K.D.Gunapala vs Bank of Ceylon – CA APPLICATION WRIT NO 955/2006-2013

In the case between K.D. Gunapala (Managing Director of RIO Industries Limited) and the Bank of Ceylon with M/s R S M Auctions, the court addressed the issue of whether the Bank of Ceylon’s Board acted ultra vires its statutory powers by passing a resolution authorizing the sale of mortgaged property to recover a sum alleged to exceed the amount secured by a mortgage bond. It was held that the Bank was legally empowered under the Bank of Ceylon Ordinance to recover the entirety of the unpaid loan amount, and that such statutory powers could not be curtailed by the contractual terms of the mortgage bond. The principle reaffirmed was that statutory rights of financial institutions under relevant legislation prevail over private contractual arrangements. This relied on the interpretation of S