KULARATNE

Vs.

PEOPLE'S BANK

SUPREME COURT
ALUWIHARE, J.
JAYAWARDENA, J.
FERNANDO, J.
SC/APPEAL/4/2015
SC/HCCA/LA/239/2012
SP/HCCA/TA/12/2007 (F)
SP/HCCA/MA/49/2007 (F)
DC TISSAMAHARAMA DR/01/97
APRIL 2, 2018

Debt Recovery (Special Provisions) Act, No. 2 of 1990, section 3, 4(1), 4(2), 5, 6(1), 6(2)(a)(b)(c), 7, 11, 30- Civil Procedure Code, sections 384, 387, 390, 391-Failure to pay overdraft facility-Requisites for decree nisi-Summary procedure-Unconditional leave to appear and show cause-Filing of answer and conversion to regular procedure-Technical objections-Intention of the legislature

The plaintiff bank instituted action under the Debt Recovery (Special Provisions) Act, No. 2 of 1990, as amended by Act No. 9 of 1994, against the defendant to recover the overdrawn sum of money. The District Judge issued a decree nisi in the first instance and subsequently granted the defendant unconditional leave to appear and show cause stating that there is a matter to be looked into. With the consent of the parties, the District Court adopted the regular procedure and allowed the defendant to file answer. After trial, the plaintiff's action was dismissed. On appeal, the High Court set aside the judgment of the District Court and made the decree nisi absolute. The defendant appealed to the Supreme Court predominantly on the basis that the sum stated in the plaint did not fall within the definition of "debt" as set out in section 30 of the Act and there was no written agreement annexed to the plaint and therefore the court ought to have rejected the plaint in limine.

Held (Jayawardena, J. dissenting):

1. A "lending institution" may resort to the provisions of the Debt Recovery (Special Provisions) Act if it can satisfy court that

the transactions referred to in the plaint fall within the statutory definition of "debt". The term "debt" has been given a wide meaning to include "overdrafts", the material factor being that the sum of money should be "ascertainable" at the time of the institution of the action and should have arisen from "a banking, lending, financial or other allied business activity".

2. The sum claimed was a "debt" lawfully due to the plaintiff bank and the "instrument, agreement or document" annexed to the plaint, i.e. the two cheques and the statement of accounts, was in conformity with the requirements under section 4(2) of the Act for the issuance of the decree nisi. The contention of the defendant that the plaint was not in compliance with the mandatory provisions of section 4(1) on the basis that a written agreement was not annexed to the plaint cannot be accepted.

3. If the case of the defendant is that he has cause to show against the decree nisi or that the said "agreement, instrument or document" annexed to the plaint does not disclose a cause of action against him, the defendant is free to do so after obtaining leave to appear in the manner provided in section 6(2) of the Act: (a) by paying into court the full sum mentioned in the decree nisi or (b) by furnishing security in such sum as to the court may appear reasonable and sufficient to satisfy the sum mentioned in the decree nisi or (c) if the court is satisfied on the contents of the affidavit filed that a prima facie sustainable defence has been disclosed, on such terms as to security, framing and recording of issues or otherwise as the court thinks fit. The Act does not permit unconditional leave to appear. Leave to appear is always subject to conditions, the least being furnishing security in such sum as the court thinks fit.

4. Once leave to appear and show cause is granted, section 7 of the Act provides for the manner and mode of holding the trial, in that, summary procedure should be followed as laid down in sections 384 to 387, 390 and 391 of the Civil Procedure Code. The right to begin and the burden of proof lies with the defendant to establish