LANKA SECURITIES (PVT) LTD

Vs.

COLOMBO STOCK EXCHANGE AND OTHERS

COURT OF APPEAL
J. DE SILVA, J.
KARUNARATHNA, J.
CA/WRIT/326/2019
JANUARY 21, 2020

Writ of certiorari-Securities and Exchange Commission of Sri Lanka Act, No. 36 of 1987-Colombo Stock Exchange-Judicial review of contractual obligations-Jurisdiction of the writ court-Necessary parties to a writ application

Further to an inquiry into a complaint made by a client who had a share trading account with the petitioner, two determinations adverse to the petitioner were made by committees sanctioned by the 1st respondent, the Colombo Stock Exchange. The petitioner sought writs of certiorari to quash the determinations and interim relief staying the enforcement of the orders.

The respondents took up the following preliminary objections: (1) the 1st respondent is a private entity; (b) the dispute is purely contractual in nature; (c) no discretionary relief lies when an alternative and efficacious remedy is available; (d) necessary parties are not before court.

Held:

1. Bodies performing public duties or exercising powers that may well be characterised as "public" may be subject to judicial review in respect of those powers and duties even though they are not statutory or prerogative.

2. Even though the 1st respondent is a company limited by guarantee and incorporated under the Companies Act of Sri Lanka, the Securities and Exchange Commission of Sri Lanka Act, No. 36 of 1987, as amended, establishes that the 1st respondent operates under the authority of the government acting through the Securities and Exchange Commission of Sri Lanka and is an integral part, in fact, presently the only part, in the fabric of public regulation.

3. There is governmental control of the activity of the 1st respondent and it is integrated into a system of statutory regulation. The source of some of its powers and their scope, particularly over licensed stock brokers such as the petitioner, is due to compulsion by law and not based on any contractual relationship.

4. The 1st respondent is performing public duties or exercising powers that can be characterised as "public" and as such is subject to judicial review. But even where public bodies are concerned there may be certain powers that are derived solely through contract in which case there is no judicial review.

5. Although judicial review is not available in the context of purely contractual powers, the authority of a contractual nature, which various self-regulating organisations have over their members, help these organisations to perform their public functions, and accordingly the failure of such an organisation to perform a contractual obligation may be subjected to judicial review.

6. The powers that the 1st respondent exercised over the petitioner as one of its members is rooted in the Securities and Exchange Commission Act, which requires that the rules of a licensed stock exchange must provide for specific situations such as investigating trading in securities and the financial transactions of stockbrokers. Therefore, the dispute between the petitioner and the 1st respondent is not purely contractual. It has a statutory underpinning.

7. The jurisdiction exercised by the writ court is in terms of Article 140 of the Constitution, which cannot be ousted by any ordinary law.

8. The first rule regarding the necessary parties to an application for a writ of certiorari is that the person or authority whose decision or exercise of power is sought to be quashed should be made a respondent to the application. If it is a body of persons whose decision or exercise of power is sought to be quashed each of the persons constituting such body who took part in taking the impugned decision or the exercise of power should be made a respondent. The failure to make him or them respondents to the application is fatal and pr