Shop - Fraud on Sri Lanka Government (Volume I)

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‘In a very strongly worded Order in issuing the interim injunctions, the Learned District Judge of Colombo, inter-alia, significantly made the following observations:

• the Contractors having performed a lesser volume of work, have attempted to obtain a larger sum of money… and the Plaintiff  having raised the question concerning the basis for the payment of monies.
• the other Defendants, [i.e .the Directors], as persons having connections concerning the said Hotel business, having intervened therein in such matter, acting to obtain the said monies, had not readily acted to conduct a correct examination.
• they having prevented such correct examination, were attempting to, howsoever, effect the payment of monies.
• they are exercising the influence, that they have gained in society, acting together with the Company, to prevent the raising of the questions concerning the matters of the work in connection with the Contracts, the Prospectus …
• their collaboration was adverse to the interest of the Shareholders of the Company, and that they were acting through such collaboration, in a manner amounting to defeat the interests of the Shareholders of the Company.
• Accordingly, the present position is that the Defendants’ statement, that they have performed their part of the Contracts and the willingness shown by the Company to accept the same, as set out by the Defendants, cannot be accepted as the basis for payment…. in fact, whether, as stated by the Plaintiff, this is a devious method of siphoning out, a large scale of foreign exchange from this country…The significance, that is shown herein, is that generally, the Company which has to pay money, would be raising questions, in respect of such situation, and would not allow other parties to act arbitrarily…If the position, that explains this is correct, then this actually, is an instance of acting in fraudulent collusion.

The reference by the Learned District Judge to persons, ‘who had gained influence society’, referred, among others, to the 7th Defendant, wrong-doer Director of Hotel Developers (Lanka) Ltd., K.N. Choksy, President’s Counsel and who at that time was an influential nominated Member of Parliament, and Senior Counsel appearing for President R. Premadasa in the Presidential Election Petition filed against him by former Prime Minister Sirima Dias Bandaranaike.

Thereafter, when the Leave to Appeal Applications by the Japanese Companies came up for Hearing before the Court of Appeal, Addl. Solicitor General Shibly Aziz, President’s Counsel, subsequently President of Bar Association of Sri Lanka, appearing for Hotel Developers (Lanka) Ltd., who had been present in the District Court, but had not participated in the Inquiry into the matter of the issuance of interim injunctions, and against the issuance of which interim injunctions, Hotel Developers (Lanka) Ltd., had not filed Objections, whilst one of the interim injunctions was against Hotel Developers (Lanka) Ltd., itself, questionably appeared in the Court of Appeal, to support of the Leave to Appeal Applications made by Mitsui & Co. Ltd., and Taisei Corporation and Kanko Kikaku Sekkeisha Yozo Shibata & Associates; acting contrary to the interest of Hotel Developers (Lanka) Ltd., and the Government of Sri Lanka.

By this time, Hon. Attorney General, Sunil de Silva, President’s Counsel had ceased to hold office, and Hon. Tilak Marapana, President’s Counsel, took a diametrically opposite stance, to what the former Hon. Attorney General had taken previously, to support my Applications for interim injunctions.

Consequently the Supreme Court delivered an unanimous landmark historic Judgment upholding the interim injunctions, which had been issued by the District Court. In this landmark Judgment, reported in the 1992 Law Reports of the Commonwealth (Commercial) @ 637P, Their Lordships, inter-alia, observed as follows:

• the Plaintiff has succeeded in establishing that he has a legally enforceable right and that there is a serious question and prima-facie case and wrong-doer control, and that HDL is entitled to the reliefs claimed.
• the Plaintiff has a reasonable and real prospect of success, even in the light of the defences raised in the pleadings, objections and submissions of the Defendants
• the Plaintiff’s prospect of success was real and not fanciful and that he had more than a merely arguable case
• because in the circumstances of the case, the Directors, including the Government’s representatives on the Board will not assist or are helpless to intervene     
• Interim Injunctions were granted to prevent the “syphoning out of money” from Hotel Developers (Lanka) Ltd.,  and the Country
• but for the Interim Injunctions, Hotel Developers (Lanka) Ltd., like Pyrrhus after the battle of Asculum in Apulia, might well be constrained to say, “One more such victory and we are lost”.
• it might be pointed out that it could not entirely be a matter of indifference to the Government ….. the Government made itself eventually responsible for the repayment of the monies borrowed by Hotel Developers (Lanka) Ltd.,

Ironically, K.N. Choksy, in 1993 was appointed, as Minister of Constitutional Affairs of Sri Lanka by President D.B. Wijetunga, after this derivative action in law, District Court of Colombo Case No. 3155/Special was upheld on 2nd December 1992 by the Supreme Court, as a grave and serious case of fraud on the Government of Sri Lanka, endorsing the issuance of the interim injunctions by the District Court, and the Case was still pending before Court.

Subsequently in 2001, after a Special Presidential Commission warranted by President Chandrika Bandaranaike Kumaratunga, consequent to investigations carried out, with the assistance of the Criminal Investigation Department and the Solicitor General, had issued a Show Cause Notice, among others, on K.N. Choksy containing several Charges on grounds of fraud against the Government of Sri Lanka, ironically K.N. Choksy, notwithstanding my written representations decrying same, was appointed by President Chandrika Bandaranaike Kumaratunga, as the Minister of Finance of Sri Lanka, on the recommendation of Prime Minister, Ranil Wickremesinghe, Vice Chairman, International Democrat Union. Also likewise, Tilak Marapana, President’s Counsel, former Hon. Attorney General having entered politics, was appointed in 2001 as the Minister of Defence of the same Cabinet of Prime Minster Ranil Wickremesinghe.