Commercial High Court grants permanent restraining orders against two defaulting Directors of Jayasi

The Commercial High Court of Colombo recently granted permanent restraining orders against two directors of a renowned furniture company in Kandy, Jayasinghe Furniture Dealers Ltd.

By Petition dated 18 December 2015, Jayasinghe Furniture Dealers Ltd, sought to restrain two Directors of the company, the former Chairman and Managing Director of the company who according to the company’s Petition had controlled the affairs of the company to its detriment for over 20 years. 

Jayasinghe Furniture Dealers Ltd., a family-owned business which started trading in 1949, has now expanded into the biggest furniture company in Kandy, owning four showrooms in Kandy and a factory in Kandy having a net asset value of over Rs. 300,000,000.

On or around 22 December 2015, late Judge Amendra Seneviratne of the Commercial High Court granted two exparte interim orders sought in terms of Section 233 of the Companies Act. After hearing the submissions of Counsel Nishan Premathiratne, Judge Seneviratne granted two interim orders against the aforesaid Directors Ariyapala Jayasinghe and Bertie Jayasinghe, restraining them from interfering with the operational affairs of the present Managing Director Ramitha Jayasinghe of Jayasinghe Furniture Dealers Ltd.

Pursuant thereto, the Respondents namely Ariyapala Jayasinghe and Bertie Jayasinghe filed an application to vacate the aforementioned interim orders restraining them from interfering with the affairs of the company on the basis that the interim orders granted on 22 December 2015 are beyond the ambit and scope of what is envisaged on the in Section 233 of the Companies Act No. 7 of 2007.

The application to vacate the said interim orders was supported by President’s Counsel M.U.M. Ali Sabri and Ruwantha Cooray, Attorney-at-Law who appeared for the Respondents on the instructions of Capital Law Chambers and Corporate Consultants, Attorneys-at-Law.

On 28 June, pursuant to the careful consideration of the chronology of events and/or incidents envisaged in the written submissions filed by both parties Justice Shiran Gooneratne of the Commercial High Court of Colombo entered judgment dismissing the Defendants case and granted permanent restraining orders restraining the Respondents.

Judge Shiran Gooneratne took into consideration the Petitioner’s case and that in terms of the Articles of Association of the Company a resolution had been passed on 15 December 2015 specifically resolved to confer and empower the new Managing Director Ramitha Jayasinghe with specific functions in carrying on the duties of the Managing Director, nevertheless, Ariyapala Jayasinghe and Bertie Jayasinghe were arbitrarily, unlawfully hanging on to control of the company and not allowing the new Managing Director to carry out the duties as per the Board resolution.

Furthermore, the Judge was of the view that the Respondents failed to support any irregularity which is sufficient to invalidate the resolution passed at the Extra Ordinary General Meeting on 15 December 2015 and the actions of the Respondents pursuant to such resolution been passed amounted to continuous violation of the Articles of the Association of the company.

Justice Shiran Gooneratne added further in his judgement that if the Court vacated the existing interim orders there would be a greater possibility of the Respondents acting or continuing to act ultra vires to the Articles of Association of Jayasinghe Furniture Dealers Ltd. and dismissed the application of the Respondents. On this basis the judgement was entered in favour of the company.

Jayasinghe Furniture Dealers Ltd. was represented in Court by Counsel Nishan Premathiratne, Attorney-at-Law with Attorneys-at-Law Janith Fernando and Yasith Hirimburegama on the instructions of Sanjay Fonseka, Attorney-at-Law.