SC rules LMSL share sales agreement illegal
The Supreme Court yesterday allowing the rights application against
the sale of 90 per cent of shares in the Government-owned Lanka Marine
Service Limited (LMSL) to John Keells Holdings Limited (JKH) held that
the rights of the petitioner and the public had been violated by the
The court held that the share sales agreement was illegal on the
basis of irregularities and lack of transparency. It was pointed out
that the Share Sale and Transfer Agreement was signed on August 20,
2002, a day prior to the Cabinet of Ministers approving the share
The Court ordered former PERC Chairman and Secretary to the Treasury
P.B. Jayasundara to pay Rs. 500,000 as compensation to the State. JKH
Chairman Susantha Rathnayake was also ordered to pay Rs. 250,000 as
costs to the petitioner, Secretary of the Democratic Left Front Vasudeva
The court held that the eighth respondent P.B. Jayasundara had acted
beyond his authority favoring JKH and acted in collusion with the 20th
respondent, JKH chairman Susantha Rathnayake in the process of
transferring of the LMSL shares to the JKH.
The Bench comprised Chief Justice Sarath N. Silva PC with Justice
Nimal Gamini Amaratunga and Justice Jagath Balapatabendi.
Chief Justice Sarath N. Silva PC delivering a 70 pages long judgment
with other judges agreeing held that the transfer of the eight acre land
with the fuel storage facility located at Bloemendhal Road, belonging to
the Sri Lanka Ports Authority to the LMSL was illegal and void. The
Chief Justice ordered the LMSL to revert the land to the SLPA.
The Court also set aside the BOI status granted to the LMSL and the
Common User Facility agreement that had been entered into subsequently.
Petitioner Vasudeva Nanayakkara filed the rights application in the
Supreme Court stated that the transfer of the 90% shares of LMSL to the
JKH was violative of the rights of the petitioner as well as the public.
He stated that the LMSL was a fully owned subsidiary of the Ceylon
Petroleum Corporation and supplied fuel to the ships. The LMSL enjoyed
the monopoly of the billion rupee-bunkering business.
The petitioner stated that the he came to be aware of the transaction
only through recent media reports on the investigations by COPE. The
petitioner cited 31 respondents including former finance Minister K.N.
Choksy, former Power and Energy Minister Karu Jayasuriya, former Prime
Minister Ranil Wickremesinghe, former President Chandrika Bandaranaike
Kumaratunga, former Economic Reforms Minister Milinda Moragoda, Former
Public Enterprise Reform Minister Sripathy Sooriyaarchchi, former
Secretary to the Treasury Charitha Ratwatte, former PERC Chairman P.B.
Jayasundara, CPC, JKH, its Chairman Susantha Rathnayake, former PERC
Chairman Nihal Sri Ameresekere, COPE Chairman Wijedasa Rajapaksha PC,
IGP, Chairman of the Bribery Commission and the Attorney General.
M.A. Sumanthiran with Viran Corea appeared for the petitioner