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IN THE DISTRICT COURT OF COLOMBO
M. Tirucheivam,
No. 868, Bambukuliya,
Kochchikade.

Plaintiff

Case No" 5573/Spl. Vs.

Bank of Ceylon,
York Street,
Colombo 1.

Defendant
On this 7tn day of June, 2001

WRITTEN SUBMISSIONS ON BEHALF OF THE DEFENDANT

Introduction

1.1 The above named Plaintiff filed this action against the Bank of Ceylon claiming inter
alia the following relief:

(u) for a deciaration that the resolution (markecl as P4) passetl by the Boarcl of
Directors of the Defendant (and published on 20.10.1999) to se1l bv public
auction the property mortgaged by ivlortgage Bond Nos. 2212 (rrarked as P'1)
and 1564 {marked as P2) is rllegal and void;

(b) for a eleclaratron that all actions taken by the Defendant baserl on the sarcl
resolution is iilegai and vord;

(.) for an enjoining order and rntenm injunction reslraining the Defendant from
selling the propertv covered by the said Mortgage Bonds.

1,.2 The Plaintiff obtarned ex-parte, the enjoinlng order prayed for by him. \zVhen this
matter was taken up for the intenm injunction inquiry, both parties agreed lo tender
r,vritten submissions. The purpose of these submissions is to demonsfrate that the
Plaintiff is not entitled to the rnterim rLjunctron prayed for.

2. The PlaintiJf admits the execution of the 2 mortgage bonds under reference [uirfu
paragraphs 3 and 7 of tfu plaintl as security for the loan facilities obtained by him. His
sole ground of complaint is that as the said mortgage bonds have been valued for
purposes of stamp du{ at Rs.500,000/- and Rs.600,000/- respectrvely, the Defendant
is estopped ( in ternts of Section 16 of the Stanry Duty Act) from recovenng a sum of
Rs.1,362,835.901- as stated in the resolution passed by the Defendant.
3. The Defendant's Position

The Defendant, in its objectrons stated that:

(r) Upon an applicalion made by the Plaintiff on 20.12.1994, a loan of

Rs.300,000/- was g:anted to the Plaintiff on 20.12.7994; (Loan applicattort
marked as V1)

(b) The said loan of Rs.300,000/- was repayabie in 60 equal monthly instalments
of Rs.5000/- each together with rnterest at23% per annum on the capital;

(c) lJpon a further application made by the PtaintjJf on 21.2.7995, a loan of

Rs.200,000/- was granted to the Plainti{f; (loan applicahon marked as V2)

(d) The said loan n'as repayable in 60 equai monthly instaiments of Rs.3335/-
each together .lvith interest at27o/o per annum on the capital;

(") As secunty for the said loans, (t.e. the loans of Rs. 300,000/- E Rs.200,000/-)
'
Mortgage Bond No. 2212 (marked. as P1) was executed by G.S.M. Samarakoon, J
Notary Public on 15.11.1994 whereby the property referred to in the schedule
thereto was mortgaged to the Defendant;

(f) On 16.5.1996, the Plaintiff made an applicatron for overdraft facilitres of

Rs.600,000/- and as requested a permanent overdraft facility of Rs.600,000/-
was granted to the PlaintiJf; (ooerdraft npplicahon marked as V3)

(g) As security for the said 1oan, an additionai mortgage was created by
Mortgage Bond No. 1564 (marked as P2) attested by M.A.D. Munasinghe,
Notarv Public on 8.1.7996;

(h) As the Plairrtilf has defaulted in the payment of all three loan facrlihies, the
Defendant, acting in terms of the Bank of Ceylon Ordinance passed a
resolution to sel1 the properW mortgaged in order to recover its dues.

4.1. In order io consider the position of the Plainfiff, it is necessary to ascertain the
current position of each of the above three facilitres.

The Rs. 300,000/- loan facility

4.2 As submitted in paragraph 8 of the statement of objections, the Plainti{f has paid the
loan instalments and interest only up to 10t1, June \996. Thus, the balance capital is
Rs.210,000/-. The resoiution to se11 the mortgaged property was approved on
01.10.1999. The total interest payabie on the outstanding capital for the period
70.6.7996 to 31.08.1998 is Rs.107,583.29. Thus, for purposes of the resolution, the total
sum due from this loan facility was Rs.317,583.29.
A dutv cerhfied statement of account relating to this facility has been produced ,
marked as V5.

2.,
 The Rs.200,000/- loan facilit-v

Aa
4/ The details regarding the repavment of this loan is set out in paragraph 9 of the
statement of objections. Here too, the Plainti{f has only repaid the instaiments until
]nne 1996. Thus, there is a sum of Rs.156,6 45 / - due as balince capital. The rnterest
due on this amount tlunng the period June 1996 to 31't August,1998 is Rs.80,446.87.

Thus, a total sum of Rs.237,091.87 has been taken into account by the Defendant at
the time it passed the resolution.

The overdraft facility of Rs. 600.000/-

lr
!.1 As set out in paragraph 7 of the statement of objections, a{ter the overdraft facility
r,vas granted, the Plaintifi had operated his current account bv withdrawing and
depositing money. According to the statement of Account marked asY4, (Pg. 12 of
V4) on 24.5.7997, the total overdrawn balance was Rs. 600,000/-. There#ter, the
tnterest and BTT for tire months of May, ]une, July, August, September, October and
November 7997 have been added rncreasrng the total overdrawn balance to
Rs.6q3,{67.39.

'fhereafter, interest of Rs.119,694.38 ior the period 25.11,.7gg7-

31.8.1998 hacl been
added and the total amount due on the overdraft facility at the time of passing the
resolution had been Rs.813,761.77,

Thus, the aggregate balance on all three loan facilities at the time the resoludon was
passed was Rs.1,367,836.80 which is the amount sought to be recovered bv the
Defendant on the resoluti.on.

The terms of the Mortgage Bond

5,1 The PlaintjJf has produced the 2 mortgage bonds marked as P1 and P2. Attention of
Court is drawn to paragraph (1) appearing on page 9 on each of the two bonds. An
examination of this clause would indicate that the Bank is entitled to recover capital
upto the extent of the amount stated therern and interest due thereon.

5'2 The total capital covered by the 2 bonds is Rs. 1.1 miiiion which is the aggregate of
the 3 loans facilities made avarlable to the PlaintiJf by the Defendant. As submitted
in paragraph 4 above, the aggregate of the capital remaining on the 3 loans is
Rs.1,060,112.39. Thus, the capitai claimed by the Defendant is less than the amount
covered by the 2 bonds and thus, the resolution passed by the Defendant is in
harmony with the provisions of the lvlortgage Bond.
 Provisions of the Stamp Dufy Act

6.7 Section 16 of the Stamp Duty Act requires the bond. to be stamped for the value of
the amount that may be recovered. It has already been submitted that the Defenclant
is entitled, in terms of the 2 Mortgage Bonds to recover a total sum of Rs. 1.1 million
and interest. The lwo lV{ortgage Bonds have in fact been stamped for Rs. 1.1
mil1ion.(alde tlrc attestntion clnuse of the fiuo bonds) The queshon that remains to be
answered is rvhether stamp duty is payable on interest as welI.

6.2 Attention of Court is drawn to Section 17 of the Stamp Duty Act which reads thus:

"Wrcre. interest rs expressly mnfu payable by ttu terms of an instrr.tment, such instrtLnrcnt
shall not be chnrgeable u,ith stamp duly higher tlmn tlmt uith ruhich it utould haae been
clurgenble lnd no mention of int.erest been msde tlterein.',

In view of &e above section, it is respecffully submitted that the legisiature has
thought it fit that no stamp dutv is payable on the rnterest due under a instrument
such as a Mortgage Bond.

6.3 It is submitted further that it only stands to reason that no stamp duty is payable on
interest. For instance, a debtor who defaults in the repayment of a loan obtained by
him ( sirnilnr to thz Plaintiff in this case) can always avoicl the payment of rnterest
arislng from such default by claiming that in terms of sectj.on 16, the Bank is not
entrtied to recover interest. This would result in the unjust enrichment of the debtor
at the expense of the Frnancial Institution. In anv event, a deficrencv in stamprng an
instrument is curable.

In the circumstances, it is respectfullv submittecl that the action taken by the Defendant is
entirelv within the four comers of the 1aw.

7. Crounds for granting interim relief

There matters that a an iniunction

are:

(a) Has the Plaintiff made out a strong prima-facie case of infringement or imrninent
in{ringement of a 1egal right lo which he has title, that is, that there is a serious
question to be hied, in relalion to his legal rights and that the probabilities are that
he wi11u.rn;

(b) In whose favour is the balance of convenience- the main factor being the
uncompensatable disadvantage or irreparable damage to either parry,

(c) As the injunction is an equitable relief granted in the discretion of Court, do the
conduct and the dealings of the parties justify the grant of the injunction.

These three matters are discussed be1ow.

 81 For the Ptaintilf to succeed in obtaimng
any rnterim reiief he must first satisfy
court that there is a prima facie case.

82 In one of the oldest cases on this point, Conon

L.J ,n preston v. Luck (Lgg4) zZ
Ch497 observed that;

" it ts necessnry tlmt tlte Cotrt shoulcl be sntisfied that

there is a serious question to be
trted at the lrcanng. a.nd thst on the before'it
facts ttrcre is a- possibili$ thnt tln plaintiffs
nre entitled to ysltsf. "

J'his case was aclopted bv Darron in

J. Jinadasa v. weerasinghe 31 NLR 33"
8.3 Follorving this principal, the courts in sri Lanka
and England have constantlv
held that interim relief should be granted
onlv if the ptuiotiff has a prim, ,:':;,:
CASE.

8.4 It r.t,as held in (1981) 2 Sri

LR 287 at302 that "in sri Lankaielturt
off *itt, ulri.r,u facie case. That is the
applicant for an Interim Injunction must show
thai there is a serious mafter in
relation to his regal rights, to be tried at the
hearing and that he has a good
chance of winning".

8.5 In the above case the Supreme Court further held that ,,where
Plarnhff has established a strong prima facie however the
case that he has title to the legal
right claimed by himaut only an arguable case
that the ciefendant has infringecl
it or is about to infringe it, the Ljunction shourd not be granted. If the
probability is that no right of the Plaintiff will
be violated or that he wiil suffer no
wrong such as the 1aw recognises, then the
Injunction will not issue,,.

8.6 The Plaintiff has admittecl that he obtained loan/overdraft

I)efendant' He has also admitted that he executed facilities from the
2 rvlortgages as security for the
said loans' The Defendant has already demonstrated
assertion
that the plaintifls main
that the Defendant cannot claim Rs.1,367,g36.g0
is without merit.
8.7 The PiainfiJf also asserts that he has ma,le
pavments to the Defendant and that his
requests to hand over statements of accorrntias
been ignored by the Defendant. It is
submitted that if the Plaintiff has deposited
more ,ionies than what has been
creclited to his accoun! the onus i.s on him
to produce the relevant deposit slips. This
the Plaintiff has failed to do. opposed to
this, the Defendant has produced three
dulv certified statements of ac.olnt which accurately
the Plarntiff and ihe balance clue on each facility.
,"n"., the deposits macle by
The Defendant is a reputed
banking inshtution and it has no reason not
to credit deposits made by the plaintiJf.
Furthermore' it is cofirmon *nowledge that
statements
current account holders' Thus, the Plaintiff would are sent monthly for ail
have received a, statement
monthly in respect of his overdraft faciliw.
 8.1 For the Plaintiff to succeecl in obtaining any
interim relief he must first sahsfy
court that there is a prima facie case.

8.2 In one of the oldest cases on ihis poini, Cotton L.I. in preston v. Luck
Ch497 observed thaU (1gs4) zZ

" it is necessary
that tlu CotLrt slnuld be sntisfied" tlmt there
is a sertous question to be
tried Ltt the hearing nnd thttt on tlu before'it
facts there is o porriuitiry th.,xt the plaintiffs
are entttleLl tLt relief. "

This case n'as ad.pted by Dalton in Jinadasa v. weerasinghe

J. 31 NLR 33.
B3 Following this principal, the courts rn Sri Lanka
and England have constantly
held that rnterrm relief shoulci be granted only
if the plaintiff has a pr.ima facie
CASE.

8.4 It was held in

LR 287 at 302 that "in sri LankaGturt (1981) 2 Sri
or?iitt, , pr.r.,, facie case. That is the
applicant for an Interim Injunction must show
thai there is a serious matter in
relation to his legal rights, to be tried at the hearing
and that he has a good
chance of winning".

8.5 In the above case the Supreme Court further held that ,,where
Plaintiff has established a strong prima facie case however the
that he has title to the legal
rrght claimed by him.b.ut only ai irguable
case that the defendant has infringecl
it or is about ro infringe it, rhe Ijunction should ;;^;;;;rr*1"'#',n*
probabilitv is that no right of the Plaintiff will
be violatetl or that he will suffer no
wrong such as the law recognises, then the
Injunction will not issue,,.

5,b The Plaintiff has admitted that he obtained loan/overdra1t

Defendant' He has also admrtted that he executed facilities from the
2 Mortgages as security for the
said loans The Defendant has already demonstrated
asserlion that the Defendant cannot ciaim
that the plaintiffs main
Rs.7,367,g36.g0 is without merit.

8.7 The Piaintiff aiso asserts that he has made

payments to the Defendant ancl that his
requests to hand over statements of acco.rntias
been ignored by the Defendant. It is
submitted that if the Plaintjff has deposited
more ,ionies than what has been
credited to his account, the onus i, or', i1i* to
produce the relevant deposit slips. This
the PlaintjJf has failed to do. opposed
to this, the Defendant has produced three
duly certified statements of ac.olnt which accurately
the Plainriff and the balance due on each facilif.
,"n"., the deposits marJe by
The Defendant is a reputed
banking institution and it has no reason not
to credit deposits made by the plaintiJf.
Furthermore, it rs corunon knowledge that
statemu.rr,
current account hoiders. Thus, the'Plarntiff would uru sent monthly for ail
have received a statement
monthly in respect of his overdraft faciliw.
 Lr these circumstances, the Plaintiffs assertion that he requested for a statement is
false and thus, P3 aPPears to be document prepared soiely to support the plaintiff,s
. concocted story.

For the reasons set ort above, it is respectfully subrnitted that the plaintiff has failed
to make out a prima facie case.

9. Balance of Convenience

9.7 It is orLlv if the Plaintiffhas made out a prima facie case that the Court wr11
exanrine the second requ.irement, that is whether the balance of convenience
favors the PlaintiJf or the Defendants.

9,2 It was stated further by Soza J. in Felix Dias Bandaranaike Vs. The State Film
Egrparation that "if a prima facie case has been made out, we go on and consider
rvhere the balance of convenience lies. This is tested out by *.igtt-g the injury
which the Defendant will suffer if the Lrjunction is gianted and should he
ultimatelv turn out to be the victor agarnst the injury *ni.n the plaintiJf will
sustain if the injunction were refused and he should uitimately turn out to be the
victor. The main factor here is the extent of the uncompensatable rlisadvantage
or irreparabie clamage to either patty".

93 The Defendant has alrearfv submrtted that the Plaintiff has failed to establish a
prima facie case and thus it is not necessarv to examine this aspect. However i_f
Court is satisfied that the PlaintiJf has in fact estabiished a prima facie , the
balance of convenience would stili lie rn favour of the Defendant.

Ol
/,1 The Plaintilf has taken loans and mortgaged his proper{ as securif for the said
loans. If he has not settled the loans, lin fact, no- pnyments luae been made touarcls
retlttctnghis indebtedness to the Defendattt since 1996lhe has only himself to biame and
must face the consequences.

9.5 The Defendant is a premier banki.ng rnstitution and owned by the Siate. The
facilities it has granted are from deposits made by the people of furis countrv. The
Defenclant is not a charitable organisahon and is therefore required to take steps to
recover the morues advanced by it to the PlaintiJf. Thus, the Defen,lant, acting in
terms of the provisions of the 2 mortgage bonds and the Bank of Ceylon Orclinancq,
is taking steps to liquidate the securifv offered by the Plaintiff ancl recover its clues.
it is submitted that there is nothing illegal or void in this entire process.

9.6 The Defendant is losing a sum of Rs.18,000 per month by way of interest due io the
enjoining order issued against it. The amount due to the Defenclani is thus
increasing day by day and with the present land values, the monies reaiised by the
sale of the land will probably be insufficient to settle the entirety of the balance due
to the Defendant. Thus, it is important that the Defendant be permitted to exercise
its statutory right. After all, the monies grven to the Plaintiff beiong to the people of
this counky.
9 '7 h-i tl're circumstances, it is respectfuiiy submitted that the plaintiff has failed to
establish that uncompensatable disadvantage and irreparable damage would be
caused to him if the Interim Lrjunction is not issued. Therefore the balance of
convenience is ciearly in favour of the Defendant.

10. Suppression and Misrepresentation of Material Facts

10.1 Soza J further pointed out in Felix Dias BandaranaJrake Vs. The State Film
Corporation that "lastiy, as the i:r;unctron in an equitable relief grunt"d rn the
discretion of the Court, the conduct and dealings of the pirties and the
circumstalces of the case are relevant,,.

10.2 It is respectfully submitted that the plaintiff has wi11fullv and/or deliberately
suppressecl andf or concealed material facts and also misrepresented material
facts for the purpose of obtaimng the said enjoining orc{er.

,L Ll.,-) Suppression of material facts from Court and/or rnisrepresenting facts to Court
is sufficient for the Court to refuse to extend the enjoining orJ., and aiso to
refuse the application for an injunction. A parry who invokes the discretionary
powers of the Court rnust come with clean hands and disclose all relevant facts
to Court even if those facts may hold against him.
.

10.r1 It is respectfully submrtted that the PlaintjJf suppressed the followrng from
Court:

(a) that he has defauited in the repayment of the loans and that he had been
served with final notices;
(b) that section 16 of the stamp Duty Act has no appiication rn view of the
provisions of Section 17 of the said Act.

10.5 hr Thusitha Wijayasena v Walker Sons & Co. Ltd. ( CA Revision Application
No.570/95 - decided on75.7.97 - BAL] reports 7997 Yol. VII part I page 49) Ismail
I quoted with approval the statement made by Athukorale J in gotel Galaxy
(Pvt.) LTD' And other vs. Mercantile Hotel Management Ltd. 7987 l Sri LR 5 at
36-

"a misstatement of the true facts by the plaintiff which put an entirelv dffferent
complexion on the case as presented by him when injunction was applied ex-
parte would amount to a misrepresentation or suppression of material facts
r.r,arranting its dissolution without going into the merits.,,

Ismail J went on to state that " it is now settletl that a person who makes an ex-
parte application is under an obiigation to make the fullest possible clisclosure of
a1i the material facts and that iJ he does not make the fullest possibie disclosure,
then he cannot obtain any advantage which may have already been obtarned by
him' (R v Kensington Lrcome Tax Commissioners 1917 7 KB 486) A party cannot
thereafter plead that the misrepresentation was due to inadiertence or
 misinformation or that the applicant was not aware of the importance of certain
facts which he omitted to place before Court."

10.5 ln the circumstances, it is respecffully submitted that the Plaintiff has not come to
Court with clean hands and hence is not entitled to any relief from this Corrrt.

Conclusion

11. In view of the above submissions, the Defendant respecdully submits that the
Plaintiff is not entitled to an Interim L:rjunction and that h1s application for Interim
lnjunction should be refused-

Attorney-at-Law for the Defendant

Settled by: Arluna Obeyesekere

State Counsei

\.-

B"