The Colombo District Court on Monday granted injunction in favour of Lanka Realty Leisure Ltd., against the Sri Lanka Tourist Development Authority (SLTDA) from terminating the lease entered into between the two. 

The Court reiterated that in terms of the lease SLTDA had wrongfully tried to terminate the lease without due notice under the provisions of the lease agreement.

The Court has also noted that the SLTDA contends it has sought Cabinet approval to grant the land to a third party, however the documentation and dates of the Cabinet papers do not tally. The Court said therefore it did not wish to go into the matter in relation to the Cabinet decisions. 

However the Court was of the view that the obligations between the parties were governed by the lease agreement entered into and until the case was heard the Court granted an injunction preventing the termination of the same under the purported documents.

The SLTDA has contended that there exists other issues for reasons of termination, however such reasons are not mentioned in their purported letter. 

The injunction was given after Court took into consideration the Petition filed by Lanka Reality Leisure Ltd. (formerly known as Ascot Leisure Ltd.), which had entered into an agreement with the SLTDA in 2014 to lease out a seven-acre plot of land on a 99-year lease in the Palatupana area in Hambantota, to build a tourist resort targeting the Yala National Park. SLTDA has since sought to terminate the agreement, saying that the developer had failed to develop the site in the given period.

The Court was the opinion that it was the terms and conditions of the lease that governed the obligations between the parties – prior to termination of the lease, a notice of termination should be issued, and the Court was of the opinion that such notice had not been issued under Section 12.2, but notice had been issued under 12.3.2 of the lease to take possession.

SLTDA has sought the Attorney General’s opinion on termination of the lease in reference to the letter dated 26 July 2019 and the letter dated 13 November 2019, and completely disregarded the AG’s opinion and/or of seeking a penalty in the event of the inability to complete the project on time.

Therefore, the Court was of the view that it must decide if the lease had been terminated lawfully as per the lease agreement.

SLTDA had relied on a letter dated 26 July 2019 and a letter dated 13 November 2019 for the cancellation of the lease agreement. The Authority however contended that the developer had not made certain payments, but such grounds of non-payment had not been cited as grounds of termination in the said letters.

SLTDA had stated that under the Tourist Board Act No: 14 of 1968, Section 17, the Board could terminate the lease. However, the letters do not refer to such Sections, nor to the fact that certain payments had not been made, nor the breach of such conditions.

The SLTDA contends that the lease was terminated upon a Cabinet decision for which this Court had no jurisdiction. However, the Cabinet decision is dated 17 October 2018, and no documents relating to the statement dated 31 August 2017 had been attached thereto, and the said Cabinet paper was related to Iranawila land development and not the Yala Palatupana development.

Lawyers for SLTDA informed Court in June that the Authority had asked for and received advice from the Attorney General, and taken the prudent course of action, and that the lease had been duly and properly terminated and/or cancelled and the Plaintiff was in wrongful occupation of the said project.

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