CA extends stay order against CIFL till 1 November

Thursday, 17 October 2013 00:00 -     - {{hitsCtrl.values.hits}}

  • Limited objections and counter affidavits to come up on 31 October
The Court of Appeal on Tuesday extended the Interim Stay Order against the Central Investment & Finance Ltd (CIFL) till 1 November. When the Writ petition against the CIFL came up before Justice W.M.M. Malinie Gunaratne, Counsel for the Petitioner depositors moved to file Counter Objection on basis the limited objections will be filed in the course of the day. The Court listed the matter to be mentioned on October 31 for Counter Objection. The Court on 27 September issued an Interim Order against the Central Investment & Finance Ltd. staying the operation of the Monetary Board’s direction to convert its 60% deposit liabilities into Non-Voting Shares. Court also stayed the operation of the Monetary Board’s another direction to pay 5% of the existing public deposit of Rs. 3.4 billion to Non-Voting Shares. The Writ petition was filed by the depositors of the CIFL complaining of alleged unlawful and activities in breach of Finance Business Act. The depositors cited the Monetary Board, Central Bank Governor Ajith Nivard Cabraal, Finance Ministry Secretary Dr. P.B. Jayasundera, the Central Bank, Director of the Department of Supervision of Non-Bank Financial Institutions, Chairman of CIFL Roscue A. Maloney and its Directors. The Petitioners are seeking a Writ order from the Court compelling and/or directing the Monetary Board, Central Bank Governor, Finance Ministry Secretary, the Central Bank and the Director of Supervision of Non-Bank Financial Institutions to take steps to have the CIFL to pay the depositors the deposited monies in CIFL, the capital and interest. Faisz Musthapha PC with Mangala Niyarapola instructed by Derrick Samarasekara Associates appeared for the Petitioners. Petitioners state the CIFL represented that it was established in 1966 and registered with and/or licensed by the Monetary Board. They state it was revealed from the Notes of the Auditors of the Annual Report of the CIFL the presence of certain irregular dealings of the CIFL. They complain that commencing from February 2013, CIFL has started refusing to release the deposits and the relevant interest payments of those deposits which had become matured. They allege they had been deliberately and fraudulently deceived and cheated by CIFL which is faced with severe liquidity issues. They bemoan that the true picture of unlawful activities, which were in clear breach of the Finance Business Act, began to emerge as the depositors intervened by demanding their investments and lament that they found CIFL severely experiencing liquidity problems due to unwise and reckless investments in the properties and mismanagements and irregularities. They state that they believe that CIFL Chairman Roscoe Maloney and Directors J.G.S. Maloney and D.A. Hettiarachchi have already left Sri Lanka despite repeated promises by the Director of the Department of Supervision of Non-Bank Financial Institutions to impound their passports preventing the Directors leaving the country. They state that when CIFL, which made a profit of Rs 7.9 million as at 31 March 2012, was making a shocking loss of Rs. 330 million as at 31 March 2013, it was reflected online in the company network system and visible to the Account Manager working under the Central Bank who was directly responsible for monitoring the activities of CIFL. They charge the Central Bank failed to take prompt action to rectify the situation immediately, as a result of which the CIFL too collapsed within less than two years. They maintain it is the duty and responsibility of the Central Bank to penalise CIFL and its Board of Directors for resorting to unlawful and illegal practices by eroding billions of investors’ money, instead of allowing them to continue to operate as Registered Finance Company. They allege the Monetary Board has failed to examine the maintenance of the CIFL’s capital, liquid assets, and classification of investment schemes, provisions for bad loans, etc.