A.H.M.D. Nawaz, J.

1. The pithy question for determination in this case is whether a prior mortgage bond can extend its ambit to secure the repayment of a loan granted by a bank subsequent to its execution. It is a well-established principle that a security, such as a mortgage, typically secures both past and present liabilities. However, the inquiry is whether such a security can validly encompass a contingent liability. Given the facts in the instant appeal, can a mortgage bond executed in 2015 serve as security for a loan advanced by the same bank in 2016?

2. This issue draws attention to the intricate and often labyrinthine clauses embedded in standard form mortgage bonds. The ingenuity of their construction serves as a testament to the protective mechanisms that favor financial institutions. Indeed, one might be inclined to echo Lord Macnaghten's observation that "no one…by the light of nature ever understood an English mortgage of real estate.", Samuel v Jarrah Timber and Wood Paving Corporation (1904) AC 323, at p.326.

3. The Defendant-Appellant (hereinafter referred to as the "Defendant" or the "Commercial Bank") extended banking facilities to the Plaintiff- Respondent (hereinafter referred to as the "Plaintiff"). To secure the resulting indebtedness, the Plaintiff executed two mortgage bonds, numbered 2710 and 2711, on 25^th August, 2010.

4. The mortgage bond bearing No.2710 hypothecated the properties known as Heeressagala and Richmond Hill, while the mortgage bond No.2711 pledged the property known as Averihena to the bank.

5. A common feature of both mortgage bonds is the Plaintiff’s promise— an undertaking universally included in security documents. Specifically, the Plaintiff expressly covenanted, agreed, and bound itself to the Defendant Bank to repay, on demand, all sums that may become due, owing, or payable at any time or from time to time in connection with any banking facilities extended by the Defendant. This obligation encompassed the repayment of interest at such rates as may be determined by the Defendant Bank in the ordinary course of its business. This is the pith and substance of the covenants in the two mortgage bonds that demand consideration.

6. Due to a failure to repay the periodic dues owed to the bank, the Board of Directors of the Commercial Bank passed a resolution authorizing the sale of the mortgaged properties described in the schedules to the plaint and the schedules to the mortgage bonds. The sale was to be conducted pursuant to the provisions of the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 (as amended) (the Act ) to recover the monies outstanding on the banking facilities extended to the Plaintiff from time to time.

7. It appears that the Commercial Bank (the Defendant) complied with the procedure outlined in the Act, including the issuance of notice regarding the board resolution. A quick examination of paragraphs [7] to [9] of the plaint and the response in paragraphs [3(s)] to [3(z)] of the statement of objections makes it clear that, despite receiving notice of the board resolution, the Plaintiff failed to take any action to settle the outstanding amounts under the specified banking facilities.

8. Some facts germane to the case warrant recapitulation. It remains undisputed that the Plaintiff has failed to liquidate the amounts owed under the terms of the aforesaid board resolution.

9. Against this backdrop, the Plaintiff instituted the present action, seeking, inter alia, an enjoining order and an interim injunction to restrain the sale of the mortgaged properties in question.

10. As is typical in cases of this nature, the Defendant Bank filed its statement of objections on 21^st September 2017, opposing the issuance of the interim injunction sought in the Plaintiff’s prayer to the plaint. The inquiry into the interim injunction was resolved through written submissions. By an order dated 15^th November 2017, the learned Judge of the Commercial High Court granted the in