IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an application for Leave to Appeal under and in terms of Section 5(2) of the High Court of the Provinces (Special Provisions) Act No. 10 of 1996 read with Chapter LVIII of the Civil Procedure Code.

1. Muthu Jeewarathnam

2. Sellappan Mehaletchumi No. 14, Ebenzer Place, Dehiwela. Plaintiffs SC Appeal No. 54/2015 SC (HC) Leave to Appeal Application N. 16/2013 High Court Case No. H.C. (Civil) 290/2012(MR)

Vs Commercial Bank of Ceylon PLC Commercial House, No. 21, Bristol Street, Colombo 01.

Defendant AND NOW Commercial Bank of Ceylon PLC Commercial House, No. 21, Bristol Street.

Colombo 01.

Defendant-Petitioner Vs

1. Muthu Jeewarathnam

2. Sellappan Mehaletchumi No. 14, Ebenzer Place, Dehiwela.

Plaintiffs-Respondents Before : Priyantha Jayawardena PC, J A. L. Shiran Gooneratne, J Mahinda Samayawardhena, J Counsel : Harsha Amerasekara PC with K. Peiris for the Defendant-Appellant Dr. Sunil Coorey for the Plaintiff-Respondent Argued on : 14^th November, 2022 Decided on : 5^th July, 2023 Priyantha Jayawardena PC, J Facts of the case This is an appeal to set aside the Order of the Commercial High Court dated 12^th of March, 2013 granting an interim injunction restraining the parate execution of a mortgaged property until the conclusion of the trial.

The 2^nd plaintiff-respondent (hereinafter referred to as “the 2^nd respondent”), who is the wife of the 1^st plaintiff-respondent (hereinafter referred to as “the 1^st respondent”), had obtained a housing loan of Rs. 8 Million on the 12^th of April, 2005 from the defendant-appellant (hereinafter referred to as “the appellant bank”) by mortgaging the property described in the schedule to the plaint as security, which is owned by her. In addition to the above security, the 1^st respondent had given a personal guarantee to secure the said loan.

Thereafter, the 2^nd respondent had obtained another loan of Rs. 6 Million on the 17^th of January, 2007 from the appellant bank against the same property by entering into a secondary mortgage. Further, the said loan was settled in full by the 2^nd respondent and the secondary mortgage bond had been discharged by the appellant bank.

Subsequently, the respondents had jointly obtained another loan of Rs. 5 Million on the 25^th of February, 2008 from the appellant bank by entering into a secondary mortgage as security against the same property.

After some time, the respondents had defaulted on the repayment of both the said loans. Hence, the appellant bank had sent a letter of demand dated 14^th of February, 2011 to the respondents, requesting them to settle the money due to the appellant bank.

However, as the respondents did not pay the money due on the aforesaid loans, the appellant bank had passed a resolution for the sale of the said mortgaged property by parate execution to recover the sum due on the aforesaid loans.

The said resolution dated 20^th of December, 2011 states inter alia, to sell the mortgaged property by public auction for the following reasons:

(a) recovery of a sum of Rs. 4,670,691/- with further interest at 12% per annum from the

17^th of September, 2011 together with costs of advertising and any other incurred less payments (if any) since received; and (b) recovery of a sum of Rs. 9,129,306/- with further interest on a sum of Rs. 5 Million per annum from the 17^th of September, 2011 to date of sale together with costs of advertising and any other incurred less payments (if any) since received.

In the circumstances, the respondents instituted action against the appellant bank in the Commercial High Court on the 30^th of May, 2012 alleging that the resolution passed by the appellant bank to parate execute the said mortgaged property to recover both the aforesaid loans is unlawful as the appellant bank was not entitled to treat the loan of Rs. 8 Million in default. Further, the respondents prayed for an interim injunction staying the sale of the mortgaged property by parate execution.