INSTITUTE OF DATA MANAGEMENT (PVT) LTD

INSTITUTE OF DATA MANAGEMENT (PVT) LTD

VS.

IDM NATIONS CAMPUS (PVT) LTD AND OTHERS

SUPREME COURT
ALUWIHARE, J.
DEHIDENIYA, J.
THURAIRAJA, J.
SC/APPEAL/58/2016
HC/CIVIL/59/2014/CO
AUGUST 7, 2020

Companies Act, No. 7of 2007, sections 224, 225, and 521- Oppression and Mismanagement - Interim orders - Laches - lntervention of court into the affairs of a company

The petitioner being a shareholder filed this application in the Commercial High Court on the grounds of oppression and mismanagement of the 1st respondent company. Pending determination of the substantive matter,

an application was also made for an interim order. The Commercial High Court refused the interim order on the ground of laches, The petitioner appealed to the Supreme Court.

Held :

1. When the affairs of a company are being conducted in a manner oppressive to any shareholder (oppression) or prejudicial to the interests of the company (mismanagement),an eligible shareholder (as described in section 226) can make an application to court under section 224 or 225 of the Companies Act, respectively, seeking an order to remedy the situation.

2. On an application by a party to the proceedings, the court can, pending determination of the main matter, make interim orders in terms of section 521 for regulating the conduct of the affairs of the company upon such terms and conditions as appear to the court to be just and equitable.

3. An isolated act of oppression or mismanagement is inadequate for a shareholder to successfully make an application to court for relief. There shall be a series of actions and/or inactions which is burdensome, harsh and wrongful.

4. Section 521 does not specify a time frame within which a party shall make an application for interim orders. Whether a party is guilty of Iaches in making that application depends on the facts and circumstances of each individual case.

5. The basic principle is that the court has no jurisdiction to interfere with the internal affairs of a company acting within its powers. Nevertheless, in an appropriate case, the court can intervene as a regulatory body.

6. In the instant case, although there had been several acts of oppression and mismanagement, the High Court singled out one incident to refuse interim relief. The delay of five months in making the application does not ipso facto warrant the refusal of interim relief.

Cases referred to :

1. Scottish Co-op Society v. Meyers [1959] AC 324

2. Needle Industries (India) Ltd v. Needle Industries Newey (India) Holding Ltd (1981) AIR 1298

3. S.P. Jain v. Kalinga Tubes Ltd (1965) AIR 1535

4. Ratnam and others v. Jayathileka [2002] 1 Sri LR 409

5. Re Harmer Ltd [1958] 3 All ER 689

6. Re Bright Pine Mills Pty Ltd [1969] VR 1002

7. A. Brahmaraj v. Sivakumar Spinning Mills Pvt Ltd, Tirunelveli-6 and others (1984) 1 MLJ 376

8. Shri Raj Kumar Gupta v. D.P. Gupta & Co (Pvt) Ltd and others (2008) 84 CLA 390 (CLB)

9. S. Sukhdeep Singh Jhikka v. S. Ajit Singh Deogan and others (2009) 93 SCL 212

10. Re A Company (No. 005134 of 1986), Exp. Harries, [1989] BCLC 383

11. Burland and others v. Earle and others (1902) AC 83

12. Lee v. Chou Wen Hsein and others (1985) BCLC 45

13. Unipak Ltd and others v. Amarasena [2002] 3 Sri LR 173

14. Re the Langham Skating Rink Company (1877) 36 CT 605

APPEAL from the Judgment of the Commercial High Court.

Dr. Harsha Cabral, P.C., with Kushan lllangathilake and Sasheen Arsecularatna for the Petitioner-Petitioner.

Charaka Jayaratne and Amila Perera for the Respondent-Respondent.

cur. adv. vuft.

December 18, 2020

THURAIRAJA, J.

Introduction

The Petitioner-Petitioner (hereinafter referred to as the "Petitioner") filed an application by Petition dated 15th December 2014 in the High Court of the Western Province Sitting in Colombo in the Exercise of its Civil Jurisdiction (hereinafter referred to as the "High Court")

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