Chelliah Ramachandran and others vs Hatton National Bank Ltd and others – SC CHC APPEAL 03/2012-2024

The case between Hatton National Bank Ltd. and a group of defendants including Nadarajah Ganarajah, Chelliah Ramachandran, and Manohari Ramachandran examined whether the reschedulement of a loan amounted to a novation discharging guarantors and the enforceability of the mortgage bond under statutory and common law principles. The analysis focused on whether the restructuring was merely an internal bookkeeping adjustment or a substantive change to the contractual obligations. It was determined that the reschedulement did not create a new contract, thereby preserving the continuing liability of the guarantors and enforcing the original mortgage.

Mahinda Samayawardhena, J. — It was determined that the modification of the loan terms through reschedulement did not constitute a novation but