IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an Appeal against a judgment of the Court of Appeal under Article 128 of the Constitution.

Kusalanthi Fernando Kandawala, Rathmalana.

Plaintiff Vs.

1. Weerasekara Hettiarachchige Gertrude Perera No. 275, Ubayasenapura, Rajagiriya.

2. Weerawarnakulasuriya Boosabaduge Shamaline Fernando Beruwala.

Defendants SC Appeal No. SC Appeal 55/2020 Court of Appeal No. CA/1111/00(F)

D.C. Panadura Case No. 22300/MB AND Weerasekara Hettiarachchige Gertrude Perera No. 275, Ubayasenapura, Rajagiriya.

1st Defendant – Appellant Vs.

Kusalanthi Fernando Kandawala, Rathmalana.

Plaintiff – Respondent Weerawarnakulasuriya Boosabaduge Shamaline Fernando Beruwala.

2nd Defendant - Respondent AND NOW BETWEEN Weerawarnakulasuriya Boosabaduge Shamaline Fernando Beruwala.

2nd Defendant – Respondent –

Appellant Vs.

Kusalanthi Fernando Kandawala, Rathmalana.

Plaintiff – Respondent – Respondent Weerasekara Hettiarachchige Gertrude Perera No. 275, Ubayasenapura, Rajagiriya.

1st Defendant – Appellant -

Respondent Before: B.P. Aluwihare, P.C., J.

Yasantha Kodagoda, P.C., J.

Janak De Silva, J.

Counsel: Dr. Sunil Cooray with Ms. Diana S. Rodrigo for the 2nd Defendant – Respondent – Appellant Ms. Daphne Peiris Vissundara instructed by Ms. Hasanthi Dias for the 1st Defendant – Appellant – Respondent Argued on: 7th July 2021 Decided on: 9th November, 2023 Yasantha Kodagoda, P.C., J.

This judgment relates to an Appeal against a judgment of the Court of Appeal, originating from a judgment pronounced by the District Court of Panadura.

Background and institution of civil proceedings On 23rd June 1987, the Plaintiff – Respondent – Respondent (hereinafter sometimes referred to as “the Plaintiff”) instituted action in the District Court of Panadura against the 1st Defendant – Appellant – Respondent (hereinafter sometimes referred to as “the 1st Defendant” and at other times referred to as “the 1st Defendant - Appellant”) on the premise that on 2nd September 1986 she gave a loan of Rs. 25,000/= to the 1st Defendant at an interest rate of 24% per annum. As security for the loan, the 1st Defendant mortgaged to her a property owned by her, which mortgage she alleged is depicted in mortgage bond No. 8643 dated 17th June 1986 attested by Notary Public Lasantha Stembo. The Plaintiff alleged that the 1st Defendant defaulted the repayment of the loan and interest amounting to Rs. 6,000/=, and accordingly prayed for a decree for the total amount due being Rs. 31,000/=. She also prayed for a decree for the sale by auction under the supervision of court the mortgaged property to recover the afore-stated amount due to her.

On 15th July 1994, the Plaintiff filed an amended Plaint. In addition to the 1st Defendant, the 2nd Defendant – Respondent – Appellant (hereinafter sometimes referred to as “the

2nd Defendant” and at times referred to as “the 2nd Defendant - Appellant”) was cited as the 2nd Defendant. The amended Plaint contained the same allegation against the 1st Defendant. However, the Plaintiff averred that the property referred to in the Plaint (also referred to in the schedule to mortgage bond No. 8643) had been previously subjected to a primary mortgage in favour of the 2nd Defendant and that the said primary mortgage was reflected in mortgage bond No. 8425 dated 12th March 1986 which had also been attested by Notary Public Lasantha Stembo. Accordingly, the Plaintiff averred that mortgage bond No. 8643 (the mortgage in favour of the Plaintiff)

was a secondary mortgage and was subject to mortgage bond No. 8643 (a primary mortgage in favour of the 2nd Defendant).

On 19th June 1995, the 2nd Defendant filed Answer, in which she averred that the 1st Defendant had obtained a loan of Rs. 50,000/= from her at an annual interest rate of 24%. As security, the 1st Defendant mortgaged her property to the 2nd Defendant, which is reflected in mortgage deed No. 8425. The 2nd Defendant alleged that the 1st Defendant defaulted re-pay