SC grants leave for FR by LDB Chairman against CB

Wednesday, 18 January 2017 00:01 - - {{hitsCtrl.values.hits}}

The Supreme Court granted leave to proceed in the Fundamental Rights application filed by Lasantha Goonewardena, the Chairman of Lankaputhra Development Bank Ltd. (LDBL), against a decision of the Director Bank Supervision (DBS) of the Central Bank. The application, which was heard by a two-judge bench headed by the Chief Justice, challenges the determination of the Director Bank Supervision that Goonewardena is not fit to function as Chairman. The determination relates to Goonewardena revealing information about the bank’s status to the media and his engagement in direct management functions.

Senior Counsel Harsha Fernandoappearing on behalf of the Petitioner Goonewardena submitted that under the Baking Act, the DBS has no authority to remove a Chairman. He said that Section 42 of the Act only deals with Directors of Banks and the DBS has been acting completely outside the law by attempting to remove the Chairman. He warned that if regulatory decisions aretaken in this manner affecting reputations and employment prospects of key management personnel, the financial sector stability would be affected.

Refuting the allegations made against the Chairman he further submitted that the Petitioner only participated at the press conference referred to by the DBS at the request of theMinister of Finance. The press conference was called by the Minister to inform the public of the parlous situation of the Bank when the new management took over and the steps now being taken to improve its financial status. That, he said, is a necessary steps to rebuild confidence in LDBL. He further submitted that all actions of the Petitioner Goonewardena in directmanagement was as a member of the Board appointed Committees and subject to its overall direction. The Petitioner continues to be a Director of LDBL.

Additional Solicitor General, appearing on behalf of the Central Bank said that a number of new recruitments have been made by the Chairman and several other instance of breach of Central Bank Directives have been highlighted in an examination conducted by the Bank Supervision Department that led to the removal of the Petitioner as Chairman.

Harsha Fernando, Attorney at Law, with Shanil Perera, ChamithSenanayaka and NatashiyaNoordeen instructed by Jagath Thalgaswattage appeared for the Petitioner. Senior Additional Solicitor General, Sanjay Rajarathnam, PC appeared for the Central Bank.

Considering the urgency of this matter, the Court fixed the case for argument on 3 May on top of the list.