028-SLLR-SLLR-2003-V-3-PERERA-AND-OTHERS-v.-HON.-TILAK-MARAPONA-MINISTER-OF-TRANSPORT.pdf
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Perera and others v Hon. Tilak Marapona, Minister of Transport
,(Udaiaaama, J.)i_
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PERERA AND OTHERSvHON. TILAK MARAPONA, MINISTER OF TRANSPORTCOURT OF APPEALUDALAGAMA, J.SRIPAVAN, J.
CA 477/2003JULY 11,24, 28, 2003AUGUST 8, 2003
Writ of Certiorari – Transferring of Shares of Bus Company – Quash extensionof time granted to pay the initial payment – Is there a binding Agreement?Invitation to treat – payment through Letter of Credit not by Bank Draft – Is it aviolation? Locus standi? Non-joinder of necessary parties – Fatal?
The Consortium made a bid at the Colombo Stock Exchange for 39% of theEquity Capital in the 4-9th respondents Companies and had to pay 60% of thepurchase price within 30 days of the date of bidding. The consortium request-ed the extension of time and was granted same.
Employees and shareholders of the 4th respondent Company sought to quashthe extension of time granted by the respondents, restrain the respondentsfrom transferring the shares, and to cancel the offer to sell 39% of the shareequity.
Held :The document relied upon by the petitioner, is only a request for pro-. posals and it could not form a binding written agreement or an offerlegally valid as it is manifestly only an invitation to the private sector toparticipate in the proposed project with no legally binding objection – itdoes not consist of a legally binding agreement but at most an invita-tion to treat.
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A letter of credit although not a Bank draft imposes on the issuing Bankan absolute and irrevocable obligation to pay and could be held to bean equivalent to payment in cash.
“It is a false belief to think that a Bank draft is irrevocable, it can bestopped just like any ordinary cheque though immediately debited tothe customer’s account.”
The letter of credit was issued to the credit of the 3rd respondent rep-resenting the Government of Sri Lanka, and is a transaction betweenthe 3rd respondent and the 10-12th respondents which could be reject-ed by the 3rd respondent – and no substantial prejudice is caused tothe petitioners in accepting the letter of credit, submitted by theConsortium instead of a Bank Draft.
Petitioner are not mere strangers or busy bodies but persons havinginterest to pursue this application. .
The Cabinet of Ministers should have been made a party.
APPLICATION for a writ of certiorari.
Cases referred to:
Hard Bottle Ltd., v National Westminster Bank Ltd., – 1978, QB 146.
Torapore & Co, v Tractor Export Moscow and another 1970 AIR (SC)891
Environmental Foundation Ltd., v Ratnasiri Wickremanayake – 3 1996South Asian Environmental Law Reporter 103
R v. Paddington Valuation Officer- 1956 1 WB 380
Chandrasena v Dahanayaka – 1985 2 Sri LR 151
Ms Ruwana Rajapakse with Ms Shamila Daluwatte for petitioners.
L.C. Seneviratne P.C., with V.K. Choksy for 2nd and 3rd respondents.
Srinath Perera P.C., for 4th respondent.
Romesh de Silva P.C., with Nihal Fernando for 10-12 respondents.
Uditha Egalahewa S.C. for Attorney-General
Cur.adv.vult
September 3, 2003
UDALAGAMA, J.The 1 and 2 petitioners admittedly employees and shareholdersof the 4th respondent Company, the Colombo Metropolitan BusCompany Limited, by this application prays, inter alia, for a
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Mandate in the nature of a writ of certiorari quashing the latestextension of time granted by the 1st respondent and/or 2nd respon-dent and/or 3rd respondent to the. 10th to 12 respondents for theinitial payment of the 39% of equity capital, a Mandate in the natureof writ of prohibition restraining the Government of Sri Lanka andthe 1st- 3rd respondents from transferring any shares or the man-agement to the 4th-9th respondents and also for a writ in the natureof mandamus directing the Government of Sri Lanka to cancel itsoffer to sell 39% of the share equity of the 4th-9th respondents tothe 10th-12th respondents.
The Counsel for the petitioners on 28.07.2003 informed courtthat she was not pursuing the relief sought in paragraph (e) of theprayer to the petition as admittedly the petitioners had received theshare certificates (vide notice 2R3).
The crux of the case for the petitioners appears to be that theconsortium which made a bid at the Colombo Stock Exchange for39% of equity capital in the 4th-9th respondent companies alsoreferred to as the cluster bus companies were bound in law to pay60% of the purchase price within 30 days of the date of bidding.The petitioners further state that the prospective bidders werebound by the conditions set out between the Government of SriLanka in the draft of the shareholders agreement and draft man-agement agreement appearing in document P6.
Evidently the purported shareholders agreement and draft man-agement agreement are significantly unsigned. Hence P6 by itselfis clearly a request of a proposal published by the 2nd respondent.
Most significantly it is to be noted that the Cabinet of Ministerswho represent the Government of Sri Lanka have not been madeparties although the relief prayed for include the issue of a writagainst the Government of Sri Lanka.
Having considered the oral submissions made on behalf of theparties and the subsequent written submissions filed, firstly thiscourt is of the view that document P6 which is basically and evi-dently only a request for proposals could not form a binding writtenagreement or an offer legally valid as it is manifestly only an invita-tion to the private sector to participate in the proposed project withno legally binding obligation. P6 is merely a guide to make propos-
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als for the acquisition of shares in the proposed management of the4th-9th respondent Companies. Of importance to this application ispart II of P6 which clearly sets out the time frame and .selectionprocess with an absolute discretion given to the 2nd respondent“PERC” to amend the time frame or the selection process and ifnecessary to amend the draft shareholders agreement and draftmanagement agreement. By reason of the above, this court is alsoof the view as stated above that P6 does not consist of a legallybinding agreement but at most an invitation to treat. The aboveconclusion is irresistible and inexplorable from a plain reading ofP6. Secondly para 4 of part II of P6 containing the draft sharehold-ers agreement and management agreement which only requestinvestors to. make proposals and provide any amendments, alsoindicates that no determination or finality had .been arrived at. Insuch circumstances this court would not issue a writ in the natureof Certiorari to quash a decision or a determination which is obvi-ously not final.
Apart from the above it is apparent that only the 10th-12threspondents as a consortium had placed a bid. There appears tobe no other bidders. The 10th-12th respondents had by making theonly bid admittedly (vide X2) paid, the consideration for shares ofthe 4-9 respondents (cluster bus company). The payment referredto above in any event formed only one part of the invitation to bid.The handing over of the management of the Companies and theexecution of the shareholders and management agreement arealso integral parts of the transaction which is admittedly ought to befinalized. In the above context this court is unable to determine thatP6 is in fact as stated above a binding obligation entitling the par-ties for relief.
The direction for the payment of 60% of the purchase price bythe investors also appears to have been made by the Cabinet ofMinisters consequent to the only bid made on 31.10.2002 havingalso approved the aforesaid bid. That the same Cabinet ofMinisters permitted the only bid made on 31.10.2002 having alsoapproved the aforesaid bid. That the same Cabinet of Ministerspermitted the only successful bidder to pay the purchase price onor before 13.02.2003 is also apparent. The only bidders being the10-12 respondents had by a letter of credit dated 07.02.2003 which
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date is prior to 13.02.2003 referred to above to its Bank in theUnited Kingdom transmitted the total consideration for the pur-chase of the aforesaid 60% of the allotted shares to the Bank ofCeylon vide document X2 referred to above. It is also evident fromX2 that the beneficiary is the 3rd respondent, the Secretary to theTreasury. This letter of credit importantly is valid till 30.09.2003.
It is the view of this court that a letter of credit although not abank draft imposes on the issuing bank an absolute and irrivocableobligation to pay and could be held to be an equivalent to paymentin cash. (S.M. Guptha,”The Banking Law in Theory and Practice”2nd Edt. p.251).
Letter of credit as held is Hard Bottle Ltd. v NationalWestminister Bank Ltd.W “is the life blood of internationalCommerce”
In the Indian case Torapore Co. v Tractor Export Moscow &another;<2) “a letter of credit was held to impose upon a Banker anabsolute obligation to pay irrespective of any dispute that may arisebetween the parties”.
The court also held in the same case a letter of credit is “inde-pendent of and unqualified by the contract of sale of underlinetransactions. The automony of the letter of credit is entitled to pro-tection”.
In any event, the letter of credit X2 issued to the credit of the 3rdrespondent representing the Government of Sri Lanka is a trans-action.between the 3rd respondent and the 10th-12th respondentswhich could be rejected by the 3rd respondent representing theGovernment of Sri Lanka and as such is not a document that thiscourt could reject or invalidate.
The submission of the learned Counsel for the petitioners that aletter of credit is invalid as same could be liable to default unlike abank draft is untenable as even a bank draft is described as acheque drawn by a clearing bank on itself. But as seen in the def-inition found in X3 filed by the petitioners in respect of the provi-sions of the Bank Act of 1979 and appearing in “the Economist”publication, “it is a false belief to think that a bank draft is irrevoca-ble. It can be stopped just like any ordinary cheque even thoughimmediately debited to the customer’s account.
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On the facts as stated above this court is of the view that the10th-12th respondents admittedly been the only bidders and pay-ments made even though by a letter of credit had paid the consid-eration due by placing the said amount due to the credit of the Bankof Ceylon and thereby securing the funds to the 3rd respondent on 120behalf of the Government of Sri Lanka. In any event, no substantialprejudice has been caused to the peititioners in accepting the letterof credit, submitted by the consortium instead of a bank draft. Thepetitioners are not parties to a transaction between the consortiumand the Cabinet of Ministers. In the circumstances, this court is ofthe view that it ought not interfere in the matter in the interest ofadministrative justice.
Finally in respect of the contentious issue of Locus Standi of thepetitioners, the court is of the view that considering the test ofLocus Standi it is necessary in an application such as this as stat- 130ed by Wade on Administrative Law, 8th Edn. P.680, the test to be“as to whether the applicant can show a strong enough case on themerits judged in relation to his own concern with it”.
Considering the merits of the complaint itself this court is of theview that the interest of the two petitioners do appear to be affect-ed in that the relief as prayed for in prayer “e” to the petition for theissue of share certificate had been admittedly complied with. Theissue of shares subsequent to filing of this application satisfied theirinterest.
In any event as held by Dr. Ranaraja, J. in Environmental noFoundation Ltd. v Ratnasiri WickremanayakeW the petitioners “asa party genuinely interested in the matter complained of, has thelocus standi to make the application.
The petitioners are admittedly citizens of this country and admit-tedly shareholders of the 4th respondent company and also appearto be users of the public bus service. They are also persons con-nected to the Court of Appeal case No. 1406/2002 which caseappears to have been settled vide document P9.
Lord Denning, M.R. in R v Paddington Valuation OfficeWobserved as follows: “Nevertheless the court would not listen to a 150mere busybody who was interfering in things which did not concernhim but will listen to anyone whose interests are affected”.
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Perera and others v Hon. Tilak Marapona, Minister of Transport
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This court is of the view that the petitoners are not merestrangers or “busybodies” but persons having interest and that theydeserve to receive this court’s discretion to pursue their applicationalthough for other reasons as stated above they are not entitled torelief as prayed for.
In all the attendant circunstances this court would refuse toissue a writ in the nature of Certiorari to quash a purported exten-sion of time granted for the reasons as stated above in addition tothe absence of any specific document forthcoming from the peti-tioners to confirm granting of such extension and also for the rea-son that a letter of credit as described earlier had been issued with-in time specified by the Cabinet of Ministers. The relief prayed foran issue of a Writ of Prohibition restraining the Government of SriLanka and the 1 st-3rd respondents from transferring shares to the10th-12th respondents or the grant of the management of theCompany is also refused for the aforesaid reasons, in addition tothe fatal omission of not making the Cabinet of Ministers repre-senting the Government of Sri Lanka a party.
This court is also prevented from issuing a Writ in the nature ofMandamus to the Government of Sri Lanka to cancel the offer tosell 39% of the shares to 4th-9th respondent Company for thesame reasons as stated above and additionally as admitted to bythe petitioners themselves that the sale of shares had been alreadyaccomplished by the Colombo Stock Exchange.
A writ of mandamus would not lie to undo a thing which hasalready been done. (Vide Chandrasena v Dahanayaka.S5)
Accordingly this application is dismissed, however without
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SRIPAVAN, J.- I agree.
Application dismissed.
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