Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                       Unbowed And Unafraid                                                                      Unbowed And Unafraid                                                                      Unbowed And Unafraid                                                                       Unbowed And Unafraid



Home

News

Editorial

Politics

Issues

Spotlight

Parliament

Defence

Focus

Economy

Letters

World Affairs

Serendipity

Thelma


Business

Review

Sports

 

 Politics  

Govt-Judiciary on collision course as the war takes its toll


Mahinda Rajapakse, Sarath N. Silva, Nivard Cabraal, Nimal Siripala de Silva, Dinesh Gunawardena and Rajitha Senaratne

 

With the Supreme Court taking the high road on public interest litigations, the government decided to take the battle to the judiciary last week while a resurgent opposition planned a counter offensive in the name of safeguarding democracy and the rule of law, setting the stage thereby for major confrontations in the days ahead.

Who will blink first in this eye ball to eye ball confrontation, it is too early to say but the mood in government when the ministers met Wednesday night was certainly ugly, and news from the battlefront did not make the UPFA administration's burdens any lighter.

War basket

Having placed all its eggs in  the war basket, the government was totally dependent on success in the military front to survive politically, in the face of a crashing economy due to mismanagement and extravagance, and the stiff resistance faced in the Wanni has now placed the Mahinda Rajapakse administration on a razor's edge.

Just last week, while the military claimed it killed over 120 Tigers in fierce battles for Killinochchi, the LTTE Political Wing Leader B. Nadesan was to tell this column the security forces suffered very heavy casualties numbering over 170 dead and some 400 injured, claims the military denies.

Nadesan was to also say that repeated attempts by the security forces to breakthrough LTTE's Killinochchi defences have failed at a heavy cost to the state and the government will soon realise how costly the war is going to be both in military and political terms.

To give credence to LTTE claims, the organisation posted through Tamilnet photographs of dead soldiers all lined up and ready for handing over to the ICRC. 

Indicative

The fact also  remains the government no longer talks of liberating Killinochchi notwithstanding earlier statements on 'kissing distances,' but instead, of taking Mullaitivu which to the discerning observer is indicative all is not well on the war front with the regime compelled to look for new propaganda targets due to the upcoming provincial council polls, considering the economic hardships the people are facing.

Splurge

This mind you, at a time the government continues to splurge billions of rupees on a bankrupt Mihin Air and eyeing to buy the five star Continental Hotel to house the Sri Lanka Port Authority staff despite the state of collapse the economy finds itself in with even Sri Lanka's international credit rating being downgraded.

It is in this backdrop the Supreme Court went into the fuel pricing formula submitted by the Treasury following a public interest petition filed by Ven. Thiniyawala Palitha Thero, UNP MP, Ravi Karunanayake and Attorney Ravi Jayewardena and on Wednesday directed the Treasury Secretary Sumith Abeysinghe, Ceylon Petroleum Corporation and the Lanka Indian Oil Company to sell from midnight that day a litre of petrol at Rs. 100. In effect reducing the price of a litre by Rs. 22.

Needless to say more public interest cases will now be filed calling for reduction of electricity prices given the fuel surcharges, and for a state facing virtual bankruptcy, the revenue losses will be disastrous and no doubt will send the budget estimates haywire.

As far as the Supreme Court is concerned it has acted in the public interest based on the rule of law, but for a government already embroiled in a hedging scandal which is going to cost the tax payer upwards of US$ 675 million, the revenue loss can be the death knell and that view was reflected when the ministers met on Wednesday.

The reduction in fuel prices will cost the state an estimated Rs.15 billion in revenue which it can ill afford unless of course the President scraps Mihin Air, reduces the number of ministries and other wasteful expenditure.

The President of course attempted to make a pre-emptive strike the previous week by publicly taking a broadside at the judiciary and stating his government will not subscribe to a pricing formula, words Rajapakse may now have to eat unless he dares the Supreme Court.

It is in this overall backdrop the cabinet of ministers was to meet Wednesday, December 17 at 6 p.m. but before the official meeting, President Rajapakse met a kitchen cabinet of sorts to map out strategy, where some harsh comments were made on Chief Justice Sarath N. Silva and the Supreme Court.

Refuge

Interestingly, those who hailed and even took refuge under Supreme Court judgments on the de-merger of the north and east, P-TOMS Agreement, reducing President Chandrika Kumaratunga's tenure by one year, declaring the Inland Revenue Authority Bill and the 19th Amendment to the Constitution unconstitutional, were visibly angry when the shoe was on the other foot.

At this kitchen cabinet meeting where the consensus was that the Chief Justice was acting as a law unto himself, among those present were, the President, Prime Minister Ratnasiri Wickremanayake, Ministers Nimal Siripala De Silva, Maithripala Sirisena, Susil Premajayanth, G.L. Peiris, Rajitha Senaratne, Bandula Gunawardena, Faizer Mustapha, Treasury Secretary Sumith Abeysinghe, Central Bank Governor Nivard Cabraal and Justice Ministry Secretary Suhada Gamlath. Deputy Solicitor General Sanjay Rajaratnam joined the meeting at the tail end.

The President started firing at the Supreme Court from the very start and was ably supported by other members present, who opined, there will be no end to such orders from the judiciary unless pre-emptive action was taken.

Playing

Said the President referring to the Chief Justice - "He is playing a political game and pushing the limits."

Responded Minister Senaratne - "Reducing the fuel prices is a populist decision, so without taking up that issue, lets go for him on other issues such as the withdrawal of barriers."

Added Senaratne - "If we are going to take action, let's take a firm decision. At the same time, explain to the people how much we are spending on the war without cutting any subsidies. Also detail the number of jobs created. Tell the people we will have to withdraw all welfare facilities if the fuel prices have to be reduced."

Dangerous

Chipped in Minister Peiris - "The Chief Justice is in charge of the judiciary but he has taken over the functions of the Executive and the Legislature. This is a dangerous trend."

Not to be outdone, others present weighed in with their own comments, and Minister Nimal Siripala De Silva went so far as to hint at an impeachment motion following which the President called on Treasury Secretary Sumith Abeysinghe to explain the state of play and he proceeded to do so, detailing the events leading upto the pricing formula.

In an obvious state of irritation, the President snapped - "Just tell us what happened today in court."

That, Abeysinghe proceeded to do, stating though no specific order was given,  they were asked to reduce the price of a litre of petrol to Rs. 100 in keeping with the pricing structure.

By this time, DSG Rajaratnam too had walked in and explained in detail the implications of the Supreme Court order and the options open to the government, which saw Central Bank Governor Cabraal making his own contribution oblivious to his role in the hedging scandal, which had pauperised the government.

Different song

Cabraal who earlier directed the Petroleum Corporation not to pay the monies due to the hedging banks was to sing an altogether different song at the meeting saying it was the Supreme Court order on the hedging case that had upset all the good work done by the government.

He said the government negotiated with the banks to reach an amicable settlement on the hedging deals for implementation by January 5 and that it was while all arrangements were being put in place the Supreme Court order was given, derailing the entire process.

Added the Central Bank Governor - "This judgment is bad for us internationally. It has an impact on agreements we reach with banks. We had discussed this issue with the banks and reached a settlement but the Chief Justice's order upset everything."

Ironically, what Cabraal sought to do was now blame the Supreme Court for making a ruling based on a petition which was a direct consequence of his own bungling but with the prevalent mood at the meeting being against the Chief Justice, no one called into question the Central Bank Governor's action that led to the crisis in the first place.

Be that as it may, the meeting ended with the ministers present reaching the conclusion there was a conspiracy afoot to destabilise the government and that it must be met with the full might of the administration.

Following the kitchen cabinet meeting, the official cabinet pow wow got underway, where the only subject up for discussion was the Supreme Court order on the fuel pricing formula and the President once again started firing at the Supreme Court from the outset.

Gratitude

In an obvious signal to the ministers that he wanted to take Sarath Silva and the Supreme Court head on, the President said it was he who went to UNP MPs houses when an impeachment motion was brought against the Chief Justice in the past to lobby support against it  and the gratitude he gets is in the form of these court orders. Not stopping at that the President took some personal swipes at the Chief Justice alleging he had enough material on him if it came to a fight.

The President who just the previous week said he will respect judgements of the court by now was obviously not in a mood to do so but may well have in the process under-estimated the grit of the Chief Justice.

Continued the President - "Sarath has been an old friend. He obviously has a political agenda and wants to get angry with me by giving these orders. He must be thinking his political agenda cannot be pursued by being friendly with me. This is therefore done for me to get angry with him so that he can pursue his political agenda."

So angry was the President that he even threw some files on the floor at one point and said Mahinda Rajapakse will never run away from a fight and would face the challenge head on.

Attempting to infuse some calm to the proceedings was Urban Development Minister Dinesh Gunawardena who said the justification given for the call to reduce prices is the wastage and corruption in government, which issues the Minister noted should be addressed.

Corruption

Shot back an angry President - "There may be corruption but not to the extent they are saying. If you want to talk about corruption, look at the Urban Development Authority. I can give you names and details of what is going on in your ministry. There is no corruption the way they are saying with regard to ministers. It is the officials who are responsible."

Not stopping at that verbal assault, the President had this to say - "I am conducting a war. All must rally round me and help in this task. Once the war is over, I will start the war on corruption. It took me two years to finish the war. I will finish the war on corruption in two months. I know what to do."

Continuing, the President also hinted at not giving in to the Supreme Court on the appointment of the Constitutional Council, stating he intends to keep all the executive powers till the war is over.

"Most of these things are happening because of officials but the ministers get the blame," Rajapakse added.

Mood

The President then turned to Constitutional Affairs Minister D.E.W. Gunasekera and asked - "What do you have to say?"

Gunasekera was in no mood to disagree with an irate President and said it was true ministers get blamed for acts of officials and pointed out that what was at play was an international conspiracy against the government which should be met politically.

The Minister also cautioned against fighting the Supreme Court without having a political strategy in place, stating it could be harmful to the government.

With emotions running high, the ministers who may have  been seeing their perks disappearing before their eyes with the enforced reductions of fuel prices called for collective action to face the threat posed to the government's stability by the court decisions.

Views

Accordingly, the ministers said they should decide not to act on the Supreme Court directive that day, which saw the President calling on Cabinet Secretary Wijesinghe to express his views on the matter.

Not overawed by the situation, Wijesinghe brought his years of experience in the public service to bear on the crisis and said the ministers must give thought to the plight of Treasury Secretary Sumith Abeysinghe when arriving at such a decision since he would be helpless before the court as a public official.

Not responsible

Replied Minister Senaratne - "Then let's announce that this is  a collective cabinet decision. Then the Treasury Secretary is not responsible. The Cabinet Secretary must write and communicate the cabinet decision."

With tempers fraying, Foreign Minister Rohitha Bogollagama like Cabinet Secretary Wijesinghe struck a note of caution stating it would not be prudent to confront the Supreme Court or its orders since it would have international repercussions.

Bogollagama also drew attention to the fact, the Supreme Court order to reduce fuel prices has struck a chord with the people and that it would not be in the government's best interest to challenge it.

Contrary view

Taking a contrary view was Minister Peiris, who took the view the Chief Justice should not be allowed to arrogate to himself the powers of the Executive and the Legislature, which he said if allowed to go unchecked will make governance impossible.

Striking an even more defiant note was Health Minister De Silva who said the government should not rule out a possible impeachment against the Chief Justice as a last resort while Minister Sarath Amunugama also called for serious action to stem the tide.

"Lets tell the people we can do what the Supreme Court has directed by cutting the subsidies," Minister Amunugama added.

Emotions

By this time, emotions had taken over the proceedings and the ministers called for the imposition of curfew to maintain calm on the streets, alleging Ravi Karunanayake was planning to burn two petrol sheds to fuel the crisis by blaming it on the fuel scarcity while Kurunegala District MP Dayasiri Jayasekera was accused of mobilising people on to the streets.

Said Minister Sirisena - "Don't worry. Let us mobilise the people and bring them on to the streets. The people are with the President. We have the people power. Let's show it. This is a conspiracy."

Added the President - "Yes, Ranil can never win through elections. He will try to get there by conspiracies. This is a local and international conspiracy. Let the whole cabinet stand together, mobilise the people and move forward."

Campaign

At this point, Minister Senaratne entered the fray once again stating they should launch a campaign against the Chief Justice not on the fuel price reduction but on other issues.

He said since the price reduction is popular with the people, the attack on the judiciary should come on issues such as the withdrawal of barriers, which pose a security threat and undermine the war effort.

"That's the way to go," he said with a majority of the ministers agreeing, barring the likes of Bogollagama, John Senaratne, Dinesh Gunawardena and A.H. M. Fowzie.

Said Fowzie - "You must be careful not to go against a popular order. People will be brought to the streets by the opposition and we will be playing into their hands and be seen as undermining the independence of the judiciary."

Continuing, Fowzie said due to the court order, petrol is not being sold at the sheds and is causing big problems with people getting agitated.

"They are wanting to know the price. We have to make a quick decision so that there can be stability in the market," Fowzie went on to say.

But Minister Senaratne who once championed an impeachment motion against the Chief Justice would hear none of it, calling instead for tough action.

Emergency Law

Said Senaratne - "We have Emergency Law. Just use it. What's the problem? Tell them their dealerships will be cancelled if they don't sell petrol. Use the Emergency Law for the public benefit."

Interestingly, while speaking of the public benefit, no minister thought it fit to say that the public benefit would best be met by complying with the Supreme Court order and providing them relief through the reduction of fuel prices.

Instead, Minister S.B. Nawinna who claimed to be the owner of a  petrol shed had his own formula to resolve the problem and did not shy away from making his case.

Said Nawinna - "I too have a fuel station. That is not the issue. Tell all the shed owners to sell at the price we supply fuel. If there is a change in price, say the government will meet the difference."

Finally it was decided that since the Supreme Court order was not communicated to the government in writing, they will not act on it but meet again on Thursday to take stock of the situation.

That said, the ministers also decided to launch a campaign against the Chief Justice and the Supreme Court based on issues other than the fuel price reduction even as the opposition too moved in on the action.

Before the meeting ended, there was one other concern the ministers had and that related to The Sunday Leader and its reporting of cabinet meetings which if leaked they felt may compromise their tough talk about the judiciary.

Discussed

The ministers said all what was discussed would be reported in detail on Sunday in the Leader, which for President Rajapakse however was not a matter of serious consequence.

The President told the ministers there maybe among them some who don't like him and that if they were prone to provide details of the discussion, to stick to the facts.

The following day Thursday, when the ministers met, the same defiant mood prevailed with the consensus being that the government will not reduce fuel prices since the court order was not communicated in writing.

And to drive home the point, the ministers decided to take up the issue when the cabinet next meets after the Christmas vacation, which is two weeks hence.

The thinking in government was that the courts will be on vacation from Friday, December 19 to January 5 and they would have time till then to map out strategies and mobilise the people. What they did not reckon was a determined Supreme Court and a battle-hardened Chief Justice for whom it was not so much a personal battle but preservation of a constitution he headed, the Judiciary.

For the order was issued in open court and both the Attorney General and the Secretary, Treasury took notice of it and for the government to say they have not received an order in writing was in effect trifling with the Supreme Court. And in any event the order was against the CPC and the Treasury and not the cabinet.

In fact the very day the Supreme Court issued order on the fuel pricing formula, the Chief Justice spoke at a Law College function where he stressed the importance of respecting the rule of law.

"We are all persons who have gone through the institution. If the institution is functioning well, then the product is good and finally the rule of law is preserved in a much better way," he said.

Kept pace

Added the Chief Justice - "I think the legal field today has a significant place in the country because we have kept pace with the momentum of change. We have responded to all situations that have come up. The situations that have come up are wide and varied and we have responded to every one of them in keeping with the rule of law. All orders are well considered, heard patiently, and orders made in keeping with the rule of law."

And the Chief Justice was not done yet.

With the government sticking to the position the court order was not communicated in writing, Thursday evening, the Chief Justice worked late in to the night and had the order despatched to all the respondents including the new CPC Chairman, Thoradeniya, the Attorney General, Treasury Secretary and the Lanka Indian Oil Company.

Thus, the ball was back in the government's court Friday with at least one petitioner set to file a motion in court drawing attention to the fact the court order has not been complied with. In other words it tantamounts to a contempt of court for which the respondents will be answerable. 

Strategy

By Friday, the government was reassessing its strategy realising the Supreme Court was not backing down and with the court order issued to the Treasury Secretary, CPC and the Lanka Indian Oil Company, there was no way they could all be protected from possible contempt of court charges and jail time and the time had come for the ministers to partake in some humble pie.

The first signs of that came with the LIOC announcing Friday that it will sell petrol at Rs. 100 per litre.

The internal problems for the government were magnified with Treasury Secretary Abeysinghe no doubt fully alive to the fate of  his predecessor, informing the President he will be compelled to resign if the Supreme Court order is not complied with.

Thus by Friday evening the government was veering towards implementing the Supreme Court order having made an unnecessary hash of the issue but still determined to battle the judiciary on other grounds such as the order to withdraw barriers.

This campaign is expected to gather momentum in the weeks to come even as the Supreme Court sits in January to consider the Constitutional Council case.

Consequences

In fact one message that went out Friday was the fate of the minorities in the country if the government chose to ignore Supreme Court orders in the backdrop of earlier eviction orders and diplomatic circles were abuzz on the consequences.

For the LTTE too such a move by the government would be heaven sent since it could be milked to the maximum in India and with the international community as a whole at a time there is a growing call for intervention.

In the meantime, the UNP too was gearing for action with a massive public demonstration planned for January 5, if the government does not provide relief to the people in terms of the Supreme Court order.

Opposition Leader Ranil Wickremesinghe convened a meeting of the party top brass Thursday and said if the government fails to reduce the fuel prices, they will launch a Bangkok style protest campaign until such time the UPFA administration caves in.

That however may now not come to pass with the government wilting under pressure especially due to the refusal by the public officials to go on a confrontation course with the Supreme Court.

Knowing President Rajapakse however he will not go down without a fight, but he surely has met his match in Chief Justice Sarath Silva, who unlike Velupillai Pirapaharan is not living in a jungle hideout or bunker but dispensing justice openly, even daring to drive his own car to the wayside boutiques to buy his stringhoppers and kiri hodi.

Supreme Court lays down the law

The Supreme Court on Thursday delivered copies of the Order on the fuel pricing formula to the Respondents in the case including Treasury Secretary Sumith Abeysinghe, CPC, LIOC and the Attorney General calling for the immediate implementation of the new fuel prices.

In his hard hitting Order, Chief Justice Sarath N. Silva with Justices K. Sripavan and P.A. Ratnayake agreeing has said the people have not received the full benefit of the reduction in world oil prices due to the illegal 'Hedging Agreements,' "on which over 32 million US$ had been paid at the time the Applications were filed with a further imminent payment of US$ 46 million and a total payment of US$ 675.72 million for the operative period of 9 months calculated at the price of US$ 50 per barrel and; the arbitrary and irrational government taxes and levies that have been imposed."

 Following is the full text of the judgement which the Respondents received Friday:

Decided on 17th December 2008

Sarath N. Silva C.J. 

We have heard these applications filed in the public interest and made orders on 28.11.08, 1.12.08 and 15.12.08. The alleged infringement of fundamental rights which deny to the People the equal protection of the law guaranteed by Article 12(1) of the Constitution relate to the impugned executive or administrative action in two respects. They are:

i) "Hedging Agreements" that had been entered into by the 3rd Respondent purportedly on behalf of the Ceylon Petroleum Corporation (CPC - 2nd Respondents) and

ii)  the price of sale of petroleum products, in particular, of petrol.

The applications have been filed in the public interest on the basis that the price of sale is not commensurate with world market prices. In that, with the reduction of the world market prices the People have not derived the benefit thereof at the point of sale due to the illegal "Hedging Agreements" on which over 32 million US$ had been paid at the time the Applications were filed with a further imminent payment of US$ 46 million and a total payment of US$ 675.72 million for the operative period of 9 months calculated at the price of US$ 50 per barrel; the arbitrary and irrational government taxes and levies that have been imposed.

We made an interim order on 28.11.2008 suspending payments on the "Hedging Agreements" for the several reasons that were stated. The Monetary Board being the proper Authority, on whose license the banks have been operating was directed to investigate these matters and to take action according to law.

In the order of 15. 12. 2008 considering the submission made by the Intervenient Petitioners supported by documents that benefits have been provided to the 3rd Respondent, being the former Chairman of the CPC by certain banks involved in the "Hedging Agreements", we directed the Monetary Board to investigate these matters with the assistance of the Criminal Investigation Department of the Police.

The Monetary Board is now directed to refer the results of the investigations to the Commission to Investigate Bribery and Corruption.

The next aspect of the alleged infringement relates to prices. Considering the evidence adduced of the price of petrol in particular being highly excessive, it was decided to lay down a pricing formula to be addressed as a national issue above party politics and the 2nd Petitioner being a Member of Parliament in the Opposition agreed to co-operate in such exercise. Accordingly the Secretary to the Treasury who was present in Court was directed to submit a report on the taxes and levies with the suggested pricing formula.

A copy of the order was sent to the Secretary to His Excellency the President. In the order 1.12.2008, we set out the 3 components of the pricing formula be considered only with regard to petrol. In the Order of 15.12.2008 having considered the report submitted by the Secretary to the Treasury and submissions of parties we directed that the benchmark figure should be taken at US$56.05 per barrel of imported refined petrol. The Secretary was directed to compute a formula on the basis of this benchmark price on the premise that the revenue component would not exceed 100% of the price per litre of imported refined petroleum and of overhead costs.

According to the report of the Secretary at the benchmark importation price of 56.05 US$ per barrel the cost of a litre of refined petrol is Rs. 39.06 and the overhead costs and profit margin of the Ceylon Petroleum Corporation is 9.71 totaling Rs. 48.77. The current selling price of a litre of petrol is Rs. 122. Hence a total of 7 Government and fiscal levies amount to Rs. 73.23.

Accordingly, when a consumer purchases a litre of petrol of which the total cost is only Rs. 48.77 he is in fact paying Rs. 73.23 by way of Government taxes and levies. Viewed from another perspective Government and fiscal levies amount to over 180% of the actual price of petrol. The Petitioners have thus established a strong prima facie case that as many as 7 different levies are imposed in an unreasonable and arbitrary manner.

These levies are imposed in terms of the applicable law by way of executive orders published as Regulations and remain in force unless revoked by Parliament. The impugned executive orders being prima facie unreasonable and arbitrary and deny to the Petitioners and the People the equal protection of the law and excessive prices have a serious impact on the cost of living, the Petitioners are entitled to the grant of interim relief.

Accordingly, we made order on 15.12.2008 that the Secretary to the Treasury should prepare a price formula in terms of which at the benchmark referred above the totality of Government and fiscal levies will not exceed 100% of the cost (i.e. cost of import plus overheads and handling charges).

There has been a downward trend of the prices of petroleum products. In view of the submission of the Secretary to the Treasury that there is a revenue expectation from the sale of petrol and that the formula should not diminish the revenue expectation, we made an order that where the price descends below US$ 56.05 per barrel the reduced amounts be absorbed by way of a customs duty adding to the volume of revenue. On the same basis that where there is an increase of the price from US$ 56.05 upto US$ 100 per barrel, there should be a decrease in government levies coming down to a minimum 75%.

Based on the aforesaid directions the Secretary to the Treasury has now tendered two options for the formula to be adopted.

Having considered the submissions of counsel we are of the view that option No. 1 which is annexed marked "A" to this order would be just and equitable and assure to the People the equal protection of the law.

The Secretary has recommended that Government fiscal levies be reduced to three instead of the previously applicable six. On the basis of the formula only following Government and fiscal levies would be imposed:

i)  Excise duty Rs. 40 per litre which would remain constant;

ii) An effective customs duty of Rs. 30 per litre which would be adjusted by waivers being granted depending on the imported cost of a barrel of petrol taking the benchmark at US$ 56.05 per barrel.

Annex "A" sets out the particulars of the price formula that would be applicable.

Secretary to the Treasury submitted that there would be an undue reduction in Government revenue as a result of this formula. On the other hand the Petitioners contend that since Government revenue would not descend below 75% when the cost per barrel goes up to 100 dollars the price per litre would be as high as Rs. 142 per litre.

We are of the view what whilst there is some degree of merit in both contentions the formula at annex "A" adequately meets the requirements and would be reasonable as well as equitable considering the interest of revenue as well as the aspect of the consumer.

The Secretary's submission that there has been a high expectation of revenue from sale of petroleum is not well founded. According to the chart given in page 6 of his Report the percentage of taxes in relation to the 'total petroleum bills is as follows:

2003 - 39.23%, 2004 - 27.58%, 2005 - 19.52%, 2006 - 14.11%

2007 - 13.89%, 2008 till September 8.7%

Hence the Estimates for the year 2009 could not have been prepared on a revenue estimate significantly higher than 8.7. The presently applicable rate of 180% on the sale of petrol would have been way beyond any reasonable expectation. That has become possible only because of the downward trend of world prices and most importantly due to the interim relief staying the prime facie illegal "Hedging Agreements" being the executive action which infringed the fundamental rights of the People.

Hence it is just and equitable that the People should derive the benefit of the interim order they secured from Court.

In the circumstances we make a direction that the price of petrol be adjusted on the basis of the formula in Annex "A" and that the selling price of petrol be reduced to Rs. 100 per litre with effect from midnight on 17.12.2008. An adjustment of the Excise Duty, Customs Duty, Prot and Aviation Levy (P.AL) being an increase, should be effected in terms of Annex "A" in the manner suggested by the Secretary.

As noted above the imposition of the Excise Duty in terms of Section 3(1) of Act No. 13 of 1989 and the imposition of Customs Duties and the grant of partial waivers as stated in Annex "A" in terms of Section 10A and 19A of the Customs Ordinance, are executive functions that come within the purview of the fundamental rights jurisdiction of the Court.

The alleged infringements result from illegal, arbitrary and unreasonable executive action. The Secretary being the appropriate functionary and the Attorney General who represent the President in terms of Article 35(3) of the Constitution have been heard on the several days this matter was considered. Accordingly we direct that necessary orders be made in terms of the applicable law to give effect to the content of Annex "A" which has been prepared by the Secretary to the Treasury.

A submission was made that the difference in price between the superior grades of petrol that is 95 octane and other superior grades and the ordinary rate of petrol is unreasonable.

The Secretary is authorised to obtain the necessary particulars from the CPC and LIOC and to make a suitable direction as regards the difference in the prices he levies in the aspect of the superior grades of petrol. Once that direction is made it should be notified to the CPC  and the LIOC who would be bound to comply with it and adjust prices accordingly.

The Executive is also authorised to adjust the custom duty so as to prevent an undue gain by LIOC resulting from lower overhead charges and any subsidies that have been derived from the Government in the course of the privatisation exercise, to which reference has been made in the order 15.12.2008.

This order is to be communicated by the Registrar to the Secretary to the Treasury who is present and takes notice, the Chairman of the Ceylon Petroleum Corporation, the Chief Executive Officer of LIOC. They are directed to comply with the price formula on Annex "A" from midnight of 17.12.2008 and to ensure that sales take place without undue interruption. The Petitioners or any affected person may file papers in this court in respect of any infringement of this directive.

A submission was also made when the percentage of tax operative at 100% goes up due to lowering of prices from the benchmark price the excess revenue beyond 100% should be credited to a Stabilization Fund. We are of the view that this is a suggestion to which the Secretary to the Treasury was in agreement is reasonable since such funds would be a useful source to meet Government expenditure where assistance is required for different aspects of the economy.

Accordingly the Secretary is directed to make the necessary arrangements to have such amounts credited to a Stabilization Fund to be used on the basis of the direction given by Government.

Objections may be filed by any of the Respondents, if necessary, within three weeks. Counter affidavits within two weeks thereafter and this matter is to be listed before the same Bench on 16.02.2009, together with SC FR 566/08, 567/08 and 577/08

Direction stated above will be in operation till the final determination of this application.

Sgd/ Chief Justice.

Sripavan J,

I agree

Sgd./Judge of the Supreme Court

Ratnayake J,

I agree

Sgd./Judge of the Supreme Court

 


©Leader Publications (Pvt) Ltd.
24, Katukurunduwatte Road, Ratmalana Sri Lanka
Tel : +94-75-365891,2 Fax : +94-75-365891
email :
editor@thesundayleader.lk