DFCC Bank Ltd vs. Seylan Bank Ltd and Five Others – sllr 2011 volume 1 page 398

In the case between DFCC Bank Ltd. (Plaintiff) and Seylan Bank Ltd. with other parties (Defendants), the court addressed whether DFCC Bank could proceed with a “parate execution” (public auction) of mortgaged property under the Recovery of Loans by Banks (Special Provisions) Act No. 4 of 1990 while a winding up petition for the mortgagee company, Amico Industries (Ceylon) Ltd., was pending. It was determined that the provisions of the Companies Act No. 17 of 1982, particularly sections 260 and 261 governing restrictions during winding up, prevail over the special powers conferred by the Recovery Act, preventing unilateral execution while collective creditor interests are being protected. The court reaffirmed the principle that asset distribution in winding up is subject to statutory contro