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srilawsby aturio
As enacted
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Part V · Winding Up of Licensed Bank

74. Liquidator to apply to court for an order to nullify certain acts

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

The liquidator shall, in consultation with the

Central Bank, and after giving notice to the licensed bank subject to winding up, make an application to the court requesting that any act, including but not limited to, any act of such licensed bank that has been carried out within the period of ninety days before the date of coming into effect of the winding up order, be declared null and void.

(2)

The court may upon receipt of an application under subsection (1), and on being heard the parties named in such application, if satisfied, that such licensed bank and such parties involved in such act have had the knowledge or should have known at the time of carrying out of such act that it is likely to damage the interests of depositors or other creditors of such licensed bank, declare that any act, including but not limited to, any transaction of the licensed bank subject to winding up that has been carried out within the period of ninety days before the date of coming into effect of the winding up order, to be null and void.

(3)

The knowledge referred to in subsection (2) shall be presumed whenever such act consists of –

(a)

a gift or other transfer to any person without consideration;

(b)

a payment of money, or transfer of assets or any other interest of the licensed bank, a shareholder, director, an Administrator, a key management personnel or an employee of the licensed bank, unless such licensed bank, shareholder, director,

Administrator, key management personnel or the employee proves to the satisfaction of the court, taking into account the views of the Central Bank, that-

(i)

such person engaged in the payment of money or transfer of assets or interests of the licensed bank as a bona fide counterparty;

(ii)

such person had reasonable grounds to believe that the payment of money or transfer of assets or interests of the licensed bank as the case may be, is genuine based on the representations made by the licensed bank in that respect; and

(iii)

such person was not aware that the payment of money or the transfer of assets or interests of the licensed bank would have damaged the interests of the depositors and creditors of such licensed bank;

(c)

a payment or transfer made prior to its due date, or the transfer of collateral for a debt prior to the date on which such debt becomes payable;

(d)

the conclusion or performance of a contract imposing obligations on the licensed bank that are significantly more onerous than the obligations imposed on the other party or parties to the contract;

(e)

an arrangement between the licensed bank and one or more other persons, other than a financial contract, permitting setting off rights and obligations of the licensed bank, prior to the issuance of the winding up order;

(f)

an inter-bank transfer between a bank incorporated outside Sri Lanka, which has been issued a licence under the Banking Act and the head office of that bank, its branches or subsidiaries which have been established outside Sri Lanka; or

(g)

a transfer between the licensed bank and its related parties.

Read on from s 75

Schedules