Tuesday, 24 December 2013 00:43
Battle for boutique resort continues
Commercial Court Judge Mahinda Samayawardhena revokes interim order against Anura Lokuhetty and spouse serving as directors
Rules appointment of three other directors by Lokuhetty unlawful
Warnakulasuriya ordered to pay costs to Lokuhetty in separate case
Two varying orders were issued at the Colombo Commercial High Court yesterday in the controversial Serene Pavilions case with one order being favourable to founding Director Anura Lokkuhetty and the other favouring his opponents.
In the case (Case NO 41/2013/CO) filed by Sumith Guruge Judge Mahinda Samayawardhena found that the Board Meetings held by Lokkuhetty on 16 August 2013 were unlawful since the necessary quorum was not present.
Therefore the Court determined that the appointment of Gamini Neththikumara, Wasantha Galagoda and Nipuna Lokkuhetty in to the Board of Directors at the said meeting unlawful.
In this case the petitioner instituted action that appointment of Nipuna Lokuhetti was illegal.
The judge however informed that Lokuhetty may appoint the same individuals through the proper procedure.
He said that the application for revocation of the interim order already issued as prayed for of the prayer to the petition dated 13.09.2013 is refused and the interim order as prayed for is issued.
In the result the Nethicumara, Galagoda and Nipuna Lokuhetty cannot act as directors and the 11th respondent Chart Business Systems can continue to act as Company Secretaries to the company until the final determination of this action.
However the Judge said this does not prevent Anura Lokuhetti to appoint/get appointed Nipuna as a director of the Company on the strength of his admitted shareholding of 30.10% by following the proper procedure in due course.
However insofar as Nethicumara (8th respondent) and Galagoda (9th respondents) are concerned they cannot be appointed as Directors on the basis that South West Holdings is the owner of 308,550 shares in Serene Pavilions after the unilateral revocation of shares unless and until that matter is decided by a competent court.
Judge said petitioner Sumith Guruge is entitled to costs of this inquiry from Anura Lokuhetti (2nd respondents), Mrs. Lokuhetty (4th), Nethicumara, Galagoda and Nipuna Lokuhetty (8, 9th and 10th respondents).
The battle over the ownership of the multi-million rupee boutique hotel at Wadduwa ended in Courts after these three directors were appointed to the Board following the controversial board meeting in August. The hotel was set up with a major investment from British media mogul and investor Clive W Leach.
Meanwhile in the case (Case NO 41/2013/CO) filed by Jit Warnakulasuriya, also from the opposing camp to Lokuhetty, the judge withdrew the previous interim order (issued by Commercial High Court No: 3) preventing Anura Lokuhetty and his spouse from functioning as Directors of the company. The judge determined that the petitioner had not disclosed all the relevant information at the time of obtaining the interim relief ex parte and ordered Warnakulasuriya to pay costs to Lokuhetty and his spouse.
In this case, action was instituted by Jit Warnakulsuriya a a shareholder and director of Serene Pavilions seeking several declaratory and interim reliefs against Anura Lokuhetti and his associates.
Based on grave suppression of material facts, Judge Samayawardhena vacated the interim orders issued. He said that in any event, admittedly, lawfully appointed two directors of the company, more importantly one being a founder member and the second largest individual shareholder of the Company who claims to have made lots of scarification to make the company what it is today, cannot be summarily be sacked from the Board pending inquiry into the main matter.
“If he has done some wrong doing, he must be dealt with separately. After all, both of them (Mr and Mrs Lokuhetty) cannot be a serious threat to the other directors because still those two are in the minority camp in the BOard of Directors,” said Judge Samayawardhena ruling that Mr and Mrs. Lokuhetty (the 2nd and 3rd respondents) are entitled to costs of this inquiry from the petitioner Jit Warnakulasuriya.
The much publicised Serene Pavilions case has drawn attention due to the high profile business and political personnel involved in the controversy.
Judge Samayawardhena who held there are two competing camps at present in the Board of Directors said both cases are directly connected to each other.
The Daily FT will publish the respective orders in full in tomorrow’s Daily FT.