CHOOLANIE v. PEOPLES BANK AND OTHERS

009-SLLR-SLLR-2008-V-2-CHOOLANIE-v.-PEOPLES-BANK-AND-OTHERS.pdf


Choolanie v
SCPeople's Bank and others93
CHOOLANIEv
PEOPLE'S BANK AND OTHERSSUPREME COURT
DR. SHIRANI A. BANDARANAYAKE, J,
DISSANAYAKE, J. ANDRAJA FERNANDO, J.
S.C. (FR) APPLICATION NO. 530/2002MAY 31 ST 2006JUNE 21 ST, 2006
Fundamental Rights – Article 12(1) of the Constitution – Equality before lawand equal protection of the law – Need to give reasons – Concept of legitimateexpectation – Discretion and/or unequal treatment.
The petitioner alleged that the decision of the 1st respondent-Bank to retirehim from service with effect from 15.03.2002 was illegal, unlawful, arbitrary,irrational and inconsistent with the provisions of the Circulars No. 323/2001dated 12.10.2001 and No. 323/2001 dated 19.11.2001 and thereby violatedhis fundamental rights guaranteed in terms of Article 12(1) of theConstitution.
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Held:
When there is no evidence to indicate that there is deliberate concealmentof material facts from Court, an application cannot be rejected on accountof the failure to comply with the requirement of uberrima fides.
Although the 1st respondent Bank had not given reasons for their decisionto the petitioner, the Bank should have revealed all such reasons to Courtand denial of tendering reasons for their decision to the Supreme Courtwould undoubtedly draw an inference that there were no valid reasons forthe refusal of the extension of service to the petitioner.
Satisfactory reasons should be given for administrative decisions. Adecision not supported by adequate reasons is liable to be quashed byCourt.
Per Dr. Shirani Bandaranayake, J.
"giving reasons to an administrative decision is an important feature in
today’s context, which cannot be lightly disregarded. Furthermore, in asituation, where giving reasons have been ignored, such a body would runthe risk of having acted arbitrarily in coming to their conclusion.”
Held further
In general terms legitimate expectation was based on the principle ofprocedural fairness and was closely related to hearings in conjunction withthe rules of natural justice. A promise or a regular procedure could give riseto a legitimate expectation. The doctrine of legitimate expectation has beendeveloped both in the context of reasonableness and in the context ofnatural justice.
An employee of the 1st respondent Bank would, while knowing that hecould retire at the age of 55 years, have a legitimate expectation to serviceupto the age of 60 years on extensions of his service and therefore it couldnot be correct to state that the legitimate expectation of an employee wouldbe to retire at the age of 55 years.
Held further
The equal protection to all persons guaranteed by means of constitutionalprovisions, ensures that there would not be any discrimination betweenany two persons, who are similarly situated. However, there could beclassifications among a group of people where such classification isreasonable and is not based on an arbitrary decision.
What is necessary for a justifiable decision is that equals should not betreated unequally and the unequals should not be treated equally and the onlydifferentiation that could be justified is, what could be classified on anintelligible basis and with a close nexus to the objective of the classification.Those who are similarly circumstanced, should be treated similarly.
Although the Extensions of Service Committee was granted the authorityto consider the extensions of service of the employees of the Bank, they
Choolanie v
SCPeople's Bank and others
had to exercise their discretion according to law and undoubtedly having inmind the basic concepts stipulated in terms of Article 12(1) of theConstitution.
Per Dr. Shirani Bandaranayake.J.
“Article 12(1) of the Constitution … deals with the right to equality andtherefore the bank, being a State Institution should act within the fourcorners of the aforesaid constitutional provision. The guarantee of equalitybefore the law ensures that among equals the law should be equal andshould be equally administered."
The refusal of the extension of service was taken arbitrarily andunreasonably and therefore the said refusal of the Bank to grant anextension of service to the petitioner is in violation of the petitioner'sfundamental right guaranteed in terms of Article 12(1) of the Constitution.
Cases referred to:
Gas Conversions (Pvt) Ltd. et aI v Ceylon Petroleum Corporation et al -SC (Application) No. 91/2002.
Pure Spring Co. Ltd. v Minister of National Revenue (1947) 1 DLR 501.
Minister of National Revenue v Wrights' Canadian Ropes Ltd. (1947) AC109.
R. V. Gaming Board for Great Britain, ex parte Benaim and Khaida (1970) 2Q.B. 417.
R.V. Civil Service Appeal Board, ex parte Cunningham (1991)4AER310.
Padfield v Minister of Agriculture, Fisheries and Food (1968) A.C. 997.
Doody v Security of State for the Home Department (1993) 3 A.E.R. 92.
Lloyd v McMohan (1987) 1 AER 1118.
LaI Wimalasena v Asoka Silva and Others SC (Application) No. 473/2003,SC Minutes of 04.08.2005.
Wijepala v Jayawardene SC (Application) No. 89/95, SC Minutes of30.06.1995.
Manage v Kotakadeniya (1997) 3 Sri L.R. 264.
Suranganie Marapana v The Bank of Ceylon and Others (1997) 3 Sri LR156.
Karunadasa v Unique Gem Stones (1997) 1 Sri LR 256.
W.P.A. Pathirana v The People's Bank and Others SC (FR) 297/2004, SCMinutes of 12.12.2005.
Schmidt v Secretary of State for Home Affairs (1969) 2 Ch. 149.
Mdnnesv Onslow-Fane (1978) 1 WLR 1520.
Breen v Amalgamated Engineering Union (1971) 2 QB 175.
Cinnamond v British Airports Authority (1980) 1 WLR 582.
R v Barnsley Metropolitan Borough Council, ex parte Hook (1976) 1 WLR1052.
96Sri Lanka Law Reports[2008] 2 Sri L.R
Attorney-General for New South Wales v Quin (1990) 170 CLR 1.
Attorney-General of Hong Kong v Ng Tuen Shiu (1983) 2 AER 346.
Council of Civil Service Unions v Minister for the Civil Service (1984) 3AER 935.
Re Westminster City Council (1986) AC 668.
Ram Krishna Dalmia v Tendolkar AIR 1958 SC 538.
APPLICATION complaining of infringement of Fundamental Rights.
J.C. Weliamuna for petitioner.
Ben Eliyathamby, PC with Ronald for respondents.
Cur.adv.vult.
June 20, 2007
DR. SHIRANI BANDARANAYAKE, J.The petitioner alleged that by the decision of the 1st respondentBank (hereinafter referred to as ’the Bank1) to retire him from theservice of the said Bank with effect from 15.03.2002 (P11) had violatedhis fundamental rights guaranteed in terms of Article 12(1) of theConstitution for which this Court had granted leave to proceed.
The facts of the petitioner's case, as submitted by him, are brieflyas follows:
The petitioner, a Graduate had joined the Bank as an Officer -Grade IV in 1972. Later he was promoted to Grade III (II) in 1985, andGrade III (I), which is a managerial Grade, in 1996. When he hadreached the age of 55 years on 23.08.1998 the bank had granted thepetitioner his first extension of service upto 23.10.1999 (P4) and laterhe was granted his second extension from 23.10.1999 to 23.10.2000(P5). He was granted his third extension from 23.10.2000 to
(P6).
Since the petitioner was of the view that he had the capacity andthe ability to serve the Bank upto the age of 60 years, in March 2001he had applied for his fourth extension of service, which fell due on
(P6).
By letter dated 10.08.2001, the Bank had informed him that hisservices were extended from 23.10.2001 to 28.02.2002 (P8).
In October 2001, the Bank had introduced the Circular No.323/2001 dated 12.10.2001, that contained a new policy and schemefor extensions of service for the employees, which cancelled allprevious circulars relating to extensions of service. The employees of
unooiame v
SCPeople's Bank and others (Dr. Shirani Bandaranayake, J.)97
the Bank, who had made applications under the previous circularswere instructed to make fresh applications in terms with theaforementioned new circular on which the petitioner also had made afurther application for extension of his service.
By letter dated 25.02.2002, the petitioner was informed that theBank had decided to extend his services until 15.03.2002 (P11).
The petitioner was surprised by the said decision of the Bank todeny his extension of service as the following persons were grantedextensions of services under the new scheme:
Mrs. P. Perera-4thextension
Mrs. Samitha Abeywickrama-3rdextension
Ms. J. Peiris-2ndextension
Mrs. C.K. Adhikaramage-4thextension
The petitioner had appealed against the decision of not grantinghim a full year's extension of service to the General Manager of theBank. The petitioner did not receive any response in relation to the saidapplication. The petitioner therefore had stated that the decision of thebank to retire him from service with effect from 15.03.2002 is illegal,unlawful, arbitrary, irrational and inconsistent with the provisions of theCirculars No. 323/2001 (P9) dated 12.10.2001 and No. 323/2001 (1)(P10) dated 19.11.2001 and thereby had violated his fundamentalrights guaranteed in terms of Article 12(1) of the Constitution.
The respondent took up a preliminary objection that the petitionerhad misrepresented the material facts in his application and inaccordance with the decision in Gas Conversions (Pvt.) Ltd. et al vCeylon Petroleum Corporation et aP), the petitioner's applicationshould be rejected on account of the failure to comply with therequirement of uberrima tides.
The contention of the learned President's Counsel for the 1 st and2nd respondents was that the petitioner in his application to the HumanRights Commission on 18.03.2002, a copy of which was annexed tohis petition (P12), had stated that he 'has been prematurely retired' bythe Bank.
The Bank accordingly had taken the position that the age ofretirement in terms of the People's Bank Staff Circular is 55 years andas the petitioner was over 55 years of age at the time he had retired,that it was a false claim and therefore lacks uberrima tides.
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In Gas Conversions (Pvt.) Ltd. et al (supra), which consideredseveral decisions on suppression of material and/or misrepresentation,clearly held as to what amounts to such suppression and/ormisrepresentation. Accordingly it was stated that,
"… a petitioner invoking the fundamental rights jurisdictionmust make a complete disclosure of all material facts andrefrain from deliberately concealing material facts from theCourt. If a petitioner has not made the fullest possibledisclosure, such a person cannot obtain any relief in termsof Article 126 of the Constitution."
Thus it is clear that, what is necessary is to see whether there hasbeen any attempt to 'deliberately conceal material facts from Court'. Ifthere is no such deliberate concealment, then there cannot be anysuppression and/or misrepresentation of material facts.
In this application, the respondents' contention was the positiontaken up by the petitioner in his application to the Human RightsCommission. A careful perusal of his statement clearly indicates that, itwas the view expressed by the petitioner, considering the fact thatextensions were granted to some of the employees upto the age of 60years and in that context his retirement is premature. His application tothe Human Rights Commission contains the details he had included inhis petition to this Court and in my view the petitioner has not made anyattempt to suppress or misrepresent the relevant material.
Accordingly, when there is no evidence to indicate that there isdeliberate concealment of material facts from this Court, an applicationcannot be rejected on account of the failure to comply with therequirement of uberrima tides.
For the reasons aforementioned, I overrule the preliminaryobjection raised by the learned President's Counsel for the 1 st and 2ndrespondents and would turn to consider the petitioner's application onits merits.
The contention of the learned President's Counsel for the 1st and2nd respondents was three fold.
Firstly, it was submitted that the granting of extensions of service isat the discretion of the management of the Bank and that there is norequirement to give reasons for such decisions taken by the Bank.
Choolanie v
SC People's Bank and others (Dr. Shirani Bandaranayake, J.)5E.
•*+
Secondly, it was contended that the previous Staff Circular No.286/97 (P7) as well as the current Staff Circular No. 323/2001, (P9)clearly had designated and had laid down that ’the age of retirement ofthe Bank employees shall be 55 years' and therefore the legitimateexpectation of all the petitioners would have been to retire at 55 years.
Thirdly, considering the extensions granted, which were cited by thepetitioner as persons who were similarly circumstanced where theSpecial Extension Committee (R3), which had stated that the petitionercould be easily replaced and that said conclusions are not'unreasonable, irrational or arbitrary1.
Having stated the contention of the 1st and 2nd respondents, let menow turn to consider the aforementioned submissions separately.
The need to give reasonsIt is common ground that the extension of service of the employeesof the Bank are governed by the terms specified in Staff Circular No.323/2001 dated 12.10.2001. This Circular deals with several aspectspertaining to granting of extension of service and whilst several clausesmake provisions regarding the basic requirements and the procedurefor the extension of service implementation, clause 12 and clause14(iii) refer to the specific need to give reasons in the event of non-recommendation of an application. Clause 12 has to be read withother clauses and therefore clause 11, clause 12 and clause 14 (iii), arereproduced below and are in the following terms:
“Clause 11 – All application forms duly filled as stated above
should be sent to the Chief Manager H.R.Department to be received by the Chief Manager onor before 20th January 2002 without exception ifthey are recommended. Staff Department shouldprocess all applications received by them, andsubmit their applications to the Service ExtensionCommittee by February 10, 2002. The ServiceExtension Committee should sit from 10th Februarythrough 20th February 2002 and forward papers toGeneral Manager, who will finally decide on theindividual applications by February 25th 2002.
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Clause 12 – In the event the applications is/are not
recommended, a separate report stating thereasons why it was not recommended should besent directly to DGM (Est, HR, I and I) (emphasisadded).
Clause 14(111) -When any member of the line management is not
recommending an application for an extension, aseparate report has to be submitted by suchmanager, giving reasons for the same to DGM
(E, HR I and I) extension is received by suchmanager (emphasis added).”
A careful examination of clauses 12 and 14(iii) of theaforementioned circular clearly specifies that, if an application is notrecommended by the line management, a separate report has to besubmitted by such manager, with reasons as to his decision for thenon-recommendation. This aspect clearly indicates that the Extensionsof Service Committee needed all the relevant information includingreasons for refusal, if any, for deciding on each applicant on theirextensions of service and therefore the said Extensions of ServiceCommittee should have maintained records in relation to all applicants,who had applied for extensions of service.
Learned Counsel for the petitioner contended that, except for thecomments made by the Extensions of Service Committee, no detailedreasoning has been given in terms of clauses 11,12 and 14(iii) of theCircular No. 323/2001 in relation to the petitioner's extension ofservice.
The petitioner, as referred to earlier, had submitted the applicationfor his extension of service on 20.12.2001 (R2) to his immediateSuperior Officer, who had recommended his application.
Thereafter the application was forwarded to the DGM, who hadrecommended his application on 27.12.2001.
According to the affidavit of the 1st and 2nd respondents, theCommittee, which considered the Extension of Service had rejectedthe petitioner's application for extension as the petitioner could bereplaced since his service did not warrant any specific skills.
Choolanie v
SCPeople's Bank and others (Dr, Shirani Bandaranavake, J.)“'O'*
The Extensions of Service Committee however had not given anyreasons based on the aforementioned submissions and had onlystated that it is possible to appoint a successor to the petitioner'sposition and the petitioner should be sent on retirement in terms ofclause 10 of 323/2001. If this is to be regarded as the reasons givenby the Extensions of Service Committee, I would find it difficult to agreewith the respondents as there has not been any justifiable reason givenwith regard to the rejection of the petitioner's application for anextension. This position becomes much stronger, when one comparesthe recommendation received by some of the other officers, who hadreceived extensions of service for a period of one year. For instanceone Mrs. P. Perera had been granted an extension of service fromFebruary 2002 to January 2003 with the mere word 'recommended1(R4) entered by the AGM. However, no reasons were given for theaforesaid extension of service or differentiating the petitioner'sapplication from that of the others, who were given a year's extensionof service with recommendations similar to what was given to thepetitioner.
Thus it is apparent that, although there may not be a requirementfor the Extension of Service Committee to give reasons for theirdecision to the petitioner, the 1 st respondent Bank owed a duty to thisCourt to reveal the reasons for their decisions. It would not be incorrectto presume that in order to arrive at a decision, the committee mustconsider several aspects in terms with the relevant clauses of CircularNo. 323/2001 and more importantly that they should have revealed thereasons for their decisions. As stated earlier, although the reasonswere not communicated to the petitioner, the Bank should haverevealed all such reasons to this Court and denial of tendering reasonsfor their decisions to this Court would undoubtedly draw an inferencethat there were no valid reasons for the refusal of the extension ofservice to the petitioner.
In general terms, considering the general rule, the position taken byCourt is that there is no duty to state reasons for judicial oradministrative decisions Pure Spring Co. Ltd., v Minister of NationalRevenue<2) at 501, (Statements of Reasons for Judicial andAdministrative Decisions, Michael Akehurst, MLR Vol. 33, 1970,pg.154). Accordingly as Michael Akehurst has clearly pointed out, ‘astatement of reasons is not required by the rules of natural justice, and
102Sri Lanka Law Reports[2008] 2 Sri L.R
therefore there is no duty to state reasons for the decisions of Courts,juries, licensing justices, administrative bodies and tribunals ordomestic tribunals' {supra).
Although the common law had failed to develop any general duty toprovide a reasoned decision Minister of National Revenue v Wrights’Canadian Ropes LtdS3) at 109, flv Gaming Board for Great Britain, ex.p. Benaim and Khaidd4) at 417, R v Civil Service Appeal Board, ex.P. Cunninghard5) at 310, there are several exceptions to this generalprinciple.
One clear method was through statutory intervention, which cameinto being by the recommendation of the Franks Committee (Cmnd.218 (1957)). The Franks Committee recommended the giving ofreasons {{supra) paras 98, 351), that came into being through theTribunals and Inquiries Act, 1958, which was replaced by the Tribunalsand Inquiries Act, 1992.
The Franks Report of 1957, {{supra), at para 98), in fact highlightedthe issue as to why reasons should be given, referring to ministerialdecisions taken, after the holding of an inquiry.
“It is a fundamental requirement of fair play that the partiesconcerned in one of these procedures should know at the end ofthe day why the particular decision has been taken. Where noreasons are given the individual may be forgiven for concluding thathe has been the victim of arbitrary decision. The giving of fullreasons is also important to enable those concerned to satisfythemselves that the prescribed procedure has been followed and todecide whether they wish to challenge the minister’s decision in thecourts or elsewhere. Moreover as we have already said in relationto tribunal decisions a decision is apt to be better if the reasons forit have to be set out in writing because the reasons are then moretruly to have been properly thought out'.
Another method, and one which was extremely important from thepractical point of view, indirectly imposed a requirement that reasonsbe stated and if not had decided that the result reached in the absenceof reasoning is arbitrary. Thus in the well known decision in Padfield vMinister of Agriculture^6) at 997 the House of Lords decisively rejectedthe notion that the absence of a duty to state reasons precluded the
Choolanie v
SC People's Bank and others (Dr. Shirani Bandaranayake, J.)103
Court from reviewing the reasons for the decision. It was thereforestated in Padfield (supra) that,
“If all the prima facie reasons seem to point in favour of his (theMinister's) taking a certain course to carryout the intentions ofParliament in respect of a power which it has given him in thatregard, and he gives no reason whatever for taking a contrarycourse, the court may infer that he has no good reason and that heis not using the power given by Parliament to carry out itsintentions.”
Similarly in Minister of National Revenue v Wrights' CanadianRopes Ltd., (supra), which considered an appeal from an income taxassessment, the Privy Council stated that,
‘Their lordships find nothing in the language of the Act or in thegeneral law which would compel the Minister to state his reasonsfor taking action…. But this does not mean that the Minister bykeeping silent can defeat the taxpayer's appeal…. The court isalways entitled to examine the facts which are sworn by evidenceto have been before the Minister when he made his determination.
If those facts are insufficient in law to support it, the
determination cannot stand…..”
Accordingly an analysis of the attitude of the Courts since thebeginning of the 20th century, clearly indicates that despite the fact thatthere is no general duty to give reasons for administrative decisions,the Courts have regarded the issue in question as a matter affectingthe concept of procedural fairness. Reasons for an administrativedecision are essential to correct any errors and thereby to ensure thata person, who had suffered due to an unfair decision is treatedaccording to the standard of fairness. In such a situation without astatement from the officer, who gave the impugned decision or theorder, the decision process would be flawed and the decision wouldcreate doubts in the minds of the aggrieved person as well of theothers, who would try to assess the validity of the decision. Consideringthe present process in procedural fairness vis-a-vis, rights of thepeople, there is no doubt that a statement of reasons for anadministrative decision is a necessary requirement Referring toreasons, fair treatment and procedural fairness, Galigan (Due Processand Fair Procedure, Clarandon Press, Oxford, pg. 437) stated that,
104Sri Lanka Law Reports[2008] 2 Sri L.R
"If the new approach succeeds, so that generally a statement otreasons for an administrative decision will be regarded as anelement of procedural fairness, then various devices invented in thepast in order to allow the consequences of a refusal of reasons tobe taken into account will gradually lose their significance”
The necessity to give reasons was quite succinctly expressed inUoyd v McMahonP) at 1118), where Lord Donaldson, M. R. hadconcluded that the giving of reason was necessary, where McCowan,L.J., stated that the Court was not required to tolerate the unfairness ofreasons not being given and Legalt L. J. had stated that the duty to actfairly extended to the duty to give reasons. The need for reasons inadministrative decisions was described in very practical terms by LordMustill in Doody v Security of State for the Home Department (8) at 92,where he had stated that,
"a perceptible trend towards an insistence on greater openness, orif one prefers the contemporary jargon, ‘transparency’, in themaking of administrative decisions."
The necessity to give reasons was considered by this Court, asreferred to in Bandaranayake, J’s judgment in Lai Wimalasena v AsokaSilva and Others<9) in Wijepala v Jayawardene(1°), Manage vKotakadeniya<11) at 264, Suranganie Marapana v The Bank of Ceylonand Otherat 156 and in Karunadasa v Unique Gemstones*13) at256. In Wijepala v Jayawardene {supra), considering the necessity togive reasons, at least to this Court, Fernando, J., was of the view that,
‘The petitioner insisted, throughout, that established practiceunquestionably entitled him at least to his first extension and thatthere was no relevant reason for the refusal of an extension…
Although openness in administration makes it desirable thatreasons be given for decisions of this kind, in the case I do not haveto decide whether the failure to do so vitiated the decision.However, when this Court is requested to review such adecision, if the petitioner succeeds in making out a prima faciecase, then the failure to give reasons becomes crucial. Ifreasons are not disclosed, the inference may have to be drawnthat this is because in fact there were no reasons – and soalso, if reasons are suggested, they were in fact not the
Choolanie v
SC People's Bank and others (Dr. Shirani Bandaranayake, J.)105
reasons, which actually influenced the decision in the firstplace” (emphasis added).
In Manage v Kotakadeniya and others (supra), where anapplication of a Post Master for his extension of service, upon reachingthe age of 55 years was refused, Amerasinghe, J., was of the view that,
“the refusal to extend the service of the petitioner was not based onadequate grounds."
The order of retirement was thus quashed on the basis that thepetitioner in that case was treated unequally and that there had beendiscriminatory conduct against the petitioner.
In Suranganie Marapana v The Bank of Ceylon and Others (supra),it was held that the Board failed to show the Court that valid reasonsdid exist for the refusal to grant the extension, which wasrecommended by the corporate management and therefore it was heldthat the refusal to grant the extension of service sought was arbitrary,capricious, unreasonable and unfair.
It is noteworthy to refer to the views expressed by MarkFernando, J., in Karunadasa v Unique Gemstones (supra) withreference to the need to give reasons to a decision, where it was statedthat,
"… whether or not the parties are also entitled to be told the reasonsfor the decision, if they are withheld, once judicial reviewcommences, the decision “may be condemned as arbitrary andunreasonable"; certainly the Court cannot be asked to presume thatthey were valid reasons for that would be to surrender itsdiscretion. ”
On a consideration of our case law in the light of the attitude takenby Courts in other countries, it is quite clear that giving reasons to anadministrative decision is an important feature in today’s context, whichcannot be lightly disregarded. Furthermore, in a situation, where givingreasons have been ignored, such a body would run the risk of havingacted arbitrarily in coming to their conclusion. These aspects havebeen stated quite succinctly in the following passage, where Prof.Wade had taken the view that, (Administrative Law, 9th edition, pg.522),
106Sri Lanka Lavs Reports[2008) 2 Sri L.R
“Unless the citizen can discover the reasoning behind the decision,he may be unable to tell whether it is reviewable or not, and so hemay be deprived of the protection of law. A right to reasons istherefore an indispensable part of a sound system of judicialreview. Natural justice may provide the best rubric for it, sincethe giving of reasons is required by the ordinary man’s senseof justice. It is also a healthy discipline for all who exercisepower over other, (emphasis added)”
And more importantly,
'The only significance of withholding reasons is that if the facts pointoverwhelmingly to one conclusion, the decision maker cannotcomplain if he has held to have had no rational reason for decidingdifferently, and that in the absence of reasons he is in danger ofbeing held to have acted arbitrarily"
In the light of the aforementioned, it becomes important to refer tothe decision in Suranganie Marapana v The Bank of Ceylon andOthers {supra), which was discussed in detail in W. P. A. Pathirana vThe People’s Bank and Others4).
In that case, the petitioner was the Chief Legal Officer of therespondent Bank. As she was to reach the age of 55 years on
she applied to the Bank on 25.05.1996 for an extension ofservice for an initial period of one year. Her application wasrecommended by the Personnel Department in its draft Board minute,under exceptional circumstances. The Board of Directors took fourmonths to decide on the application and after a lapse of a furthermonth, the petitioner was informed on 22.10.1996 that her applicationhad been rejected and she would be retired from 27.11.1996. Officers,who were of a comparable grade had been granted extensions. Butshe was refused for no reason. The Board failed to submit to Court itsdecision. The Chairman of the Bank stated in his affidavit that therefusal to extend her services was done bona fide and unanimouslyafter a careful evaluation of her application and the need of the Bankto increase the efficiency of its Legal Department. This Court held thatthe Board failed to show the Court that valid reasons did exist for therefusal to grant the extension, which was recommended by thecorporate management. Considering the question in issue the Courtstated that,
Choolanie v
SCPeople's Bank and others (Dr. Shirani Bandaranayake, J.)107
"… the Personnel Department recommended that the petitioner'sservice be extended for a period of one year with effect from
under exceptional circumstances. If, therefore, theBoard of Directors thought otherwise, it should have done so onlyfor valid reasons and on reasonable grounds. Even though PublicAdministration Circular No. 27/96 dated 30.08.1996 (P8), whichwas an amendment to Chapter 5 of the Establishments Code, doesnot have any direct application to the matter before us, it clearly setsout the attitude of the State in regard to the question of extension ofservice of public sector employees, when it states that whereextensions of service of State Employees are refused “thereshould be sufficient reasons to support such decisionsbeyond doubt ” Even if the bank failed to give the petitioner thereasons for the refusal of her application for an extension of service,it undoubtedly became obliged in law to provide such reasons tothis Court where the decision of the Board was challenged by thepetitioner, (emphasis added)”
The decision in Suranganie Marapana {supra) in my view isstrongly supportive of the view taken by several decisions thatsatisfactory reasons should be given for the decisions taken by aCommittee. In fact Prof. Wade (Administrative Law, supra at p. 226-229) has clearly stated that,
‘The whole tenor of the case law is that the duty to give reasons isa duty of decisive importance which cannot lawfully bedisregarded. ”
Having considered the necessity to adduce reasons foradministrative decisions, let me now turn to examine the question oflegitimate expectation.
II. Legitimate expectation
Learned President’s Counsel for the Bank contended that thepetitioner cannot be heard to say that her fundamental rightsguaranteed in terms of Article 12(1) of the Constitution was violatedsince she had a legitimate expectation to work for the Bank beyond theage of 55 years, as if there was any such legitimate expectation withregard to serving at the Bank, such legitimate expectation would havebeen to serve only upto the age of 55 years.
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This contention raises the basic issue as to how a legitimateexpectation could arise in a situation such as extensions of service.
In general terms legitimate expectation was based on the principleof procedural fairness and was closely related to hearings inconjunction with the rules of natural justice. As has been pointed out byD. J. Galigan (Due Process and Fair Procedures, A study ofAdministrative Procedure, 1996, pg. 320),
“In one sense legitimate expectation is an extension of the idea ofan interest. The duty of procedural fairness is owed, it has beensaid, when a person's rights, interests, or legitimate expectationsare in issue. ”
Discussing the concept of legitimate expectation, David Foulkes(Administrative Law, 8th Edition, Butterworths, 1995, pg. 290) hasexpressed the view that a promise or an undertaking could give rise toa legitimate expectation. In his words:
‘The right to a hearing, or to be consulted, or generally to put one'scase, may also arise out of the action of the authority itself. Thisaction may take one of two, or both forms; a promise (or astatement or undertaking) or a regular procedure. Both thepromise and the procedure are capable of giving rise to whatis called a legitimate expectation, that is, an expectation of thekind which the courts will enforce” (emphasis added).
An examination of the decisions pertaining to rights and privilegesin the field of Administrative Law, clearly indicates that since thedecision of Lord Denning M.R., in Schmidt v Secretary of State forHome Affairs05) at 149, the concept of legitimate expectation hadcome into being to play an important role in the development offairness. A long line of cases, since the decision in Schmidt (supra),had considered the concept of legitimate expectation R v GamingBoard for Great Britain, ex. P. Benaim and Khaida (supra), Mclnnes vOnslow-Fane<16) at 1520, Breen v Amalgamated EngineeringUniori17) at 175, Cinnamond v British Airports Authority^18) at 582, Rv Barnsley Metropolitan Borough Council, ex. P. /-/ooM19) at 1052.
Examining the decision in Schmidt (supra) and the Australiandecision in Attorney General for New South Wales v Quin <2°) at 1, P.P.
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Craig (Legitimate Expectations, A Conceptual Analysis, L. Q.R. (1992)108, pg. 79) had observed the applicability of the concept of legitimateexpectation in administrative decisions. In his words,
‘The foundation of the applicants procedural rights is not simplythat he has some legitimate expectation of natural justice orfairness. The basis of the applicant's claim to protection is thathe has a legitimate expectation of an ultimate benefit which isin all the circumstances felt to warrant the protection of thatprocedure, in this instance his continued presence in the country"(emphasis added).
Thus it is apparent that, as stated by David Foulkes, (supra) apromise or a regular procedure could give rise to a legitimateexpectation that could be enforced by Court. This position is clearlyillustrated by the decisions in Attorney-General of Hong Kong v NgTuen SM/21) at 346 and Council of Civil Service Unions v Minister forthe Civil Service^22) at 935.
In Ng Tuen Shiu, (supra), Ng was an illegal immigrant. Thegovernment had announced a policy of repatriating illegal immigrants.According to the said policy each immigrant would be interviewed andeach case was treated ‘on its merits’. Ng was interviewed and hisremoval was ordered.
Ng complained that at the interview he was not allowed to explainthe humanitarian grounds on which he would have been allowed tostay, but was allowed only to answer the questions put to him. It wasstated that although Ng was given a hearing, it was not the hearing ineffect, which was promised as what was promised was to give ahearing at which ‘mercy’ could be argued. The Judicial Committeeagreed that, on that narrow point, the government’s promise had notbeen implemented and that Ng’s case had not been considered on itsmerits, and therefore the removal order was quashed. Accordingly Ngsucceeded on the basis that he had a legitimate expectation that hewould be allowed to present his case arising out of the government’spromise that everyone affected would be allowed to do so.
In Council of Civil Service Unions (supra), the question of legitimateexpectation arose, not due to a promise as in Ng's case (supra), but
110Sri Lanka Law Reports[2008] 2 Sri L.R
out of a regular practice, which could reasonably be expected tocontinue. In this matter, the then British Prime Minister Mrs. MargaretThatcher, issued an instruction that civil servants engaged on certainwork would no longer be permitted to be members of trade unions. TheHouse of Lords held that those civil servants had a legitimateexpectation that they would be consulted before such action wastaken, as it was an established practice for government to consult civilservants before making significant changes to their terms andconditions of service.
Having stated the applicability of legitimate expectation on thegrounds of a promise and a procedure, let me now turn to examine thepetitioner’s case in the light of the aforementioned position.
It is not disputed that the 1 st respondent Bank had been grantingextension of services to its employees beyond the age of 55 years. Itis also not disputed that the previous circulars, which dealt with theextensions of service did not refer to the age of retirement, but simplycalled for applications for extensions of service. For instance, clause 1of Staff Circular No. 286/97(2) (P8), which refers to ‘applications forextension of service’ states that,
"As per instructions given in the above circulars, all employees whowish to remain in service on the basis of extension of servicebeyond 55 years of age should submit their applications forextension to the relevant line authorities of the subject employee,six months prior to the date of retirement."
However, by Staff Circular No. 323/2001, (P10) of October 2001,amendments had been made to the existing policy for extension ofservice, which stated that the age of retirement of the Bank employeesshall be 55 years. However, although the age of retirement was fixedat the age of 55 years, the Circular No. 323/2001 had made provisionfor the grant of extensions. In fact it is pertinent to note that the saidcircular clearly refers to the decision of the Board of Director of the 1 strespondent Bank at their September 2001 meeting was to 'implementthe policy and scheme for the extension of services' of the employeesof the Bank. The relevant paragraph of the aforesaid circular reads asfollows:
Choolanie v
SCPeople's Bank and others (Dr. Shirani Bandaranayake, J.) -111
' *
‘The Board of Directors at their meeting on September 28th 2001decided to implement the policy and scheme for the extension ofservices detailed as stated below:
The age of retirement of the Bank employees shall be 55 years.However the General Manager/CEO and Management nominatedby the CEO will grant extensions of the period of employment of astaff member for a specific period beyond 55 years of age and uptothe age of 60 years at their discretion taking into consideration thefollowing factors. ”
Accordingly, it is obvious that prior to the introduction of the newpolicy regarding extensions of service, extensions were consideredand granted upto the age of 60 years and even under the new policyformulation, provision was made for extensions of service to begranted beyond the age at 55 years. This position was incorporated inClause 9 of Circular No. 323/2001, where it was stated that,
'The new policy will be fully implemented with effect from 1st March2002. In the meantime extensions will be considered in the normalway….”
It is not disputed that the petitioner had joined the Bank well beforeCircular No. 323/2001 came into effect. Moreover, he had been givenextensions of service more than on one occasion, in terms of theprevious circulars.
Learned Counsel for the petitioner strenuously contended that,although the age of retirement in the Bank was 55 years as was thecase in most of the public sector establishments, this condition wassubject to annual extensions being granted upto the age of 60 years.
If one has to consider the petitioner’s position vis-a-vis the conceptof legitimate expectation, it is apparent that he comes within both thecategories explained by David Foulkes (supra), which contains apromise and a regular procedure, which in other words could becategorized as substantive and procedural legitimate expectation.
It is to be noted that the doctrine of legitimate expectation has beendeveloped both in the context of reasonableness and in the context ofnatural justice. (Administrative Law, Prof. Wade, 9th Edition, pg, 500).
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In Re Westminster City Council23), considering the question oflegitimate expectation it was stated that,
“The courts have developed a relatively novel doctrine in public lawthat a duty of consultation may arise from a legitimate expectationof consultation aroused either by a promise or by an establishedpractice of consultation"
Considering the major aspects of legitimate expectation, Prof.Wade (supra, at pg. 372) has clearly indicated that,
“inconsistency of policy may amount to an abuse of discretion,particularly when undertakings or statements of intent aredisregarded unfairly or contrary to the citizen’s legitimateexpectation."
Accordingly legitimate expectation must be given a broadinterpretation as it could be used in more than one way utilizing theconcept as the foundation for procedural fairness. Considering theconcept of legitimate expectation being linked to the concept ofprocedural fairness, P. P. Craig (Administrative Law, 3rd Edition, 1994,pg 294-296) stated that this could depend on three different ways.Firstly, it could be on the basis of procedural rights for the purpose ofprotecting the applicant’s future interests. Secondly, the concept isbased on the foundation of procedural rights. Thirdly, the legitimateexpectation could arise, where an applicant had relied on a particularcriteria, whereas the defendants had applied a different one.
Considering the aforementioned it is clearly evident that the Bankhad had a practice of granting extensions upto the age of 60 years. Asreferred to earlier, the circulars, which were introduced prior to CircularNo. 323/2001, had clear provisions regarding such extensions, wherethe employees of the Bank had continued upto the age of 60 years onextensions. Moreover, it is not disputed that even under the presentCircular, provision has been made for extensions beyond the age of 55years. Although guide lines and/or criteria have been laid down forsuch extensions beyond the age of 55 years, the fact clearly remainsthat, in principle the Bank had accepted the position that extensionswould be considered beyond the age of 55 years at least for a limitednumber of employees.
SCChoolanie v113
People's Bank and 2 others (Dr. Shirani Bandaranayake, J.)
In such circumstances an employee of the Bank would, whileknowing that he could retire at the age of 55 years, would have alegitimate expectation to service upto the age of 60 years onextensions of his service and therefore it would not be correct to statethat the legitimate expectation of an employee would be to retire at theage of 55 years.
Having considered the aforementioned submissions let me nowturn to examine the submissions made on the ground of discretionand/or unequal treatment.
Discretion and/or unequal treatment
The petitioner in paragraph 10 of his petition has set out fourexamples, where other officers were granted extensions. Whilst someof the officers had received the 2nd extension, others had obtained the4th or the 5th extensions of service.
Having considered the aforementioned aspects let me now turn toexamine the aspects relating to equal treatment and discretion basedon decisions taken by the Bank and thereby the validity of thedecisions that were taken without giving any reasons.
The petitioner’s complaint was that the refusal to grant him anextension of his service for a period of one year was arbitrary andunreasonable and violative of Article 12(1) of the Constitution for whichthis Court had granted leave to proceed under Article 12(1) of theConstitution. Article 12(1) of the Constitution, refers to the right toequality and reads as follows:
“All persons are equal before the law and are entitled to the equal
protection of the law”.
The equal protection to all persons guaranteed by means ofconstitutional provisions, ensures that there would not be anydiscrimination between any two persons, who are similarly situated.However, this does not mean that there should not be any kind ofclassifications among a group of people. All classifications would notbecome arbitrary and thereby invalid. What is necessary is that, suchclassification should be reasonable and is not based on an arbitrarydecision. Therefore if the following conditions could be satisfied, suchclassifications would not become arbitrary or unreasonableclassifications:
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that the classification must be founded on an intelligibledifferentia, which distinguish persons that are grouped in fromothers, who are left out of the group; and
that the differentia must bear a reasonable, or a rationalrelation to the objects and effects sought to be achieved (RamKrishna Dalmia v Tendolkai)<24) at 538.
What is necessary for a justifiable decision is that equals should notbe treated unequally and the unequals should not be treated equallyand the only differentiation that could be justified is, what could beclassified on an intelligible basis and with a close nexus to the objectiveof the classification. Accordingly it is evident that, those who aresimilarly circumstanced, should be treated similarly.
On a consideration of the circumstances of this application, it is notdisputed that all the officers referred to in the application, who wereeither granted or refused extensions of service, belonged to the Bank.It is also not disputed that for all such employees the applicableCircular relating to their extensions was the Staff Circular No. 323/2001dated 12.10.2001 (P10). Accordingly it is common ground that theextensions of service were considered on the basis of the provisionslaid down in the aforementioned Circular to all the employees of theBank without any reservations. Therefore regarding the extensions ofservice and the applicability of the Staff Circular No. 323/2001 (P10)there were no differentiation and all the employees of the Bank weregrouped into one class. In such circumstances, it is apparent that therehad been no classification to distinguish employees and to group themseparately and therefore the Bank had regarded all of them as equalson the question of considering the employees, who had completed 55years of age for extensions. Accordingly, all such applicant employeeswould have to be considered equally and there was no possibility forthe petitioner to have been treated in a manner different to thetreatment meted out to others, who were his equals.
Having said that the next question that has to be answered is thediscretion that was vested with the Extensions of Service Committee,which was empowered to decide on extensions of service of theemployees. There is no doubt that in today's context, for efficiency andsmooth functioning of departmental management, discretionary powerhas to be conferred on administrative officers. However, suchdiscretionary power cannot be absolute or uncontrolled authority as
SCChoolanie v115
People's Bank and 2 others (Dr. Shirani Bandaranayake, J.)
such would be arbitrary and discriminatory, which would negate theequal protection guaranteed in terms of Article 12(1) of the Constitution.It would therefore be essential that a decision-making authorityexercises its discretion taking into account relevant consideration onequal basis. Examining the discretionary powers and stressing theimportance of the well-known House of Lords decision in Padfield vMinister of Agriculture, Fisheries and Food (supra), Lord Denning M.R.in Breen v Amalgamated Engineering Union (supra) stated that,
‘The discretion of a statutory body is never unfettered. It is adiscretion which is to be exercised according to law. That means atleast this: the statutory body must be guided by relevantconsiderations and not by irrelevant. If its decision is influenced byextraneous considerations which is ought not to have taken intoaccount, then the decision cannot stand. No matter that thestatutory body may have acted in good faith; nevertheless thedecision will be set aside. That is established by Padfield v Ministerof Agriculture, Fisheries and Food (supra), which is a landmark inmodern administrative law."
Accordingly, although the Extensions of Service Committee wasgranted the authority to consider the extensions of service of theemployees of the Bank, they had to exercise their discretion accordingto law and undoubtedly having in mind the basic concepts stipulated interms of Article 12(1) of the Constitution.
The petitioner submitted that upon reaching 55 years of age, theBank had granted three annual extensions of service uponapplications duly made by him. When the new Circular wasintroduced (P9), he was given an extension upto 28.02.2002, butas required by Clause 10 of the Circular (P9) he was required to re-apply under the new Circular and on his application he was givenan extension only until 15.03.2002.
The petitioner had submitted his application to his SupervisingOfficer for his consideration. The aforesaid officer hadrecommended the petitioner’s application. Thus it appears that theofficer, who was functioning in a superior as well as in a supervisorycapacity had thought the petitioner was a person, who should berecommended for his extension of service for a further year. Therespondents contended that as the other employees can performthe duties of the petitioner, the Extensions of Service Committee
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had decided not to extend the service of the petitioner beyond15.03.2002.
Clause 14(11) of the Staff Circular (P9) clearly states that theExtensions of Service Committee has to ‘scrutinize and recommend’all application on a ‘case by case basis’. However, what has beenproduced before this Court does not indicate any kind of scrutiny andrecommendations on a case by case basis.
Thus considering the aforementioned factual position of thepetitioner’s case, it is obvious that the Extensions of ServiceCommittee had acted arbitrarily as well as unreasonably in relation tothe application made by the petitioner.
There have been several cases pending before this Court regardingextensions of service by the employees of the Bank. As was stated inW. P A. Pathirana v The People’s Bank {supra, Bandaranayake, J.’sminority judgement), I am quite mindful of the competitive nature in theBanking sector and the efforts that have to be made in meeting withthe challenges of the new millennium. However, there cannot be anydispute that the 1st respondent Bank is an Institution of the State.Therefore irrespective of the competitive nature in relation to theirfunctions, the actions of the Bank could be challenged in terms of theprovisions pertaining to fundamental rights enshrined in theConstitution and therefore the management of the Bank will have tofunction having in mind such guarantees that are enshrined in theconstitution with regard to fundamental rights. Although the Bankundoubtedly should have its freedom to exercise its discretion in re-organizing their organization and for that purpose to limit the grant ofextensions of service, this has to be carried out, without anyinfringement of the guarantees enshrined in Article 12(1) of theConstitution. Article 12(1) of the Constitution, as pointed out earlier,deals with the right to equality and therefore the Bank, being a StateInstitution should act within the four corners of the aforesaidconstitutional provision. The guarantee of equality before the lawensures that among equals the law should be equal and should beequally administered.
On a consideration of all the aforementioned circumstances, theonly conclusion that could be drawn is that the refusal of the extensionof service was taken arbitrarily and unreasonably and therefore I holdthat the said refusal of the Bank to grant an extension of service to the
CAJayathilaka v117
Attorney-General
petitioner is in violation of the petitioner’s fundamental right guaranteedin terms of Article 12(1) of the Constitution. I accordingly declare thatthe petitioner was entitled to an extension of service for a period of oneyear with effect from 23.10.2002.
On a consideration of the totality of this matter, although there hadbeen a violation of petitioner’s fundamental right in terms of Article12(1) of the Constitution, it could not be possible for him to be given anextension of service since the petitioner has now retired from theservice of the Bank.
In the circumstances since the petitioner will not be granted anyextensions, I direct the 1 st respondent Bank to pay to the petitioner asum of Rs. 50,000/- as compensation and costs. This amount to bepaid within one month from today.
Dissanayae, J. – I agree
Raja Fernando, J. – I agree
Application allowed.