The Colombo District Court on Tuesday (16) issued an enjoining order over the unlawful claim made by Sri Lanka Tourism Development Authority (SLTDA) on a land handed over to Ascot Leisure Pvt Ltd (now Lanka Realty Leisure Pvt Ltd) under a 99-year lease.
Although the relevant Company had invested a preliminary down payment amounting to Rs. 30 million with taxes up to December 2020, the SLTDA has drafted a 'deed of declaration' and referred it for registration without meeting a lawful closure on the lease agreement, details into the case disclosed before Court.
It was also revealed that behind the chain of events through which the land, which had been provided with the aim of empowering the business community for developing the tourism industry in the post-war period, had been reclaimed without letting it being developed was the nepotism practiced by the newly appointed chairwoman of the SLTDA.
Attorney at Law Ruwantha Cooray, Attorney at Law Namith Nafad and Attorney at Law Nalinda Alwis, with President's Counsel Ali Sabry, appeared on behalf of the plaintiff company Lanka Realty Leisure Pvt Ltd on the instructions of Attorney at Law Francis Julianpathi.
After the War ended in 2009..
After the three-decade war ended in 2009, it was well known that the then government had initiated a huge development process in the country. That being said, the then government had decided that the Yala Palapatuna area should be developed and interested potential investors were given an opportunity for the betterment of the tourism industry. The SLTDA had granted Ascot Leisure Pvt Ltd, the plaintiff company, the relevant land following an extensive and rigorous screening process under a 99-year lease.
One of the terms expressed in the lease agreement was that the properties shall be subject to an uninterruptible entertainment within the 99-year lease period. A major feature of the agreement was that a large sum of the lease value, amounting to over Rs. 29 million (Rs. 29,381,250), was set to be paid as a principal payment prior to the commencement of the agreement.
Another clause of the agreement states that these properties will be subject to a fixed time period, which may also be subject to timely extensions in compliance with notices, for the initial procedure of development following entering the agreement.
Another clause of the same agreement states that approval will be granted should the development or construction affairs be extended up to a fair period without being navigated by the relevant parties. Under ordinary circumstances, constructions ought to be completed and the hotel should commence its operations within 24 months, i.e. two years, from the date of notice for commencement of construction.
Noteworthy in the same agreement that the agreement stands in effect exceeding the agreement period were the rights and responsibilities not enforceable in the occurrence of circumstances beyond the control of either parties.
In an arbitrary move the SLTDA is closing the agreement on the basis of 'failure to initiate operations within the agreed time period.'
The SLTDA is even approving the blueprint of the proposed hotel to be constructed in the land subjected to development under the long-term lease. Accordingly, the notice to initiate constructions was handed over to the company on 19.04.2019, and the period was subsequently extended up to two years under lawful observations.
Meanwhile, on September, 2017, a separate company under the name 'Ascot Holdings' was established with the involvement of several foreign investors, who are now managing the plaintiff group. Due to an internal conflict questioning ownership during the takeover, interim injunctions were filed in case No: HC (Civil) 07/2018 CO by the Commercial High Court. This prevented the company from pursuing ordinary functions and even routine matters such as filing of the annual return was delayed. Hence, advice was given to defer commencement of the project until this issue was resolved.
These internal complications were updated with the SLTDA, and a grace period was granted in re-initiating the development affairs following closure to the legal matters.
In accordance with the new grace period, the company was set to re-initiate the development affairs by 19.04.2018.
These development affairs should be concluded within two years in compliance with the agreement. Meanwhile, the Easter Sunday bombing had occurred in 21.04.2019 and it was obviously a situation beyond the control of the company.
A letter reveals that the land has been reclaimed!
Amidst the devastation befallen upon the tourism industry of Sri Lanka in the wake of the Easter Sunday genocide, the prime body responsible for the betterment of tourism, the SLTDA, should have been entitled to restore the sector which was on the verge of extinction. However, the SLTDA taking a rather drastic course of action begins to hunt down one of the business companies accompanied it. Accordingly, Lanka Realty Leisure (previously Ascot Lanka) receives a letter as if a bomb was thrown at their direction, declaring that the lease agreement is closed!
The letter dates itself to November 13, 2019, days before the 2019 Presidential Polls. It is interesting to note that the SLTDA Board of Directors had been dissolved at the time during which the letter was composed.
The company receives the letter on November 28, 2019 due to the conduction of the Polls. Excluding the fact that monthly lease payments were settled for until December, 2020, the land is set to be reclaimed by the Authority with effect from November 04, 2019, considering that the company project has been abandoned, according to the letter, without any formal notice or negotiation!
That being said, the SLTDA has begun to act as if it has awakened from a nightmare since November, 2019.
Nepotism of the new SLTDA Chairwoman
Chairman of Dilmah Merrill J. Fernando and Family. The photo also features the new Chairwoman of the Tourism Development Authority.
In the reigning in of the new government, new faces began to fill the seats in the SLTDA. Accordingly, Mrs. Kimali Fernando is appointed as the new Chairperson on December 16, 2019. Her Husband is Malik Fernando, who is the youngest son of Mr. Merrill J. Fernando, a renowned businessman and the Chairman of Dilmah/MJF business network.
The aforementioned land was being reclaimed with much interest under the new chairwoman of the SLTDA.
Meanwhile, the aggrieved company begins to realise rather an interesting fact. It is the fact that Wild Coast Lodge, which is located next to the questionable land, belongs to Dilmah/MJF business chain. It is owned by the family members of Mr. Malik Fernando, the husband of the SLTDA chairwoman. This land has also been acquired through the Authority. That being disclosed, there is an indication of a Conflict of Interest. On the other hand, bypassing the obstructions without pacing slightest respect before the Court, she has attempted to seize the land by force!
Nonetheless, need we denote something in particular, that according to our knowledge, Mr. Merrill J. Fernando the Chairman of Dilmah network is a reputed businessman and a gentleman whose commitment towards humanitarian causes such as aiding children living with autism in Sri Lanka and investing half the profits he earns for social welfare is vast. Therefore, we do not intend to embarrass, or draw him into inconvenience by any means. However, we are left with no choice but to mention his name on accounts to his most power-hungered daughter-in-law.
SLTDA turning itself into a Wile-E-Coyote!
Drafting a deed of declaration, the SLTDA had acted in a manner in which no formal notice, negotiation, or lawful obligation was taken towards cancelling the agreement. According to the Sri Lankan Law, deeds of declaration are given the minimum recognition towards the ownership. That is, because by doing so anyone could formulate a deed for someone else's land. That being said, the SLTDA has turned itself into a predator -- a Wile-E-Coyote figure whose greediness before prey has no limit -- in seizing lands belonging to other people. Without stopping from there, it even has registered the deed.
Hearing the case, the Colombo District Court stated on Tuesday that 'any further action taken by the defendant is invalid without the proper termination of the lease agreement'.
Accordingly, a period until June 30 was granted by the Court to provide justification that on what basis the SLTDA suggests the agreement has been cancelled.
No wonder why the Tourism Industry is being hell-bound
Chairperson of Sri Lanka Tourism Development Authority Kimali Fernando
According to the official website of Sri Lanka Tourism Development Authority (https://www.sltda.gov.lk/) - the Sri Lanka Tourism Development Authority (SLTDA) is the existing state authority for Planning, Development, Monitoring and Policy Implementation of Tourism and Related Industries. In laymen's terms, the SLTDA is the highest authority in Sri Lanka responsible for the betterment of the tourism industry. However, its chairwoman Kimara Fernando not only holds the sole ownership of the institute, but also challenges the law by exercising nepotism. In an attempt to offer lands belonging to the Authority to close relatives, the SLTDA chairwoman is abusing power. Should we wonder, whether is it a mystery that the tourism industry is breathing its final air amidst such crisis?