Six enjoining orders issued against Seylan Bank and trust companies

Monday, 24 October 2016 00:01 - - {{hitsCtrl.values.hits}}

Nine former employees of Seylan Bank Plc last week filed six separate cases in the District Court of Colombo before District Judge M.Y. Irshadeen against Seylan Bank Plc and six other trust companies, namely ESOTS Ltd, SESOT Ltd, SEYSHOP Ltd, SOTSE Ltd, SEYFEST Ltd, SEYFEST Ltd and SEYSHOP Ltd.

The former employees in the six cases were represented by Counsel Nishan Premathiratne with Pravi Karunaratne, who was instructed by Sanjay Fonseka.

The former Seylan Bank employees, through their complaints, took up the position that the six trusts were created by Seylan Bank in order to provide an additional benefit to the employees of Seylan Bank to be given to the employees at the point of cessation of employment from Seylan Bank. The six trust companies jointly own over 12 million shares of Seylan Bank, which is presently valued at over Rs. 1.1 billion.

The former employees submitted that this additional benefit, which was to be given to these employees, was to be separate from gratuity and other payments. The former employees submitted to Court that Seylan Bank and the trust companies had neither paid the respective sums nor allocated the shares of Seylan Bank to the beneficiaries of the trust, who were the bank’s employees.

The former employees further told Court that through a letter dated 22 June 2016 Seylan Bank Plc had informed the Colombo Stock Exchange that the subject trust companies do not hold these shares for the benefit of the employees. The former employees also handed the Court several annual reports of Seylan Bank, in which the bank had categorically stated that the Employee Share Owning Trusts were being held for the benefit of the employees which were in contradiction of this letter.

Citing these reasons the former employees of the bank submitted through Counsel that there was an imminent risk that these shares of these trusts would be alienated by Seylan Bank in violation of the trust deeds.

Pursuant to the submissions made by Premathiratne on behalf of the former employees, the District Judge granted six enjoining orders in respect of the six trusts with interim injunction notices restraining Seylan Bank Plc and six trust companies from disposing the Seylan bank shares other than for the specific purpose of paying the beneficiaries who are none other than the employees.

These enjoining orders will be in effect until 1 November 2016, when Seylan Bank and the six trust companies will be required to appear in Court.