Financial Times

Glimmer of hope for Pramuka depositors
By Quintus Perera
The Court of Appeal last week gave a glimmer of hope to desperate Pramuka Bank (PSDB) depositors when it asked the Central Bank to (once again) restructure the failed bank rather than liquidating it.

The Court comprising Justices P. Wijayaratne and K. Srivapan said attempts to liquidate PSDB would mean covering up fraud and lapses of certain persons in the past, which is evident from the material that is already placed before the Court.

This was revealed when the writ application filed by PSDB depositors against the Monetary Board and the Central Bank challenging the alleged second attempt to liquidate it came up for hearing. M. A. Sumanthiram, Senior Counsel for Pramuka Depositors, said he was willing to meet the Attorney General if it is helpful to amicably resolve the matter through restructuring.

Justice Wijayaratne observed the liquidation option would not sufficiently protect the rights of those who have deposited their money. "The action of restructuring is the only morally acceptable, humane and appropriate course of action that the Central Bank could take under the present circumstances and such steps should be taken in the interests of poor depositors and national interests in general," he said. The court asked the Central Bank to first consider the option of restructuring before going into other remedies adding the liquidation of the bank would affect the economic scenario of the country.

The judge said it was clear it was misleading for the Central Bank to say that the funds of Public Trustee and the Provincial Road Development Authority should be treated as government funds and given higher priority than the depositors.

Sumanthiran pointed out that although the Attorney General has indicated that these funds were not government funds and should not be given high priority, the legal officer of the Central Bank has by a minute over-ruled the AG's opinion and emphasized that in fact such funds could be given priority as government funds. Counsel for the Petitioners pointed out that it is irregular to treat the opinion of AG in this manner.

M. A. Sumanthiram with Miss V. Arulanantham and Mrs P. S. Bandaranaike and Viran Corea instructed by Sundaraligam and Balendra appeared for the Petitioners and State Council Milinda Gunatilleke with State Counsel Riad Ameen appeared for the Respondents, Central Bank and Monetary Board. The Court re-fixed the inquiry for December 7.

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