commercial transaction. The money had been withdrawn after committinga criminal act or acts. Hence it is a criminal transaction causing loss anddamage to the respondent which is the basis of the cause of action andthe petitioner Bank negligently or wrongfully without following the properbanking procedure has given into the criminal or criminals who forged thesignature and thereby depriving the respondent of his money and to thatdishonest transaction the respondent is no party. I am unable to agreewith the aforesaid submission of counsel for the following reasons.
On an examination of the respondent’s pleadings, it is to be seen thatthe entire pleadings of the respondent refers to banking transactions andthe cause of action of the respondent encapsulated in paragraph 21 of thesaid pleadings states as follows:
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In essence the very nucleus of the cause of action as claimed by therespondent is the transfer of funds from one account to another. The questionthat arises for determination is whether a cause of action based on bankingtransaction cannot be treated as a cause of action arising out of bankingtransactions if such transactions are performed by the Bank negligently orcontrary to established banking practices.
It is to be seen that all causes of action are based on a wrong and therecould be no cause of action if not for a wrong. It was held in Lowe vs.Fernandd'K
“Generally ‘cause of action’ is the wrong for the preventionor redress of which an action may be brought. The wrong is thecombination of the right and its violation.”
In the instant action the wrong or the cause of action is not constitutedby negligence or contrary banking practices which in isolation does notconstitute any wrong or give rise to a cause of action. The wrong or thecause of action is constituted by the transfer of funds from one bankaccount to another bank account which per se is manifestly a bankingtransaction and arising out of a banking transaction. This is consistentwith the plain and ordinary meaning of the provisions in Schedule 1 of Act,No. 10 of 1966 and any construction to the contrary would defeat the veryintention and purpose of the establishment of the Commercial High Court.
Item 1 of the 1st Schedule of the Provincial High Court (SpecialProvisions) Act prescribes ‘all matters where the cause of action hasarisen out of commercial transactions including the cause of action relatingto banking in which the debt, damage or demand is for a sum exceedingthree million.’ In Brumswick Exports Ltd. vs. Hatton National Bank Ltd.™it was held that item 01 of the 1st Schedule manifestly embraces withinits fold all banking transactions (unless specifically excluded). Thus it isto be seen that the aforesaid provisions viz: item 01 of the 1 st Schedule
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People's Bank vs Weerasinghe (Andrew Somawansat J. (P/CA))
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does not confine jurisdiction merely to commercial transactions or bankingtransactions only but extend such exclusive jurisdiction to all matterswhere the cause of action has arisen out of commercial or bankingtransactions.
For the foregoing reasons, I would hold that the instant action beforethe District Court has arisen out of a banking transaction and hence out ofa commercial transaction as contemplated in Schedule 1 of the HighCourt of the Provinces (Special Provisions) Act, No. 10.of 1996. Accordinglyin terms of section 02 of the aforesaid Act, No. 10 of 1996 the determinationof the matter involved in the instant action would be within the exclusivejurisdiction of the High Court established thereunder read with Article154(3) of the Constitution. Therefore as provided for in section 9 of Act,No. 10 of 1996 the matter shall stand removed to the High Court by operationof law.
Before I conclude there is one other matter that needs consideration;that being whether the objection taken to jurisdiction is belated for thepetitioner Bank has taken up this objection after the commencement oftrial. As aforesaid neither any objection to jurisdiction was taken in theanswer of the petitioner Bank, nor was there any issue raised on the basisthat District Court Gampaha lacks jurisdiction to try and determine thisaction. In the case of Baby vs. Banded it was held that if the want ofjurisdiction is patent and not latent objection can be taken at any time. Insuch a case it is the duty of Court itself ex mere motu to raise the pointeven if the parties fail to do so. In any event, the instant action standstransferred to the Commercial High Court by operation of law.
For the foregoing reasons, I would grant leave to appeal from the orderof the learned District Judge of Gampaha dated 13.07.2004 and set asidethe aforesaid impugned order and direct the District Judge to forthwithtransfer the instant action pending in the District Court to the ProvincialCommercial High Court. The petitioner Bank is entitled to the costs of thisapplication fixed at Rs. 15,000.
WIMALACH ANDRA, J. — I agree.
Order set aside. District Judge directed to transfer the instant action to theCommercial High “Court.