Abeysiri v. Wijesiri (Ismail, J.)
ANZ GRINDLAY’S BANKv.
MINISTRY OF LABOUR AND OTHERS
COURT OF APPEAL.
C.A. APPLICATION 873/94INDUSTRIAL COURT A/2394MARCH 25, 1995.
Industrial Law – Industrial Disputes Act S4(1) – Arbitration – S5(1) S8(2A) -Payment of Gratuity Act, No. 12 of 1983 – Enhancement – Industrial Dispute -Resignation – Claim for enhanced gratuity – Live Dispute – Cessation ofEmployment.
'The 4th Respondent resigned from the Services of the Petitioner Bank with effectfrom 1.7.91. In terms of S5(1) (2) read with S8(2A) he was paid gratuity computedon the basis of 1/2 months salary for each year of completed service. Thereafterby his letter of 6.9.91 he requested for gratuity computed on the basis of 2months gross salary for each year of service; referring to the case of 2 employeeswho had resigned after his resignation and had been paid gratuity at 2 months foreach year of completed service, after adding a further 5 year period. TheCommissioner refused this application. Thereafter on 21.6.93, a request wasmade to the Minister of Labour to refer this matter to Arbitration in terms ofS. 4(1). In an application to quash the said reference, it was;
There was no Trade Dispute or any dispute at the time the Employeetendered his resignation.
A dispute can be referred for settlement only if the Dispute arose while therelationship of Employer-Workman subsists.
Sri Lanka Law Reports
(1995) 2 Sri LR.
The Minister cannot act under S4(1) where there was no industrial disputeexisting at the time when the Workman ceased to be an employee,
Cases referred to:
Standard Chartered Bank v. C. Carthigesu CA 456 of 1992.
S. C. Special leave to Appeal application 165/94
S.C. Appeal 106/94 SCM 22.2.1995
R. v. National Arbitration Tribunal 1947 AER 703.
State Bank of India v. S. Sundaralingam 73 NLR 514.
AN APPLICATION for a Writ of Certiorari.
S. L. Gunasekera. with Gomin Dayasiri for PetitionerAdrian Perera S.C. for 1st and 2nd Respondent.
A. R. Surendran with Gihan Ranawake for 4th Respondent.
Cur. adv. vult.
This is an application for a mandate in the nature of a Writ ofCertiorari to quash the order of the 1st Respondent dated 8th March,1994 the document marked P7 and also a Writ of Certiorari to quash theorder of the 3rd Respondent dated 4th November, 1994 marked P13and also for a mandate in the nature of Writ of Prohibition preventingand or restraining the 3rd Respondent hearing and of proceeding withthe said Arbitration No. A/2394.
The relevant facts briefly are as follows: The petitioner is a BankingCompany duly incorporated and having Branch Offices in several partsof the world including a registered Branch Office in Sri Lanka. The 1stRespondent is the Minister of Labour and 2nd Respondent theCommissioner of Labour and the 3rd Respondent was a person whowas appointed by the 1st Respondent in terms of Section 4(1) of theIndustrial Disputes Act as an Arbitrator, the 4th Respondent was theemployee of the Petitioner from 1st June 1979 to 30th June 1991. The4th Respondent applied for one months annual leave followed by 2months no pay leave from the end of January 1991 to be spent in theUnited Kingdom by letter dated 17th December, 1990. The 4threspondent overstayed the leave and never reported to work thereafter.The 4th Respondent resigned from the service of the Petitioner witheffect from 1st July, 1991 and he also requested by another letter to thePersonnel Manager marked P2A where he stated that he had tendered
CA Anz Grindlay's Bank v. Ministry of Labour and Others (Senanayake, J.)
a letter of resignation and there were two outstanding loans that he hadobtained from the Bank for housing and a vehicle and he wished tosettle these two loans with the proceeds from the E.P.F. and E.T.F. andaccrued interest and gratuity. After the settlement of the two loans thesurplus is to be credited to his current Account No. 1056596001 andonce the loans were settled, to release the title deeds and cancel theMortgage Bond of the house and the Promissory Note of the vehicleloans and to hand over the relevant papers to his brother P. U. de Costawho had the Power of Attorney. In view of the Petitioner’s resignation thepetitioner paid the 4th respondent gratuity computed on the basis ofhalf month's salary for each year of completed service in terms ofSection 5(1) read with Section 8 (2A) of the payment of gratuity Act.
Thereafter by letter dated 6th September, 1991 marked P3, the 4thRespondent requested from the Petitioner gratuity computed on thebasis of two months gross salary for each year of service and hadreferred to the fact that two other employees who had resigned after hisresignation had been paid gratuity at two months gross salary for eachyear of service after adding a further 5 year period of service thus the4th respondent’s Attorney made an application for enhanced gratuity interms of Section 10(1) of the Payment of Gratuity Act to the 3rdRespondent on 7th May, 1992, and the said application was inquiredinto by an Assistant Commissioner of Labour and he made order on 2ndof December, 1992, marked P4(a) refusing his Application. The 4thRespondent did not canvass the order made by the AssistantCommissioner of Labour in any Court of Law. After 7 months of theorder P4A the 4th Respondent made an application on 21st July, 1993to the 2nd respondent requesting that the question whether or not the4th Respondent was entitled to enhanced gratuity be referred toArbitration under Section 4(1) of the Industrial Disputes Act.
The submission of the Learned Counsel for the petitioner wasthreefold. His first submission was as there was no industrial dispute theMinister had no jurisdiction under the provisions of Section 4 of theIndustrial Disputes Act to refer the matter for Arbitration. His 2ndsubmission was the Arbitrator had no jurisdiction to entertain or proceedwith the matter referred to as there was no dispute. His 3rd submissionwas the dispute between the appellant and the petitioner was after theresignation and therefore there was no industrial dispute.
Sri Lanka Law Reports
 2 Sri L.R.
In my view it is necessary to examine his third submission as theprimary submission because the 4th Respondent voluntarily tenderedhis resignation on 1st July, 1991 and this was confirmed by his owndocument P2 dated 1st July, 1991 and P2a where he had given specificinstructions as to how his outstanding loans could be settled. With theacceptance of his resignation the employer-employee relationshipceased to exist. In my view the 3rd Respondent by letter dated 6thSeptember, 1991 for the first time had raised the issue that he should bepaid gratuity at the rate of 2 months gross salary for each year. At thetime of his resignation and the acceptance of his resignation there wasno dispute regarding the gratuity. If the 4th Respondent had protestedregarding the payment or at the time of resignation, if he had indicatedthat he was entitled to gratuity calculated at 2 months gross salary foreach year of service then one could come to the conclusion that at thetime he tendered his resignation, if he had indicated to the Petitionerthat he should be paid gratuity on the basis of 2 months gross salary foreach year of service. In the instant case there was no “live” dispute atthe time the 1st respondent acted under Section 4 of the IndustrialDisputes Act. The Petitioner relied on the judgment of the StandardChartered Bank v. C. Carthigesu(1) where the Court of Appeal quashedthe order of the Arbitrator. S. B. Perera the Appellant in that caseappealed to the Supreme Court and the Supreme Court in S.C. SpecialL.A. Application 165/94(2) and S.C. Appeal 106/94(3> set aside the orderof the Court of Appeal and held there was a dispute for settlement byArbitration. But the facts in that case are distinguishable, the appellantin that case was employed by the Standard Chartered Bank in 1957and was appointed as Manager Operations in 1985, and by letter dated19th October 1989 the appellant applied for permission to retire fromthe Banks services as early as possible preferably within one month andrequested the Bank to grant a pension commensurate with the 32 yearsof service.
In terms of the Pension fund Rules of the Bank set out in a Trust Deedto which the appellant was a party, employees who had completed notless than 10 years of service were entitled to a pension computed onthe basis set out in the Rules either upon reaching his normal retirementage of 55 years or upon premature retirement on account of infirmity ordisability.
Anz Grindlay's Bank v. Ministry of Labour and Others
(H. W. Senanayake, J.)
The Appellant was 55 years of age at the time of the retirement,the retirement was not on account of infirmity or disability. In reply tohis letter dated 19th October the Manager Administration of the Bankwrote to the Appellant pointing out that no provisions existed in theterms and conditions of service for the payment of the requestedpension and that the Bank will therefore require to consider theapplication and thereafter refer it to the Head Office in London. On3rd November, 1959 the Bank wrote to the appellant informing himthat his request for premature retirement on pension terms had notreceived approval. On 10th November, 1989 the appellant wrote tothe Bank tendering his resignation with effect from 13th November,1989. These were the salient facts of the case. So at the time hisresignation was tendered on 13th November, 1989 there was adispute regarding his conditions of service, in terms of the definition -Industrial Dispute-in the Industrial Disputes Act. The matter forsettlement that was referred to was on the basis that the Appellantwas entitled to retirement benefits, but whether having regard to thelength and quality of the service he had rendered especially in thelight of the fact that two other employees had retired prematurely hadnevertheless been granted retirement benefits. In the said case therewas a dispute and the dispute arose before the Appellant tenderedhis resignation. Considering these facts the Supreme Court hadcome to a determination that there was a “live" industrial dispute.Therefore the Minister had acted under Section 4(1) of the Act,because there was a dispute that arose on 19th October, 1989 whenthe Bank responded negatively to the appellant’s request.
In the instant case there was no dispute between the Petitionerand the 4th respondent. At the time the 4th respondent tendered hisresignation on 1st July, 1991 it was to be effective from that date, andP2A confirms that he was accepting gratuity and to deduct theoutstanding loans and credit the balance to his Current Account andrelease the relevant documents to his brother who had beenappointed as his Attorney. The 4th respondent had not asked for twomonths gross salary for each year of service as gratuity. It was only inSeptember, 1991 by P3 that he had indicated to the Bank that he hadheard that some others who retired prematurely after his resignationhad been granted two months gross salary for each year of service.At the time he made this request it must be understood quite clearly
Sri Lanka Law Reports
 2 Sri LR.
and without any ambiguity that he was an ex-employee and therewas no relationship in the nature of employer-employee.
I am not for a moment stating that an ex-employee under nocircumstances cannot have an Industrial Dispute. That would becontrary to the intention of the Industrial Disputes Act. If the disputearose before the termination or due to voluntary resignation by theworkman there was a "live" dispute to be referred to and the Ministerhas the power under Section 4(1) of the Industrial Disputes Act torefer to Arbitration. Cessation of employment does not mean thatthere is no Industrial Dispute if in fact before the cessation there wasa dispute between the employer and employee. In Rx v. NationalArbitration Tribunal<4) Lord Goddard rejected the submission thatthere must be an existing contract of employment because “if effectwere given to it would mean that any workman could Nullify the wholeprovision of the order and the object of the regulation under which itwas made by terminating the contract of service before a referencewas ordered or even after the matter was referred but before theTribunal considered it.
I am of the view that in the instant case there was no trade disputeor any dispute at the time the 4th respondent tendered hisresignation.
The 4th respondent in his objection averred that the petitioner hadnot accepted the said resignation in writing, the 4th respondent hadalso stated that before the resignation was handed over to thepetitioner that he through his brother demanded payment of gratuityat a higher rate and his brother Upul de Costa objected to thecomputation of the gratuity at a lower rate and as a result of thisobjection his brother refused to sign the receipt 4R6 given by thepetitioner. If that was the position I cannot understand why the 4threspondent waited till 6th September, 1991 to protest to the petitionerabout the said gratuity. In the complaint made by P4 to theCommissioner of Labour under Section 10 (1) of the Payment ofGratuity Act, No. 12 of 1983 the 4th respondent’s brother hadindicated that the petitioner operated a scheme of gratuity wherebyemployees were paid 2 months gross salary for each year of service.Such agreement form the basis of payment of gratuity by the
Anz Grindlay's Bank v. Ministry of Labour and Others
(H. W. Senanayake, J.)
Petitioner. I cannot understand why the 4th Respondent’s Attorneywaited till 7th of May 1992 to make this complaint to theCommissioner of Labour.
Each case must be viewed on the facts of that case. One couldcite any number of authorities especially from the Courts of India ofthe various branches of the High Courts but one has to decidewhether the terms and the language used by the Industrial DisputesAct India has any similarity to our Industrial Dispute Act. One shouldnot import wholesale the decisions because the section of thestatutes are not the same. Section 5 of the Gratuity Act lays down theminimum that has to be paid as gratuity to an employee and if thePetitioner had complied with Section 5 (1) of the Gratuity Act hewould have complied with the Law, unless there was a specialagreement between the parties to pay higher gratuity at the time ofresignation or termination.
The Counsel for the 4th respondent submitted that there was noevidence of the acceptance of the resignation by the Petitioner. I amunable to accept his submission. His submission is contrary to alldocuments filed by the Petitioner and the Respondent.
I am unable to agree that the 1st Respondent could act underSection 4 (1), where there was no Industrial Dispute existing at thetime where the workman ceased to be an employee. An IndustrialDispute must necessarily arise at the time of employment not afterthe cessation of employment either voluntarily or by termination. Ifone were to take the view that there could be an Industrial Disputeafter cessation of employment we would be opening the gateway forall employees to refer matters for arbitration in terms of Section 4 (1)of the Act even after passage of a long period. For example if thepetitioner was paying 6 months gross salary for each year of serviceto the retiring employees presently, could an ex-employee who hadresigned 5 years ago claim the same gratuity that was not inexistence or contemplated by the petitioner at that time or which wasnot followed at the time he ceased to be an employee. If one were toaccept the view that the 1st respondent has the power under Section4 (1) to make such a reference on the basis that there was anIndustrial Dispute I am of the view that we would be doing violence tothe language of the Act.
Sri Lanka Law Reports
 2 Sri LR.
The 4th respondent in his statement of objections averred thatwhen his brother handed the letter of resignation he demanded thepayment of gratuity computed at a higher rate as specified in thescheme. That his brother was informed by Mr. Cassell that thegratuity computed at the higher rate would be paid to the 4threspondent once the approval of the Petitioner's General Managerwas obtained. If there was such a representation made I cannotunderstand why he had failed to mention this important undertakingin his letter P3 dated 06.09.91.
In terms of 4R3 clause (e) An employee shall uponresignation/termination of employment prior to retirement in thecircumstances which does not entitle him to a gratuity referred to atthe aforementioned clauses (A), (B), (C) and (D) will be entitled to agratuity computed in Terms of the Payment of the Gratuity Act No. 12of 1983. The 4th respondent therefore was fully aware of what he wasentitled to as gratuity on resignation.
in the case of The State Bank of India v. S. Sundaralingam(5) oneThuraisingham a Sub Accountant employed by the petitioner retiredon 10th April, 1962. On 15th August, 1963 the Union on his behalfand that of the Sub Accountants applied for the benefits of a salariesrevision subsequent to the orders in I.D. 306 and I.D. 306A. In theapplication the Union included an application of pension and theconsequent arrears of salary and pension.
Alles, J. observed at page 316 “I cannot see how this definitioncan ever apply to any dispute or difference between an employerand an ex-employee who has retired from service of his employer.Thuraisingam ceased to be the Petitioner’s employee on 10th April,1962. This is a case of cessation of employment and not one oftermination or reinstatement. When a person ceases to be inemployment, there cannot be a live dispute between the partieswhich can ever culminate in an award affecting the terms ofemployment".
To my mind that a dispute can be referred to settlement only if thedispute arose while the relationship of employer and workmansubsisted. A dispute which arises between an ex-employer and an
Anz Grindlay's Bank v. Ministry of Labour and Others(H. W. Senanayake, J.)
ex-worker after the employer-workman relationship has ceased toexist is not an industrial dispute within the meaning of the Act.
In the circumstances, I hold that the Minister’s order referring thepurported dispute between the petitioner and the 4th respondent isultra vires Section 4 (1) of the Act and allow the application byallowing the paragraph’s c, d and e of the prayer of the Petition.
I refrain from making an order for costs.