SC delivers a landmark judgment broadly interpreting parate execution

BY Lakmal Sooriyagoda   

A Supreme Court seven-judge-bench yesterday delivered a landmark judgment giving a broad interpretation in respect of parate execution (law which allows sale of mortgaged properties without intervention of courts), by overruling the decision of Chelliah v Ramachandran case.   

The Supreme Court seven-judge bench comprising Justices Buwaneka Aluwihare, Murdu Fernando, S. Thurairaja, Gamini Amarasekara, A.H.M.D. Nawaz, Kumudini Wickremasinghe and Mahinda Samayawardhena unanimously held that the majority judgment in Chelliah v Ramachandran was wrong and thus overruled it.  

In Chelliah v Ramachandran, in a majority decision of Supreme Court five-judge-bench (four to one) held that the banks are not entitled to parate execution when the property has been mortgaged by a person   

other than the borrower. This caused grave prejudice to the banks in that the recovery process (for the money lent and due to be repaid to the bank) was stalled and the circulation of money was greatly impeded.   

Justice Nawaz in a lengthy judgment drew attention to Roman Dutch Law, Roman Law, the practice of overseas jurisdictions and stated that parliamentary intention was to permit sale of third party mortgages as well and therefore the time has come to perform the burial rites of Chelliah v Ramachandran.   

Taking into consideration of the facts in the cases, the counsel who appeared on behalf of the banks moved for a seven-Judge-bench to consider the correctness of Chelliah v Ramachandran judgment of 2006.   

The court unanimously overruled the four judge decision in Chelliah V Ramachandran and held that banks are entitled to sell by parate execution any property mortgaged to the bank.  
Rohan Sahabandu PC appeared for the Appellants. Counsel N.R. Sivendran, with Kaushalya Nawaratne appeared for DFCC Bank PLC Dr. Romesh de Silva PC with Niran Anketell appeared for Hatton National Bank PLC. Palitha Kumarasinghe PC, Kushan De Alwis PC, Geethaka Goonewardene PC, Dr. Harsha Cabral PC, Harsha Amarasekera PC and Additional Solicitor General Susantha Balapatabendi PC, appeared for several other banks.