Order

Introduction

The Applicant-1^st Respondent (hereinafter referred to as the “1^st Respondent”) is the owner of a parcel of land, in extent of 5 perches, situated in the Wellampitiya. The 1^st Respondent having obtained Rs. 500,000/- (Five Hundred Thousand Rupees) on 08^th June 2019, he has executed a mortgage bond, bearing No. 90, attested by Ms. K.L. Manjula Notary Public, in favour of the Petitioner-Respondent (hereinafter referred to as the “Petitioner”), from whom he had obtained the said Rs. 500,000/- (Five Hundred Thousand Rupees). The said loan was obtained at an interest rate of 4% per mensem; and there was also a condition in the said mortgage bond, that the 1^st Respondent had undertaken to redeem the said mortgage by paying the principal amount along with the interest due thereon within 6 months from the date of execution. However, since the 1^st Respondent had failed to pay the interest or the principal sum, the 1^st Respondent had agreed to execute a transfer deed at the request of the Petitioner, after the period of 6 months. Accordingly, a transfer deed bearing No. 68, attested by the same Notary Public, Ms. K.L. Manjula, dated 16^th December 2019, has been executed in favour of the Petitioner.

The Petitioner and the 1^st Respondent have entered into a further agreement in the form of a Memorandum of Understanding (MOU) to redeem the said property within one year by paying the full amount of Rs. 1,000,000/- (One Million Rupees). However, without redeeming the said property, the 1^st Respondent has filed an application before the Debt Conciliation Board (hereinafter referred to as the “Board”) seeking a declaration that he is the debtor, and the Petitioner is the creditor and accordingly seeking to settle the issues between the parties. He also sought to have the Deed bearing number 68, marked as P3 annexed to the Petition, be declared a sham or only as a mortgage bond and not a transfer, although it appears to be a transfer.

However, after inquiry, the Debt Conciliation Board, by the impugned order marked as P4, decided that P3 is not a transfer, though it mentions so, it is only a mortgage; therefore, the 1^st Respondent is entitled to redeem the property by paying back the principal and the relevant interest.

Being aggrieved by the said order of the Board, the Petitioner has come before us seeking to invoke the jurisdiction of this Court in terms of Article 140 of the Constitution. This was supported on 17.09.2025, and the following submissions were advanced before us by the Counsel.

Arguments

The thrust of the main submission of Mr. Fernando, Junior Counsel, is that the Debt Conciliation Board has assumed jurisdiction without considering the fact that P3 is a valid transfer executed for valuable consideration. Therefore, when there is a valid deed for valuable consideration, the Debt Conciliation Board does not have jurisdiction. Assuming jurisdiction amounts to an arrogation of jurisdiction. However, in answering a question posed by the Court, Mr. Fernando further submitted that he does not make any submission based on the time limits within which the 1^st Respondent had gone before the Debt Conciliation Board to invoke its jurisdiction.

The Petitioner in this Application has sought to challenge the assumption jurisdiction by the Members of the Debt Conciliation Board, on the basis that the Board has no jurisdiction unless X2 is a Deed of Mortgage; since it is a Deed of Transfer, the Board does not have jurisdiction to hear and determine the application to the Debt Conciliation Board, marked as P1, by 1^st Respondent. However, it must be noted that the said objections had never been raised before the Board.

Secondly, the preliminary objections raised before the Court was on the territorial jurisdiction, which was overruled by the Board. Therefore, it is my view that such an objection cannot be taken up now. However, I will now proceed to consider whether the Petitioner can still maintain that objection to the jurisdiction, a