MITSUI AND COMPANY LTD.v.
AMERASEKERA AND ANOTHER
COURT OF APPEALPALAKIDNAR, J„
PRESIDENT C.A. ANDGUNAWARDENA, J„
C.A. LA NO. 206/91C.A. LA NO. 208/91;
17, 20, 21 AND 22 JANUARY 1992,'
Appeal – Leave to appeal – Quesiions of law – Right to injunctive relief – Right tobring derivative action.
The right to obtain injunctive relief where the question whether.a prima facie casehas been made out and the locus standi of the plaintiff to bring a derivative suitwhere he is not qualified to seek relief under, the. Companies Act are in issue arefit questions of law to be decided in appeal.
Cases referred to:
Wellersteinerv. Moir No. 2 (1975) 1 All ER 849.
Miriam Lawrence v. Arnoida Bar Association Law Journal Reports (1984)Vol. 1, Part IV p. 136.
APPLICATION for leave to appeal.
Eric Amerasinghe, P.C. with L. A. Wickramasinghe, H. Soza, Anil Silva and
R.Abdeen for petitioner.
K. Kanag-lswaran, P.C. with A. M. Illiyas, Anil Tittawela and H. Cabral for plaintiff-respondent.
Nihal Fernando for 5, 6 and 7 defendants-respondents.
S.Aziz, P.C. A.S.G. with A. R. Wickremanayake, S.C. for 4th defendant-respondent.
Cur adv vult.
31st January, 1992.
PALAKIDNAR, J. (P/CA)
The plaintiff-respondent who is a shareholder of the 4th defendant-respondent Company (Hotel Developers (Lanka) Ltd.) has filed this
action in the District Cotirt of Colombo. He has claimed that the saidCompany has acted in fraud of the shareholders, in accepting andmaking payments to the 1st, 2nd and 3rd defendants-respondents forthe building constructed for the Hilton Hotel, when in fact the saidbuilding was not in conformity with building plans forming part of thebuilding construction agreement entered into between the 4thdefendant-respondent Company and the 1st, 2nd and 3rd defendants-respondents. The plaintiff-respondent alleged that, in effect, the 4thdefendant-respondent Company was paying a larger sum of moneyfor lesser amount of work done. Therefore he sought an injunctionfrom the District Court restraining the 4th defendant-respondentCompany making any further payments to the 1st, 2nd and 3rddefendants-respondents.
The. District Court made an enjoining Order i.n the first instance,restraining the 4th defendant-respondent.Company making anyfurther payments to the 1st, 2nd and 3rd defendants-respondents.Thereafter an interim injunction was granted for the same purpose.This leave to appeal application is against the said Order.
According to the provisions of section 54 of the Judicature Act, theCourt must satisfy itself, “that sufficient grounds exist” beforeinjunctive relief is granted. It does not appear from the Order of thelearned District Judge that he has addressed his judicial mind to thequestion whether the plaintiff-respondent has adduced sufficientevidence to make out a prima facie case, although reference to somedocuments by name has been made, in passing.
The Counsel for the 1st and 2nd defendants-respondents submittedthat the plaintiff-respondent has no locus standi to bring this action.He contended that the facts urged by the plaintiff-respondent doesnot disclose a cause of action. He also submitted that plaintiff-respondent does not have a right to bring a derivative action. TheCounsel for the 7th defendant-respondent submitted that right tobring a derivative action does not exist under the Sri Lankan law. Hesubmitted that the Companies Act of Sri Lanka is comprehensive onthe rights of the shareholders. He further argued that only rightsavailable to a shareholder are those specified in sections 210 and211 of the Companies Act, in this regard. Those rights he pointed outcould only be exercised by a shareholdethaiving a minimum of fivepercent of shares of the Company. The learned Counsel for theplaintiff-respondent cited section 3 of the Civil Law Ordinance, andcontended that law applicable in regard to this matter is the EnglishLaw. He pointed out that in the case of Wallersteiner v. Moir (No. 2)(,),this right has been recognized in England. Therefore he argued thata right to bring a derivative action exists in Sri Lanka.
In our view these are fit questions of law to be decided in appealand we accordingly grant leave to appeal.
The parties in C.A.L.A. 208/91 agreed to be bound by the decisionin this case. Accordingly the Order in C.A.L.A. 208/91 will be thesame.
We make no order as .to Posts.
GUNAWARDENA, J. – / agree.Leave to appeal granted.
MITSUI AND COMPANY LTD v. AMERASEKERA AND ANOTHER