015-SLLR-SLLR-1996-1-SAMARAWEERA-AND-ANOTHER-V.-SUNPOWER-PVT-LTD-AND-ANOTHER.pdf
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SAMARAWEERA AND ANOTHERV.
SUNPOWER SYSTEMS (PVT) LTD., AND ANOTHER.
COURT OF APPEAL.
DR. GUNAWARDENA, J. ANDDE SILVA, J.
REVISION APPLICATIONNO. 101/96
D.C. COLOMBO CASE NO. 4523/SPL.
20 AND 22 FEBRUARY, 1996.
Company Law- Memorandum of Understanding not signed by all parties tothe Consortium- The effect of authorisation by resolution – Holding Com-pany distinct and separate entity from its subsidiary company- Interpreta-tion Ordinance, section 23 – Whether a declaration can be asked for, againstthe Director General of Telecommunications when acting as empoweredunder Sri Lanka Telecommunications Act, – Interpretation Ordinance, sec-tion 24- Whether an injunction would lie against a Minister or a public of-ficer?
In response to an advertisement by the Ministry of Posts and Telecommuni-cations, calling for proposals leading to the issue of wireless-local looplicences, the respondents have submitted a proposal along with NTTI Cor-poration of Japan. The'said Ministry required that such proposal should bein conformity with the requirements of the Final Franchise Document. Therespondents' proposa had been disqualified, for alleged non-conformitywith the requirements, specified in Clause 2.3. (1) of the Final FranchiseDocument which stipulated that, "The applicant may be a single company
or a consortium of companies' . The Memorandum of Understanding
(M.O.U.) submitted along with the said proposal was signed only by Direc-tors of NTTI Corporation and Sun Power System (Pvt) Ltd. The MOU wasentered into on an exclusive basis. A resolution had been passed by theMaharajah Organisation Ltd., authorising the Sun Power System (Pvt) Ltd.,to submit the said proposal.
Held:
That Maharajah Organisation Ltd., has not signed the said M.O.U. andtherefore is not a party to the said M.O.U. Hence the M.O.U. is not "legallyenforceable" against Maharajah Organisation Ltd., as required under thesaid Final Franchise Document.
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That the resolution passed by the Maharajah Organisation Ltd., did nothave the legal effect of making Maharajah Organisation Ltd., a member ofthe said Consortium.
A holding Company is a distinct and separate entity, from its subsidiarycompanies, and therefore a holding company is not liable for any obliga-tions incurred by the subsidiary companies.
In view of the provisions of section 24 of the Interpretation Ordinancethe respondents have no right to ask for a declaration against the Director-General of Telecommunications, as he was acting, as empowered by the SriLanka Telecommunications Act.
It is apparent that the petitioners have acted in their official capacity, incalling for proposals for manifestly a public service. Hence the provisions ofsection 24 of the Interpretation Ordinance would apply, and no injunctionwould lie in the circumstances.
APPLICATION for Revision of the order of the District Court.
A.S.M. Perera, Additional Solicitor-General with Chanaka Perera S.C. forthe Defendant-Petitioners.
Romesh de Silva, P.C. with Geethaka Gunawardena and Hiran de Alwis forPlaintiff-Respondents.
Cur.adv.vult.
22 February, 1996.
DR. GUNAWARDENA, J.
This is an application to revise the order of the learned DistrictJudge dated 06.02.96, wherein he has extended an enjoining orderalready granted, to be effective till 20th February.This order had beenfurther extended, to be effective till 22nd February, as the applicationfor interim injunction was fixed for that day, with the consent of theparties.
In response to an advertisement by the Ministry of Posts andTelecommunications, calling for proposals leading to the issue of wire-less local loop licences, the respondents have submitted a proposalalong with NTTI Corporation of Japan, on 30.11.95. The said Ministryrequired that such proposal should be in conformity with the require-
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shows that the Maharajah Organisation Ltd. was an active partner, inthe consortium that submitted the said proposal.
It is to be observed that Maharajah Organisation Ltd. has not signedthe said M.O.U. and therefore not a party to said M.O.U. Hence theM.O.U. would not be "legally enforceable" against Maharajah Organi-sation Ltd., as required under the said Franchise Document. The saidresolution passed by the Maharajah Organisation Ltd., will also nothave the legal effect of making Maharajah Organisation Ltd. a memberof the said consortium. Furthermore the submission of the statementof annual turnover of S-Lon Lanka (Pvt.) Ltd. would not satisfy therequirements of clause 2.3. (i) of the said Franchise Document, as thatsubsidiary Company is a distinct and separate legal entity and not apartner of the said consortium which submitted the said proposal.
Thus on a consideration of the submissions made by the Counsel,we are of the view that, prima facie, it cannot be said that the Mahara-jah Organisation Ltd. is a partner in the consortium that submitted thesaid proposal to obtain a licence for Wireless Local Loop telephonesystem, in terms of clause 2.3. (i) of the said Franchise Documents.Therefore we are of the view that the finding of the learned DistrictJudge that the Respondents have prima facie satisfied the require-ments under the said clause 2.3. (i) of the said Franchise Document,is erroneous.
The Counsel for the petitioners pointed out that the Respondentsin their plaint have prayed that a declaration be made, that the petition-ers have no right in law to grant a licence on the basis that the re-spondents' proposal is disqualified, in terms of the said Final Fran-chise Document. The Counsel for the petitioners submitted that, it isnot permissible in law to seek such a declaration from Court, in view ofthe provisions of section 23 of the Interpretation Ordinance. Section23 of the Interpretation Ordinance states as follows
"Subject to the provisions of section 24, where a Court of originalcivil jurisdiction is empowered by any enactment, whether passedor made before or after the commencement of this Ordinance, todeclare a right or status, such enactment shall not be construedto empower such Court to entertain or to enter decree or make
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any order in any action for a declaration of a right or status uponany ground whatsoever, arising out of or in respect of or in dero-gation of any order, decision, determination, direction or findingwhich any person, authority or tribunal is empowered to make orissue under any written law.*
He also submitted that, the decision that the Director of Telecom-munications had made, that the said proposal of the Respondents wasnot in conformity with the said Franchise Document, is a decisionempowered by law. He pointed out that section 17 (5) of the Sri LankaTelecommunications Act No. 25 of 1991, stated as follows :-
17. (5) "Before recommending the grant of a licence, the Author-ity shall satisfy himself that the applicant is capable of operatingthe telecommunication system for which licence is being appliedfor".
The Counsel for the petitioners submitted that, requirements in theFranchise Document have been included by the Director-General ofTelecommunications, who is the "Authority" referred to, in the said pro-vision, in order to satisfy himself that, "the applicant is capable ofoperating the telecommunication system for which licence is beingapplied for. " Hence the Respondents have no right to ask for a decla-ration against the Director- General of Telecommunications as he wasacting, as empowered by the said Act.
The Counsel for the Respondents submitted that, the provisions ofthe said section 23 is subject to the provisions of section 24 as statedtherein, and that section 24 (5) states as follows :-
"The preceding provisions of this section shall not be deemed toaffect the power of any Court to make an order declaratory of therights of parties".
On a careful examination of the provisions of the said section 23,it is clear that the legal effect sought to be given is to prevent a Courtfrom entertaining an action for declaration of a right, on any groundwhatsoever in respect of an order or determination made by a personor tribunal, empowered by law, to make such order or determination.
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This Court is of the view that, prima facie, the decision of the petition-ers to disqualify the said proposal by the Respondents, appear to fallwithin the provisions of the said section 23.
The Counsel for the petitioners submitted that under section 24 ofthe Interpretation Ordinance no injunction would lie against a Ministerof State or a public officer. He pointed out that according to paras 3and 4 of the plaint, the Petitioners have been used in their officialcapacity, as averred therein. The calling for proposals leading to theissue of wireless local loop licences was clearly an act in their officialcapacity and for an official purpose. He submitted that therefore, theprovisions of sections 24 would apply, and no injunction would lie insuch a situation.
The Counsel for the Respondents submitted that the procedurefollowed by the Petitioners is not provided for by the law and thereforethey were liable to be restrained by an injunction.
On a consideration of the facts and the circumstances in this case,it is apparent that the Petitioners have acted in their official capacity,in calling for proposals for manifestly a public service. In no way canthey be said to have acted in their private capacity. Therefore, primafacie, it appears that they have acted in their official capacity as em-powered by law. Hence an injunction would not lie in the circumstances.
In view of the reasons set out above we hereby suspend the en-joining order issued in this case on 6.2.1996 till the final determinationof this revision application. We also make order that no further enjoin-ing orders be made against the Petitioners in this case pending thefinal determination of this revision application. There will be no orderfor costs.
The application for interim injunction may be taken up for inquiryand every effort should be made to dispose of it expeditiously.
Objections of the Respondents on 02.04.96.
J.A.N. DE SILVA, J. -1 agree.
Enjoining Order Suspended.