Case Summary: SC APPEAL 36/2011

1. Parties Involved

Plaintiff-Appellant-Respondent:

• Anura Silva Abeyratne (Resident of Edmonton Housing Complex, Colombo 06)

Defendants-Respondents-Appellants:

• Kusuma Wijetunga (Resident of Thavaluwila, Ambalantota)
• Sudirikku Hennedige Nilupul Jayawickrema (Resident of Thavaluwila, Ambalantota)

2. Facts of the Case

1. The plaintiff (Anura Silva Abeyratne) claimed ownership of the lands described in the plaint and alleged that he had taken a loan of Rs. 40,000 from the 1st defendant (Kusuma Wijetunga) on April 17, 1988.

2. As security for the loan, the plaintiff asserted that he transferred the beneficial interest of the lands to the 1st defendant, and in addition, the 1st defendant took possession of the original deeds.

3. The plaintiff further claimed that he was made to sign three blank sale deeds as a security measure, which were later fraudulently filled in by the 1st defendant to create a false deed bearing No. 167 (P-1).

4. According to the plaintiff, the false deed was attested by a notary public, H.A. Amarasena, and included fabricated details, such as a false date (June 13, 1988) and a false purchase price.

5. The 2nd defendant (Sudirikku Hennedige Nilupul Jayawickrema), the son of the 1st defendant, was listed as the purchaser in the deed, but the plaintiff argued that he was a minor at the time and that no actual sale had taken place.

6. The plaintiff raised three key legal arguments:

   • Fraud: The deed (P-1) was fraudulent and had no legal effect.
   • Minority of the 2nd Defendant: Since the 2nd defendant was a minor at the time of the alleged transaction, the deed was void.
   • Laesio Enormis: The value of the land at the time of the transaction was Rs. 200,000, whereas the stated purchase price was Rs. 58,000, making the sale invalid due to gross inadequacy of consideration.

7. The plaintiff sought a declaration that the deed (P-1) was fraudulent and that the 2nd defendant should not acquire any rights from it.

8. In response, the defendants denied all allegations and claimed that the plaintiff voluntarily sold the land to the 2nd defendant under a legally executed deed (P-1). They further argued that the plaintiff had filed this case to extract additional money from them.

9. The District Court ruled in favor of the defendants on November 20, 2006.

10. The plaintiff appealed to the High Court of Civil Appeal in Matara, which on May 5, 2010, ruled in favor of the plaintiff, declaring that the deed was fraudulent.

11. The defendants then appealed to the Supreme Court, which granted leave to appeal on several legal questions, including:

• Whether the High Court wrongly introduced the concept of a trust into the case.
• Whether the High Court misapplied the doctrine of Laesio Enormis.
• Whether there was sufficient evidence to prove fraud.
• Whether the High Court misinterpreted the facts of the case.

3. Legal Issues Considered by the Supreme Court

1. Was the deed (P-1) fraudulent?

   • The High Court had ruled that the deed was fraudulent based on letters of demand (P-3, P-4, P-6), which suggested that the loan existed and that the deed was fabricated.
   • The Supreme Court noted inconsistencies in witness statements and found that the plaintiff failed to meet the standard of proof required for fraud.

2. Was the 2nd defendant’s minority a factor in invalidating the deed?

   • The Supreme Court found that a minor’s deed is not automatically void but rather voidable. Since the 2nd defendant continued to defend his rights after reaching majority, the deed remained valid.

3. Was the doctrine of Laesio Enormis misapplied?

   • Laesio Enormis allows a seller to rescind a contract if the sale price is less than half the true value.
   • The Supreme Court ruled that since the plaintiff knew the land’s value, he could not claim Laesio Enormis to invalidate the deed.

4. Did the failure to reply to the letter of demand imply an admission of fraud?

   • The High Court treated the lack of a reply to letter P-4 as an admission of fraud.
   • The Supreme Court ruled that failure to reply to a business letter does not automatically amount to an admission, particularly when a legal case is pending.

5. Did the High Court err in overturning the District Court’s ruling?

   • The Supreme Court concluded that the High Court misapplied the legal principles and should not have overturned the District Court’s decision.

4. Judgment of the Supreme Court

• The Supreme Court ruled in favor of the defendants, setting aside the High Court’s decision and reinstating the District Court’s judgment.
• The Supreme Court held that the plaintiff failed to prove fraud beyond a reasonable doubt.
• The Court ruled that the doctrine of Laesio Enormis did not apply since the plaintiff was aware of the land’s value at the time of sale.
• The Court held that the failure to reply to a letter of demand did not constitute an admission of fraud.
• The appeal was allowed, and the plaintiff’s case was dismissed.

5. Conclusion

This case highlights key principles in Sri Lankan contract and property law, particularly:

1. Fraud must be proven with strong evidence beyond mere suspicion or inconsistencies in documents.
2. A minor’s contract is voidable, not void, meaning that it remains valid unless challenged after reaching majority.
3. Laesio Enormis cannot be used to rescind a contract if the seller knew the land’s value.
4. Failure to reply to a business letter does not automatically amount to an admission of wrongdoing.

By upholding the District Court’s ruling, the Supreme Court reinforced the importance of requiring clear, strong evidence before overturning a legally executed property transfer. This case serves as a precedent on fraud, contractual fairness, and procedural law in Sri Lanka.