Commercial High Court grants enjoining order in favour of Frostaire against Pan Asia Bank

The Commercial High Court through Order dated 10 October issued an Enjoining Order against Pan Asia Banking Corporation PLC on hearing an Application filed by Frostaire Industries Ltd. (the Plaintiff) a company engaged in the business of importing, assembling, and manufacturing air conditioners, refrigerators and cooling systems and founded by Mukthar Marikkar, a reputed businessman who has also functioned as a Director of Pan Asia Bank in its inception.

Frostaire through its Plaint maintained it had over a period of time obtained several facilities from Pan Asia Bank for which as security the Plaintiff had mortgaged primary properties in Union Place and Walisara.

The Plaintiff through its Application maintained that although it had been servicing the said facilities, by a letter dated 12 February Pan Asia suddenly demanded immediate payment of a sum of Rs. 51,669,089.10 to be settled within 14 days. Thereafter despite continuous negotiations Pan Asia Bank on 28 February moved pass a Board Resolution to sell the Plaintiff’s properties by public auction.

The Plaintiff further maintained that, thereafter pursuant to negotiations the parties agreed to re-schedule the said loan facilities and the Plaintiff in good faith paid off the interest component of the facilities obtained from Pan Asia Bank of approximately Rs. 4.8 million.

The Plaintiff also maintained that, thereafter even though all requisite documentation for the rescheduling of the facilities were signed and handed over by the Plaintiff , that the rescheduling process was delayed due to negotiations between the Plaintiff and Pan Asia bank for the release of the  Plaintiff’s Walisara to be included as a part of the re-schdulement. Accordingly the Plaintiff relying on representations of Pan Asia Bank executed a further mortgage on the Plaintiff’s Union Place property as security for re-scheduled facilities on the understanding that the Plaintiff’s Walisara would be released.

However, the Plaintiff through it’s application informed court that the Plaintiff was shocked to receive a letter dated 10th July 2018 from Pan Asia Bank requiring the Plaintiff to pay an additional sum of Rs. 989,578.03 before the Plaintiff’s Walisara property could be released. The Plaintiff maintained that this computation of interest was purportedly for the period between 22nd June 2018 (the date on which the Plaintiff handed over to the Bank the required documentation in respect of the re-schdulement) and 10th July 2018 (the date on which the Plaintiff executed an additional mortgage over it’s Union Place property).

The Plaintiff maintained that given the nature of Pan Asia Bank’s unreasonable demand especially owing to the fact that the delay was attributable to the part of Pan Asia Bank that the Plaintiff made a request that the additional sum be waved off by Pan Asia Bank.

However, despite all negotiations with the Bank ,thereafter a further demand was made on the Plaintiff to pay a sum of Rs. 1.481 Million through a letter dated 30th July 2018.Given the Plaintiff’s unwillingness to comply with the unreasonable demands of Pan Asia Bank the Bank thereafter wrote to the Plaintiff and informed the Plaintiff that it would proceed to sell both the Plaintiff’s Union Place and Walisara properties at a public auction under and in terms of the Bank’s original Board resolution dated 28th February 2018 and the Bank thereafter moved to publish notices in several newspapers in September 2018.

Accordingly, the Plaintiff’s urged Court to in the first instance to issue an Enjoining Order against Pan Asia Bank preventing the Bank from acting on a purported Board resolution dated 28th February 2018 and proceeding to auction/sell or transfer the Plaintiff’s property in light of the unlawful/unjust conduct of the Bank and detrimental effect that such a sale would cause the Plaintiff.

Accordingly High Court Judge Hon RathnapriyaGurusinghe having considered submissions made ex parte on behalf of the Plaintiff in the first instance move to issue an Enjoining Order against Pan Asia Bank preventing Pan Asia Bank from acting on the Board resolution dated 28th February 2018 and proceeding to auction/sell or transfer the Plaintiff’s property and also issued notice of Interim Injunction on the Bank.

The Plaintiff was represented in Court by Counsel NishanPremathiratne who appeared with NadunWijayasriwardena and KrishanFernandopulle Attorneys at-Law on the instructions of Sanjay Fonseka Attorney at-Law. The matter is re-fixed for the 23rd of October 018.