K.A.S. AUTO INTERNATIONAL (PVT) LTD AND ANOTHER

K.A.S. AUTO INTERNATIONAL (PVT) LTD AND ANOTHER

Vs.

SAMPATH BANK PLC AND OTHERS

COURT OF APPEAL
SAMAYAWARDHENA,J.
OBEYESEKERE, J.
CA/WRIT/205/2020
OCTOBER 15, 2020

Writ of certiorari-Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990, as amended-Parate execution-Major facts in issue-Effect of rescheduling facilities-Novation proper-Denial of documents admittedly signed

The petitioners filed this application mainly seeking to quash by a writ of certiorari the Board resolution of the 1st respondent bank whereby it was resolved to recover the 1st petitioner's dues by parate execution in terms of the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990, as amended. The petitioners admitted having borrowed a sum of Rs. 50 million from the bank but denied defaulting on the payment. According to the bank, the petitioners did default and, therefore, at the request of the petitioners, the monies due were rescheduled. The documents tendered by the bank to substantiate its position were denied by the petitioners.

Held:

1. Major facts are in dispute and therefore the writ court lacks jurisdiction to pass judgment on the matter. The writ court is not a trial court to decide on the veracity of the conflicting assertions of rival parties.

2. Both directors of the 1st petitioner company have signed the documents relating to the rescheduling of the loans on almost every page and they do not say their signatures have been forged. Subject to limited exceptions, as a general rule, if a signatory to a document is an adult who is neither illiterate nor blind, he shall take full responsibility for the contents thereof. He cannot disavow or disown the document he admittedly signed when he later realises it is unfavourable to him. ff he signs blank documents, he does so at his own peril.

3. The bank reminded the petitioners by letters and emails of the default on payment referring to the rescheduling of the loans, and the petitioners did not deny the rescheduling of the loans. Although failure to reply alone cannot decide the whole case, in business matters, if the party receiving a letter, email or the like disputes the assertions contained in it, he must reply, for failure to do so can be regarded as an admission of the claims made therein.

4. By rescheduling the outstanding facilities, a new debt was created on new terms in place of the existing debt. In the law of contract, this is known as "novation proper". When rescheduling takes place, matters prior to the rescheduling have no relevance.

Cases referred to:

1. Mercantile Credit Ltd v. Thilakaratne [2002] 3 Sri LR 206 at 211
2. Jayawardena v. Piyaratne [2004] 1 Sri LR 37
3. Saravanamuttu v. de Mel (1948) 49 NLR 529
4. Wiedeman v. Walpole (1891) 2 QB 534
5. Colombo Electric Tramways and Lighting Co Ltd v. Pereira (1923) 25 NLR 193 at 195
6. Seneviratne v. LOLC [2006] 1 Sri LR 230
7. Wickremasinghe v. Devasagayam (1970) 74 NLR 80 at 93
8. Hatton National Bank Ltd v. Rumeco Industries Limited [2011] 2 BLR 329

APPLICATION for Writ of Certiorari.

Upul Jayasuriya, P.C., with Sandamal Rajapakshe for the Petitioners.

Romesh de Silva, P.C.. with Niran Anketell for the 1st-12th and 14th-15th Respondents.

Shaheeda Barrie, S.S.C., with lndumini Randeny, S.C., for the 16th-17th Respondents.

cur. adv. vult.

November 18, 2020

SAMAYAWARDHENA, J.

The Petitioners filed this application mainly seeking to quash by a writ of certiorari the Board resolution of the 1st Respondent Sampath Bank PLC dated 26.03.2020 (P13A), whereby the Bank resolved to recover

the dues from the 1st Petitioner to the Bank by selling the mortgaged property, in terms of the provisions of the Recovery of Loans by Banks (Special Provisions) Act. No.4 of 1990, as amended. The two Mortgage Bonds executed as collateral are No.1365 (P3) and No.1746 (P6) in respect of the same property, the former being a primary mortgage and the

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