Claims under the Cheetus Ordinance are unenforceable if not compliant with registration and exemption requirements.

Cheetu-Cheetu existing at the time of enactment of Ordinance-Failure to obtain exemption-Ordinance No. 61 of 1935 (Cap. 128), s. 46 (4).

Section 5 (2) of the Cheetus Ordinance bars an action for the recovery of money due on a cheetu which was being conducted when the Ordinance came into operation but which was not exempted under section 46 (4) of the Ordinance.

APPEAL from a judgment of the Commissioner of Requests of Kandy.

J. E. M. Obeyesekere (with him M. M. Kumarakulasingham), for the plaintiff, appellant.

E. B. Wikremanayake, for the second defendant, respondent.

June 9, 1939. SOERTSZ A.C.J.-

The Cheetus Ordinance is by no means easy to interpret and apply. It has the teasing quality of a cross-word puzzle. It arises for examination in this case in the following circumstances. The plaintiffs who are a duly incorporated company, limited in liability, carried on a business of auctioning cheetu among its subscribers on the condition inter alia that each subscriber could buy the cheetu only once. The cheetu was sold to the subscriber who offered the largest discount. The first defendant who was a subscriber bought the cheetu that was auctioned on September 5, 1936, and in respect of the liability she incurred on that occasion, she and the second defendant gave a joint and several promissory note. She made payments amounting to Rs. 117.28, and then defaulted.

The plaintiffs, thereupon, instituted this action against both defendants and claimed the balance sum of Rs. 82.72 and interest. They did not however, proceed with their claim against the first defendant. They did not even take summons on her, and on August 31, 1938, they stated that they Were not going on with the case against her.

On April 1, 1937, the Cheetus Ordinance came into operation, and in view of section 5 (2) of that Ordinance, the learned Commissioner dismissed the plaintiffs' case holding the claim unenforceable.

Section 5 (2) enacts that " no right or claim under any scheme or arrangement which only partakes of the nature of a cheetu within the meaning of section 4 shall be enforceable by action in any Court or Village Tribunal in this Island ".

On this finding of the Commissioner, two questions were raised on appeal, namely, (1) whether the plaintiffs' scheme or arrangement was within section 4; (2) if so, whether the plaintiffs can enforce their claim on the ground that section 5 (2) did not apply to transactions entered into before the Cheetus Ordinance came into operation in cases in which, the cheetu out of which the transaction arose, was abandoned after the Ordinance was proclaimed. It was said that that was the case here, and that the plaintiffs were doing no more than trying to collect debts that subscribers had incurred prior to April 1, 1937.

In regard to the first of these questions, there does not seem to be room for doubt. The evidence of the plaintiffs' secretary clearly shows that their scheme or arrangement was not a cheetu in the meaning given to that word by section 3 of the Ordinance. It is inconsistent with some, at least, of the essential terms and conditions postulated by section 3. But although the plaintiffs' scheme did not reach the stature of the Legislative cheetu, it did not fall entirely outside the Ordinance. The

Legislature had taken steps to prevent that by providing in section 4 that " every scheme or arrangement which, notwithstanding that it purports to be a cheetu, is not based wholly on the essential terms and conditions set out in section 3 or which is based on terms and conditions inconsistent wholly or in part with those essential terms and conditions, shall for the purpose of this Ordinance be deemed only to partake of the nature of a cheetu ". In this way, the Legislature brought within the scope of the Ordinance th