• FR application No.281/2023 dismissed for lack of merit
• Petitioner claims Cabinet’s decision to wind up 3 firms was arbitrary
• Court notes RDA, as majority shareholder, consented to voluntary winding-up
• Maga Neguma companies provided equipment, materials, consultancy for road development

The Supreme Court on Thursday (25) dismissed a Fundamental Rights (FR) application instituted seeking to halt the winding-up process of the three Maga Neguma companies on the grounds that the application lacked merit. 

On Thursday, the FR application bearing No.281/2023 came up for consideration for leave to proceed before a Supreme Court bench comprising Chief Justice P. Padman Surasena, Justice A.H.M.D. Nawaz, and Justice Mahinda Samayawardhena. 

The petitioner, allegedly acting in the public interest, sought to halt the winding-up process of the three Maga Neguma companies, contending that the Cabinet of Ministers’ decision approving the process was arbitrary.

The petitioner’s counsel submitted that the Cabinet Memorandum had proposed only the amalgamation of Maga Neguma Road Construction Equipment Company Ltd., Maga Neguma Emulsion Production Company Ltd., and Maga Neguma Consultancy and Project Management Company Ltd., whereas the Cabinet had, in fact, decided to wind up all three companies, rendering the decision arbitrary.

It was further argued that the companies were generating profit and that there was therefore no rational basis to wind them up.

The petitioner’s counsel, relying on the Supreme Court’s judgment regarding the 2022 economic crisis in SC FR 195/2022, argued that even policy decisions of the Government could be subjected to judicial review if the underlying decision was arbitrary.

However, the Supreme Court raised concerns regarding the petitioner’s standing to institute the action and noted that the majority shareholder, the Road Development Authority (RDA), had consented to the voluntary winding-up of the three companies. Accordingly, the court dismissed the application without costs on the grounds that it lacked merit.

The former Road Planning and Development Company, which at one time existed under the RDA, was terminated to establish the institutes Maga Neguma Road Construction Equipment Company, Maga Neguma Emulsion Production Company, and Maga Neguma Consultancy and Project Management Company in 2014.

Maga Neguma Road Construction Equipment Company provided construction equipment and machinery to those engaged in road sector development, on recovery of hire charges, and undertook road construction works not exceeding Rs. 100 million awarded by the RDA.

Maga Neguma Emulsion Production Company was involved in the manufacture of emulsion, pre-mix, etc. and supplied the same for road sector development works.

Maga Neguma Consultancy and Project Management Company provided consultancy services for the preparation of bills of quantities, project proposals, etc.