Achala Bogollagama sets record straight on MBA Systems case

In reference to the Daily FT article titled ‘Commercial High Court reinstates Marina Perera as Director of MBA Systems’ published on 14 May, Achala Bogollagama has sent the following statement:

The article is misleading and contains several inaccuracies, some of which are referred to below. It does not reflect the true nature of the Order of the Commercial High Court in Case in number HC Civil 44/2014/CO delivered on 22 May 2015.

The Petitioner Marina Perera sought, amongst other reliefs, eight interim orders from the Commercial High Court. Seven of these interim orders were refused by Court with detailed reasons given for such refusal (to which there is no reference in your article).

Amongst the interim reliefs strenuously contended for by Marina Perera and refused by Court, the more important reliefs were the interim orders preventing the 2nd and 3rd Respondents (Achala Bogollagama and Wijesinghe) from acting as Directors of MBA Systems Ltd., the prevention of the 4th respondent from functioning as the Secretary of MBA Systems Ltd., and the request to hold an investigative audit of MBA Systems Ltd.

Only one interim order out of the eight interim orders sought by the Petitioner was granted by Court. By this interim Order the 1st to 4th Respondents were restrained only from preventing the Petitioner from acting as a Director of the 1st Respondent company. 

The 2nd Respondent, Achala Bogollagama, has already preferred an appeal against the issuance of this single interim order to the Supreme Court, However what is important to note is that that the 2nd and 3rd Respondents continue to remain Directors and in management of the Company, contrary to what was strenuously sought for by the Petitioner, Marina Perera in this Court action.

Furthermore although the Petitioner, Perera, made the allegation that Bogollagama acquired 65% of the shareholding of MBA Systems which was worth more than Rs. 200 million without paying a single rupee as consideration and thus was wrongfully holding such shares, the Court has come to a strong finding against Perera and in favour of Bogollagama (which is also not referred to in your article).

With regard to this matter the Commercial High Court after giving detailed reasons at pages 20 and 21, at page 22 of the Order sets out its finding as follows: “For those reasons I am of the view that prima facie, the petitioner has failed to satisfy that the 2nd respondent was wrongfully holding 900,000 shares of the 1st respondent company and therefore the petitioner has failed to satisfy that the issue of 400,000 shares of the 1st respondent company to the 2nd respondent was oppressive to the petitioner as a shareholder of the 1st respondent company.”

It is also important to note that the Learned Commercial High Court judge refused the interim order k) by which the Petitioner, Perera had sought to prevent the 2nd Respondent, Achala Bogollagama from voting and/or acting as a shareholder in respect of the 400,000 shares held by her in the company, MBA Systems Ltd. However, during the hearing of the Court case, Bogollagama through her counsel, Romesh de Silva, PC, had voluntarily undertaken not to dispose of the said shares to any 3rd party, as she had no intention of doing so. The Order merely directs the 2nd Respondent to continue with the said voluntary undertaking until the conclusion of the case.

The summary of conclusions of the Learned High Court Judge contained at page 53 of the said Order are set out below in full, in order that your readers may get a true and accurate picture of what actually transpired in Case No CHC 44/14/CO

Summary of conclusions

(121) From the discussions made above and the findings reached for the points raised under relevant sub-headings, the following is summary of the conclusions:

1. An interim order to conduct an investigative audit on the 1st respondent company as prayed for in paragraph (j) of the prayer to the petitioner is refused.

2. An interim order preventing the 2nd respondent from voting on the 400,000 ordinary shares issued by the 1st respondent and/or authorising any other in any way or manner and/or acting on the basis that the 2nd respondent holds the said shares to so vote and/or and or authorising any other person to act on the basis of being a shareholder of the 1st respondent company as prayed for in paragraph (k) of the prayer to the petition is refused.

3. An interim order is issued against 1st, 2nd, 3rd and 4th respondents restraining them from preventing the petitioner from acting as a Director of the 1st respondent company as prayed for in paragraph (l) of the prayer to the petition upon depositing a sum of Rs. 500,000 as security. The petitioner has already deposited Rs. 500,000 as per the journal entry no. 2 dated 13 October 2014. The said security will be applicable to this interim order as well.

4. An interim order restraining the 2nd respondent from acting as a Director of the 1st respondent company as prayed for in paragraph (m) of the prayer to the petition is refused.

5. An interim order restraining the 3rd respondent from acting as a Director of the 1st respondent company as prayed for in paragraph (n) of the prayer to the petition is refused.

6. An interim order restraining the 4th respondent from functioning as secretary of the 1st respondent company and for Court to appoint an alternative secretary as prayed for in paragraph (o) of the prayer to the petition is refused.

7. An interim order restraining the 2nd, 3rd and 4th respondents from exhausting funds of the 1st respondent company on litigation costs as prayed for in paragraph (p) of the prayer to the petition is refused.

8. During the hearing on 26.03.2015, the learned Presidents’ Counsel for the 2nd Respondent Romesh de Silva on behalf of the 2nd Respondent gave an undertaking to Court that the 2nd Respondent will not alienate or transfer the 400,000 ordinary shares of the 1st respondent company until the conclusion of this case (Vide page 7 of the proceedings dated 26.03.2015) The 2nd Respondent is accordingly directed to comply with the said undertaking given to Court and not to alienate and/or transfer the 400,000 ordinary shares of the 1st respondent company which was issued to the 2nd respondent, until the conclusion of this case.