In a significant legal development concerning Sri Lanka’s controversial Treasury Bond scandal, the Supreme Court has overturned a Court of Appeal decision that effectively halted criminal proceedings against several accused persons and entities, including a leading primary dealer, and ordered the case to proceed before the High Court at Bar.
The judgment relates to allegations of large-scale irregularities in the issuance of Treasury Bonds by the Central Bank of Sri Lanka between February 2015 and March 2016, a period widely associated with one of the country’s largest financial scandals. The alleged misconduct is said to have caused substantial losses to the State and contributed to broader economic repercussions.
The Attorney General had originally filed indictments against ten accused, including Perpetual Treasuries Limited and several individuals, on 22 counts involving conspiracy, criminal misappropriation, and offences under the Offences Against Public Property Act.
However, before the commencement of the trial, the defence raised a preliminary objection challenging the maintainability of the charges against the corporate entity. The High Court at Bar upheld the objection and discharged all accused from the indictment. The Attorney General subsequently sought relief from the Court of Appeal through its revisionary jurisdiction, but the application was dismissed on jurisdictional grounds.
The matter ultimately reached the Supreme Court, which granted special leave to appeal on several important questions of law relating to the powers of the Court of Appeal, the interpretation of the Offences Against Public Property Act, and the Attorney General’s right to challenge the discharge order.
In a detailed ruling, the Supreme Court held that the Court of Appeal had erred in dismissing the Attorney General’s application without granting a hearing on significant legal issues, particularly those concerning the criminal liability of corporate entities under public property legislation. The Court emphasized that questions involving the prosecution of companies for serious financial offences are matters of substantial public importance and deserve full judicial consideration.
The Supreme Court further found that the Court of Appeal had incorrectly interpreted the scope of its jurisdiction under Article 138 of the Constitution. According to the judgment, the appellate court’s restrictive approach effectively denied judicial review of a High Court at Bar order and prevented the Attorney General from pursuing serious criminal allegations.
The apex court stressed that principles of natural justice and fair hearing required that the Attorney General be afforded an opportunity to argue the legal questions raised. It noted that the dismissal of the application without a substantive hearing undermined the proper administration of justice.
As a result, the Supreme Court set aside the Court of Appeal’s decision and ruled that the Attorney General is entitled to proceed with the prosecution. The Court ordered that the case be remitted to the High Court at Bar for further proceedings, paving the way for the long-delayed trial to continue.
The ruling is expected to have far-reaching implications not only for the Treasury Bond prosecutions but also for the broader question of corporate criminal liability in Sri Lanka. Legal observers say the decision reinforces the supervisory role of appellate courts and underscores the judiciary’s commitment to ensuring that allegations involving public funds are subjected to full judicial scrutiny.
The Treasury Bond scandal has remained one of the most politically and economically consequential cases in Sri Lanka’s recent history, with investigations, commissions of inquiry, and multiple court proceedings spanning more than a decade. The Supreme Court’s latest decision now reopens the path for criminal proceedings against the accused to be heard on their merits before the High Court at Bar.
