SC directs Commercial High Court to terminate proceedings in Harry J. Vs Milford Exports trio

By S.S.Selvanayagam

The Supreme Court last week directed the Colombo Commercial High Court to terminate the proceedings in two litigations pending against the business magnate Harry Jayawardene.

The Supreme Court made this order in its judgment on the ongoing legal dispute between Harry Jayawardene and the other Directors of the Milford Exports (Ceylon) Ltd.

The Directors of Milford Exports (Ceylon) Ltd. R.K.Obeysekera and Z.Alif together with Sonia Williams (daughter of former Director the late Dr. V.P.Vitachchi) initiated a litigation in the Commercial High Court challenging the other Director Harry Jayawardene for the purchase of their shares in the said Company, or in the alternative, for the sale of Harry Jayawardene’s shares to them at market value.

Appellant Harry Jayawardene in his appeal against the Commercial High Court proceedings cited R.K.Obeysekera, Zaki Alif, Dr. V.P.Vittachchi (deceased) as Petitioner-Respondents and Milford Exports (Ceylon) Ltd., Sonia Weinman and Secretaries and Registrar Limited as Respondent-Respondents.

President’s Counsel S.A.Parathalingam with Rajindra Jayasinghe and Ranil Angunawela appeared for Harry Jayawardene.



President’s Counsel Romesh de Silva with Aritha Wickramanayake, Chanaka de Silva, Aruna Samarajeewa, Sugath Caldera, Shanaka Cooray and Eraj de Silva instructed by G.G.Arulpragasam appeared for R.K.Obeysekere and Zaki Alif.

President’s Counsel D.S.Wijesinghe with K.Molligoda appeared for 2nd Respondent-Petitioner. President’s Counsel Nihal Fernando with Ranjan Jayasinghe appeared for 3rd Respondent-Petitioner. Shanaka Amarasinghe instructed by Julius & Creasy appeared for 4th Respondent. M.A.Sumanthiran appeared for 1st Respondent Company.

Chief Justice Asoka de Silva with Justices N.G.Amaratunga and Saleem Marsoof agreeing stated that this was an appeal from an order of the Colombo Commercial High Court (CHC) and that the Appellant Harry Jayawardene was seeking to set aside the order of the HC.

The Petitioner-Respondents Obeysekera, Zaki Alif and Dr. Vittachchi instituted two actions before the HC. Perusal of the trial record indicates that Court was informed of the death of 3rd Petitioner-Respondent Dr. Vittachchi on 15 October, 2008 which was the date fixed for the filing of objections by the Appellant and the Respondent-Respondents, the Chief Justice observed.

The Counsel for the 1st, 2nd and 3rd Petitioner-Respondents before the High Court submitted that the case could proceed without any substitution in place of 3rd Petitioner-Respondent Dr. Vittachchi but the Counsel Parathalingam appearing for the Appellant Dr. Vittachchi submitted that an application for substitution was mandatory and that action could not proceed any further without such an application having being made.

The High Court judge had held with the Petitioner-Respondents and permitted them to proceed with the action. Harry Jayawardene appealed to the Supreme Court against this order of the High Court.

Chief Justice in his judgment was of the opinion that the right to sue does not survive to the heirs on the basis that the action requires a shareholder to form an opinion that the affairs are conducted in a manner oppressive to shareholders.

He noted that with the demise of the Complainant, his complaint loses sanctity and that clearly it is available to the heir or any other shareholder to make a fresh complaint; but as far as the original complainant is concerned, it ceases to be of effect with the death of the complainant.

He observed that it appears that the surviving complainants could continue the action if each of them satisfy the shareholding threshold. He was not of the view that a joint prosecution of the case by the remaining complainants and the heirs is necessary.

He held that the plaintiffs failed to satisfy the requirement of making an application by way of summary procedure and therefore the plaintiffs are prevented fatally from proceedings any further.