IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA Arpico Finance Company Limited, No. 146, Havelock Road, Colombo 05.

Plaintiff SC APPEAL NO: SC/APPEAL/107/2017 SC LA NO: SC/HCCA/LA/198/2016 HCCA NO: WP/HCCA/MT/135/2011 (F)

DC MT LAVINIA NO: 3034/00/M Vs.

1. Jayasinghe Chandrakeerthi Jayasinghe, No. 532/5, Elvitigala Mawatha, Colombo 05.

2. Chrishani Renuka Jayasinghe, No. 532/5, Elwitigala Mawatha, Colombo 05.

Defendants AND BETWEEN Arpico Finance Company Limited, No. 146, Havelock Road, Colombo 05.

Presently known as, Associated Motor Finance Company PLC, No. 89, Hyde Park Corner, Colombo 02.

Plaintiff-Appellant Vs.

1. Jayasinghe Chandrakeerthi Jayasinghe, No. 532/5, Elvitigala Mawatha, Colombo 05.

2. Chrishani Renuka Jayasinghe, No. 532/5, Elwitigala Mawatha, Colombo 05.

Defendant-Respondents AND NOW BETWEEN

1. Jayasinghe Chandrakeerthi Jayasinghe, No. 532/5, Elvitigala Mawatha, Colombo 05.

2. Chrishani Renuka Jayasinghe, No. 532/5, Elwitigala Mawatha, Colombo 05.

Defendant-Respondent-Appellants Vs.

Associated Motor Finance Company PLC, No. 89, Hyde Park Corner, Colombo 02.

Plaintiff-Appellant-Respondent Before: S. Thurairaja, P.C., J.

Janak De Silva, J.

Mahinda Samayawardhena, J.

Counsel: Sandamal Rajapaksha for the Defendant-Respondent-

Appellants.

Palitha Kumarasinghe, P.C., with Asanka Ranwala for the Plaintiff-Appellant-Respondent.

Argued on : 15.09.2022 Written submissions:

by the Defendant-Respondent-Appellants on 17.09.2018.

by the Plaintiff-Appellant-Respondent on 24.08.2017.

Decided on: 10.08.2023 Samayawardhena, J.

The plaintiff company filed this action in the District Court of Mount Lavinia against the two defendants seeking to recover a sum of Rs. 809,991.13 with interest arising out of the Lease Agreement marked P4. The defendants filed answer seeking dismissal of the plaintiff’s action and made a claim in reconvention for a sum of Rs. 428,684 on unjust enrichment. After trial, the District Court dismissed the plaintiff’s action as well as the defendants’ claim in reconvention. Being dissatisfied with the judgment of the District Court, the plaintiff appealed to the High Court of Civil Appeal of Mount Lavinia. The High Court of Civil Appeal set aside the judgment of the District Court and entered judgment for the plaintiff. Hence this appeal by the defendants. This Court granted leave to appeal on the question whether the plaintiff is legally entitled to recover the balance due arising out of the Lease Agreement after its termination. There is no dispute that the defendants entered into the Lease Agreement P4 dated 24.10.1997 with the plaintiff company. Under the terms of the Lease Agreement the defendant-lessees agreed to pay the plaintiff-lessor 48 monthly lease rentals of Rs. 48,219 each and take the Minor Passenger Bus on lease. Although the leased vehicle was in the possession of the defendants for 29 months, they only paid a total of Rs.

977,035 as rental fees. The defendants were admittedly in default (as seen from paragraph 14 of the answer and P8).

If there is a default, 4% monthly overdue interest is added to the amount due (as stated in item 5 of the schedule to the Lease Agreement).

Since arrears were not settled, the Lease Agreement was terminated by the plaintiff by P9 dated 27.03.2000 and the leased vehicle was repossessed and thereafter sold for a sum of Rs. 850,000 on 05.04.2000. The position of the plaintiff is that as at 15.08.2000, the defendants were obliged to pay the plaintiff a sum of Rs. 809,991.13 (as seen from the statement of account marked P14).

The contention of learned counsel for the defendants before this Court is that, once the Lease Agreement is terminated, the plaintiff cannot recover future rentals but can only seek damages for the breach of contract. This is the crux of the matter.

In my view, this contention is unsustainable in view of the terms of the Lease Agreement the parties have agreed upon. Let me explain.

In terms of Article 5(1)(a) of the Lease Agreement, “if Lessee fail