Bank of Ceylon vs Jaqa Lanka International (Pvt) Ltd – SC CHC APPEAL/50A/2013-2023

In the case between Jaqa Lanka International (Pvt) Ltd and Bank of Ceylon, the Supreme Court considered whether a secured creditor forfeits secured status by failing to respond to the liquidator’s notice under Section 358 of the Companies Act, and whether the liquidator may deduct expenses incurred for the protection and maintenance of mortgaged assets from the sale proceeds, when the creditor is deemed unsecured. The proceedings arose out of winding up and liquidation actions involving banking facilities secured by mortgage. The Bank of Ceylon had not replied to notices from the liquidator requesting an election of rights under the statute, leading to its automatic classification as an unsecured creditor. As a result, it was determined that expenses for the care and discharge of the mortg