Mohamed Lebbe V. Cader Lebbe

1936 Present : Soertsz J. and Fernando A.J.

MOHAMED LEBBE v. CADER LEBBE

327-D. C. Kandy, 46,405.

Cheetu club-Mortgage bond to secure payment of money due-Bond invalid and unenforceable-Action by assignee.

A mortgage bond given to secure payment of money due to a cheetu club is invalid. Such a bond is unenforceable in the hands of a bond fide assignee for value.

Sinnathurai v. Chinniah (10 N. L. R. 5) followed. Narayani v. Kanapathy (6 S. C. C. 68) referred to. APPEAL from a judgment of the District Judge of Kandy.

H. V. Per era (with him Rajapakse), for plaintiff, appellant.

Navaratnam (with him Gratiaen), for defendant, respondent.

Cur. adv. vult.

February 1, 1937. SOERTSZ J.-

The plaintiff (appellant) brought this action against the legal representative of one Seyad Lebbe Noor Mohamadu to recover a sum of Rs. 575 balance principal and Rs. 303 interest said to be due on a mortgage bond given by the said Noor Mohamadu Lebbe to one Ismail Lebbe Seyadu Mohamadu Lebbe and by him assigned to the plaintiff appellant.

The defendant filed answer admitting the execution of the bond but stating that it was not enforceable because it was given by Noor Mohamadu Lebbe to secure contributions due by him to a lottery cheetu, and, therefore, in furtherance of a lottery; that, as a matter of fact, the amount due by way of contributions had been paid, that Ismail Lebbe Seyadu Mohamadu Lebbe, the mortgagee and manager of the cheetu club, acting fraudulently and in collusion with the plaintiff, had assigned the bond to him.

The trial Judge found that the mortgage bond had been given in the circumstances alleged in the answer, and that, therefore, the bond was not enforceable. He also found that the amount due had been paid. He dismissed the plaintiff's action with costs. There is sufficient evidence to support the findings of fact that the bond was given in the circumstances alleged. In my opinion, the evidence on the issue whether the amount due had been paid is altogether unsatisfactory, and the trial Judge should have answered that issue against the defendant. But this is of no practical consequence in this case in view of the conclusions I reach on the earlier question. That question is with regard to the position in law of the plaintiff who had taken an assignment of a bond given to secure payments due to a lottery club in furtherance of a lottery.

I will, in the first instance, consider this question on the assumption that the plaintiff was not aware of the circumstances in which the bond had been given. The evidence led shows that the mortgagor Noor Mohamadu Lebbe was a member of a lottery cheetu club and that the mortgagee Ismail Lebbe Seyadu Mohamadu Lebbe was the manager of the club. There were forty members in all, each contributing monthly Rs. 25. The pool went from time to time to the member who drew the winning number in a lottery. This was clearly against the law. It offends against the provisions of the Lotteries Ordinance, No. 3 of 1844, particularly against sections 3 and 5.

In Sinnathurai v. Chinniah [1 10 N. L. R. 5.] a Bench of three Judges held that cheetu club where the prizes were distributed by lot were within the scope of the Lotteries Ordinance. Hutchinson C.J. who delivered the judgment of the Court commenting on the argument that " there were no prizes inasmuch as every person who joins the club simply got back all his money and neither more or less" said the advantage is the getting of the use of the money at the beginning of the term-£10 in hand is better than £10 a year or two hence. The advantage is to get it at once and getting that advantage by means of lots you get a prize."

In this sense Noor Mohamadu had drawn a prize and when he gave his bond to secure the future payment of contributions, he was promoting

this arrangement. He thus entered into an illegal transaction, and the bond was invalid and unenforceable. The

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