Commercial High Court issues interim orders against Mascons Ltd. and associate

On an application made by Mahenthiran Subramaniam, a Joint Managing Director of Mascons Ltd., and Mascons shareholder Amirtha Gowrie Mahenthiran, the Commercial High Court of Colombo by an order dated 8 May granted two Interim Orders against Mascons and Sealcore Stainless Steel Industries Ltd, an associate of Mascons.

The petitioners referred their application before the Commercial High Court of Colombo on the basis that though Mahenthiran Subramaniam functioned as a Joint Managing Director of Mascons, he had over a period of time been excluded from the day-to-day management of the company by Sivamohan Sathiamoorthy and Sathiamoorthy Subramaniam, who along with Mahenthiran Subramaniam, function as the Board of Directors of Mascons. 

The petitioners stated that  in these circumstances Mahenthiran Subramaniam had sought access from Mascons to financials, documentation, information pertaining to the company as he was lawfully entitled to obtain in his capacity as a Director of the company with a view to verify certain financials of Mascons. However, despite several requests Mascons failed to provide Mahenthiran Subramaniam with access to the requested financials, documentation and information.

Furthermore, the petitioners through their petition stated that due to the company’s continuous refusal to provide Mahenthiran Subramaniam with the requested information that the petitioners made inquiries and were shocked to discover several acts of mismanagement committed by Sivamohan Sathiamoorthy and Sathiamoorthy Subramaniam who managed the day-to-day operations of Mascons. The petitioners, drawing the court’s attention to dealings between Mascons and one of its associate companies Sealcore Stainless Steel Industries Ltd, stated that it had come to their attention that Masconshad commenced several practices including importing goods on behalf of Sealcore with negligible margins, utilising Mascons employees for the sole benefit of Sealcore, and utilising Mascons administrative staff for the sole benefit of Sealcore, etc. 

The petitioners stressed that these acts were troubling given that Sivamohan Sathiamoorthy and Sathiamoorthy Subramaniam also function as directors of Sealcore and that approximately 70% of the shareholding of Sealcore is held by Sivamohan Sathiamoorthy, Sathiamoorthy Subramaniam and members of their immediate family.

On hearing the submissions made on behalf of the Petitioners, Commercial High Court Judge Ruwan Fernando in the first instance issued an Interim Order issued against Mascons directing Mascons to provide Mahenthiran Subramaniam with complete access to the company’s restricted computer system, financials, records, stock taking, banking transactions, etc. in respect of a period commencing from 1 January 2013 to 2 May 2018.

Furthermore, Court issued an interim order against Sealcore directing Sealcore to provide Mahenthiran Subramaniam with all the details, information, records and financials pertaining to products imported by Mascons for Sealcore, the sales prices of the products imported by Mascons for Sealcore employees of Mascons who have been allocated responsibilities in respect Sealcore, etc. in respect of a period commencing from 1 January 2013 to 2 May 2018.

Furthermore, the Petitioners by their application also sought that Court direct the Registrar of Companies to appoint an investigative officer to investigate the affairs of the company and other pertinent matters. Accordingly, Court issued notice of the Petitioners’ application to direct the Registrar of Companies.

Mascons, which is a company incorporated in 1953, is engaged in the business of importing, manufacturing and distributing a wide variety of building materials and tools within Sri Lanka. Mascons is famed for its signature product Elephant Masconite roofing sheets. Mascons has over time developed into a business with an asset value exceeding Rs. 1 billion.

The petitioners were represented in Court by Dr. Harsha Cabral, President’s Counsel, who appeared with counsels Nishan Premathiratne and Nadun Wijayasriwardena on the instructions of Julius and Creasy Attorneys-at-Law.