Commercial High Court grants interim order against Ceylon and Foreign Trades and directors

The Commercial High Court has recently granted an interim order against CFT and its directors, Ali Asger Shabbir and Malayandi Jayaprakash, restraining them from disposing, alienating and encumbering any of the assets of Ceylon and Foreign Trades on the grounds of oppression and mismanagement. 

Petitioners of the Case have alleged that Ali Asger Shabbir has violated statutory provisions of the Companies Act and committed financial fraud by disposing the main assets of CFT prejudicial to the interest of the company and further suppressing these acts from shareholders, causing irreparable damage and putting the petitioners in a non-compensable disadvantage. 

Ceylon and Foreign Trades PLC (CFT) was an asset-rich company and has held a number of very valuable real estate properties. The CFT Chairman and Managing Director Ali Asger Shabbir has mortgaged and sold a number of these properties including its office premises without prior board approval at prices 20-23% lower than its book value to LOLC.

Counsel for Ali Asger Shabbir, Kamran Aziz AAL argued in Court that this was not a sale at a lesser than book value but merely a money lending and conditional transfer, which could also be confirmed by LOLC, if noticed to do so. However, the Petitioners’ Counsel, Manoj Bandara AAL submitted that the land registry entry along with the Deed of Transfer clearly show that the land and premises were an absolute transfer to LOLC with no conditions attached. 

This proves that the Directors have not only misled the Court but have completely misled shareholders. Interim financial statements submitted by the company do not show any of these transactions either. It is clear that Ali Asger Shabbir has only been working towards his own personal interest and not in the interest of the company or its shareholders.

Considering the evidence put forward by the parties, Commercial High Court Judge Ruwan Fernando held that, prima facie, Ali Asger Shabbir as Chairman and Managing Director of the company has not conducted the affairs of the Company in the best interest of the Company and shareholders, and held that the petitioners have satisfied the requirements of prima facie case of oppression and mismanagement against the Company, Ali Asger Shabbir and Malayandi Jayapragash. 

The High Court Judge, in granting the interim order, further held that Court should grant the interim order in order to regulate the affairs of the Company, and if the interim order is not granted, the remaining properties of the Company will also be sold by Ali Asger Shabbir.