OF SUMMARY PROCEDURE ON LIQUID CLAIMS

  

 

OF SUMMARY PROCEDURE ON LIQUID CLAIMS

Action by summary procedure on liquid claims.

703. All actions where the claim is for a debt or liquidated demand in money arising upon a bill of exchange, promissory note, or cheque, or instrument or contract in writing for a liquidated amount of money, or on a guarantee where the claim against the principal is in respect at such debt or liquidated demand, bill, note, or cheque, may, in case the plaintiff desires to proceed under this Chapter, be instituted by presenting a plaint in the form prescribed by this Ordinance, but the summons shall be in the form No. 19 in the First Schedule, or in such other form as the Supreme Court may from time to time prescribe.

P. & O. Banking Corporation v. Selvathurai - (1926) 28 NLR 289

Liquid claim-Order for payment by instalments-Banking corporation-Civil Procedure Code, Chapter LIII.

Where, in an action by way of summary procedure on a liquid claim, the defendant admits liability, it is competent to a Court to enter a decree for payment of the amount due by instalments.

Such relief should not be denied to a debtor merely because the creditor is a Bank.

Mather v. Peri Tamby Chetty - (1927) 28 NLR 443

Summons-Action by way of summary procedure-Two defendants working in partnership-Personal service-Civil Procedure Code, ss. 55', 64, 705.

In an action by way of summary procedure on a liquid claim service of summons need not be personal.

Where such an action is brought against two defendants, carrying on business in partnership, summons may to served on one as agent of the other.

Letchimanan v. Ramanathan Chetty  overruled.

NOORBHOY v. MOHIDEEN PITCHE. 31 NLR 3

Action by way of summary procedure-Promissory note-Grant of leave to defend-Addition of money count for goods sold and delivered- Powers of Court.

Where, in an action by way of summary procedure on a promissory note, the defendant was given leave to defend, the Court has power to allow an amendment of the plaint by the addition of an alternative cause of action for goods sold and delivered.

 

Defendant not to appear or defend except with leave.

704. Without such leave decree at once with speedy execution.

(1) In any case in which the plaint and summons are in such forms respectively, the defendant shall not appear or defend the action unless he obtains leave from the court as hereinafter mentioned so to appear and defend; and in default of his obtaining such leave or of appearance and defence in pursuance thereof, the plaintiff shall be entitled to a decree for any sum not exceeding the sum mentioned in the summons, together with interest to the date of the payment, and such costs as the court may allow at the time of making the decree.

Nallan v. Ossen - (1897) 2 NLR 381

Times, calculation of-Summary procedure under chapter LIII of the Civil Procedure Code-Sundays and public holidays.

In the calculation of the time within, which a defendant is to obtain leave to appear and defend on a summons under chapter LIII of the Civil Procedure Code, Sundays and public holidays are to be included; but when the last day of the period allowed falls on a Sunday or public holiday, the defendant may move on the next Court day.

Wijesundera v. Weerawadiwakara - (1959) 61 NLR 470

Liquid claim-Summary procedure-Time limit for ol1taining leave to appellant  defend-Civil Procedure Code, ss 704 (1), 707.

In an action by summary procedure on a liquid claim, if the defendant does not obtain leave to appear and defend within the time prescribed in the summons served on him; the Court has no power to grant an extension of the time, and is bound under section 704 of the Civil Procedure Code to grant a decree in favour of the plaintiff.

Perera v. Karunanayake - (1960) 62 NLR 423

Liquid claim-Action by summary procedure-Summons on defendant-Time within which defendant must obtain leave to appear and defend-Computation-Civil Procedu1'e Code, ss. 703-706, Schedule I, Form No. 19.

Where, in an a  by summary procedure on a liquid claim, summons under
Chapter 53 of the Civil Procedure Code was ordered by Court to be issued directing the" defendant to appear within seven days of service of summons"

Held, that in computing the period of seven days a Sunday could not be excluded.

Held further, that when the Judge had directed the defendant to appear within the seven days the Secretary of the Court, when issuing the summons in Form No. 19 of Schedule I of the Civil Procedure Code, had no authority to compute the period of seven days to include the day of service. When an act has to be done "within" a specified period from a certain date, in computing that period the day of that date must be excluded.

Nanayakkara v. Paiva - (1961) 64 NLR 193

Summary procedure-Action on a liquid claim-Application for leave to appear and defend-Computation of time limit-Civil Procedure Code, ss. 703, 704, 706-Interpretation Ordinance, ss. 2, 8 (3), 11.

Where, in an action on a liquid claim under Chapter LIII of the Civil Procedure Code, the summons in Form No. 19 required the defendants to cause an appearance to be entered for them within seven days from the service thereof, inclusive of the day of such service-

Held (BASNAYAKE, C. J., dissenting), that, in computing the period within which the defendants were required to make an application for leave to appear and defend the action, Sundays and public holidays should be excluded, in terms of section 11, read with section 8 (3), of the Interpretation Ordinance.

Sri Lanka Co-Operative Society v. Susai - (2009) 1 Sri LR 67

Civil Procedure Code - Section 703, Section 704(2) liquid claims dishonouring of cheques - Jurisdiction - which Court? - English Law, or Roman Dutch Law applicability? - Leave to appear and defend unconditionally - When?

The plaintiff complained that the defendant had issued 5 cheques and the cheques were dishonoured by the bank. The plaintiff resided in Colombo, the transaction took place in Colombo, the defendant resided in Nuwara Eliya, the trial Judge granted leave unconditionally. It was contended that the cheques were drawn on banks situated outside the jurisdiction of the District Court of Colombo and therefore the District Court of Colombo has no jurisdiction.

On leave to appeal being sought-

Held:

(1) In the absence of express agreement as to the place where the plaintiff is to be paid, the English Law will apply, accordingly as to the place of payment, die debtor must seek out the creditor in the absence of an express agreement with regard to payment.

The cheques were issued, from the banks at Nuwara Eliya, Hanguranketa and PadiyapaJalla, payments were made in Colombo, the plaintiff resides in Colombo and the cheques were dishonoured in Colombo. It is the District Court of Colombo which has jurisdiction.

(2) Judge can order such a deposit if he considers the defence is not prima facie sustainable or not bona fide. Section 704 (2) does not say that if the Judge accepts the defence outlined as bona fide he must necessarily give leave to appear and defend unconditionally.

(3) The defendant's affidavit indicates that his defence is not prima facie sustainable. A reasonable doubt exits as to the honesty of the defence set up by the defendant. The alleged defences are not sufficient to grant unconditional leave to appear and defend, there are reasonable doubts about the good faith of the defendant.

 

(2) The defendant shall not be required, as a condition of his being allowed to appear and defend, to pay into court the sum mentioned in the summons, or to give security therefor, unless the court thinks his defence not to be prima facie sustainable, or feels reasonable doubt as to its good faith.

Supramanian Chetty v. Kristnasamy Chetty - (1904) 10 NLR 327

Civil Procedure Code, ch. LIII.-Summary procedure on liquid claim-Promissory note-Defence of partial failure of consideration and payment-Failure to give particulars-Reasonable doubt as to the good faith of defence.

Where in an action on a promissory note for Rs. 2,000 under summary procedure, the defendant applied for leave to defend upon an affidavit admitting the making of the note, but alleging that the plaintiff paid him only Rs. 1,500, out of which sum he had paid Rs. 1,300, leaving only a balance sum of Rs. 200 due, and where the defendant filed no particulars with his affidavit in support of his defence,-

Held (affirming the order of the District Judge), that there were reasonable grounds for doubting the good faith of the defence, and that the defendant should only be allowed to defend the action, if he deposits in Court the amount of the claim or gives security for it.

Rengasamy v. Pakeer - (1911) 14 NLR 190

Action of summary procedure on liquid claims-Unconditioned leave to defend-" Reasonable doubt "-Civil Procedure Code, ss. 703 and 704-Expediting trial.

Where the defendant, in an action by summary procedure on a liquid claim, has sworn to things which, if proved, will be a good defence, he should be allowed to defend unconditionally, unless there is something on the face of the proceedings which leads the Court to doubt the bona fides of the defence. The Court may impose terms as to framinga and recording issues, expediting the trial, or other wise, but it should not require payment into Court of, or security for, the amount claimed.

"Reasonable doubt " in section 704, Civil Procedure Code, doesnot mean doubt for which reason could be given; although a Judge, should always be able to give a reason for his belief.

De Silva Et Al. v. De Silva Et Al. - (1948) 49 NLR 219

Civil Procedure Code-Action on promissory note-Summary procedure-Is it available to executor of holder ? Defence not prima facie sustainable-Order for security-  Chapter 53 of the Code.
 
The provisions of Chapter 53 of the Civil Procedure Code relating to summary procedure on liquid claims can be utilised by the executor of a deceased holder of a promissory note.
 
In such an action where the defendant's affidavit indicates that his defence is not prima facie sustainable he should be required to give security as a condition, of his being allowed to appear and defend.

Issadeen & Co. Ltd. v. Wimalasuriya - (1960) 62 NLR 299

Civil Procedure Code-Action by summary procedure on a liquid claim-Disclosure of prima facie defence in regard to part of claim-Defendant's right to defend unconditionally-Sections 704 (2), 706.

Plaintiff filed action by way of summary procedure under Chapter 53 of the Civil Procedure Code for the recovery of a sum of Rs. 20,000. The Court did not consider as lacking in good faith the defence that only a sum of Rs. 7,600 was due to the plaintiff.

Held, that the defendant was entitled to be allowed to appear and defend the action without being called upon to furnish any security at all. There is nothing in section 704(2) of the Civil Procedure Code which precludes its application to a case where a prima facie sustainable defence is disclosed in regard to only a part of the claim while the rest of it is admitted.

Valliappa Chettiar v. Visuvanathan - (1961) 66 NLR 481

Liquid claim-Summary procedure-Prima facie defence, an regards a part only of claim-Appropriate order an to leave to appear and defend-Civil Procedure Code, s. 704 (2).

In an action by way of summary procedure for the recovery of Rs. 25,200 upon three cheques X, Y and Z, each for Rs. 8,400, the defendant applied for leave to appear and defend unconditionally. There was no admission of any liability by the defendant. The Court was of opinion that the defendant had no prima facie defence is respect of cheques X and Y but that the defence in respect of cheque Z was prima facie sustainable.

Held, that the defendant should be allowed to file answer unconditionally as against the claim on cheque Z only. In respect of the other two cheques, an order to give security as a condition of his being allowed to appear and defend was valid. As the defendant failed to furnish security in respect of the claims on cheques X and Y, the entering up of the judgment for those claims should be deferred until adjudication upon the claim on cheque Z.

Issadeen & Co., Ltd. v. Wimalasuriya (62 N. L. R. 299) distinguished.

 

Instrument to be produced with the plaint, and affidavit to be made.

705.

(1) The plaintiff who so sues and obtains such summons as aforesaid must on presenting the plaint produce to the court the instrument on which he sues, and he must make affidavit that the sum which he claims is justly due to him from the defendant thereon.

Paindathan v. Nadar - (1935) 37 NLR 101

Summary procedure on liquid claims-Affidavit in support of plaint-The use of words " justly due" not essential-Civil Procedure Code, s. 705.

In an action under Chapter LIII of the Civil Procedure Code it is not essential that the plaintiff should actually use the word "justly" in his affidavit in support of the plaint.

The defendant should not be granted unconditional leave to defend merely because such word was not used.

The affidavit will substantially comply with the requirements of section 705 of the Code if the facts therein set out show that the sum claimed was rightly and properly due.

Science House (Ceylon) Ltd. v. Ipca Laboratories Private Ltd. - (1987) 1 Sri LR 185

Civil Procedure - Summary procedure on liquid claims - Chapter 53 of the Civil Procedure Code - Civil Procedure Code, ss. 181, 703 and 705 - S. 34 (1) of Companies Ordinance - Affidavit of Company - Security.

Section 703 and 705 of the Civil Procedure Code taken together provide the path to reach out to s. 34 (1) of the Companies Ordinance of 1938 and this latter section read with s.181 of the CPC provides for the making of an affidavit of facts by a company or corporation. The law as it stands permits a corporation or a company the option of instituting an action by way of summary procedure under Chapter 53 of the Civil Procedure Code for recovery on liquid claims.

The order that security in a sum exceeding the principal sum claimed to be deposited as a condition of the grant of leave to appear and defend is not bad in law as interest was also being claimed.

Bank of Madras v. Ponnusamy (1891) 9 S. C. C. 169 not followed.

Science House (Ceylon) Limited. v. I. P. A. Laboratories Private Limited. - (1989) 1 Sri LR 155

Civil Procedure - Summary procedure (on liquid claims) under Chapter LIII of the Civil Procedure Code - Ss. 25,703,704,705 and 706 (1) CPC - Attorney -Recognised Agent - Companies Ordinance S. 34 (1) - Security.

In a suit by way of summary procedure under Chapter LIII of the Civil Procedure Code for recovery of monies due on two Bills of Exchange on a sale of drugs, the plaintiff a company incorporated in India filed plaint through its Attorney in Sri Lanka who held a power of attorney from it. To the plaint was annexed an affidavit from the said Attorney stating, inter alia, that the sums claimed in the plaint were justly and truly due to the plaintiff.

The defendant-company asked for unconditional leave to appear and defend the action on the ground that part of the drugs were of poor quality and had deteriorated and had to be destroyed and the plaintiff had failed to contribute towards the remuneration and expenses of two medical representatives. Further there had been delay in presentment for payment and the monies were therefore not recoverable. At the hearing the defendant-company took up the position that as the. plaintiff was a company it could not avail itself of the summary procedure on liquid claims provided by Chapter LIII of the Civil Procedure Code in that it could not make an affidavit as. required by S. 705 (1) of the Code. The District Judge held that S. 34 (1) of the Companies-Ordinance permitted any document requiring authentication by a company to be signed by "a Director, Secretary or other officer of the Company and therefore the affidavit filed along with the plaint fulfilled the requirements of S. 705 (1) of the C. P: C. In the correspondence between the parties the defendant company had not complained that any quantity of the drugs had to be destroyed owing to poor quality or deterioration or that the plaintiff had failed to contribute towards the expenses and disbursements on account ot Medical Representatives and the District Judge concluded the defence was not prima facie sustainable and he had reasonable doubt as to its good faith. He ordered the defendant-company to deposit Rs. 400,000/- as security. In appeal, the Court of Appeal held with the District Judge.

Held

1.      The District Judge's conclusions that the defence was not prima facie sustainable and that he had reasonable doubt as to its good faith are justifiable and should be upheld.
 

2.      A Corporation or a Company can avail itself of the special procedure in Chapter LIII of the Civil Procedure Code and it can make an affidavit as required by S. 705 (1) of the Civil Procedure Code through one of its principal officers.
 

3.      The Plaintiff-Company's Attorney in Colombo was a "recognised agent" within the meaning of S. 25 (b) of the Code and his affidavit was sufficient and satisfied the requirements of S. 7O5(1) of the Code.

4.      Section 34(1) of the Companies Ordinance permits juristic persons to file affidavits in proceedings under Chapter LIII of the CPC.

5.      Sections 704 and 706 of the CPC stipulate that only the sum mentioned in the summons could be ordered as security. The security of Rs. 400,000/- is in excess of the amount that could be ordered. No more than the amount mentioned in the summons can be ordered as security.

Amerasekera v. Amarasinghe - (1998) 3 Sri LR 253

Civil Procedure Code - Cap LIII - S. 704(1)(2) - Unconditional leave to appeal and Defend - Promissory Note - Was it duly Stamped - Stamp Duty Act No. 43 of 1982 - S. 7, S. 7 (2), S. 7 (3) - Bills of Exchange Ordinance - S. 30 (1)-genuiness of the defence.

The plaintiff-petitioner instituted action under Caption LIII of the Civil Procedure Code to recover a sum of Rs. 3 million on a promissory note.

The defendant-respondent was granted unconditional leave to appear and defend. In the revision application it was contended that court failed to -

(a) Consider whether the defence is prima facie sustainable.

(b) Consider whether the defence was bona fide.

(c) Adduce reasons.

Held:

1. It was manifest on an examination of S. 704 (2) that it requires the court to consider the petition and affidavit together with any document annexed and decide whether the defendant has disclosed a prima facie sustainable defence. It further requires the court to consider that even if the defendant disclosed a prima fade sustainable defence whether such defence is bonafide.

2. The averment in the affidavit of the defendant-respondent that the promissory note in question was a false and fraudulent document does not only by itself furnish any material in the absence of other circumstances to buttress that allegation.

3. The defendant - respondent had averred that no consideration passed, having regard to the absence of a specific averment denying the signature on the promissory note this denial of consideration has no meaningful effect.

Per Weerasuriya, J.

By making a general statement of fraud without specifying particulars or grounds of such fraud one cannot discharge the burden of satisfying court of a prima facie sustainable defence and presence of good faith.

4. The promissory note should be stamped with stamps to the value of Rs. 1,500. However, any instrument bearing an adhesivee stamp which has not been cancelled in the manner set out in S. 7 (1) (2) is deemed to be unstamped to the extent of the value of that stamp.

Ranasinghe v. Zubair and Others - (2002) 2 Sri LR 399

Civil Procedure Code - S. 703, 704 (1) (2), 705 (1), 706 - Liquid claims - Is it imperative to annex to the plaint the original of the instrument which he is suing? - Triable issue?

At the inquiry the defendant-respondents took up the objection that the original cheque was not produced in Court at the time of presenting the plaint as required under s. 705 (1) (Photocopy of the dishonoured cheque was annexed). The trial Judge held that the failure to produce the instrument on which the plaintiff relies as required by s. 705 (1) gave rise to a triable issue and the defendant-respondents were granted leave to appear and defend the action unconditionally.

On leave being sought.

Held :

(1) It is unnecessary to annex the original of the instrument to the plaint. However, the plaintiff shall set out in his affidavit why the original instrument is not annexed to the plaint.

Per Jayasinghe, J.

"It must be had in mind that when the Civil Procedure Code was enacted in 1889, photocopying and other duplicating machines were unknown to Court. There has now arrived for Courts to recognise the scientific and technological progress and assimilate such progress into archaic legislation wherever possible so that such legislation will remain compatible with the emerging trends and to deal with complex and varied transactions."

(2) A prima facie sustainable defence must be independent of the requirement set out in S. 705 (1) for S. 704 (2) and S. 705 (1) are distinct and independent of each other.

Wicramaratne v. Senanayake. - (2005) 1 Sri LR 222

Civil Procedure Code Cap. LIII sections 85, 85(1) 704(1), 705(1) and 710 - Affidavit imperative - Sum justly due - Summons returnable date - Defendant absent - Copy of decree served on defendant - Non existent order nisi made absolute - Validity -Decree not signed by judge - Is it a nullity?

The plaintiff respondent instituted action under Cap. 53 of the Code to recover a sum of money alleged to be due on a cheque. No affidavit was filed. The trial court ordered that summons be served on the defendant, and when the defendant failed to appear in court the court made order nisi absolute.

HELD :-

(1) Section 705(1) of the civil Procedure Code makes it mandatory for the plaintiff to make an affidavit that the sum which he claims is justly due to him from the defendant. Whole of the proceedings commencing with the institution of the action are bad.

(2) There was no summons returnable date, if the defendant is absent, the court should proceed to hear the case ex parte and enter decree in favour of the plaintiff in terms of section 85.

(3) After entering the decree under section 85(1) the court shall cause a copy of the decree to be served on the defendant.

(4) It is only after entering the decree properly signed by the judge, the court can issue the writ of execution. A writ of execution not founded on a valid decree is a nullity - proceedings thereunder are void.

 

(2) If the instrument appears to the court to be properly stamped, and not to be open to suspicion by reason of any alteration or erasure or other matter on the face of it, and not to be barred by prescription, the court may in its discretion make an order for the service on the defendant of the summons above mentioned.

Sivapalanathan v. Raj Gopal - (2005) 1 Sri LR 162

Civil Procedure Code, sections 705(2) and 706-Summary procedure on liquid claims - Conditions precedent to issue of summons - Prescription Ordinance, No. 22 of 1871, section 6 - Defence prima facie sustainable-Security.

Can a claim for unjust enrichment be joined ? -Application for leave to appear and defend - Is a petition necessary ?

The petitioner contended that he has a valid ground to appear and defend unconditionally as the respondent's action is prescribed.

The District Court ordered the defendant to defend with security.

The petitioner sought leave to appeal against the said order Held:

(i) A condition precedent to the issue of summons is that the document on which the action is based should not appear to be prescribed ; the plaintiff's action based on the 2 cheques is clearly prescribed.

(ii) It if appears to Court that the plaintiff respondent's action is barred by some provision of a statute the defendant petitioner should be allowed to appear and defend without being ordered to furnish security.

(iii) In an action under Summary Procedure, a claim for unjust enrichment is not a liquid claimarising upon the two cheques and is not a proper subject for Summary Procedure.

The Court should have amended the plaint by striking out the claim for damages based on unjust enrichment and then proceeded to issue summons.

(iv) The manner of making the application is found in section 706 - it only speaks of an affidavit and not petition and affidavit

Central Union Insurance Co., Ltd. v. Boteju - (1954) 56 NLR 149

Liquid claim-Summary procedure-Instrument must bear stamp-Civil Procedure Code, ss. 703, 705 (2), 706.

A condition precedent to the issue of summons in an action by summary procedure on a liquid claim is that the document on which the action is based should be properly stamped, as required by section 705 (2) of the Civil Procedure Code.

Ruhunu Agro Fertilizer Co. Ltd. v. Kapila - (2000) 2 Sri LR 277

Civil Procedure Code, S. 53, S. 704(2), S. 705(1) (2), S. 706 - Summary Procedure - Liquid claims - Leave to defend - Without security -, Triable issues - Notice of dishonour - Should it be given - Discretion of Court - Bills of Exchange Ordinance S. 73, S. 73(1), S. 75 - Countermand of payment - Debt Recovery Act, No. 2 of 1990, S. 25.

The Plaintiff Petitioner instituted action for the recovery of a certain sum with interest under Section 53 Civil Procedure Code claiming that the Respondent had issued ten cheques in favour of the Petitioner Company without funds. The Court permitted the Defendant Respondent to file answer unconditionally.

On Appeal, it was contended that Court had erred in law by coming to the conclusion that it was necessary to ascertain the reasons for the Defendant Respondent to countermand the cheques and also to ascertain whether there were funds in the Bank to meet the payments on the ten cheques. It was further contended that it was not necessary for the Plaintiff Respondent to give Notice of Dishonour.

The Defendant Respondent contended that the Plaintiff Petitioner has violated S. 705 (1). Civil Procedure Code and that Notice of Dishonour had not been given, and that, he had in fact raised a triable issue.

Held:

(1) In terms of S. 705(1) Civil Procedure Code the condition-precedent to the issue of summons is that the documents on which the action is based must on presenting the plaint, be produced to Court, and that the Plaintiff must make an affidavit that the sum which he claims is justly due. The documents marked are only copies and they are unstamped. Court could not have issued summons under S. 705(2).

(2) The legislature had intended to give the Judge the discretion as to imposing terms with which the appeal Court should not interfere. The Defendant has raised a triable issue - non-issuance of the Notice of dishonour by the Plaintiff Petitioner and in such an event leave must be given unconditionally.

Per Jayawickrama, J.

"On a consideration of S. 704(2), 706 of the Civil Procedure Code it appears that when the Defendant who swears to a fact which, if true constitutes a good defence, he must be allowed to defend unconditionally unless there is something on the face of the proceedings which lead the Court to doubt the bona fides of the Defendant."

(i) S. 704(2) Civil Procedure Code should not be made use of as a punishment for not honouring one's obligations and the words 'unless the Court thinks his defence not to be prima facie sustainable or feels reasonable doubt as to his good faith, - "means that the Court has the discretion to decide the question whether the Defendant should be allowed to appear and defend without security.

(h) It is not clear whether the cheques were drawn without sufficient funds in the Bank as the drawer had stopped payment regarding certain cheques on the basis that the Plaintiff Petitioner refused to continue the supply of fertilizer. In such a situation the drawer is entitled to notice of dishonour unless such notice is excused or waived.

 

(3) The day to be inserted in the notice as the day for the defendant's appearance shall be as early a day as can be conveniently named, regard being had to the distance of the defendant's residence from the court.

When leave to defend may be granted.

706. The court shall, upon application by the defendant, give leave to appear and to defend the action upon the defendant paying into court the sum mentioned in the summons, or upon affidavits satisfactory to the court which disclose a defence or such facts as would make it incumbent on the holder to prove consideration, or such other facts as the court may deem sufficient to support the application and on such terms as to security, framing, and recording issues, or otherwise, as the court thinks fit.

Whitham v. Pichche Muttu Kankani - (1902) 6 NLR 289

Promissory note-Action under chapter 53 of the Civil Procedure Code- Defence to such action-Claim in reconvention for unliquidated damages -Transactions between superintendent of an estate and his head kankani -Position of head kankani-His relations between superintendent and sub-kankanies and coolies-Promissory note by head kankani-Purpose for which the note was given-Subsequent difference between superintendent and head kankani-Interference of superintendent with head kankani's coolies-Severence of head kankani's responsibility-Right of superintendent to sue him on promissory note-Validity of plea that note was given, in pursuance of a well-known custom, by way of security for repayment of advances made to coolies.

A claim in reconvention for unliquidated damages is a "defence" to an action on a promissory note instituted under chapter 53 of the Civil Procedure Code.

The employment of coolies on estates up-country is effected according to a well-known custom, whereby the head kankani of an estate desiring employment on another estate comes to it with a tundu or memorandum received from his present employer showing the amount due to the estate from the coolies on advances. The would be employer gives the kankani a cheque for the amount appearing in the tundu in favour of the present employer, who thereupon permits the kankani and his coolies to serve on the new estate. On arrival, the kankani gives the superintendent a promissory note for the amount of the advances received on account of the coolies, and in turn takes promissory notes from his sub-kanganies. By this arrangement the superintendent avoids the inconvenience of having to treat with each cooly, and so long as the coolies continue under the head kankani, the superintendent obtains on pay days and other occasions a reduction of the debt due to the estate.

In view of such a custom, a promissory note signed by the head kankani in favour of the superintendent, though containing an unconditional promise to pay on demand or on a certain date, must be looked upon as a note given for a special purpose and subject to special conditions.

So long as there is no severance of connection between the kankanies, coolies, and the estate, the note cannot be put in suit. But if it becomes impossible by no fault of the superintendent to induce the coolies to pay off their debt, the liability of the head kankani to the estate becomes actual.

If the superintendent interferes with the coolies and severs their connection with the head kankani, such conduct would discharge the latter from his liability.

The promissory note of the head kankani is only a security for the advances made to the coolies and sub-kankanies, and it is the duty of the superintendent who comes into Court with such a note, to prove failure on the part of the principal debtors to pay the amounts due by them.

Muttaiya Chetty v. Arumugam - (1903) 6 NLR 302

Civil Procedure Code, chapter 53-Action on promissory note-Summons to appear, with liberty to obtain leave to defend within fourteen days-Application for such leave made out of time-Right of Court to impose terms in giving leave to defend.

Where, in an action on a promissory note brought under chapter 58 of the Civil Procedure Code, a defendant did not apply in time for leave to appear and defend the suit, the Court is entitled, under section 706 of the Code, to put him on terms as a person in default as regards the defence of the suit.

The effect of the decisions of the Supreme Court in Arunasalam Chetty v. Assina Marikar (2 Browne, 295) and Davies & Co. v. Perera (ib. 297) explained.

Ramanathan v. Fernando - (1930) 31 NLR 495

Liquid claim-No valid defence disclosed-Right of defendant to appear and defend-Deposit of claim-Civil Procedure Code, Ch. LIII.

In an action upon a liquid claim brought under Chapter LIII of the Civil Procedure Code, the defendant has the right to appear and defend upon depositing in Court the amount in claim, even where the Court finds that no valid defence is disclosed.

Per LYALL GRANT J.-Where a Judge rejects the affidavit of the defendant, his order ought to fix a time within which the amount sued for should be deposited in Court and to state that, unless the money is deposited within the time so fixed, leave to appear is refused.

Silva Et Al. v. Weerasuriya - (1936) 38 NLR 323

Liquid claim-Action on promissory note payable on demand-Endorsement on note by payee-Agreement not to sue for two years-Defence prima facie sustainable-Civil Procedure Code, ss. 705 and 706

Where a promissory note payable on demand contained an endorsement on the back signed by the payee to the following effect:

"This promissory note is given on the condition that the same shall not be filed in Court or sued upon by the payee or any holder thereof within a period of two years from the date thereof, and I undertake not to do so till the expiration of the said period."-

Held (in an action on the note under the provisions of Chapter LIII of the Civil Procedure Code), that leave to defend should be granted unconditionally.

PERERA v. KARUNANAYAKE 62 NLR 423

Liquid claim-Action by summary procedure-Summons on defendant-Time within which defendant must obtain leave to appear and defend-Computation-Civil Procedu1'e Code, ss. 703-706, Schedule I, Form No. 19.

Where, in an a  by sl1m.thary procedure on a liquid claim, summons under
Chapter 53 of the Civil Procedure Code was ordered by Court to be issued directing the" defendant to appear within seven days of service of summons"

Held, that in computing the period of seven days a Sunday could not be excluded.

Held further, that when the Judge had directed the defendant to appear “within” seven days the Secretary of the Court, when issuing the summons in Form No. 19 of Schedule I of the Civil Procedure Code, had no authority to compute the period of seven days to include the day of servioe. When an act has to be done "within" a specified period from a certain date, in computing that period the day of that date must be excluded.

Sebastian. A.Z v. Sri Dharma Kumarajeewa. L.S - (1977) 80 NLR 264

Civil Procedure Code-Action by summary procedure on a liquid claim - Bona fide defence disclosed in affidavit - Court can order security as a condition to file answer - Sections 704 (2), 706.

 In an application for leave to appear and defend, even if the affidavit of the defendant is satisfactory, the court can exercise its discretion under section 706 and order the defendant to deposit part of the sum claimed in the plaint as a condition to defend the action.

Decision in Issadeen and Company v. Wimalasuriya 62 N.L.R. 299 not followed.

Esquire (Garments) Industry Ltd. v. Sadhwani (Japan) Ltd. - (1983) 2 Sri LR 242

Civil Procedure Code ‑ Summary procedure In liquid claims ‑ Bills of Exchange ‑ Civil Procedure Code s. 703 ‑ Unconditional leave to appear and defend ‑ Acceptance of Bills ‑ Triable issue.

In a suit filed in terms of s. 703 C. P. C. the District Judge had issued summons although the originals of the Bills of Exchange had not been filed. The defendant in asking for leave to appear and defend unconditionally had claimed that the Bills were not properly accepted or accepted by directors who had been removed.

 Held ‑

The correct question is whether a triable issue arose on the affidavits and documents before Court.

The failure to produce the originals of the documents at the time of the presentation of the plaint raises a triable issue. The failure of the defendant to plead this question should not be held against him because he could have discovered this only after the inquiry commenced. Further none of the bills had been stamped.

Sections 704 and 706 C.P.C. are relevant to the question of granting leave to appear and defend unconditionally. The Court should have considered the defence and if it was prima facie sustainable or it feels reasonable doubt as to its good faith, given leave to appear and defend unconditionally.

At this stage, the Court is not called upon to adjudicate upon the merits of the defence.

The question whether these bills had been signed by two directors at a time when they were removed from office also raises a triable issue.

ANANDA v. DISSANAYAKE (2007) Sri LR 391

Civil Procedure Code - Cap 53- Section 704, Section 706 - Summary Procedure on liquid claims - Defendant objecting to jurisdiction and that promissory note is not valid in statement of objections - Praying for leave to defend unconditionally - Validity - Judicature Act section 39 - Action barred by positive rule of law - Objections when? - Matters involving Law Merchant, which Court has jurisdiction? - Debtor seeking creditor - Past consideration - No consideration? - Bills of Exchange Ordinance, section 27 and 91 - Prima facie sustainable defence.

The plaintiff instituted action to recover a certain sum of money with interest owning to him on a promissory note - under Cap 53 of the Code. The petitioner without filing petition/affidavit filed a statement of objections/affidavit and a number of documents praying that, the case be dismissed for want of jurisdiction as the parties were residing outside the jurisdiction of the District Court of Colombo and on the ground that the promissory note was not a valid note, as there was no valuable consideration. The application was dismissed by the District Court.

Held:

(1) Objection to jurisdiction must be taken at the earliest opportunity if no objection is taken and the matter is within the plenary jurisdiction of the Court, the Court will have jurisdiction to proceed with the matter. Where the action is barred by a positive rule of law objection must be taken before pleading to the merits of the case.

(2) In a matter involving "Law Merchant" English Law (Common Law) has to be applied. It is the debtor who should seek the creditor. Therefore the plaintiff must file action in the District Court having jurisdiction within which he resides.

(3) In the instant case, there is ample evidence to show the intention of the parties that the payment must be made at the office of the defendant-petitioner. Evidence indicates that the place of residence of the defendant-petitioner is within the jurisdiction of the District Court of Colombo.

(4) Although the general rule is past consideration is no consideration there are exceptions to this rule - Sections 27/91 Bills of Exchange Ordinance once the petitioner admitted the receipt of money and a Promissory Note signed in the absence of any documentary evidence to the contrary, it is not in the mouth of the petitioner to argue that he has a prima facie sustainable defence.

 

When court may set aside decree, & c.

707. After decree the court may, under special circumstances, set aside the decree, and if necessary stay or set aside execution, and may give leave to appear to the summons and to defend the action, if it seem reasonable to the court so to do, and on such terms as the court thinks fit.

Sockalingam Chetty v. Muttiah Pulle - (1925) 26 NLR 465

Summons-Action by way of summary procedure-Order to appear and defend within ten days-Mistake in summons issued.

Where, in an action by way of summary procedure, the Court ordered summons on the defendant to appear and defend within ten days of the service, but the summons itself, by a mistake, required him to appear within seven days; and where judgment was entered against him before the expiry of ten days.

Held, that the defendant was not entitled to have the judgment set aside as of right.

Sayado Mohamado v. Maula Abubahkar - (1926) 28 NLR 58

Action by summary procedure under Chapter LIII of the Code-Leave to defend granted on ex parte application- Rescission or modification of such order on application of plaintiff—Ordinance No. 2 of 1889, ss. 704 and 706.

Held, that an order made ex parte, granting leave to defend, may be vacated by the Court making the order.

The rule in Vonliutzgy v. Narayansingh ¹ followed.

Khan v. Sally Et Al. - (1939) 41 NLR 282

Liquid claim-Action on promissory note-Leave given to appear and defend- Failure to deposit money in time-Delay on the part of Proctor-Civil Procedure Code, s. 707.

In an action on a promissory note defendant was given leave to appear and defend on December 14, 1938, and ordered to file answer on giving security in Rs. 200 by January 16, 1939.

When the case was called on January 17, it was found that the money was not deposited and judgment was entered for the plaintiff.

Held (in an application to set aside the judgment), that dilatoriness on the part of the proctor which resulted in his failure to comply with an order of Court within the time fixed did not amount to proof of such special circumstances as are contemplated by section 707 of the Civil Procedure Code.

Court may order deposit of instrument.

708. In any proceeding under this Chapter the court may order the instrument on which the action is founded to be forthwith deposited with an officer of the court, and may further order that all proceedings shall be stayed until the plaintiff gives security for the costs thereof.

Recovery of expenses incurred in noting.

709. The holder of every dishonoured bill of exchange or promissory note shall expenses have the same remedies for the recovery of the expenses incurred in noting the same for non-acceptance, or non-payment, or otherwise, by reason of such dishonour, as he has under this Chapter for the recovery of the amount of such bill or note.

Saving clause.

710. Except as provided in this Chapter, the procedure in actions under this Chapter shall be the same as the procedure in actions instituted under Chapter VII.

Special trial roll to be kept.

711. In every court in which cases may be instituted under this Chapter, a special trial roll shall be kept of such cases in which issue has been joined. And it shall be competent for the Judge of such court to order such cases to be set down for hearing on such days, and on the day fixed for the hearing of any such case to direct the same to be called on for trial, in such order as to him shall appear best calculated to promote the ends of justice, any rule or practice of such court to the contrary notwithstanding:

Provided that the parties to such case shall have received reasonable notice of the day of hearing.