The well-settled general principle is that Courts are reluctant to interfere with settlements recorded before them. When there is an Attorney on record, the settlement should be notified to Court through him, not by the party himself. A party cannot be allowed to resile from the settlementon later realizing that it is unfavorable to him, or on the ground that he did not sign the case record, or that the decree is yet to be entered.

 

SC Appeal 96/2021

 

Abraham Galappaththige Sandya Amarasiri vs Borelle Liyana Arachchilage Manel Iranganie 

Date of Judgment: 10th September 2024 

Justices: 

Hon. Justice S. Thurairaja, P.C. 

Hon. Justice Mahinda Samayawardhena 

Hon. Justice Arjuna Obeyesekere 

Background of the Case:

This case revolves around a land dispute filed in 2003, where the plaintiff, Abraham Galappaththige Sandya Amarasiri, sought a declaration of title, ejectment of the defendant, and damages. The land in question had been transferred to the plaintiff by the defendant in 2002 by a Deed of Transfer. The defendant, Borelle Liyana Arachchilage Manel Iranganie, contended that the plaintiff held the property in trust for her, and she should be allowed to repay the money borrowed and regain the property.

A settlement was reached in court in 2011, where the defendant agreed to pay Rs. 500,000 to the plaintiff by 20th November 2012 to have the property retransferred to her. If the plaintiff refused to accept the payment, the defendant could deposit the money in court and secure the property. If the defendant failed to pay, the plaintiff was authorized to  execute the writ of possession.

The defendant did not make the payment by the agreed deadline and later claimed that the plaintiff obstructed her efforts to pay the money. She sought to stop the execution of the writ by filing an application in the District Court of Gampola. However, her application was dismissed by both the District Court and the High Court, leading to her preferring an appeal to the Supreme Court.

Legal Issues:

1. Whether the defendant could deposit the Rs. 500,000 in court after the stipulated deadline had passed and still regain ownership of the property.  

2. Whether the plaintiff obstructed the defendant's efforts to make the payment before the deadline.  

3. Whether the settlement reached in court was enforceable, given the defendant’s noncompliance with the terms.

Arguments Presented on behalf of the Defendant-Appellant:

The counsel for the Defendant argued that according to the settlement, the defendant could deposit the money in court even after the deadline of 20th November 2012. They claimed that the defendant made an attempt to pay the money but was thwarted by the plaintiff. The defendant requested the court to allow her to deposit the money and regain ownership of the property.

Plaintiff-Respondent’s Argument:

 The plaintiff’s counsel countered that the defendant failed to make the payment as stipulated in the settlement. He denied any obstruction to the defendant’s efforts and argued that the defendant had 12 years to deposit the money but chose not to. The plaintiff sought to enforce the original terms of the settlement, which gave the plaintiff the right to possession after the defendant's failure to meet the payment deadline.

Precedents Discussed:

1. Bandhua Mukti Morcha v. Union of India (1984 AIR 802): 

This case highlighted the court’s responsibility to prevent the abuse of its process. The Supreme Court of India held that the judicial process should not be misused to achieve ulterior motives, which was applicable to the defendant’s prolonged avoidance of fulfilling the terms of the settlement. 

2. Beinash v. Wixley (1997) ZASCA 32 (South Africa): 

In this case, the South African Supreme Court of Appeal discussed the concept of "abuse of process." The defendant’s attempt to delay the execution of the settlement without sufficient grounds was viewed as a manipulation of the judicial process.

 3. Varawa v. Howard Smith Co Ltd (1911) 13 CLR 35 (Australia): 

Isaacs J. in the High Court of Australia observed that abuse of process occurs when legal procedures are employed for purposes beyond their legitimate objective. This principle was relevant in dismissing the defendant's arguments.

 4. Sinna Veloo v. Messrs Lipton Ltd (1963) 66 NLR 214: 

This Sri Lankan case reinforced the principle that parties cannot resile from settlements unless there is a justifiable reason such as fraud or misrepresentation. Here, the defendant’s noncompliance with the settlement terms was seen as a failure to meet the agreed conditions.

 5. Newton v. Sinnadurai (1951) 54 NLR 4: 

Gratiaen J. in this case emphasized the need for clarity and precision in drafting settlements to ensure enforceability. This was cited to explain the importance of clear settlement terms in the current case.

6. The well-settled general principle is that Courts are reluctant to interfere with settlements recorded before them. When there is an Attorney on record, the settlement should be notified to Court through him, not by the party himself. A party cannot be allowed to resile from the settlement upon later realizing that it is unfavorable to him, or on the ground that he did not sign the case record, or that the decree is yet to be entered. 7. (Sinna Veloo and v. Messrs Lipton Ltd (1963) 66 NLR 214, 

8. Balasunderam and Others v. Letchiraman and Others [2006] BLR 1, 

9. Francis Wanigasekera v. Pathirana [1997] 3 Sri LR 231) 

Conclusion:

The Supreme Court unanimously dismissed the appeal filed by the defendant. The court held that the defendant failed to comply with the terms of the settlement by not paying the Rs. 500,000 by the agreed deadline. The court rejected the argument that the defendant could deposit the money at any time after the deadline, as this interpretation was contrary to the intention of the parties.

 The court further found no credible evidence to support the defendant's claim that the plaintiff obstructed her attempts to make the payment. The defendant’s delay in seeking a resolution, combined with the absence of any deposit over 12 years, indicated bad faith. The plaintiff was therefore entitled to possession of the property, and the defendant’s appeal was dismissed with costs.

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