SC affirms Commercial High Court’s jurisdiction to hear Contempt Proceedings under Companies Act

By Lakmal Sooriyagoda

In a significant ruling, the Supreme Court has affirmed that the Commercial High Court holds the jurisdiction to hear and determine contempt proceedings stemming from violations of its interim orders issued under the Companies Act No. 7 of 2007.

The judgement was delivered by Justice Mahinda Samayawardhena, with Justices Preethi Padman Surasena and Arjuna Obeyesekere concurring. The Court reviewed an extensive body of constitutional and statutory provisions in reaching its decision, including Articles 105, 111, and 154P of the Constitution, along with the Judicature Act, the Penal Code, the Civil Procedure Code, and relevant sections of the Companies Act.

The Court emphasised that the Commercial High Court is a Provincial High Court established under Article 154P and derives its contempt jurisdiction from Section 18 of the Judicature Act. This section provides that High Courts have authority to try and punish for any contempt committed against or in disrespect of its authority, including both in facie and ex facie curiae contempt.

Accordingly, the preliminary objection raised by the 1st respondent was overruled, and the appeal was dismissed. This judgement affirms the authority of Commercial High Courts to maintain the integrity of their own orders and reaffirms the importance of judicial authority in upholding the rule of law.

The appeal filed before Supreme Court was initiated by the petitioner, Virgina Perera, against M.B.A. Systems (Pvt) Ltd and other respondents including A.P. Bogollagama. The action was filed in the Commercial High Court of Colombo under the Companies Act No. 7 of 2007, specifically invoking Sections 224 and 225 for oppression and mismanagement within the company. 

As interim relief, the High Court issued an order on 22.04.2015 restraining the 1st to 4th respondents from preventing the petitioner from acting as a director of the company, subject to a Rs. 500,000 deposit as security. Subsequently, the petitioner alleged that this order was violated by the 1st and 2nd respondents, and she moved for contempt of court proceedings.

Legal Issue for Determination

The central legal issue was whether the Commercial High Court had jurisdiction to hear and determine contempt of court arising from an alleged violation of its own interim order, particularly where the contempt was committed ex facie curiae (i.e., outside the court). The 1st respondent argued that the court lacked such jurisdiction and that no express provision in the Companies Act authorized the court to entertain contempt proceedings under these circumstances.

Rejection of Limiting Argument

The Supreme Court rejected the argument that only superior courts of record have jurisdiction to punish for contempt committed outside of court. It clarified that the language of the Judicature Act was broad enough to vest such jurisdiction in Provincial High Courts as well, irrespective of whether the contempt is committed within or outside the courtroom. The court also noted that historically, courts of first instance, such as District Courts, had more limited contempt powers, but this limitation did not apply to High Courts.

Impact of Contempt of Court Act No. 8 of 2024

Although the new Contempt of Court Act, No. 8 of 2024, was enacted after the alleged contempt occurred, the Court provided a detailed overview of how this legislation now unifies and clarifies contempt procedures across all courts of first instance. Under this Act, courts such as the High Court, District Court, Family Court, and Magistrate’s Court are empowered to punish for contempt whether committed in or out of court, and it provides a uniform procedural code under Chapter LXV of the Civil Procedure Code.

Uditha Egalahewa, P.C. with Damitha Karunarathne and Miyuru Egalahewa appeared for the 1st Respondent-Respondent-Appellant. Upul Jayasuriya, P.C. with Sandamal Rajapakshe appeared for the Petitioner-Petitioner-Respondent. Kamran Aziz with Fahama Lathiff appeared for the 2nd Respondent-Respondent-Respondent.