CA orders Treasury Secretary to pay Rs.96.6mn to Seylan Bank

By Lakmal Sooriyagoda
The Court of Appeal has issued a writ of mandamus against the Secretary to the Treasury and the Compensation Tribunal to pay the Seylan Bank PLC a sum of Rs.96.6 million over a mortgage loan granted under the Revival of Underperforming Enterprise or Underutilized Assets Act.

The petitioner, Seylan Bank PLC states that Ceylinco Leisure Properties had been vested on the Secretary to the Treasury under Revival of Underperforming Enterprise or Underutilized Assets Act No. 43 of 2011 that was enacted in November 2011. 

A Competent Authority was appointed in respect of this property. At the time of vesting, the petitioner bank had granted a loan in the form of a mortgage to the property, which belongs to the Urban Development Authority which had leased out the property to Ceylinco Homes International Limited (Lotus Tower). 

The said lessee had borrowed money as a loan from the petitioner bank with the consent of the Urban Development Authority.

As of 31st December 2011, a sum of Rs. 3,410,654,094.65 was due from Ceylinco Homes International (Lotus Tower) on the mortgage for this amount, the petitioner made a claim under Act No. 43 of 2011 to the compensation tribunal. 

After an inquiry, the compensation tribunal awarded compensation to the petitioner amounting to Rs. 2,146,415,239.80 on 20th November 2013. In terms of Act 43 of 2011, it is the duty of the Secretary to the Treasury to pay the compensation awarded for and on behalf of the Government of Sri Lanka. The compensation tribunal too is liable to settle the compensation awarded. Therefore, the petitioner requested from respondents by letter dated 29th January 2014 to pay the money.

The petitioner states that after repeated inquiries by the petitioner, the respondents agreed to pay the compensation by or about January 2015. The petitioner further states that the 1st respondents failed to comply with the Supreme Court order and gravely prejudicing the petitioner bank and its stakeholders.

A total of Rs.1,179,937,389.87 had been paid out of Rs. 2,146,415,239.80 at the time the petition was taken up for argument. The petitioner himself has acknowledged receiving a sum of Rs. 1,179,937,389.57. It was argued that if a part is paid, it is the duty to pay the balance.

Therefore, the Court was of the view that the writ of mandamus compelling the Secretary to the Treasury and the Compensation Tribunal to pay the petitioner bank a sum of Rs 96,647,789 should be issued.

Court of Appeal two-judge-bench comprised of Justice Mohammed Laffar and K.K.A.V. Swarnadhipathi.
President’s Counsel Romesh De Silva with Counsel Harith Mel appeared for the petitioner. Additional Solicitor Genereal Palinda Ranawaka with State Counsel Nayomi Kahawita appeared for the respondents.