Siriaeaa vs. Oc Mel and Another
DE MEL AND ANOTHER
COURT OF APPEAL,
A. DE Z. GUNAWARDANA, J.
C.A. APPEAL NO. 664/82L.T. NEGOMBO NO- 21/1J96.
(PREVIOUSLY. L.T. COLOMBO CASE NO. 8/6383/74),
JUNE 12, 25. 1991. AUGUST 19. 1991,
AND SEPTEMBER 19, 1991.
Industrial Disputes Act – Payment of gratuity should not be confined toretiral situation – Against whom should a claim for gratuity be made when,the employer is dead? – No provision in the Industrial Disputes Act to makeheirs liable in their personal capacity.
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The Applicant who was the Superintendent of an estate worked under thedeceased employer for nearly 29 years and was continued in employment bythe deceased’s wife and daughter who were the heirs, for about another 2years, till the estate was vested in the Land Reform Commission.
That the payment of gratuity should not be confined to retiral situationbut should also be available to a workman for long and meritorious servicewhere services have been terminated as in the instant case.
That the obligations incurred by a deceased employer, will be the liabil-ity of the representative of the estate of the deceased employer.
Per Gunawardana }., “Unfortunately, however.the two Respondents in thiscase have not been sued in that capacity, viz. as representatives of the estateof the deceased, Mr. V. M, de Mel, although in fact, they may be the onlyheirs of the deceased employer, Mr. V. M. de Mel. The distinction drawnhere is that, although they may be liable in their representative capacity asrepresentatives of the estate of the deceased, they are not liable personally,for any obligations incurred by the deceased." >
That the Industrial Disputes Act docs not make any provision to make aclaim for gratuity against an estate of a deceased employer. There is a lacunain the Industrial Disputes Act, as at present, in regard to this aspect.
Cases referred to:
Independent Industrial A Commercial Employees Union v. Board ofDirectors, Co-operative Wholesale Establishment 74 NLR 344, 352.
Hatton Transport Agency Co., Ltd., v. R. George 74 NLR 473.
Ambalamana Tea Estates Ltd., v. Ceylon Estates Staff Union 76 NLR457.
4- National Union of Workers v. Scottish Tea Company Ltd., 78 NLR 133
5. y.G. de Silva v. Associated Newspapers Ltd., Bar Association LawJournal Vol. 1 FT III, P. 118.
6- Somerville A Co, Ltd., v. O. F. Bakelman C.A. 170/83 Court of AppealMinutes of 27.11.1987.
Sirisena vs. De Mel and Another (A. De. Z. Gunawardena, J.)
7. Arnolds v. Gopalao 64 NLR 153, 156, 157.
APPEAL from the Judgment of the Labour Tribunal of Negombo.
J, W. Subasinghe P.C. with Harsha Soza for Applicant – Appellant.
H.L. de Silva P.C. with Desmond Fernando P.C. and Kumudim deSilva for Employer – Respondents.
October 30, 1991,
A. DE Z. GUNAWARDENA, J.
This is an appeal from an Order of the Labour Tribunaldated September 1, 1982, dismissing the application of theApplicant-Appellant. In the said applicatibn to the LabourTribunal the Applicant-Appellant had claimed the followingreliefs: (a) Compensation for loss of career calculated at Rs.91,876/- (b) Gratuity for 31 years of service (c) ProvidentFund and (d) Bonus for the year 1973 or in the alternative forreinstatement with back wages. At the inquiry the Applicant-Appellant did not-canvass his claim for reinstatement andback wages. The Applicant-Appellant’s claims for gratuity,Provident Fund and bonus have been dismissed by the LabourTribunal on the basis that it had no jurisdiction to entertainsuch claims. The claim for compensation for loss of career wasrefused by the Labour Tribunal as it held that it was not justand equitable and that it had no power to make such anOrder, against a widow or legal representative of the deceasedemployer.
At the hearing of this appeal the main matter that wasargued before this Court was whether the Applicant-Appellantwas entitled to claim gratuity from the two Respondents, notonly for the period that they employed him, but also for theperiod their predeces$or-in-title Mr. V. M. de Mel, employedhim.
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After consideration of the‘evidence led in the case, thelearned President of the Labour Tribunal has in my viewrightly held that the Applicant-Appellant had been employedby Mr. V. M. de Mel from 1943 upto his death on 28th May1972 and that the two Respondents continued to employ himupto the time the estate was vested in the Land Reform Com-mission on 20.5.1974. Thus the deceased Mr. V. M. de Melhad employed the Applicant-Appellant for nearly 29 years andthe two Respondents for approximately 2 years.
According to a long line of decided cases it is now wellsettled law that payment of gratuity should not be confined toa retiral situation only, but should also be available to theworkman for long and meritorious service. See IndependentIndustrial A Commercial Employees' Union vs. Board ofDirectors, Co-operative Wholesale Establishment (1), HattonTransport Agency Co., Ltd. vs. R. George (2) AmbalamanaTea Estates Ltd. vs. Ceylon Estates Staff Union (3) NationalUnion of Workers vs. Scottish Tea Company Ltd. (minorityview) (4) Y.G. de Silva vs. Associated Newspapers Ltd. (5)Somerville A Co., Ltd. vs. O. F. Bakelman C. A. (6).
In my view, the decision in Ambalamana Tea Estates Ltd.vs. Ceylon Estates Staff Union (3) is of particular interest tothe facts of this case. Where Chief Justice, H.N.G. Fernandostated that,
“If then his employment under a particular employer is termi-nated by that employer solely for the latter’s purpose, and notbecause of any voluntary act or any fault on the part of the•employee, it is not reasonable for the employee to be deprivedof a claim to a gratuity in respect of the period of thatemployment.”
Although the services of the Applicant-Appellant were termi-nated by the Respondents in consequence of the operation ofthe Land Reform Law, in my view the same considerations asstated in the passage quoted above would apply. Hence, theApplicant-Appellant would be entitled to claim gratuity fromthe employer.
5inserts vs. De Mel and Another (A. De. Z. Cunawardena, J.)
In the enforcement of the said right to claim gratuity afundamental issue arises for consideration, in the instant case.The question that has to be decided is, against whom shouldsuch a claim be made when the employer is dead? In this casethere are two periods of service. The first period of nearly 29years that Applicant-Appellant served under the deceasedemployer, Mr. V. M. de Mel and the second period of approx-imately 2 years, that Applicant-Appellant was employed by theRespondents. In regard to the second period there is no diffi-culty as to the liability as it is clearly the responsibility of theRespondents. However, as to the question whether the periodof two years is too short to award gratuity, will be consideredlater.
The learned Counsel for Applicant-Appellant submittedthat a contract does not terminate with the death of theemployer, unless it is of a personal nature. He cited the Lawof Contracts by C. G. Weeramanthry, Vol. II (1967) page 871- section 916, where it is stated that, “Examples of contracts ofa purely personal nature are those dependent upon personalknowledge, skill of capacity or involving personal services."He pointed out that in the instant case Applicant-Appellantdid not perform any personal service to the deceased Mr. V.M. de Mel, like being a Confidential Secretary. He argued thatthe rights and obligations under the contract of employmentsubsisting between the deceased and Applicant-Appellant,passed to the Respondents, who are the intestate heirs, whoadiated the inheritance, and are therefore liable to pay gratuityto the Applicant-Appellant.
It is to be noted that in the very section cited by thelearned Counsel for the Applicant-Appellant, Prof. Weera-manthry has added that,
"In all other cases, (meaning contracts not of a purelypersonal nature – explanation mine) all contractualrights and duties pass upon death to the representatives
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of a deceased person, and the obligation is thereforenot extinguished, but survives in favour of or againstthe representative of the estate of the deceased.”
Thus it is seen that the obligations incurred by the deceasedare clearly cast upon the representative of the estate of thedeceased. Unfortunately, however the two Respondents in thiscase have not been sued in that capacity, viz. as representativesof the estate of the deceased Mr. V. M. de Mel, although infact they may be the only heirs of the deceased employer Mr.V. M. de Mel. The distinction drawn herp is that although theymay be liable in their representative capacity as representativesof the estate of the deceased, they are not liable personally, forany obligation incurred by the deceased.
This position accords with the line of argument taken upby the learned Counsel for the Respondents who submittedthat the liability to pay gratuity, was a liability which at thetime of the death of the deceased was yet undetermined and isa sum claimable against the estate of the deceased. He addedthat although the Respondents were the intestate heirs of thedeceased, they are not liable as the “former employers” of theApplicant-Appellant, during the relevant period for the pur-pose of an application made to the Labour Tribunal. He-con-ceded that the Respondents may be liable in a civil action inthe District Court as the legal representatives of the deceasedfor any claim made in respect of the estate of the deceased.
In this context it is pertinent to note that the IndustrialDisputes Act does not make any provision to make a claim fc-gratuity against an estate of a deceased employer. This posi-tion was enunciated in the case of Arnolds vs. Gopalan (7)where Thambiah.J. stated that,
“The scope and ambit of the amended Industrial Dis-putes Act is to give relief or redress to a workman whois in a position to make an application before theLabour Tribunal against the employer or ex-employerwho is alive at the time of the application. The Labour
CASirisena vs. De Mel and Another (A. De. Z. Gunawardens, J.)73
Tribunal derives its jurisdiction from the amendedIndustrial Disputes Act. Its powers as well as its juris-diction has to be looked for within the four corners ofthis statute and liability under this statute, thereforecannot be extended to a widow of a deceased employerwho is brought before the Labour Tribunal and againstwhom relief is sought for a liability incurred by her latehusband."
He added further at page 157 that,
"There are other statutes which have imposed liabilityon the executor or the personal representative of adeceased person for debts or liabilities of the deceased(vide the Income Tax Ordinance (Cap. 188) and theWorkman’s Compensation Ordinance (Cap. 139)>but itis significant that the Industrial Disputes Act does notimpose any liability on the executor, personal represen-tative or the executor de son tort of a deceased personfor his debts or liabilities".
The learned Counsel for the Respondents submitted that,although the Report of the Commission on Industrial Disputes(Sessional Paper No. 10 of 1970) recommended that provisionshould be made that in the event of the death of an employer,after commencement of proceedings, his legal heirs, executorsor administrators should be substituted, and furthermore thatclaims of a workman against the estate of deceased employershould be made the first charge thereon, and rank in prece-dence over the claims of the creditors (para 579); such recom-mendation has not been given effect to by the Parliament. Thisclearly confirms the lacuna that exists in the Industrial Dis-putes Act, as at present, in regard to this aspect.
Thus it is clear from the above analysis that the LabourTribunal does not have the power to make an Order againstthe Respondents requiring them to pay gratuity for the periodof nearly 29 years, the Applicant-Appellant was employed by
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deceased employer Mr. V. M. de Mel. In the circumstances theOrder made by the Labour Tribunal in this case that it lackedjurisdiction to .make an Order for the payment of gratuityagainst the Respondents, for the said period of nearly 29 years,is correct in law, and I accordingly uphold that part of theOrder.
The question that remains to be considered now is, whetherApplicant-Appellant is entitled to claim gratuity for the 2 yearperiod he was employed by the Respondents. In ordinary cir-cumstances, gratuity is payable only for long and meritoriousservice. However in this case although the period under con-sideration is only two years, one cannot help but note thatthese tv-o years are the last two years of the service ofApplicant-Appellant after having served for nearly 29 years,the deceased Mr. V. M. de Mel, who was the husband andfather of 1st and 2nd Respondents respectively. It is also to beseen that the Applicant-Appellant had not been able to recovergratuity due to him for 29 years of service to the deceased, dueto the legal impediment that has stood in his way. Accordingto the evidence the last salary received by the Applicant-Appellant is Rs. 1000/- per month. Thus in the special circum-stances of this case, I am of the view that, it is just and equit-able to award gratuity for the two years he had served theRespondents. Accordingly, I set aside that part of the saidOrder of the Labour Tribunal in which the Labour Tribunalrefused to award gratuity for the said two years and order thatthe Respondents pay the Applicant-Appellant 1 month’s salaryfor each year of service, which would amount to Rs> 2000/-.
1 The Respondents should deposit the said Rs. 2000/- with theCommissionel1 of Labour, Colombo on or before 31stDecember 1991, to be paid to the Applicant-Appellant. TheApplicant-Appellant is free to withdraw the same thereafter.
1 make no order as to costs.
SIRISENA VS. DE MEL AND ANOTHER