CELON BANK EMPLOYEES UNION v. STATE MORTGAGE INVESTMENT BANK

009-SLLR-SLLR-1983-1-CELON-BANK-EMPLOYEES-UNION-v.-STATE-MORTGAGE-INVESTMENT-BANK.pdf


Ceylon Bank Employees, Union v. State Mortgage Investment Bank
. 403
:sc
CEYLON BANK EMPLOYEES' UNION
'V. ■
. STATE MORTGAGE INVESTMENT BANK
SUPREME COURT,
.SAMARAKOON, C.J., WANASUNDERA, J.,AND SOZA, J.
S.C. APPEAL NO. 32/82.
C.A. APPEALS NOS. 315/80 TO 380/80,L.T. NO. 1/5812/78 AND OTHERS.
JULY 19TH AND 20TH, 1983.
Unjustifiable Termination of Services Whether theServices provided by the State Mortgage Investment Bankconstituted essential services under section 2(9) and (10)of the Essential Services Order No.10 of 1972 – Definitionof the rule "ejusdem generis" in construing "any otherSank®- Regulations 2(1), 3(2) and/$8(l) of the Emergency- .(Miscellaneous Provisions and Powers) Regulation No.20/5 of 15.8.72 declared under section 5of the PublictSecurity Ordinance.
A Number of employees of the State MortgageInvestment Bank represented by the Ceylon Bank .Employees' Union (Appellant), claimed that theiremployment had been unjustifiably terminated by theBank (Respondent) and therefore they had asked forgratuity and compensation respectively. The Bankpleaded that these employees were deemed to havevacated their employment in terms of Regulation38(1)(a) of the Regulation No.8 of 1972. the Bankalso claimed inter alia to be a "corporation"within the meaning of Essential Services Regulation
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2(9) and therefore exempt from liability. Though,the President, Labour Tribunal rejected thissubmission the Court of Appeal has held that theState Mortgage Bank is a “Bank" within the meaningof the expression 'any other bank* engaged in thetransaction of commercial or financial business inparagraph 2(10) of the same order.
The two points for decision are:-
Whether the Essential Services Order 1972, wasbad in law.
Whether the services provided by the StateMortgage Bank constituted an Essential Service interms of the Essential Services Order, 1972.
Held –
That the State Mortgage Bank is not a "Bank" withinthe meaning of the words "any other Bank" inregulation 2(10), and in view of this finding it isnot necessary to consider the other point of lawregarding the legal validity of the regulations.
Cases referred to –
United Towns Electric Co. Ltd. v. AttorneyGeneral of Newfounland (1939) 1 All E.R. 423,428.
S. Magnihild (owners) v. McIntyre Brothers andCompany (1920) 2 K.B. 321.
R.V.Edmonton (1859) 28 L.J. MC 213, 218.
United Dominions Trust v. Kirkwood (1966) 1All E.R. 968.
Appeal from the judgment of the Court of Appeal.
H.L.■ de Silva, Senior Attorney-at-law with GomisDayasiri and P. Samararatne for ApplicantRespondent – Appellant.
Mark Fernando with. M.A.Bastians for Employer -Appellant – Respondent.
SC. Caykm Bank Employees, Union v. State Mortgage Investment Bank ISamarakoon. C. J.l 405
August 29,1983.
SAMARAKOON. CJ.
This appeal arises out of a dispute betweenthe State Mortgage Bank (Respondent) and its em-ployees represented by the Ceylon Bank EmployeesUnion (Appellant). The dispute was first adjudi-cated upoft by the President, . Labour Tribunal (1)who made an award in favour of the employees. TheBank appealed against it to the Court of Appeal andTambiah J. allowed the appeal and set aside theorder of the Labour Tribunal. Hence this appeal.
The facts relevant to the dispute are these.The Union was at all relevant times a registeredTrade Union. In the year 1972 it had about 7100members and a number of Branch Unions which wererepresented on the governing body of the ParentUnion. The State Mortgage Bank Branch was one ofthese Branches and it had 71 members. From aboutAugust 1971 the Union made several demands on be-half of its members which related to their emolu- -ments and conditions of work. The State MortgageBank was also presented a set of demands. A jointnegotiating Committee of Banks was set up by thethen Minister of Finance to negotiate on thesedemands. The State Mortgage Bank rejected thedemands of its own employees and did; not partici-pate in these negotiations on the glea that it wasnot a profit making concert like’ the other Commer-cial Banks which were participating in the negotia-tions. The negotiations failed and the Union gavenotice of strike action. The strike continued fer aperiod of 108 days commencing 31-8-72 and endingon 17-12-72.
This strike was staged during a period ofemergency declared by the President of the Republicunder the provisions of the Public Security Ordi-nance (Cap.40). Acting under the provisions- of
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section 5 of that Ordinance the President made, on15-8-72, a series of regulations captioned theEmergency (Miscellaneous Provisions and Powers) Re-gulations No.8 of 1972. They were published in theGovernment Gazette (Extraordinary) No.20/5 of 15-8-72. The two that are relevant for the purposes ofthis case read as follows:–
Regulation 2(1) –
Essential Services' means any servicewhich is declared by order of the Presidentto be of public utility or to be essentialfor the .public safety or to the life ofthe community, and includes any Department ofGovernment or branch thereof which is so dec-lared to be such a service."
Regulation 38(1) –
"Where any service is declared by order madeby the President, under regulation 2 to be anessential service, any person who, on or afterAugust 15, 1972, was engaged or employed, onany work in connection with that service,fails or refuses, after the lapse of one dayfrom the date of such order, to attend at hisplace of work or employment ox> such otherplace as may from time to time be designatedby his employer or a person acting under theauthority of his employer, or who fails orrefuses, after the lapse of one day from thedate of such order, to perform such work as hemay be directed, by his employer or a personacting under the authority of his employer toperform,- he shall, notwithstanding that he hasfailed or refused to so attend or to sq workin furtherance of a strike –
(a) be deemed for all purposes to haveforthwith terminated or vacated his employmentnotwithstanding anything to the contrary inany other law or the terms or conditions of
SC Ctykin Bank Empkyoes. Union v. Sts!s Mortgage tnvaslmeni Bank ISamtrikoon. C. J.l 40?
any contract governing his employment; and.
(b) in addition, be guilty of an offence."
At the same time he made the Essential Services.Order of 1972 which was published in the sameGazette. Among the several services declaredessential two concerned corporations and Banks andread thus –
2(9)- "The services provided by any
Government Corporation or branchthereof."
2 (10) – "The services provided by theCentral Bank of Ceylon and anyother Bank engaged in the transac-tion of commercial or financialbusiness."
"Government Corporation" was defined by Regulation3(ii) to mean a corporation the capital of which iswholly or partly subscribed by the Government.
On 18-12-72 the employees of the Banks numbering 71persons reported for duty but the Respondent Bankrefused them entry into the premises. Their entrywas barred by two policemen who guarded the entran-ce to the Bank. The Union then filed application inthe Labour Tribunal on behalf of these 71 employ-ees; five of which were later withdrawn. The Unionclaimed that the employment of its members (save,four who had in the meantime reached retiring age)had been unjustifiably terminated. Subsequently .bynegotiation with the Government a majority of theseemployees were engaged by the Bank of Ceylon whilea few secured employment in the public sector.Those employed by the Bank of Ceylon were placed atthe same point of salary they were paid by the Res-pondent Bank at the time of termination of service,but their past services were not recognised intheir new employment. In respect of these employeesthe Union asked for gratuity and compensation. The
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.Bank denied that it terminated the employment of .these employees and pleaded that the employees weredeemed to have vacated their employment in terms ofRegulation 38(1)(a) of the Regulations No.8 of :1972. At the inquiry before the Labour Tribunal theBank claimed' inter alia to be a "corporation" with-in the meaning of Essential Services Regulation2(9) and therefore exempt from liability. The Pre-sident Labour Tribunal rejected this submission.This decision was not canvassed before the Court ofAppeal and does not therefore arise for decision bythis Court. The two points for. decision are asfollows:-
Whether theEssentialServicesOrder,
1972, was bad in law.
Whether the services provided by the State
Mortgage Bank constituted an essential servicein terms of theEssentialServicesOrder,
1972.
The Courtof Appeal hasheld thatthe StateMort-gageBankis a "Bank" within themeaningof the
sxprcssxon ,f; ?th6r bank engaged in the trans-action of commercial or financial business"in para-graph 2(10) of the Essential Services Order 1972. .This conclusion was influenced by the submission ofCounsel for the Bank which commended itself toTambiah, J., viz., "that the common quality thespecified institutions possess which bring themunder a genus is that the'Central Bank' and the1Bank of Ceylon' are both -institutions known asbanks under the law." I will revert to this laterin this judgment.
The Court of Appeal invoked the ejusdemgeneris rule iii construing the words 'any otherBank'. Counsel for both parties before us arguedtheir respective cases on the basis that this ruleapplied to decide the issue Ejusdem generis is arule of construction and not a rule of law. "To in-voke the application of the ejusdem generis rule
– SC. Ceyion Bank Employees, Union v. State Mortgage Investment Bank (Samarakoon. C. J.) '409'
l::
_there must be a distinct genus or category" (Craies. .on Statute Lav Edn. 7 p.181) a single species doesnot create a genus or category and the rule cannottherefore apply. United Tom Electric Co. Ltd. vs.A.G. of Newfoundland (1939, 1 A.E.R. 423 at p.428).In this case the United Towns Electric Co. Ltd wasincorporated by a Public Act in 1902 known as theUnited Towns Electrical Company Act. Section 30 ofit said as follows
"The Company shall be liable for water rateson all lands and buildings owned by it in theaforesaid towns, but otherwise the Companyshall be exempt from taxation."
The Supreme Court of Newfoundland held that theterm "taxation" was limited to taxes ejusdem gener-is with water rates and did not include the revenueof the colony such as income tax. The Privy Councilrejected this construction as it found "no room forthe application of the principle of ejusdem generisin the absence of any mention of a genus, since themention of a single species – for example water
rates – does not constitute a genus'," "The
specific words must apply not to different objectsof a widely differing character but to Somethingwhich can be called a class or kind of objects."(Craies on Statute Law Edn.7 p.181). These are theguide lines for the application of the rule' ofejusdem generis. The Court of Appeal searched for a"common quality the specified institutions possesswhich bring them under a genus" and found it intheir birth. The Central Bank was begat by the.Monetary Law Act (Cap.422) and the Bank of Ceylonby the Bank of Ceylon Ordinance (Cap.397). They are"both institutions known as bankers under the lav",states the Court of Appeal, being creatures of;statute. This constitutes then a.genus. The StateMortgage Bank Ordinance (Cap.398) begat the StateMortgage Bank and it is therefore a creature of j
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.-410i—
.statute like the other two. In the result the ejus-dem generis rule applies to constitute the StateMortgage Bank a Bank within the ambit of Regulation2(10). I am unable to agree with this reasoningbased on creation. This classification would ex-clude many Commercial Banks existing in this coun-try that are not creatures of statute but yet re-cognised by the common law of the country as Banks.All of them render inmense and varied services tothe country anff the community. It is these servicesthat Regulation 2(10) seeks to preserve for thelife of the community.
McCardie J. in the case of SS. Magnhild (Owners).vSe'Mdntyre Brothers and Company (1920, 3 K.B. 321)stated that in deciding whether an unspecifiedthing was ejusdem generis with the specified thingstwo questions must be answered. They are –
What common quality do the specified things
possess which constitutes them a genus?
and
Does the unspecified thing possess that same
J *.„0
tj uQxj tjf;
Quality here refers to their kind and characterwhich make than a class or category. McCardie J.(at page 330) suggested a test for the ascert-ainment of a genus – Do the specified things pos-sess some common and dominant feature? Their originis of no consequence. If they are of widely differ-ing character they cannot constitute a class orcategory. "I accede", said Lord Campbell in R. vs.Edmundon (1859 , 28 L.J. MC 213 at 218) "tt> theprinciple that where there are general words fol-lowing particular and specific words, the generalwords must be confined to things of the same kindas those specified." They . must be similar incharacter to the specified things. "It is really fquestion of the assumed intention of the statute",
SC – CtylonBsnk Enytaya*. Union v, Stott Mortgage Invswant Bank (Semarakoon, C. J.f 4 J1
(Craies on Statute Law Edn 7 p.179). What then is.this common character of the two specified Bankswhich constitute than a genus? This question mustnecessarily be answered in reference to the ser-vices rendered by each because it is these servicesthat the Regulation seeks to preserve in the inte-rests of the life of the community. One eoranon cha-racter stands out – they are both engaged in theBanking business and render Banking services neces-sary for the life of the community. They are bothBanks in the accepted sense of the business andcommercial world and the common law of the land.
The Central Bank is a Bank of a special kindestablished by the Monetary Law Act (Cap.422). Itis the watch dog of the Island's monetary systemand for that purpose it supervises and controls allBanking institutions in the country. The Act alsoimposes certain duties and obligations in respectof Banking institutions in the Island. It deter-mines the national monetary policy and tendersadvice to the Government on monetary and fiscalpolicy. It contfbla the sale and purchase of for-eign exchange by Commercial Banks. Although it isnot a Commercial Bank it is the Banker and FiscalAgent of the Government and its agencies and insti-tutions (section 106 of the Act), it is the soleofficial depository of the Government and its agen-cies (section 107 of the Act). The Monetary Boardmay however appoint one or more Commercial Banks asits agents to accept government deposits. As a Bankits services to other Banks, the Government, andthe country, are .so immense and so varied that thelife of the community will be seriously disruptedif its services are not available or are hampered.
The Bank of Ceylon is one of those CommercialBanks established by statute – the Bank of CeylonOrdinance (Cap.397). Its counterpart is the Peop-le's Bank, also established by statute of . theLegislature. On the other hand there are many Bankswhich have not been established by statute of the
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country's Legislature but are still functioning asBanks registered under the law of the land and havebeen so functioning for many years – some over 50years. They are part of the vast network of Commer-cial Banks which handle the bulk of the Banking inthis country. Banks such as the Grindlays Bank,Hongkong and Shanghai Bank, the Imperial Bank ofIndia (now the State Bank of India), the Habib Bank,are some of the old Banks whose services are vitalto the community. Indeed a stoppage of work in thenetwork of Commercial Banks paralyses the trade ofthe country, business comes to a- near standstill,and the life of the community is seriously affec-ted. They are all Banks well known and accepted assuch in the business world. The word "Bank" is notdefined in any statute in this country. What thenis a Bank? At the risk of being trite I would say aBank is a place or institution in which Bankers dobanking business. But that is not the entirepicture. The question will then be asked – who are"Bankers" and what is "Banking". The history ofbanking and the characteristics of Bankers todaywere considered in the case of -United DominionsTrust vs, Kirkwood (1966)(1 A.E.R.968) Lord DenningMJl.referred to the characteristics of a banker inthe 18th century thus –
"In the eighteenth century before cheques cameinto common use, the principal characteristicswere that the banker accepted the money ofothers on the terms that the persons whodeposited it could have it back again from thebanker when they asked for it, sometimes ondemand, at other times On notice, according tothe stipulation made at the time of deposit;and meanwhile the banker was at liberty tomake use of the money by lending it out atinterest or investing it on mortgage or other-wise."
&t that time cheques were not used and current
—'SC – Cuyton Bank Employees. Union v. State Mortgage Investment Bank (Samarakoon. C J.)m 413 .
. accounts were not kept. Only deposit receipts wereissuedrepayable on notice,orpass bookswere
issuedfor deposit accountsandwithdrawalswere
permitted on demand, subject to limits, on produc-tion ofsuch pass books. Thiswasthe methodadop-ted bythe Ceylon Savings Bank(establishedunde
the Ceylon savings Bank Ordinance (Cap.399)and the'Post Office Savings Bank (established under thePost Office Savings Banks (Cap.191)) both of whichhave now been absorbed by the National Savings Bankwhich also issue a pass book for deposits. This isno longer considered banking in law. "The March oftime has taken us far beyond those cases of fiftyyears ago. Money is now paid and received by cheque. to such an extent that no person can be considereda banker unless he handles cheques as freely ascash. A customer nowadays who wishes to pay moneyinto his bank takes with him his cash and the che-ques, crossed and uncrossed, payable to him. Where-as in the old days it was a characteristic of abanker that he should receive money for deposit, itis nowadays a characteristic that he should receive. cheques for collection on behalf of his customer.How otherwise is the customer to pay his money intothe bank? It is the only practicable means, parti-cularly in the case of crossed cheques. Next, whena customer wishes to withdraw the money which hehas deposited or to pay his creditors with it, hedoes it in most cases by drawing a cheque on thebank. Occasionally he does it by a draft on thebank or a written order. Whereas in the old days hemight withdraw it on production of a passbook andno cheque, it is nowadays a characteristic of abank that the customer should be able to withdrawit by cheque, draft or order. This view has gra-dually gained acceptance." (per Denning, M.R. atpage 975.) Bankers today have three characteristics^
(i) They accept money from, and collect che-ques for, their customers and place them totheir credit.
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They honour cheques or orders drawn onthem by their customers on presentment anddebit them accordingly in their account,
They keep an account, called a currentaccount, in which the credits and debits areentered.
Diplock L.J. agreed with these propositions. He
stated thus –
"What makes a person a banker is not what hedoes with the money of which he obtains theuse, as for instance by lending it at interest(as mentioned by Holmes, J., and Isaacs,J.),by investing it, by discounting bills, etc.,but the terms on which he obtains from otherpersons, his banking customers, loans of moneywhich he can use as he thinks fit. What Ithink is common to all modern definitions andessential to the carrying on of the businessof banking is that the banker should accept■from his customers loans of money on "depo-sit", that is to say, loans for an indefiniteperiod on running account, repayable as to thewhole or any part thereof on demand by thecustomer either without notice or on an agreedperiod of notice."
"Accordingly it is, in my view,essential tothe business of banking that a ' banker shouldaccept, money from his customers on a runningaccount into which sums of money are from time. to time paid by the customer and from time totime withdrawn by him by cheque, draft or or-der. I am inclined to agree with Lord Denning,M.R.‘, and the author of the current edition ofPaget on Banking (6th Edn.) that to constitutethe business of banking today the banker mustalso undertake to pay cheques drawn on himself(the banker) by his customers in favoui of
– SC Ceylon Bank Employees, Union v. State Mortgage Investment Bank ISamarakoon, C. J.l 4J5,
. third parties up to the amount standing totheir credit in their "current accounts" andto collect cheques for his customers and cre-dit the proceeds to their current accounts.This view of the essential characteristics ofthe business of banking today is supported bythe evidence of the witnesses who were unques-tionably bankers who gave expert evidence inthe present case."
These are the essential characteristics of the-business of banking which is conducted by a bank.The Bank of Ceylon and all Commercial Banks havethese characteristics. The Central Bank also pos-sesses these essential characteristics. No doubt ithas only one depositor but that depositor is pro-bably the largest depositor in the country. Myfinding therefore is that the "Central Bank" and-the "Bank of Ceylon" referred to in Regulation2(10) form a genus.
The next question is whether the State Mort-gage Bank be! ongs to that same genus ? It does nothave any of the essential characteristics of a Bankreferred to above. It is not engaged in thebusiness of Banking. Its only claim to that statusis that the Ordinance has chosen to call it a Bank.But the name cannot and does not make it a Bank.Its essential characteristic is that of a moneylender with mortgages securing the money lent. Thatis its sole financial business. Such business isdone by all finance companies and the well' known'Chettiars of Sea Street. If the State Mortgage Bankis a Bank doing banking business then these Compa-nies and Chettiars can also lay claim to that,title. Neither the law nor the business world wouldaccept them as Banks. The Agricultural and Indus–trial Credit Corporation did a much larger- volumeof business similar, if not identical with, that ofthe Respondent but the law incorporating it did notchoose to call it a Bank. The Development Finance
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Corporation, by far the largest lending institu-tion, also does not bear the name "Bank”. I am ofopinion that the State Mortgage Bank is not a"Bank" in Regulation 2(10). I therefore allow theappeal and set aside the order of the Court ofAppeal. In view of this finding it is not necesaryto consider the other point of law regarding thelegal validity of the regulations.
The Appellant will be entitled to costs of thisappeal and the proceedings in the Court of Appeal.
WANASUNDERA, J. – I agreeSOZA, J.- I agree
Appeal Allowed