SC Grants interim relief to Major General
The Supreme Court last week restrained the Army Commander and several
other military officers from giving effect to a new rule formulated by
the army; from promoting any junior officer above the rank of Major
General Nimal Ainsley Jayasuriya, the Area Commander of the Weli-Oya
operational area and from withdrawing his security and other
entitlements until the determination of a fundamental rights application
made by Major General Nimal Jayasuriya.
The Petitioner holds the substantive/confirmed rank of Brigadier in the
Sri Lanka Army and also holds the rank of Major General (unconfirmed).
Previously, he served as the Commander of the 53rd Division of the army,
which is known as the elite ‘Reserve Strike Force’ for the entire army,
comprising of the Air Mobile Brigade, Special Forces Brigade and
The Military Secretary, Major General Y.S.A. De Silva, the Army
Commander, Lieutenant General Sarath Fonseka, the Defence Ministry
Secretary and the Director Army Medical Services were made respondents.
The Bench comprised Chief Justice Sarath N. Silva, P.C, Justice Rajah
Fernando and Justice Gamini Amaratunga
The Petitioner stated that in February 1999, he was promoted to the rank
of Brigadier (temporary) and thereafter, duly conformed in the said rank
of Brigadier in January 2003.
Prior to that, at the time he completed his training in the army and was
commissioned in 1977, the Petitioner was the youngest officer in the
army. He was also the youngest officer at the stage of each of his
promotions, which was the case even up to the stage of his last
promotion to the rank of Major General.
The Petitioner has been awarded, inter alia, the prestigious ‘Rana Weera
Padakkama’ twice and the ‘Rana Sura Padakkama’ thrice, in recognition of
his gallantry and has also been awarded the following ‘Military
Operations Medals’: The North and East Operations Medal, The ‘Purna
Bhumi’ Padakkama, the Vadamarachchi Operational Medal and The ‘Riviresa’
The Petitioner stated that all his promotions up to the rank of Major
General (temporary) have been effected on time.
In April 2005, the Petitioner was promoted to the rank of Major General
(temporary) of the Sri Lanka Army.
The Petitioner stated that he is due to be confirmed in the said rank of
Major General prior to June 2007.
The Petitioner, an outstanding sportsman, represented Sri Lanka at
basketball and played rugby for the Army Sports Club until 1980, when he
sustained a severe spinal injury whilst playing Rugby for the army and
thereafter continued to suffer from a severe backache.
Thereafter, the Petitioner stated that on medical advice he went to the
UK for treatment at his own expense, and leave for 84 days for this
purpose was approved by the Army Commander and the Defence Ministry
After arriving in London, the Petitioner was compelled to re-schedule
the prior appointments he had made from Sri Lanka, due to his delayed
arrival. He duly applied for an extension of leave on the October 25,
1985 for an additional 10 weeks, in order to complete his medical
treatment in the UK. This was duly approved by his commanding officer.
Much to his surprise, despite the aforesaid explanations submitted, a
formal Charge was thereafter framed against him for the alleged offence
of being Absent Without Leave for a period of 76 days from 04/11/1985 up
He was found guilty and convicted of the said offence on 31/03/1986 and
was imposed with a punishment of a ‘severe reprimand’ as well as a loss
of pay for 77 days.
The imposition of a severe reprimand and deduction in pay are
punishments which are provided for by section 133 of the Army Act and
are recognised therein as the two least severe punishments that can be
inflicted on officers convicted of offences.
The Petitioner also states that the said Charge Sheet referred to above,
contains remarks made by the then Commander of the Support Forces,
wherein he acknowledges the fact that he had produced documentary
evidence of medical treatment but purports to state that he should have
obtained prior approval. The Petitioner was thereafter convicted for
being absent without leave for 76 days.
He stated that had medical certificates from Dr. J. Gould of St. Mary’s
Hospital London, together with the important covering letter containing
the endorsements made thereon by the Commanding Officer of the Army
Hospital as well as by the Director – Army Medical Services, been
furnished at the inquiry into the charge framed against him and prior to
his wrongful and unlawful conviction for allegedly being absent without
leave for 76 days, he would not have been found guilty of the said
offence. He is unaware as to how or why the said covering letter of
27/03/1986 and the said medical certificate, containing the said
endorsements had not been forwarded to the inquiring officer prior to
imposing the punishment on the Petitioner. He verily believes that the
said documents were unfairly withheld.
His request for extended leave had not been forwarded to the Secretary
to the Defence Ministry for his approval, although the Defence Ministry
Secretary is the proper authority according to law, who is also
empowered to approve or refuse such applications for leave.
He states that the Director, Army Medical Services (DAMS) has made an
endorsement on 29/03/1986 (two days prior to the Petitioner being
convicted of the aforesaid offence) on the Medical Certificate submitted
by the Petitioner, to the effect that same “may be approved”.
The Commanding Officer of the Army Hospital had made a minute dated
31/03/1986 that the Petitioner was referred to the UK for treatment in
consultation with him and that the documentary evidence (medical
certificate) submitted by the Petitioner was ‘authentic’ and had
forwarded it to the Director – Army Medical Services, for necessary
Thereafter, the Director – Army Medical Services endorsed this minute to
the effect that the said medical certificate covering the period up to
15/01/1986, could be approved.
The Petitioner was thereafter been granted four consecutive promotions
and confirmations without any delays or complications whatsoever.
In October 2005, He formally appealed to the then Commander of the Army,
Lieutenant General Shantha Kottegoda, in order to obtain redress in
respect of the issue of being absent without leave in 1985, due to a
crucial covering letter and a medical certificate (which were duly
endorsed by the Commanding Officer of the Army Hospital and by the
Director – Army Medical Services), having being unfairly withheld prior
to convicting the Petitioner of the said offence of being absent without
leave for 76 days.
The then Army Commander recommended to the then Defence Ministry
Secretary that the Petitioner be granted covering approval for the
period of his said absence.
The then Defence Ministry Secretary has stated that an injustice had
been caused to the Petitioner by penalising him without considering all
the facts. He also expressed concern as to why the said reports had not
been seen at the inquiry and also with regard to the lack of reasons why
the Petitioner’s application for an extension of leave had not been
submitted to him for approval.
He stated that even after covering approval had been granted he was
The Petitioner states that the ‘National Defence Course’ (NDC) is
considered a very significant/important course in the Sri Lanka Army and
the same is offered to army personnel based on their seniority. He
stated that he was unfairly deprived of participation in the NDC ‘s in
2004, 2005 and 2006.
He also stated that junior officers had been promoted above him contrary
to the practice in the army and that when Major General N.
Mallawarachchi went on retirement, the Petitioner was the senior most
officer next in line to be appointed Colonel Commandant of the Regiment.
However, Brigadier Daya Ratnayake, an officer who is one whole rank and
four years junior to the Petitioner was appointed to this rank.
The Petitioner stated that much to his utter shock and surprise, he
received a letter on the January 18, 2007 (which is dated 12/01/2007),
signed by the first Respondent and captioned “Reaching Maximum Service
in the Substantive Rank”, whereby the first Respondent informed him that
as he had gone leave for 77 days he cannot be confirmed in the rank of
Company’s Act becomes law
By Gihan Indraguptha
The private sector of the country has been hailed as the engine of
economic growth, opening up many opportunities for progress. Yet the
main law governing the private sector, namely the Company’s Act was seen
as an impediment rather than a catalyst for growth in this important
segment of the economy. Due to various shortcomings and loopholes in the
prevailing law, many scandals have erupted with some such as the Hilton
deal, Insurance Corporation privatisation deal making headlines in the
recent past. After being on the drawing boards for well over 12 years,
The Company’s Act No 7 of 2007 finally became law this week with the
signature of the Speaker being placed on the document. The relevant bill
was passed in Parliament through a rare bipartisan consensus with all
parties unanimously endorsing the new law. The Nation spoke to one of
the key architects of the Act, eminent chartered accountant Nihal Sri
Amarasekera to get a better perspective of this all important Act.
Q: What was the need to draft a new Act rather than amend the old one?
A: The need for this new Company’s Act has been felt for a very long
time. The current Act was passed in 1982 and it was mainly modelled on
the British law of 1948. So in other words even in this era when the
private sector of this country is considered the engine of growth and
while the world has advanced in leaps and bounds, the country’s laws
regarding this were more or less established in 1948. So rather than
amending the prevailing law it was decided to enact a new law keeping
with contemporary developments internationally. This process has been
going on for several years. In fact the chairman of the commission
looking in to this, Kanag Isvaran PC, has been working on this Act since
Q: Have you taken any precedence from other countries when drafting the
A: This act has primarily taken the Canadian model in to account. I
think this is one of the most advanced company laws of this nature. In
addition the Australian, Hong Kong and Japanese laws have also been
taken in to consideration. However, I must add that we have addressed
certain local interest too when drafting this Act in particular with
labour and so on.
Q: What are the outstanding differences of the new law compared with the
A: In this new act we have diverted from the regime called share capital
to Stated Capital. This Stated Capital is defined as the amount received
by the company or the dues of the company in respect of the shares
issued. So when you read this Act it is clear that we have moved away
from a concept of a par value for a share. Shares are sold at a
particular price at the inception of a company, with the growth of the
establishment the board of directors can determine the vale of the share
depending on the added value. This of course will be done with certain
checks and balances. So what has been done is to abolish the share
premium account. What traditionally was the share capital account and
the share premium account has now been taken together as the status
capital. So there’s no share premium. Even today when you are taking a
valuation one considers either the earnings per share or the net assets
per share that is considered. So this par value actually is something
nobody is bothered about.
Q: There is a now confusion about the issuing of bonus shares in this
Act. Can you clarify this matter?
A: A bonus share is a capitalisation of a reserve. In other words adding
on to the share capital or giving money to the share holder. In this
case when there is a surplus of assets then that money can be given to
the share holders directly through what is called a distribution. Such
an action can be taken with the approval of the board. This distribution
should not be confused with the declaration of dividends. It is declared
from the profits of the company while a distribution is done taking the
reserves in to consideration.
Q: Now that this Act has become law, how soon do you think it could be
A: We are hoping to get all the mechanisms in place by the 31st of
March. Most of the financial institutions end their year on the 31st of
this month. If this Act can be implemented by then most of these
businesses will be able to handle their accounts in accordance with the
new standards. So for the smooth operation of the Act it is important
that all he mechanisms are in place by the 31st.
Q: What are the checks and balances that you foresee in this act which
can prevent the occurrence of scandals like the ones we saw recently
regarding private companies?
A: We have introduced a mechanism called the solvency test which must be
undertaken by the board of directors. In this it is important that the
latest accounts be considered. This concept brought in to the Act will
depend on two cardinal issues. First whether the company is able to pay
its debt as it becomes due in the normal course of business and secondly
whether the value of the company’s assets are greater than its
liabilities and stated capital. Not only do the directors have to
certify that there is solvency of the company but the auditors have to
also certify the same. So there is always a check and balance to make
sure that the company’s solvency is maintained.
According to this Act a major transaction, which is defined can only
take place after obtaining the approval of the shareholders through a
special resolution. In cases like the Insurance Corporation
privatisation issue where the company which got the nod from the
Government buy the entity transferred its rights to an unknown overseas
company. Here the shareholders rights were definitely not considered.
The new Act envisions to rectify such matters.
Another check that is put in place is to ensure that the board of
directors be held responsible if there is an erosion of the capital of
the company. In such a case within 20 days of discovering that over 50
percent of the initial capital has been lost, the directors should
address the shareholders and inform them of the reasons for this and
come up with a detailed report to rectify the matter.
Q: One of the key complaints made against the private sector is their
regard for labour. Does the new Act have provisions to enhance the
protection of the workers?
A: If the company has defaulted payments to its employees then that
payment gets priority over mortgages and other liabilities. Even when it
comes to a liquidation the payments due to an employee will get priority
over liabilities to banks and even the taxes due to the Government. So
Employees Provident Funds and Gratuity Funds will be paid before any
other issue is taken up. This is a major feature where the rights of the
labour has been strengthened.
Q: Does this law apply to small businesses to or is it mainly focusing
on big companies?
A: We have introduced the single shareholder concept which is commonly
seen in other countries. This is targeting the small businessmen who are
running their own enterprises. These informal businesses can be made in
to limited liability companies which will have limits on their risks. So
in case of failure this individual will not run the risk of losing his
personal wealth like his house and property. What happens now is that
small scale entrepreneurs who start businesses with loans from banks
some times end up losing everything they have.
There is an important feature in this Act which protects the government.
The Secretary of the Treasury can be a sole shareholder of a company. In
the cases of converted companies there are seven odd officials who hold
shares and it is difficult to implement any change. So in such cases the
Secretary to the Treasury can be the sole representative of the
Government. This reduces the inefficiencies when taking decisions.
US Court refuses to dismiss Class Action against
(Business Wire) SAN FRANCISCO – US District Court Judge Vaughn Walker
denied the motion of Tata America International Corporation and its
parent corporations Tata Consultancy Services, Ltd., and Tata Sons, Ltd.
(collectively referred to as ‘Tata’) to compel arbitration in India and
dismiss the nationwide class action lawsuit in the United States Court.
The complaint, brought in Federal Court in San Francisco by Gopi
Vedachalam, an employee of Tata America International Corporation,
alleges Tata unjustly enriched itself by requiring all of its non-U.S.-citizen
employees to endorse and sign over their federal and state tax refund
checks to Tata.
“Judge Walker upheld the principle that before a company can force an
employee working in the United States to give up the right to have his
or her claims heard in a United States court, it must show that both the
company and the employee clearly and mutually agreed that these claims
would be heard elsewhere,” stated co-class counsel for plaintiffs.
The Court found that the documents purportedly requiring arbitration in
India applied one set of rules to Vedachalam and another set to Tata,
negating any mutual agreement to arbitrate legal disputes.
“The Court’s order ensures that Vedachalam will have his day in Court in
the United States before a neutral judge, not in India in front of a
private arbitrator of Tata’s choosing,” explained co-class counsel for
The complaint alleges further that, at least until July 2005, Tata
required its non-U.S.-citizen employees to sign power of attorney
agreements delegating an outside agency to calculate and submit each
employee’s tax return to state and federal authorities. Tata then
required its non-U.S.-citizen employees who received tax refunds from
state and federal tax authorities to endorse the tax refund checks and
send them back to Tata.
One of India’s largest business conglomerates, Tata’s revenues in the
last fiscal year totaled nearly $22 billion. The proposed class consists
of thousands of current non-U.S. citizen employees of Tata working in
the United States, plus former Tata employees dating back to 2000.