2005 1 SLR 167

• Jurisdiction: Sri Lanka
• Court: Court of Appeal (Sri Lanka)
• Citation: 2005 1 SLR 167
• Date: 04 November 2004
• Case Number: 2005SLR1V167
• Type of Document: Case report

167

HARJANI AND ANOTHER
vs.
INDIAN OVERSEAS BANK AND OTHERS

COURT OF APPEAL
SALEEM MARSOOF , P. C. (P/CA) AND
SRIPAVAN .J
C.A. NO. 1854/2003,
MAY 20,2004,
JUNE 29, 2004 AND
JULY 8 AND 12,2004

Writ of certiorari - Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990 - Sale by public auction - Private Bank- is writ jurisdiction available? - Banking Act, No. 30 of 1988.

The petitioners sought to quash the Resolution of the 1st respondent - Indian Overseas Bank - adopted under section 4 of Act, No. 4 of 1990, whereby it had been resolved to sell by public auction, the property which was mortgaged to the 1 st respondent Bank on the basis that it is ultra virus the provisions of the Act.

The 1st respondent Bank contended that the 1st respondent is a private Bank incorporated abroad which is engaged in the business of banking and is a licensed commercial bank and that it is not a public entity carrying out public functions and since it is a company which is not incorporated under any statute

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enacted in Sri Lanka, and discharging functions which are not administrative in nature is not amenable to prerogative remedies.

Held:

1. Theist respondent bank has sought to take advantage of the provisions of the Recovery of Loans by Banks (Special Provisions) Act relating to parate execution; these powers have been conferred by statute on any bank as de fined in section 22 of the Act.

2. The Act lays down a special procedure for the exercise of the powers conferred on such banks.

Per Saleem Marsoof, P. C. (P/CA)

" I am of the opinion that this Court is bound to exercise supervisory jurisdiction over the exercise of such powers despite the fact that some at least of these Banks are local or foreign Banking Companies."

APPLICATION for a writ of certiorari - preliminary objection.

Cases referred to :

1. Trade Exchange (Ceylon) Ltd., vs Asian Hotels Corporation - (1981) 1 Sri LR 67

2. Mendis vs Seema Sahitha Panadura Janatha Santhaka Pravahana Sevaya and others - (1995) 2 Sri LR 284.

3. Office Equipment Ltd., vs Urban Development Authority - CA 1062/2000-CAM 5.9.2003)

4. Regina vs National Joint Council for the Craft of Dental Technicians -(1953) 2 WLR 342,

5. R vs Electricity Commissioner Ex parte - London Electricity Joint Committee Company Ltd., - (1924) 1 KB 171 at 205.

6. O' Reilly vs Mackman - (1983) 2 AC 237 at 279.

7. R vs Criminal Injuries Compensation Board Ex parte Schofield 1971 1 WLR 926.

8. Ex parte Tong- (1976) 1 WLR 1239.

9. Ex parte Clowes - (1975) 1 WLR 1353.

10. Ex parte Cummins- (1992) 4 Admin. LR 747.

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11. R vs Criminal Injuries Compensation Board ex parte P - (1995) - 1 WLR 845.

12. R vs Criminal Injuries Compensation Board Ex parte Lain- (1967) 2 All ER 770 at 778.

13. R vs Panel on Takeover and Mergers Ex parte Datain - (1987) 1 QB 815.

14. R vs International Stock Exchange of the United Kingdom and the Republic of Ireland Ltd., (1993 1 All ER 422.

15. The Governor and Company of the Bank of Scotland. Petitioners - (1989) BCLC 700.

16. R vs Fimbra Ex parte Cochrane - (1991) BCLC 106.

17. S. I. B. Anor vs Fimbra & Anor (1992) - Chancery 268.

18. R vs. Lautro Ex parte Ross -(1992) 1 All ER 422.

19. Saheer and others vs Board of Governors, Zahira College and others (2002) 3 Sri LR 405.

20. Board of Trustees of Maradana Mosque vs the Minister of Education and Another -68 NLR 217.

S. C. B. Walgampaya, P. C. with L. K. I. Perera, and Rashani Meegama for petitioners.

A. R. Surendran, P. C, with K. V. S. Ganesharajan for 1st respondent.

Cur. adv. vult.

November 4, 2004
SALEEM MARSOOF P/CA

The Petitioners filed this application seeking a writ of certiorari to quash the resolution of the 1st Respondent Bank adopted under Section 4 of the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990 as subsequently amended, whereby it had been resolved to sell by public auction the property which was mortgaged to the 1st Respondent Bank by the Petitioners. The 1st and 2nd Petitioners claim that they executed the Mortgage Bond marked 'A' bearing No. 4965 dated 8th February 2001 attested by D. M. Swaminathan, Notary Public, as security for the overdraft

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facility provided to the 3rd Respondent by the 1st Respondent Bank. In the said Bond, the Petitioners are described as "sureties" and the 3rd Respondent is the "principal debtor". The Petitioners state that the Local Management Committee of the 1st Respondent Bank has adopted a resolution purportedly in terms of Section 4 of the Recovery of Loans by Banks (Special Provisions) Act to sell by public auction the property mortgaged to the 1st Respondent Bank by the Petitioners in view of the defaults made by the Petitioners and the 3rd Respondent in the repayment of monies due on the aforesaid Mortgage Bond. They claim that the said resolution, which has been published in the Gazette of the Democratic Socialist Republic of Sri Lanka dated 15th August 2003 marked C1 and certain newspapers of 16th August 2003 marked C2, is ultra vires the provisions of the Recovery of Loans by Banks (Special Provisions) Act insofar as in terms of the said Act, only a property mortgaged by a person to whom a loan is granted by the Bank, is liable to be sold by public auction. The Petitioners also sought an order restraining the 1st Respondent Bank and the 2nd Respondent Auctioneer from selling by public auction the land belonging to the Petitioners in pursuance of the said resolution, and this Court has issued a stay order which has been extended from time to time.

The 1st Respondent Bank is a legal entity incorporated under the Banking Companies (Acquisition and Transfer Undertakings) Act of India, and is a licensed commercial Bank within the meaning of the Banking Act No. 30 of 1988. Upon service of notice, the 1st Respondent Bank appeared before Court and objected in limine to the jurisdiction of the Court to hear and determine this application, on the basis that the application has been made against a private bank which is not amenable to the writ jurisdiction of this Court. The 1st Respondent Bank moved to file objections to the extension of the stay order on this basis while reserving its right to file a Statement of Objections on the merits of the case after the disposal of the jurisdictional objection. Thereafter the 1st Respondent Bank filed its limited Statement of Objections to the extension of the interim order on 19th of November, 2003 and the matter was fixed for inquiry on the preliminary objection raised by the 1st Respondent Bank. On 20th May, 2004 the matter was taken up for inquiry, and after hearing submissions of Counsel, the Court directed both parties of the 1st Respondent Bank. After written submissions were filed, the matter was taken up for further oral submissions on 12th July, 2004, on which date further submissions were made by learned Counsel for the Petitioners and the 1 st Respondent.

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In the oral and written submissions of the learned President's Counsel for the 1st Respondent, it has been stressed that the 1st Respondent is a private company incorporated abroad which is engaged in the business of banking. Counsel has also emphasized that the 1st Respondent is not a public entity carrying out public functions. Learned President's Counsel contends that the 1st Respondent, being a company which has not been incorporated under any statute enacted in Sri Lanka, and discharging functions which are not administrative in nature, is...