Hatton National Bank Limited vs Seylan Bank Limited – SC APPEAL NO. 85A/2009-2023

In the case between Hatton National Bank Limited (HNB) and Lanka Tractors Limited with Seylan Bank Limited, the Supreme Court addressed whether the execution of Mortgage Bond No. 475 after winding-up proceedings had commenced amounted to a “disposition” under section 260 of the Companies Act and consequently rendered it void. The court determined that winding-up proceedings commenced on the date the petition was filed and that a mortgage created in this context constitutes a disposition of a company’s property within the meaning of the statute. It was further established by statutory interpretation and precedent that the mortgage was executed with full knowledge of the pending winding up, with the intent to defraud creditors, thus invalidating the transaction. As a result, prior orders fro