RANJIT SENANAYAKE AND OTHERS v. PAUL PEIRIS

003-SLLR-SLLR-1992-2-RANJIT-SENANAYAKE-AND-OTHERS-v.-PAUL-PEIRIS.pdf


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Ranjit Senanayake and Others v. Paul Peiris
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RANJIT SENANAYAKE AND OTHERS
v.
PAUL PEIRIS
COURT OF APPEALPALAKIDNAR. J. P/CA ANDA. DE Z. GUNAWARDANA, J.
REVISION APPLICATION NO. 120/91LEAVE TO APPEAL APPLICATION NO. 14/91D.C. COLOMBO CASE NO. 3011/SPL11.27 FEBRUARY AND23 MARCH AND 12 MAY 1992
Revision – Requirement of exceptional circumstances – Proof of contempt ofCourt – stay order – ex parte interim order made under Section 213(1) of theCompanies Act – Rule of practice in respect of ex parte orders – Preliminaryobjection to entertaining an application either by way of Revision or Leave toAppeal to set aside an ex parte order.
An interim order was issued by the District Court under Section 213(1) of theCompanies Act restraining the Petitioners from removing the Respondent from theoffice of director. The Petitioners moved in Revision and obtained a stay of thesaid interim order, from the Court of Appeal. Thereafter acting under Article 83(vii) of the Articles of the company, a request in writing by all co-directors wasmade to the Respondent to resign. According to the said Article when such arequest is made, "the office of the director shall be vacated.”
Held:
that the Petitioners' apprehension that they would be liable for contempt ofCourt is not well founded and therefore there was no exceptional circumstance toact in Revision.
that in view of the criminal nature of the contempt of Court proceedings,
there must be clear evidence of violation of any Court Order or injunction.
such an order should be strictly, construed.
in determining whether or not a breach has been committed, regard shouldbe paid to circumstances and the object for which such injunction wasgranted or order was made.
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that it has become a rule of practice deeply ingrained in our legal system thata party moving to set aside an ex parte order must first go before the Court whichmade the ex parte order, to have it vacated, before moving the Court of Appeal.That the procedure laid down in Section 213(3) is an effective and expeditiousremedy to set aside an interim order made under that Section.
Per Gunawardana, J. “It is important to note here that, when this Court grantsinterim relief by way of a stay order, it does not expect the parties to take stepswhich would substantially alter the rights of the parties before Court, as suchOrders are issued, more to ensure that status quo is maintained between theparties, till the application is finally determined."
Cases referred to:
Andradie v. Jayasekera Perera (1985) 2 Sri LR 205,209.
Nadarajah Mahendran v. Sockalingam Sinnaduari, C.A. minutes of26 January, 1990. •-
Mylvaganam v. Kartagasabai 78 NLR 280.
P. A. Thomas & Co., v. Mould (1966) 1 All ER 963, 967.
A. G. v. Leveller Magazine Ltd. (1979) 2 WLR 247.
Gargial v. Somasundram Chetty 9 NLR 26.
Habibu Lebbe v. Punchi Etana 3 CLR 84.
Caldera v. Santiagopillai 22 NLR 155.
Sayadoo Mohamado v. Maula 'Abubakkar 28 NLR 58.
Loku Menike v. Sellenduhamy 48 NLR 353,354.
APPLICATION for revision of order of District Court of Colombo.
Lakshman Kadirgamar, P.C., with M. Y. M. Faiz, P.C. and H. Gunaratna forrespondent-petitioner.
L. de Silva, P.C., with Nihal Fernando and N. M. Musaj for petitioner-respondent.
Cur. adv. vult.
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Ranjit Senanayake and Others v. Paul Peiris (Gunawardana. J.)
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27th July, 1992.
A. DE Z. GUNAWARDANA, J.
There are two applications before this Court, against the sameOrder. The two applications are, 1) Revision Application No.C.A./120/91 and 2) Leave to Appeal Application No. C.A./L.A./14/91.By both Applications, the Respondents-Petitioners (hereinafterreferred to as the Petitioners) are seeking to set aside the Order ofthe District Court of Colombo dated 21 January, 1991, made underSection 213(1) of the Companies Act No. 17 of 1982, directing thatthe Petitioner Respondent (hereinafter referred to as the Respondent)should function as a Director and as an Executive Director of the 8thPetitioner-Company, until the final determination of the OriginalApplication made by the Respondent (under Section 210 and 211 ofthe said Act) dated 15 September, 1989. The said Order wasobtained by the Respondent on an ex parte application to the DistrictCourt, in consequence of the requests made by all the co-directors ofthe 8th petitioner-Company, by writings dated 8th and 9th January1991, purporting to act under Article 83(vii) of the Articles ofAssociation, of the said company. The said writings requested theRespondent to resign from the office of Director with immediateeffect. The said Article states that the office of Director “shall bevacated”, if such a request is made by all co-directors.
When the said two Applications came up before this Court, theparties agreed to take up both Applications for argument together.
The learned Counsel for the Respondent raised a preliminaryobjection to the said two Applications being entertained by thisCourt, viz., that the Petitioners should have first moved the DistrictCourt under Section 213(3) of the Companies Act, "for an Order ofrevocation or variation of the ex parte order” dated 21 January, 1991,instead of coming direct to this Court. He further submitted that thePetitioners have bypassed the said procedure, by moving forRevision and asking for Leave to Appeal from the said Order.
The Learned Counsel for the Petitioners submitted that there areample exceptional circumstances warranting the grant of relief byway of Revision. He added that, they have a right to maintain theApplication for Leave to Appeal as they have complied with all thenecessary requirements for maintaining the said Application.
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The learned Counsel for the Respondent contended that thePetitioners have, by moving for Revision of the said Order,disregarded a well-established practice existing for over a hundredyears, and cited the case of Andradie v. Jayasekera Perera(,) whereSiva Selliah, J. at page 209 stated that,
. . the practice has grown and almost hardened into a rulethat where a decree has been entered ex parte in the DistrictCourt and is sought to be set aside on any ground, applicationmust in the first instance be made to that very Court and that itis only where the finding of the District Court on suchapplication is not consistent with reason or proper exercise ofthe Judge’s discretion or where he has misdirected himself on.the facts or law will this Court grant extraordinary relief by wayof Revision or Restitutio in Integrum which are extraordinaryremedies."
In opposition to the said contention the learned Counsel for thePetitioners cited the unreported case of Nadarajah Mahendran v.Sockalingam Sinnadurai<2), where Court of Appeal had acted inrevision, in spite of the fact that, the petitioner in that case, hadalready moved the District Court to set aside the interim injunctionunder the provision of Section 666 of the Civil Procedure Code. Itmust however be pointed out that, the Court of Appeal acted inrevision in that case on the basis that exceptional circumstances thatexisted in that case warranted the exercise of the revisionaryjurisdiction. The Court held that the petitioner in that case was in peril*of being charged for contempt of court, in respect of the interiminjunction issued by the District Court, if the petitioner in that case,acted in pursuance of the Order made by the Primary Court. In thatcase, the petitioner had obtained an Order from the Primary Courtenabling him to remain in possession of the premises in question onan application made by him, under Section 66 of the Primary CourtsAct. However, the respondent in that case had, subsequent to theOrder of the Primary Court, obtained an interim injunction from theDistrict Court restraining the petitioner in that case, from occupyingthat part of the premises which was occupied by the said petitioner.Thus the application in revision was made in exceptionalcircumstances where either party may have been dealt with for
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Ranjit Senanayake and Others v. Paul Petris (Gunawardana, J.)
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contempt by either the Primary Court or the District Court if bothOrders were sought to be implemented. Furthermore, there was alsothe question whether the District Court had, in the circumstances, thejurisdiction to issue the interim injunction, in view of the prior Ordermade by the Primary Court, having regard to decision inMylvaganam v. Kanagasabai(3), where it was held that,
‘The mere fact that a suit is pending in a civil Court does notdeprive the Magistrate of jurisdiction to make an Order underSection 62 of the Administration of Justice Law, No. 44 of 1973."
These difficulties could not have been resolved except by a Courthaving appellate jurisdiction over both the lower Courts. It was inthese exceptional circumstances that the Court of Appeal acted inrevision in the said case.
The learned Counsel for the Petitioners submitted that in theinstant case too, the Petitioners have a “justified apprehension thatthey are in peril of being sued for contempt of Court." He added that,
“The finding of the District Court that the letter of 8/1/91(RP31) has negated its Order of 16/11/90 (RP25) has, in reality,made it virtually impossible and/or futile for the Petitioners toapply for revocation of the said Order under Section 213 (3) ofthe Companies Act, since there is no additional material that thePetitioners can possibly place before the District Court tochange its finding."
However upon a careful consideration of the Order of the learnedDistrict Judge dated 21 January, 1991, there does not appear to be aspecific finding that Petitioners are guilty or liable for contempt ofCourt. What the said Order states is that,
"As the Court has given special consideration to the basis,that in matters relating to appointment of directors of thecompany it should be seen that the interests of the company arenot affected and the rights of the minority shareholders are notsuppressed, the Court should hold that if the acts of the
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Respondent effected by document "Y” and “Z” are allowed. It isclear that the Defendants are trying (my emphasis) to negatethat position.”
(The above quotation is from the translation provided by thePetitioners.)
Thus it is clear that after a careful consideration of all the facts andcircumstances placed before him, at that stage, the learned DistrictJudge has arrived at a tentative finding that the Petitioners are only“trying to negate” (not that they have) the interests of the Companyand the minority shareholders. Also, there does not appear to be anyspecific finding that the Petitioners have violated the earlier Order ofthe District. Court dated September 15, 1989. Furthermore, thePetitioners have urged before this Court, legal arguments to showthat the requests to resign under Article 93(vii), of articles ofAssociation of the Company, is not the same as removal from officeand that it only amounts to vacation of post. The benefit of these legalarguments was not available to the District Court when it made theImpugned Order, ex parte.
These circumstances, in our view leaves room for the Court to bepersuaded otherwise, if the Petitioners sought to go before theDistrict Court as provided for under Section 213(3) of the CompaniesAct
In addition, the learned Counsel for the Petitioners submitted that a 'charge for contempt of Court would not lie against the petitioners inthis case mainly on two grounds, viz. 1) that the act committed by thePetitioners, “did not come strictly within the terms of the restrainingOrder.” 2) that,
"even if the letter dated 8/1/91 (RP31) was a violation ornegation of the terms of the District Court Orders of 15/9/89 and.16/11/90, because the said letter constituted the “event” ofremoving the respondent, the said letter was valid in lawbecause even the removal of the Respondent was notprohibited and was permissible, on 8/1/91, by virtue of the saidstay Order granted by your Lordship’s Court."
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Ranjit Senanayake and Others v. Paul Perns (Gunawardana, J.)
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To substantiate the argument that a charge for contempt of Courtwould not lie against the Petitioners, the learned Counsel for thePetitioners submitted firstly, that the act committed by the Petitionersviz. the issuing of the letter dated 8/1/91, “did not come strictly withinthe terms of the restraining Order.” He added that it is settled law thatin view of the rigour of the penalties which may be visited, uponbeing charged for contempt of Court, the language of a restraining orinjunctive order is strictly interpreted and applied, so as not to placea dependant in jeopardy, and that a person will not be held guilty ofviolating an injunctive order, if the act complained of did not comestrictly within the terms of the restraining order. In the case of P. A.Thomas & Co. v. Mould(4> was held that,
"… where parties seek to invoke the power of the Court tocommit people to prison and deprive them of their liberty, therehaq got to be quite clear certainty about it.”
In that case the committal for contempt was set aside because theinjunction was not sufficiently specific to cover the allegedcontemptuous act.
The above dictum in P. A. Thomas & Co. v. Mould was applied bythe House of Lords in the case of A. G. v. Leveller Magazine Ltd?',where Lord Edmund Davis said,
"nor, my Lords, would it be acceptable were the Attorney-General to urge, in effect, that no injustice has here been donesince the wishes of the Court were clear and the determinationof the respondents to flout or disregard those wishes equallyclear. Mr. Sedley rightly observed that, if no direction was in factgiven, thinking cannot have made it so, and the appellants werecorrect in thinking that by publishing they were breaching noruling of the Court. I have to say respectfully that I am uneasy atthe view expressed by Lord Widgery, C.J. that "the deliberateflouting of the Courts intention is sufficient to constitute criminalcontempt, for as O'Conner, J. said in P. A. Thomas & Co. v.Mould…" (the aforementioned quotation is then quoted.)
We are in agreement with the views expressed in the above casesthat, in view of the criminal nature of the contempt proceedings, that
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not only must there be clear evidence of violation of any Court Orderor injunction but also that such an order or injunction must be strictlyconstrued to ascertain whether there was in fact a breach committed.
The learned Counsel for the Petitioners further submitted that, inthis case there is no doubt that when the Respondent first came tothe District Court the "event" contemplated by the Respondent wasthe motion to remove the Respondent at an Extraordinary GeneralMeeting of the Company. The Respondent’s object was to preventthat "event” taking place. The first interim order (16/9/89) was soughtfor that purpose. It was in these circumstances and for that objectthat the interim order (19/9/89) was granted by the District Court. Hecited Halsbury’s Laws of England, 3rd Edition, Volume 21, page 433,para 915 which states thus,
“In determining whether or not a breach has beencommitted, regard is paid to the circumstances in which andthe object for which, the injunction was granted.”
In our view, this appears to be the correct approach to ascertainwhether in fact the terms of an injunctive order have been violated.
The second ground on which the learned Counsel for thePetitioners relied on to show that a charge of contempt, could not bemaintained against the Petitioners was that, even if the letter dated8 January, 1991 was a violation or negation of the terms of the DistrictCourt Orders of 15 September, 1989 and 16 November, 1990, the •said letter was valid in law because the removal of the Respondentwas not prohibited and was permissible on 8 January, 1991, by virtueof the operation of the stay order issued by this Court on 14December, 1990 and which was operative till 16 January, 1991.
In dealing with obtaining of the stay order dated 14 December,1990, from this Court the Counsel for the Respondent has stated, inhis written submission that it,
"… was in reality not to canvass the Order of the D.C. dated16th Nov. 1990, but to render it ineffective for the time being toenable him to do precisely what he was restrained from doing
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by the District Court viz. removing the Respondent from theBoard."
In this regard it must be pointed out that, what the Petitioners didwas to issue the two writings dated 8/1/1991 and 9/1/1991 andthereafter withdraw on 15 January, 1991 their two applications to thisCourt, one for Revision and the other for Leave to Appeal, from theOrder of the learned District Judge, dated 16 November, 1990. It isimportant to note here that when this Court grants interim relief byway of a stay Order, it does not expect the parties to take steps whichwould substantially alter the rights of the parties before Court, assuch Orders are issued, more to ensure that status quo is maintainedbetween the parties, till the application is finally determined.
The above-mentioned arguments were adduced by the learnedCounsel for the Petitioners to show that in the aforesaidcircumstances the Petitioners would not be liable for contempt ofCourt. However, in inviting this Court to act in revision, one of thegrounds relied on to show the existence of exceptionalcircumstances in this case, was the apprehension of the Petitionersfor being charged for contempt of Court. Having considered thesubmissions.and the circumstances enumerated above, such anapprehension doe's not appear to be well-founded.
We have given careful consideration, and are not convinced, that• the other matters relied on by the Petitioners would amount toexceptional circumstances. Therefore, we are of the view that thereare no exceptional circumstances in this case which warrants theexercise of the revisionary jurisdiction of this Court.
The other question that has to be considered in this case iswhether the Petitioners can maintain the Application for Leave toAppeal. With reference to that question, it is pertinent to note thatthere is a long line of cases which have held, that an applicationshould be made in the first instance to the Court which made the exparte order, even in cases where there is a right of appeal. In thecase of Gargial v. Somasundram Chetty(6), where the defendant’sproctor moved for a postponement on the ground that his client was
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ill, in India, and that the client had taken away the relevantdocuments, the application was refused and judgment was given infavour of the plaintiff. In the appeal, against that judgment Layard,C.J. stated as follows:- ,
“Now, if this was an ex parte order, I cannot understand howan appeal can be entertained by this Court. The ordinaryprinciple is that, where parties are affected by an order of whichthey have had no notice, and which had been made behindtheir back, they must apply in the first instance to the Courtwhich made the ex parte order to rescind the order, on theground that it was improperly passed against them.”
Layard, C.J. in the course of his judgment referred with approval tothe observations of Bonsor, C.J. to the same effect, in Habibu Lebbev: Punchi Etana m. He further stated that,
“There is no doubt in my mind that had been the practice ofthe court for the last thirty years at least, and I believe that itexisted prior to that date."
Bertram, C.J. applied the same principle in Caldera v.Santiagopillai(8>, where after several unsuccessful attempts to serve,summons on the defendant, substituted service was effected byaffixing the summons on the land. After the final decree was enteredthe defendant had come to know of the decree and made an •application to the District Court to set aside the decree. The DistrictCourt granted the application, holding that there had been no. effective service of summons. In appeal, the said Order of the DistrictCourt was upheld, and Bertram, C.J. observed that a person seekingto set aside an ex parte order “must first apply to the Court whichmade it, which is always competent to set aside an ex parte order ofthis description.”
In the case of Sayadoo Mohamado v. Maula Abubakkar(9), wherein a summary procedure action under Chapter Llll of the CivilProcedure Code the defendant had obtained leave to appear anddefend on an ex parte application. It was held that an order made
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ex parte granting leave to defend may be vacated by the Courtmaking the Order.
Even in cases where the application was made strictly not underany provision of the Civil Procedure Code, this principle wasfollowed. In Loku Menike v. Sellenduhamy<10, at page 354 Dias, J.observed that,
“It is clear that the learned Commissioner of Requests heldthis inquiry under a rule of practice which has become deeplyingrained in our legal system – namely, that if an ex parte orderhas been made behind the back of any party, that party shouldfirst move the Court which made that ex parte order in order tohave it vacated, before moving the Supreme Court or taking anyother action in the matter."
The above cases illustrate how this principle had been applied-uniformly to different situations arising in each case. In our view thesame principle would apply in this case too and the Petitionersshould have gone before the District Court which made theimpugned ex parte order to get it set aside, without entertainingunreasonable .apprehensions -about the Court. Furthermore, there isspecific procedure laid down in Section 213(3) of the Companies Act,to make an application to the District Court “for an order for. revocation or variation of the ex parte order.” This is an equallyeffective and a more expeditious procedure. We hold that, in thecircumstances of this case, the Petitioners should have followed thatprocedure.
Accordingly the preliminary objection is upheld and bothapplications 1) Revision application No. 120/91 and 2) Leave toappeal application No. 14/91 are hereby dismissed, with costs fixedat Rs.1050/-.
As we have decided to send the case back to the District Court,we have not gone into the merits of the said two applications,particularly in regard to the legal effect of the writings of 8 January,1991 and 9 January, 1991, which in our view, is not a complicated
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question of law, but should properly be decided after a full inquiry inthe District Court.
K. PALAKIDNAR, J. (P/C A) – I agree.
Case sent back for re-trial.