Hotel proprietor gets interim order in writ application against private bank

The Court of Appeal issued an interim order preventing DFCC Bank PLC from taking any steps to auction the properties belonging to the proprietor of Senasuma Hotel or take any steps in pursuance of the decision to auction as depicted in the resolution dated 25th January 2023 passed by the Board of Directors of the respondent bank.

The petitioner P.A.A. Panditharathne, the Proprietor of Senasuma Hotel located at Boyagane in Kurunegala filed this writ petition seeking a writ of Certiorari, quashing the decision to auction as depicted in the resolution dated 25th January 2023 passed by the Board of Directors of the DFCC Bank, to sell by auction the properties of the petitioner.

The Court of Appeal two-judge-bench comprising Justice Nissanka Bandula Karunaratne and Justice M.A.R. Marikkar made this order taking into account the submissions made by Senior Counsel Faisza Markar who sought an interim order preventing the respondents from taking any steps to auction six mortgages on July 24. The court also issued notices on respondents, returnable for August 3.

In this case, the petitioner had obtained four loan facilities amounting to Rs.100 million from the respondent bank with a view to financing the construction of a tourist hotel and restaurant on a plot of land owned by him. He stated that the loan facilities aggregating Rs.100 million were secured by mortgages.

The Petitioner further states that the bank had also granted to him an overdraft facility against his current bank account. He states that until the year 2018, he promptly paid and settled the installments payable by him on the said overdrafts and loan facilities secured by the Mortgages.

The Petitioner states however that since the year 2018, he was faced with some difficulty in meeting the said overdraft payments and loan installments, which said difficulties were severely aggravated by the Covid 19 pandemic and the economic crisis which followed in the ensuing years. The Petitioner states that he was accordingly unable to complete the said project within the expected time frame.

The Petitioner states by letter dated 27th January 2023, the second Respondent the Senior Manager (Rehabilitation and Recoveries) of the bank, forwarded to the Petitioner a purported notice dated 27th January 2023 under section 8 of the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 of the resolution passed by the Board of Directors of the Bank under section 4 of the said Act on 25th January 2023. The purported resolution pertained to the four lands situated in Kurunegala which were subject to the six mortgages which were secured to the four loan facilities.

Senior Counsel Faisza Musthapha Markar with Counsel Zainab Markar Akram and Sajda Jaward instructed by Attorney-at-Law Dilini Gamage appeared for the petitioner. (Lakmal Sooriyagoda)