Courtroom battles now between Harry and Vittachi

The bitter struggle for power at the Harry Jayawardena empire for the first time spilled into the courtroom this week.

The beginning of a courtroom drama surrounding Stassen and related companies – is the struggle in a company that was founded by V.P. Vittachi, Jayawardena, Raj Obeyesekere and Zaki Alif in the 1970s.

The falling-out of Jayawardena with his co-directors has been in the works for some time but came into public attention only around December 2005 when Jayawardena’s powerful political connections ended after Chandrika Kumaratunga left the presidency as her term ended.

The Sunday Times FT exclusively reported rumblings of discontent in the company in its January 15, 2006 edition following up with another powerful story on February 26 where the trio – Vittachi, Obeyesekera and Alif – were threatening action against Jayawardena. (See picture).

That report said the trio as directors of Milford Exports (Ceylon) Ltd were seeking to liquidate the company and all its associate firms, after negotiations between their lawyers and Jayawardena’s failed to resolve a dragging dispute out of courts.

The report, quoting informed sources, said the three were planning to file action against Jayawardena latest by mid next month (March).That move came after Jayawardena called two extra ordinary general meetings on behalf of Milford Holdings without consulting other directors.

The report said Jayawardena had borrowed money from DCSL without board approval and also without a security, which is illegal.

The report said the three directors were accusing their ‘old pal’ of arbitrary and impulsive decision taking and contemplated taking him to court if he doesn’t agree to an out-of-court settlement. “The settlement offer worked out by lawyers is being kept a secret but it’s only a matter of time before the two groups’ part company, The Sunday Times FT learns. The trio and Jayawardene are not on talking terms,” that report said.

It said the directors were also very angry when Jayawardena started referring to himself as the Chairman of Distilleries (DCSL). “He is not the chairman, but the managing director and Vittachi holds the chairmanship of the company.

He ran adverts in newspapers calling himself as the chairman last year and he was throwing his weight around. This was one of the boiling points for the three directors to gang up against him,” a source was quoted as saying in the report.

The threatened March action by the trio against Jayawardena didn’t materialise until Vittachi was ousted as chairman of DSCL and later as Stassen chairman. Last Wednesday, Vittachi went to court against Jayawardena for removing him and obtained an interim injunction against the removal.

The enjoining order was issued despite protests by Jayawardena’s lawyers who were present in the District Court.

Colombo District Judge Aruna C. Ranasinghe ordered the suspension of the operation of Jayawardena's letter on December 4 removing Vittachi from Stassen Exports Limited, preventing Jayawardena from interfering or influencing or obstructing Vittachi from functioning as a director in the company and also preventing Jayawardena from taking any steps to deprive or stop any payments and facilities to Vittachi in his office as a director.

The court directed Jayawardena to file objections on December 26 and fixed the case for inquiry on January 11, 2007. Senior counsel S.L. Gunasekera appeared for Jayawardena had strenuously objected to the issue of the enjoining order but the court held with Vittachi’s legal team led by Wijeyadasa Rajapakse.

Vittachi, in the petition, said that he held several posts in the civil service and was Principal Collector of Customs and Chairman of Consolidated Exports and State Trading Corporation Limited. He said that he was a director and chairman of the company Stassen Exports Ltd which started as tea exporter and made rapid progress to become the leading tea exporter in the country.
Following a clash of ideas with regard to the management, the Managing Director, Jayawardena had illegally removed him from functioning as Chairman.

In a letter dated December 4, 2006 he was charged with false allegations and informed about his removal.

Vittachi said according to the Companies Act a director could be removed only at a share holders meeting but his removal came without any decision taken either at a share holders meeting or at a director board meeting.

The plaintiff was further aware that the chief accountant had been informed not to pay his salary or any other payment.

He complained that Jayawardena was trying to appoint two new directors including his wife and get control of the company and for this he had issued notice to hold an extraordinary annual general meeting.