High Court issues ex-parte interim order preventing sale of Interblocks

By S.S.Selvanayagam

The High Court of the Western Province in Colombo last week issued an ex-parte interim order preventing the purported plan for the transferring selling, mortgaging, encumbering or alienating the shares of the aggrieved minority share holders of the former co-founders of the Interblocks Ltd.

The High Court Judge Laffar Thahir issued this interim order, pursuant to the litigation initiated by the aggrieved former minority share holders who are the founding shareholders namely, petitioners Faig Faaiz and Surendra Prathapa Dharmadasa who was thereafter in serious differences of opinion with the other respondents Paulovel International Ltd. of British Virgin Islands, People’s Venture Investment Company (Pvt) Ltd., Nigel Patrick O’Shea of the UK, Dinesh Lasantha Rodrigo, Oliver Lal Dharmapala and Nigel Patrick O’Shea of the Trustee of  Interblocks Employee Share Ownership Trust.

The Petitioners who had been the members of the Board of Directors of the said Company in dispute impugned they are being  compelled to sell their shares at a ridiculously low price as opposed to the real value and fair value of the shares.

They cited Interblocks Ltd., Paulvale International Ltd of British Virgin Islands, People’s Venture Investment Company, Nigel Parick O’Shea who is as well the Trustee of Interblocks Employee Share Ownership Trust, Dinesh Lasantha Rodrigo, Oliver Lal Dharmapala, Corporate Management (Pvt) Ltd., and Loh Boon Fah as respondents.

The High Court also issued two other interim orders against the respondents preventing them from changing the status quo (the existing state of affairs) as well as from dealing with the aggrieved petitioners’ shareholding in the said company.

The petitioners state they together with 2nd, 3rd, 5th and 6th   respondents namely Paulovale International Ltd., People’s Venture Investment Company (Pvt) Ltd., Dinesh Lasantha Rodrigo and Oliver Lal Dharmapala as well as one Navin Peiris formed the said company as the founding shareholders.

They stated that according on the strength of their shareholding in the said company they along with Dinesh Lasantha and Oliver Lal Dharmapala as well as Navin Peiris became the Directors.

They also stated that Paulovale International Ltd., and People’s Venture Investment Company (Pvt) Ltd. were the major financiers at the time of promoting the company and therefore they demanded superior powers and/or authority as opposed to the other Directors and/or shareholders of the said Company.

They further stated that from the very inception, Dinesh Lasantha Rodrigo had been functioning as the Chief Executive Officer as well as the Managing Director.

They added the sales activities of the company were handled by 1st petitioner Faug Faaiz as the Director Business Development and by the 2nd respondent Surendra Prathapa Dharmapala as the Director Software thereof they gave the leadership to the fellow engineering staff of the company.

They claim that the most the products and solution developed by them on behalf of the company were the first of such software developed in Sri Lanka.

The business of the company is to design and develop products and provide engineering services for the value added services to their customers and subscribers such as ATM switch (iSwitch), Internet payment Gateway (iPay), Card issuing and acquiring system (iCard) Internet banking solution (iBaking) and iMobile.

The said company develops value added service software products for financial services industry and also provides engineering services to install and maintain the said products.

The largest customers of these products are financial institutions such as banks while the target business includes both local and international customers.

On the strength of the Shareholders’ Agreement by way of a proxy by one Richard Wong, the 5th respondent Dinesh Lasantha Rodrigo acquired wider powers in the Board of Directors of the company, they asserted.

The petitioners stated that after Dinesh Lasantha Rodrigo took over the control of the company by bringing in outsiders as consultants and undermining their powers and authorities in the company, thus making it difficult for them to effectively deal with their duties.

They say that thereafter serious differences of opinion had arisen between them and the respondents, as a result of which they resigned from the Board of Directors in November 2007 and that initially in 2005, Navin Peiris who was a founding Director of the company also left the said company.

They aggrieved that the respondents offered a price of Rs. 23 per share to purchase their shares while they were able to secure a Sri Lankan investor to purchase the shares at Rs. 30 per share but the respondents ignored and did not respond to the said offer.

They blamed Dinesh Lasantha Rodrigo  was functioning as the CEO of the company acting in collusion with the other majority shareholders failed and neglected to conduct the Annual General Meetings and any other General Meetings of the shareholders since they  (petitioners) left the company.

They complained to the Court that the respondents acting in collusion with each other as majority shareholders were planning to sell the shares of the company to a front of majority shareholders and Paulovale International Ltd., as well as Dinesh Lasantha Rodrigo far less than the real value of the company with a view to unjustly enrich in subsequent sale to the prospective investor at a price above 10 times more than the prices offered to the them.

The matter is to be called on 4 May. Ali Sabri with K. Karunaratne instructed by Paul Ratnayake appeared for the petitioners.