GOMES v. SRI LANKA STATE TRADING CORPORATION AND ANOTHER

025-SLLR-SLLR-1983-2-GOMES-v.-SRI-LANKA-STATE-TRADING-CORPORATION-AND-ANOTHER.pdf


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GOMES
v.SRI LANKA STATE TRADING CORPORATIONAND ANOTHER
SUPREME COURT
WIMALARATNE. J.. COLIN-THOME. J. AND ABDUL CADER. J.
S. C. APPEAL NO. 54/82, C. A. NO. 186/77, LT. NO. 1 /A/264/74.NOVEMBER 18 1983.
Industrial Dispute — Change of employment — Absorption of department intodifferent institution — Retirement.
Held —
Public Administration Circular dated 24.6.1970 in terms of whichemployees would not be entitled to extensions of service beyond the age of 55years superseded the Co-operative Wholesale Establishment — Rules ofProcedure, Administrative and Financial Part 1, on age of retirement. Thetermination of the applicant’s services as a stenographer when she reached 55years was regular.
The change of employer by Governmental action will not affect the right togratuity.
Cases referred to:
Kulatunga v. The Board of Directors of the C.W.E. S.C. 7/81 — Minutes of3.10.81.
K.S.G.N. de Silva v. The Sri Lanka State Trading (Textiles) Corporation. S.C.39/76 — Minutes of 9.8.78
Lanka Salu Sala v. Wickremahayake — S.C. 47/75 L.T. No. 8/554/75—Minutes of 9.4.75.
APPEAL from order of Labour Tribunal.
H. L. de Silva. SAAL with L. A. T. Williams for applicant-appellant.
D. H. M. Jayamaha for respondent-respondent.
Cur. adv. vult
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Gomes i/. Sri Lanka Slate Trading Corporation
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16 December. 1983WIMALARATNE. J.
The Applicant-Appellant was employed as an EnglishStenographer in the Cooperative Wholesale Establishment(C.W.E.) from 3.3.52. In accordance with a government policydecision the textile department of the C.W.E. where the applicantworked was handed over to the Lanka Salu Sala Ltd. from1.10.67. and employees in the textile department of the C.W.E.were offered employment in Lanka Salu Sala Ltd. on terms andconditions similar to those that obtained in the C.W.E. Theapplicant accepted such appointment without a break in service.After the coming into operation of the State TradingCorporations Act. No. 33 of 1970. Lanka Salu Sala Ltd. wasincorporated in this Corporation, which is the 1st respondent-respondent. and became an employee of the 1 st respondent.
A government policy decision relating to retirement of publicofficers and public sector employees was incorporated in aPublic Administration Circular dated 24.6.70, in terms of whichemployees would not be entitled to extensions of service beyondthe age of 55 years. The Board of Directors of Salu Sala Ltd.,acting upon that circular decided at a meeting held on 27.6.70.that no extension of service would be granted to its employeesafter the age of 55 years. Certain changes in government policyresulted in a rule that extension of service from the 55th to the58th year could be granted by the Minister in charge of theDepartment or Corporation concerned, while extensions beyondage 58 up to 60 could be granted only by the Cabinet ofMinisters. That decision had been conveyed by the CabinetSecretary to all Secretaries of Ministries by circular dated25.4.73.
The applicant completed her 55th year on 5.1.74. and beforethat she was given notice by letter dated 31.7.73 that she wouldbe retired as from the date she completed her 55th year. Herappeals to the Board of Directors of the 1st respondent as wellas to the Minister met with no success. Hence this application tothe Labour Tribunal for relief in respect of what she says iswrongful dismissal.
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Both the Tribunal and the Court of Appeal have dismissed herclaim, and she has appealed to this Court claiming relief in a sumof Rs. 36.000/- as damages for breach of contract, andRs.1 3.200/-by way of gratuity.
A document which was at the forefront of the applicant's casebefore the Tribunal as weil as in the Court of Appeal, and beforeus is the document marked A3 which is a part of a booklet, thefirst page of which has the words "Cooperative WholesaleEstablishment — Rules of Procedure. Administrative & Financial.Part 1" printed in bold type. In support of her case thatemployees of the C.W.E. had a right to remain in service up toage 60. Counsel relied upon the following rules in A3.
"62
RETIREMENT Permanent employees of the CWE will beOPTIONALpermitted to retire, if they so desire, on reaching
AT 55 YEARSthe optional age of retirement (55 years). They
may not be permitted to continue in serviceafter reaching this age when it is possible to effect retrenchment byretiring an officer who has attained the age of 55 or his efficiency isdefinitely below normal.
An employee whom it is proposed to retire compulsorily for thereasons stated above should not be allowed an extension oncompassionate grounds.
COMPULSORYRETIREMENTAT 55 YEARS
An officer who is compulsorily retired fromservice after reaching the age of 55 yearsshould, in ordinary circumstances, be given 3months notice of the date of retirement.
64 (i)
AUTOMATICRETIREMENTAT 60 YEARS
All employees shall be automatically retired onreaching the age of 60, unless the sanction ofthe Board of Directors has been receivedbeforehand to retain their services afterreaching the compulsory age of retirement
It has been argued that when the applicant was appointed to the
W.E. she had a reasonable expectation of working until shecompleted 60 years unless she was retired either on the ground of
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Gomes v. Sri Lanka State Trading Corporation
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retrenchment or on the ground of inefficiency. Neither of thosegrounds were relied upon for termination of her services. This,indeed, had been the interpretation placed on those Rules by thisCourt in the case of Kulatunga v. The Board of Directors of theC.W.E. (1); Learned Counsel for the respondents sought todistinguish that case on two grounds. The first is that theemployee in that case continued to be employed in the CWEuntil he Was retired, unlike in this case, where there was achange of employer. It must be noted, however, that bothcorporations are public sector corporations and a circular dated24.11.68 by the General Manager of Salu Sala Ltd. expresslystated that till such time as a separate set of rules etc. wereformulated, the CWE Rules & Regulations would apply to allmembers of the staff. The second ground on which that case issought to be distinguished is more substantial. None of thePublic Administration Circulars which were produced in this casehad been produced in that case. Had there been such proof theresult in Kulatunga may well have been different, for it is difficultto see how the Cabinet decisions relating to age of retirement,subsequently adopted and circulated at the instance of the Boardof Directors of Salu Sala Ltd. can be ignored. That, indeed, hadbeen the decision in K. S. G. N. de Silva v. The Sri Lanka StateTrading (Textiles) Corporation (2).
I am, however, unable to agree with the Tribunal and the Courtof Appeal that A3 contains only some draft rules which hadnever been adopted by the Board of Directors of the CWE. Theybear the date stamp of "The McCallum Stores" under date17.8.69, and the oral evidence established on a balance ofprobability that those were the Rules and Regulations acted uponby the CWE. and subsequently adopted by Lanka Salu Sala Ltd.The subsequent Public Administration Circular had, however, theeffect of overriding those rules as far as age of retirement isconcerned.
Learned Counsel for the appellant stressed the relevance ofthe reasonable expectation the appellant had of working till age60 at the time she was appointed to the CWE in 1952. In theabsence of any stipulation as to the retiring age in the letters ofappointment to the CWE and to Lanka Salu Sala Ltd. one would
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expect some evidence to have been led before the Tribunal as tothe date when the Rules A3 came into operation. In the absenceof such evidence how could it be inferred that way back in 1 952she had this reasonable expectation. I am therefore of theopinion that the termination of the applicant's service was notunlawful. The claim for damages (or rather compensation) forwrongful termination has therefore been correctly refused.
The applicant prayed not only for compensation but also forany other relief; it was therefore open to the Tribunal to haveawarded the applicant relief by way of gratuity for 221/2 yearsmeritorious service as an English Stenographer, 15/2 yearsunder the 2nd respondent and 7 years under the 1 st respondent.It is significant that both respondents are public sectorcorporations. The work undertaken by the textile department andthe textile storage point of the CWE at Jawatta was handed overto the Lanka Salu Sala Ltd. also at Jawatta with effect from1.10.67. Employees of the textile branch of the CWE were to bepaid on the same salary scales they enjoyed, and leave and otherconditions of employment were to continue under the Lanka SaluSala Ltd. Just as a rose by any other name would smell as sweet,so also would the employees of the textile department of theCWE have felt justifiably that their transfer to the Lanka Salu SalaLtd. would give them the same sweet benefits enjoyed by themearlier notwithstanding such change. It would thus beunjustifiable to deprive them of a gratuity which they had earnedsolely because of a metamorphosis not of their making. Theapplicant should therefore be given gratuity for the entirety of the22V2 years of her services.
But the 2nd respondent was discharged by the President on4.2.75 as a result of a technical objection. I do not think thatshould alter the position because the new employer the 1strespondent has "cooperated to effect this metamorphosis as aresult of a policy decision" as observed by the Court in LankaSalu Sala Ltd. v. J. M. Wickramanayake (S.C.47/75 LT.No.8/5544/75 — minutes of 9.4.76).
The computation of gratuity has given us some concernbecause the statistics necessary for such computation have not
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been led in evidence. There is a document marked R17 notproduced by any witness, but which purports to be a statementof E.P.F. due to the applicant in a sum of Rs.17,101.48 up to31.12.73. If we were to remit the case to the Tribunal for thelimited purpose of computing gratuity, it would result in time andexpense not commensurate with the claim of Rs. 13,200/- asgratuity before us. We are of the view that the award of that sumis just and equitable under the circumstances of this case.
In the result, we dismiss the appeal relating to compensationfor termination of services, but we allow the appeal relating tothe claim for gratuity in a sum of Rs. 13.200/- payable by the1 st respondent. There will be no costs of this appeal.
COUN THOME. J. — I agree.
ABDUL CADER, J. — I agree for different reasons. (Seeseparate Order.)
ABDUL CADER. J.
I agree with Wimalaratne J. that the rules and regulations in"A3" were acted upon by the C.W.E. and later adopted by LankaSalu Sala Ltd. A further reason, if need there be. is that this is thefirst occasion in litigation of this nature that this defence was putforward. On this conclusion. I am of the view that whatever thedate be that these rules began to be observed, the petitioner,even if she had been employed earlier, would have been entitledto believe that these same terms will be applicable to her. too. Ifit was different, the burden was on the respondent to establish itand this has not been done. ("R1" has no reference to the periodof service.)
But her appointment to Salu Sala Ltd. made a vital difference.By "R4" she was informed that "your services under the C.W.E.will terminate on 30th September. 1967. and that an attachedletter sets out the terms and conditions of your employmentthere." She is required to sign the copy of the letter and to returnit. Presumably, she did it and thereafter she received the
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appointment letter "R4" from Salu Sala. Para 9 of the letter readsas follows :
"You will be subject to the rules, regulations anddepartmental orders obtaining in Lanka Salu Sala Ltd.,and any other orders, rules or reguletions which mey beissued from time to time by the Board."
Therefore, whatever may have been her expectations in theC.W.E. she bound herself to the conditions that her appointment
to Salu Sala was subject to "ruleswhich may be issued from
time to time."
The rules under which she was discontinued fall into thiscategory and it cannot be said that they were motivated by badfaith as they were based on a Cabinet direction. I am, therefore,of the view that the petitioner is not entitled to damages for thetermination of her services. (For a similar view, see S.C. No.39/76 – Minutes of 9.8.78.) (2).
As regards gratuity, when she was discontinued from theC.W.E. she could have then made the claim from the C.W.E. It istrue that she had been lulled into a sense of trust by theprovisions of Clause 10, but carefully analysed, it means that theSalu Sala would grant her the privilege of a gratuity on the sameterms as in the C.W.E., but contains no promise to pay thegratuity'due from the C.W.E. I am, therefore, of the view that thepetitioner will be entitled to gratuity for the period of serviceunder Salu Sala Ltd. only.
However, in view of the fact that a majority has decided togrant the petitioner gratuity in a sum of Rs. 13.200/- and in viewof the more enlightened thinking in respect of gratuity nowprevailing, I agree to the order made by Wimalaratne J.
Compensation not allowed.
Gratuity allowed.