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Thursday, 12 September 2013 00:42 - - {{hitsCtrl.values.hits}}
It was ruled that two cases filed by Cornel and Company in the District Court and Commercial High Court to restrain the enforcement of agreements between the Government and connected parties of HDL was on the basis that he was a major shareholder.
However, following the Revival of Underperforming Enterprises or Underutilised Assets Act of 2011 coming into force and the entire shareholding of HDL being re-vested with the Treasury, Cornel had no basis to for such an application, the three-member bench headed by Chief Justice Mohan Peiris ruled.
Mitsui and Company Ltd., Japan, Taisei Corporation, the Attorney General, Nihal Sri Ameresekere and HDL were cited as defendants.
Cornel Perera has been widely credited for championing the entry of Hilton to Sri Lanka 26 years ago as well as bringing a consortium of Japanese investors at considerable personal cost and effort. He has been fighting for due compensation, recognition and justice on his own right.
However, having considered the issues, a three-member bench, headed by Chief Justice Mohan Peiris and comprising Justices K. Sripavan and Priyasath Dep, said that the basis of the Plaint filed in the District Court of Colombo was that the rights of Perera as a majority shareholder of the HDL had been gravely prejudiced by the agreements connected to the company.
It was clear that the Plaintiff invoked the jurisdiction of the original Court on the basis of the rights derived to him as a shareholder of HDL, the Supreme Court said in its ruling.
The Supreme Court said that the Enjoining Order issued by the District Court was also based on the premise of the Plaintiff claiming to be a majority shareholder. The interim injunction issued by the District Court has been affirmed by the Court of Appeal on the same premise, the ruling said.
The Supreme Court ruled that it was abundantly clear that the plaint had been structured on the basis of the rights derived to it as Plaintiff shareholder and/or its entitlement of the shares of the 5th Defendant Company.
“The Revival of Underperforming Enterprises or Underutilised Assets Act No. 43 of 2011 came into operation on 11 November 2011. It is to be noted that the 5th Defendant-Petitioner-Appellant Company was the only Underperforming Enterprise listed in Schedule 1 in that Act,” the Supreme Court said.
The Court said that in terms of the provisions of this Act, shares held by all shareholders immediately prior to the Act coming into force shall vest in the Secretary to the Treasury who will hold those shares on behalf of the State.
“Therefore, the shares held by whosoever person would vest with the State by the operation of law and all rights and obligations which attach to those shares immediately prior to that would also vest with the state. Consequently, the basis of the original action before the District Court would not be available to the Plaintiff any longer,” the ruling said.
The Bench was of the considered view that the remedy that is available to the Plaintiff and the Defendants and even to the public shareholders would be to seek compensation from the Compensation Tribunal established In terms of the Act No. 43 of 2011.
Counsel for the parties informed the Court earlier that some of the parties to these applications would consent to their dismissal without prejudice to their rights in the District Court.
“Be that it may, I am firmly of the view that in the circumstances it is a futile exercise to carry on with the proceedings in the District Court since the basis of the Plaintiff’s case is no longer available to the Plaintiff company. The only party which can make a claim based on its shareholding would be the State being the sole shareholder of the company, and the State is not pursuing with this action. For the abovementioned reasons the appeals are pro forma dismissed,” Chief Justice Mohan Peiris said.
