District Court dismisses NFC action against Film Lanka; upholds rights on BOI deal

Colombo District Additional District Judge Geethani Wijesinghe recently dismissed a case filed by the National Film Corporation (NFC) against Film Lanka Ltd.

The NFC by a plaint filed on 22 June 2012 had instituted action against a company called Film Lanka Ltd., and claimed Rs. 12,301,570 together with interest from 2010, claiming that the Defendant company, which is operating cinemas Cine City, was liable to pay a levy in terms of certain gazettes and statutes and their accounts, and had demanded monies prior to the institution of this action.

The Defendant company had responded to the said demand and had notified the Department that it is not subject to payment of levies imposed under the National Film Corporation Act from the year 2002.

The Defendant filed answer (amended) dated 30 June 2024 and specifically set out its position. The Defendant in its letter to the Department specifically set out its position that it is a Board of Investment (BOI)-approved company with a BOI agreement and with exemptions given by the National Film Corporation Act, all of which are statutorily and contractually binding.

In a judgment dated 10 December 2025 by Additional District Judge Wijesinghe, the Court after considering all the facts made judgment holding that there is no legal liability for the Defendant company to pay the NFC the monies claimed and dismissed the Plaintiff’s action.

In the course of the judgment, the Court held that several witnesses including a Manager and Acting Accounts Officer had given evidence, together with a witness for the Defendant company who also produced the BOI agreement.

The Plaintiff, namely the NFC, had stated that the Defendant is carrying on a cinema complex called Cine City and that it is claiming monies in a sum of Rs. 12,301,570.70 and interest from 2010.

The Defendant’s stance was that it is subject to the agreements with the BOI and that no monies can be claimed.

Therefore, the issue arose whether the Defendant is protected by the BOI agreement and is exempt from any further levies.

The Court held that the NFC is claiming these levies from the Defendant company from 21 June 2003 and that during such period, the Defendant company was subject to such BOI agreements.

Accordingly, from the year 2002, the Defendant company is not subject to the payment of any levies imposed under the National Film Corporation Act, No. 47 of 1971.

During the course of the lengthy trial, several witnesses had tendered evidence on behalf of the NFC claiming to produce several account statements, including by the General Manager.

The Defendant tendered evidence that under Section 17 of the BOI Law, the BOI is empowered to approve projects and enter into agreements with enterprises granting exemptions from certain laws subject to fulfilment of the investment threshold or any other specified required.

The Defendant party stated that if BOI agreements that are meant to bring in foreign or local investment into the country are challenged by State bodies themselves by unnecessary litigation, it will repulse all investments into the country.

The Defendant had also stated that there is no legal or factual basis to claim these monies from the defendants.

The Plaintiff has not proved its own accounts, which failed to show proper accounting system despite knowing the Defendant’s stance has been pursuing this case from 2012 till 2023.

It was submitted that dismissal of the Plaintiff’s case would be a service to the Plaintiff, Defendant, the State, and the economy of the country.

During the course of the evidence and trial and after final submissions, the case was fixed for judgment.

Judge Wijesinghe thereafter entered judgment rejecting the Plaintiff’s case and upholding the Defendant’s stance.

The NFC was represented by its lawyers and the Attorney General.

Hiran de Alwis, with Randhini Fernando instructed by Chandrakumar de Silva Attorney-at-Law, appeared for the Defendant company Film Lanka Ltd.