The fundamental rights petition filed by the Finance & Guarantee (F&G) Depositors Association was given leave to proceed in the Supreme Court last week. The case was first filed by the Association on 27 April 2009 in an attempt to get their money from the troubled Ceylinco company through court intervention and a Central Bank (CB) monitored payment plan. Depositors say most interest payments stopped in December 2008 and January 2009.
Chief Justice Sarath N. Silva granted the petitioner’s interim relief to pursue their petition against parent company F&G Company Ltd in addition to its subsidiaries, F&G Property Development Ltd (PDL) and Real Estate Companies Ltd (RECL) as it was established in Court that the assets of PDL and RECL are linked to those of the parent company. Although the Director of Non Bank Supervision at the Central Bank (CB) S.S. Ratnayake told the Court that PDL and RECL are not registered as finance companies with the CB and not considered subsidiaries of the parent company F&G Company Ltd, which is registered with the CB, the Chief Justice said all three companies must be taken as one operation and one unit.
The Chief Justice added that the petitioners deposited their money in PDL and RECL on the premise that they are subsidiaries of F&G. The Court said PDL and RECL have no assets which requires the parent company to be included in the petition.
The Court also said that ‘siphoning money’ and ‘illegal mechanisms’ have been used with regard to the companies.
The application for winding up of PDL and RECL which was earlier instigated by two former depositors, who Association members say had been given their entire capital, has been stopped by the Supreme Court. The Court said winding up would adversely affect the depositors. It was scheduled to take place on 23 June 2009.
There are approximately 7000 depositors in the company which has an estimated liability of Rs.13 billion. Merchant Bank of Sri Lanka (MBSL) took over as the company’s managing agent in March 2009.