CA orders Swiss investor be compensated for shares in Hotel Developers Lanka

Wednesday, 4 March 2020 00:03 - - {{hitsCtrl.values.hits}}

Swiss national held 139,000 shares of Hotel Developers (Lanka) PLC before company taken over by Govt.

Compensation Tribunal offered to pay Rs. 35 per share as compensation

Swiss national filed appeal on grounds compensation was defective in nature

CA directs steps be taken to make prompt, adequate and effective compensation to petitioner

The Court of Appeal on 19 February issued a Writ of Certiorari, quashing a determination made by a ‘Compensation Tribunal’ established to award compensation for shareholders of Hotel Developers (Lanka) PLC, which was acquired by the State under the Revival of Underperforming Enterprises or Underutilized Assets Act, No. 43 of 2011.

Justice Mahinda Samayawardhena, issuing the judgment, also ordered the Respondents, in the form of a Writ of Mandamus, to take necessary steps to make prompt, adequate and effective compensation to the Petitioner in terms of Section 4 of the Act and Article 12 of the Bilateral Agreement between Sri Lanka and the Swiss Confederation.

The petitioner, Swiss investor Dr. Curt A. Twerenbold, had acquired 139,000 shares of Hotel Developers (Lanka) PLC, which was later acquired by the State under the Revival of Underperforming Enterprises or Underutilized Assets Act on the basis that it was an underperforming enterprise. However, according to the Act, shareholders of such companies were to be paid ‘prompt, adequate, and effective’ compensation. The Petitioner filed the application on the basis that he had not been paid compensation in a prompt, adequate, and effective manner by the Compensation Tribunal.

The Petitioner argued that the determination made by the Compensation Tribunal to pay Rs. 35 per share as compensation to the Petitioner was defective in nature. He challenged this defective determination on a number of grounds, including the jurisdiction of the Compensation Tribunal, which, according to Justice Samayawardhena, was a fundamental issue. In effect, the Court held that there was no properly constituted Compensation Tribunal.

Nuwan De Silva, Attorney-at-Law, appeared for the Petitioner, while Nayomi Kahavita, S.C. appeared for the Respondents.