Counsel for Perpetual Treasuries bickers on CB’s initial objections

By S.S. Selvanayagam

Counsel for Perpetual Treasuries in responding to the Preliminary Objections raised by the Central Bank disputed in the Court of Appeal that the so-called Objections were not Preliminary Objections but were defences that could be taken up after having heard his submission.

The Bench comprising Justices Vijith K. Malalgoda (President/CA) and S. Thurairaja having heard all parties yesterday decided to permit the Counsel for the Petitioner Perpetual Treasuries to support its Writ Petition.

When the matter came up before the Court, President’s Counsel Faisz Musthapha appearing for the Central Bank raised Preliminary Objections on the maintainability of the application on the purported grounds of futility, delay, acquiesce and suppression.

President’s Counsel S.A. Parathalingam appearing for Perpetual Treasuries contended that the actions of the Central Bank of Sri Lanka were ultra vires (beyond its legal power or authority) and unreasonable in the issuance of the Directives under the purported Regulation.

He submitted the position of his client Perpetual Treasuries has been disproportionally and unreasonably victimised in the issuance of the Central Bank of Sri Lanka and it is a matter of grave urgency as his client will be driven to bankruptcy as a result of the severe conditions imposed by the Monetary Board.

He said the bond auction took place on 27 February 2015 and was challenged in the Supreme Court by a public interest litigation alleging a number of wrongdoings in the said bond auction and he went on that the said application was dismissed by the Supreme Court.

By the purported Directives of the Monetary Board, his client’s functions has come to standstill and therefore there is a grave urgency, he maintained.

He contended that the Preliminary Objections raised by the Central Bank is a matter of defence and the Court has to consider those issues subsequent to the submissions made by him. Court decided to permit the Petitioner to proceed with his support of his application.

Petitioner company claims that in the absence of no formal violation of procedure by it in the purported bond scandal, the true intentions of behind the issuing of the said Directions are mala fide and ultra vires of the regulatory powers of the Respondents.

It bemoans that the impugned Directions are issued for extraneous reasons in order to satisfy the media and political agendas.

It laments that if the said impugned Directions are in force Perpetual Group of Companies will suffer grave and irremediable financial loss and will be driven to bankruptcy.

The Petition was filed by Perpetual Treasuries Ltd., Perpetual Asset Management Ltd. and Perpetual Capital Holdings Ltd., citing the Central Bank, Monetary Board and 11 others as Respondents.

Instructed by G.G. Arulpragasam, S.A. Parathalingam PC with Nishkan Parathalingam and Niranjan Arulpragasam appeared for Perpetual Treasuries Ltd. and Nihal Fernando PC with Romali Tudawe and Madura Perera appeared for the other two Petitioner companies. 

Faisz Musthapha PC with Faiza Markar instructed by Gowry Shangary Thavarasha appeared for the Central Bank. Deputy Solicitor General Milinda Gunatilake appeared for the Monetary Board and the Attorney General.

Some of the Directions are that (1) Perpetual Treasuries Ltd. shall not bid at any primary auctions exceeding 12.5% of the total amount offered at such auction and shall not bid exceeding 20% of the offered amount of each item representing different maturities; (2) the daily aggregate of the secondary market transactions by it in Government securities shall not exceed Rs. 1 billion; (3) It shall not, except with the prior written approval of the Monetary Board distribute its profits, retained earnings or reserves; (4) It shall not enter into any transaction for consideration or otherwise, except with prior written approval of the Monetary Board, in respect of anything not connected with the activities of a primary dealer.