In a landmark ruling, the Supreme Court of Sri Lanka has ordered Seagull Property Developers (Pvt) Ltd to pay Rs. 10 million in compensation to two apartment owners, Dr. K. Mahendrarajah and K. Balendra, for the unlawful conversion of parking spaces into commercial property. The decision, delivered on March 30, 2026, addresses significant violations of the fundamental rights of the petitioners under Article 12(1) of the Constitution.
The case, SC/FR/525/2011, stemmed from a protracted grievance by the petitioners who purchased apartments in a condominium on Hampden Lane, Colombo 06, based on representations made by the developer regarding adequate parking facilities. However, upon taking possession of their apartments, they discovered that the promised parking spaces had been converted into a restaurant and later a supermarket, significantly diminishing the value and utility of their properties.
Expanding Article 126: Liability of Private Actors
Traditionally, Fundamental Rights applications have been directed against executive or administrative action.
Private corporations ordinarily fall outside Article 126 unless their conduct is sufficiently connected with governmental authority.
Justice Nawaz undertook a comprehensive review of Sri Lankan jurisprudence before concluding that the constitutional position has evolved considerably beyond earlier understandings.
The judgment identifies three important stages in that evolution.
The Supreme Court found that the developer had acted in blatant disregard of planning laws and had failed to comply with multiple orders from statutory authorities, including the Colombo Municipal Council (CMC) and the Urban Development Authority (UDA). The court noted that the developer’s actions not only violated the rights of the apartment owners but also highlighted a systemic failure of the regulatory bodies to enforce compliance with the law.
Justice A.H.M.D. Nawaz, who presided over the case, emphasized the need for accountability among property developers and the importance of protecting the rights of citizens who invest their savings in real estate. The court ordered that the compensation be deposited into an escrow account to be managed jointly by the Condominium Management Authority (CMA) and the UDA, ensuring that it is used for the maintenance and upkeep of the condominium.
In addition to the financial compensation, the court directed the relevant authorities to take immediate action to demolish the unauthorized structures that had encroached upon the parking area, thereby restoring the promised facilities to the apartment dwellers. The court also mandated the appointment of a team of structural engineers to assess the impact of the demolition on the building’s integrity.
This ruling is seen as a significant step towards safeguarding the rights of property buyers in Sri Lanka and ensuring that developers adhere to legal and ethical standards. The court’s decision underscores the importance of regulatory oversight in the real estate sector and the need for reforms to protect consumers from exploitation.
The petitioners, who represented themselves in court, expressed their gratitude for the ruling, which they hope will serve as a precedent for other aggrieved property owners in the country. The Supreme Court’s decision is expected to resonate throughout the real estate industry, prompting developers to adhere more closely to legal requirements and ethical practices in their operations.
