Court refuses enjoining order against bank preventing share sales on margin facility

The enjoining order against Hatton National Bank, preventing share sales on a margin facility was dissolved and interim injection refused by the District Court of Colombo recently. 

On or around the 8 May 2023 by way of a plaint, Dr. Anura Bandara Abeysundara (the plaintiff) instituted legal proceedings against Hatton National Bank PLC (the defendant) in case bearing No. DSP 156/2023 before the District Court of Colombo to prevent the forced sale of shares by HNB on shares which were purchased through a margin trading facility. 

As per the plaint of the plaintiff, the margin trading agreement was not in compliance with the SEC rules and thus the defendant HNB was devoid of any authority to sell any shares in the margin trading facility. On 11 May 2023, the District Court of Colombo issued an Enjoining Order as prayed for in the plaint, against the defendant HNB bank restraining the defendant, its servants, agents, brokers and all those acting under and through them from selling any shares of the in the margin trading account and/or CDS slash account.

The defendant Hatton National Bank, pursuant to receiving notice of the action, appeared in Court and filed Statement of Objections objecting to the extension of the Enjoining Order and objected to the granting of the Interim Injunction. Pursuant to an extensive inquiry by way of written submissions and oral submissions Colombo District Judge Sandun Withana by way of Order dated 24 August 2023 suspended the enjoining order and refused the interim injunction which was sought through the plaint of the plaintiff to prevent HNB bank from selling shares. By way the order the district court refused the interim injunction on the basis that the plaintiff has failed to present a strong prima facie case that there is an infringement or an imminent infringement of a legal right of the plaintiff and that the plaintiff has failed to demonstrate that the balance of convenience is with the plaintiff. 

As per the refusal of the interim injunction HNB bank, the defendant could continue to act by the margin agreement and sell shares on a margin call.

The matter is fixed for the Answer of the defendant on 7 November 2023.

The plaintiff Dr. Anura Bandara Abeysundara, was represented in Court by Hiran de Alwis with Medhani Navodya, Attorneys -at- Law on the instructions of Chanra Kumar de Silva. The defendant, Hatton National Bank PLC was represented Nishan Sydney Premathiratne, Krishan FernandoPulle, and Ishara Jayakodiarachchi, Attorneys -at- Law on the instructions of K.G.N.S. Silva Attorney -at- Law.