IN THE COURT OF APPEAL OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an application for the issue of a Writs of Mandamus and Prohibition under and in terms of Article 140 of the Constitution of the Democratic Socialist Republic of Sri Lanka.

Nawaloka Polysacks (Private) Limited., No: 42, Negombo Road, Peliyagoda, Sri Lanka.

and another Petitioners C. A. Writ Application No. 401/2018 Vs.

Mrs. D. R. Karunaratne, Director, Department of Foreign Exchange, Central bank of Sri lanka, No.30, Janadipathi Mawatha, Colombo 01.

1st Respondent And eight others Before: Hon. D.N. Samarakoon J., Hon. Neil Iddawala J., Counsel: Chandaka Jayasundare, P. C., with Chandimal Mendis and Chinthaka Fernando instructed by Paul Ratnayake Associates for the Petitioners.

Manohara Jayasinghe, D. S. G., for the 01st and 02nd Respondents.

Ruwantha Coorey instructed by Sarath Wijewardane for 03rd and

04th Respondents.

Written Submissions on: 28.07.2023 by the Petitioners

27.07.2023 by the 01st and 02nd Respondents 28.07.2023 by the 03rd and 04th respondents Date: 31.08.2023 D.N. Samarakoon, J.

O R D E R

The written submissions of the 01st and 02nd respondents, (Director, Department of Foreign Exchange, Central Bank of Sri Lanka and the Monetary Board, represented by 2A to 2E respondents in the amended caption dated 16.05.2023) filed, dated 27.07.2023 based on the oral submissions made by the learned Deputy Solicitor General, particularly a sentence thereof brings the question to be determined by this order into a narrow compass.

It must be said, that, the question to be determined is issuing notice in this Writ application instituted on 14.12.2018, which was supported (and opposed) on 16.05.2023 and 22.06.2023 by learned counsel appearing for all parties, followed by respective written submissions.

The petitioner’s (Nawaloka Polysacks (Private) Ltd. and H. K. Upali Dharmadasa) application is based on section 10 (1) of the Foreign Exchange Act No. 12 of 2017, which says, “10. (1) The Central Bank may, at any time, cause an investigation to be made, of foreign exchange transactions or foreign assets of any authorized dealer or a restricted dealer or any other person, class or classes of persons as the case may be, by an officer of the Department of Foreign Exchange authorized in writing by the Central Bank (hereinafter referred to as an “authorized person”) in that behalf”.

The above passage in the written submissions of the 1st and 2nd respondents says, “The situation does not involve a cross border transfer of money on any occasion, nor does it involve a situation where there is any contemplation of money moving out of the country and thus for these reasons, the existing state of affairs quite obviously does not come within the term “foreign exchange transaction”. Furthermore, it is imperative to highlight that the words “…cause an investigation to be made of foreign exchange transactions…of any other person” as espoused in section 10 cannot be considered to be equivalent nor could it be interpreted to reflect the words “…cause an investigation to be made of financial matters of any person”.

The above passage is preceded by the following sentence, “The transaction in question is not a matter involving a foreign exchange transaction, but rather is a situation where the Central Bank of Sri Lanka has merely granted permission to Nawaloka Construction Company for a bank guarantee to be issued in favour of the financial institution in Sharjah”.

Therefore, the position of the official respondents, the 01st and 02nd respondents, is that, there was nothing “involving a foreign exchange transaction”, or, that there was no remittance of foreign exchange.

The position of the petitioners is that the 01st petitioner was granted approval in 1999 by the Exchange Control Department (the predecessor of the Department of Foreign Exchange) to establish s branch in Sharjah, due to ill health of the 02nd petitioner the 04th respondent (H. K. Jayantha Dharmadasa) was granted