GUNARATNA v. PEOPLES BANK AND OTHERS

027-SLLR-SLLR-2001-V-1-GUNARATNA-v.-PEOPLES-BANK-AND-OTHERS.pdf


GUNARATNA
v.PEOPLE’S BANK AND OTHERS
SUPREME COURTS.N. SILVA. CJ.
BANDARANAYAKE. J. ANDISMAIL. J.
SC APPLICATION NO. 514/9906™ DECEMBER 2000
Fundamental rights – Termination of services – Different punishmentsimposed in disciplinary proceedings – Article 12(1) of the Constitution.
The 1st respondent Bank after due inquiiy, took disciplinary actionagainst five employees including the petitioner on the basis of certainirregular transactions. The services of the petitioner and three otheremployees were terminated, while the services of one Rajendra, whowas on extension of service was terminated by the refusal of furtherextension for him.
Held :
The inequality to offend the principle of equality must be actually andpalpably unreasonable and arbitrary.
Per Bandaranayake, J.
“Although charges laid against two persons are the same, wherethere is a discretion in imposing punishment, the degree of culpabilityof each person should be considered and different punishments maybe imposed. This is a permissible and valid differentiation being in noway inconsistent with the equal protection of the law guaranteed byArticle 12(1)"
Cases referred to :
Wyesinghe v. The Attorney-General (1978-79-80) Sri LR 102
Ceylon Paper Sacks Ltd. v. Janatha Estate Development Board (1993)BALJ Law Reports Vol. V Part I Pg. 6
Ratnayake v. The Attorney-General (1997) 2 SRI LR 98
Perera v. Montague Jayawickrama (1985) 1 Sri LR 285 at Pg. 300
Jayasinghe v. Attorney-General (1994) 2 A Sri LR 74
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12001] 1 SriL-R.
Ram Krishna Dalmia v. Justice Tendolkar AIR (1958) SC 538
Lachman Das Kewal Ram u. State of Bombay AIR (1952) SC 235
Arkansas Gas Co. v. Railroad Commission 261 US 379 at 384
APPLICATION for relief for infringement of fundamental rights.Romesh de Silva P.C. with Geelhaka Gunawardena for petitioner.Gomin Dayasri with Ms. MaliJinadasa for respondents.
Cur. adv. vult.
July 25, 2001.
SHIRANI A. BAND ARANAYAKE, J.The Petitioner was a career officer of the 1st respondentBank. He joined the Bank in 1962 as a Clerk and later waspromoted to the position of Assistant Regional Manager ofthe Bank. In November 1993, while he was serving in thepost of Assistant Regional Manager, he was served with acharge sheet containing nine charges (A). In March 1996 hewas served with an amended charge sheet containing 10charges (F). By letter dated 10. 07. 1996, the petitioner wasplaced under interdiction without pay, on the alleged groundsof irregularities committed by the petitioner in grantingoverdraft facilities to one Translanka Investments Ltd.(hereinafter referred to as TIL) (H). Along with the petitionerfour other officers were also served with charge sheets.However, according to the petitioner, only two of those officerswere interdicted. Although all five officers had givenexplanations, they were not accepted by the Bank and formalinquiries were held against all of them.
The petitioner alleges that the charge sheet served on V.Rajendra, Regional Manager (Inspection and BranchSupervision) contained identical charges as that of theamended charge sheet served on the petitioner. However,according to the petitioner, the said Rajendra was notinterdicted. At the inquiry the petitioner was found guilty of
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four charges out of ten whereas the said Rajendra was foundguilty of seven out of ten charges. The 1st respondent Bankthereafter dismissed the petitioner by letter dated 17.05.1999,with effect from 10. 07. 1996, but the said Rajendra wasallowed to retire from service with all retirement benefits.Although the petitioner had requested an opportunity to makerepresentations to the Board of Directors regarding hisdismissal, his services were terminated without granting thisopportunity.
The petitioner submitted that he was 57 years of age withan unblemished career at the 1st respondent Bank for 34 years,at the time of his termination of services. He alleged that hehad.not received equal protection of the law, due to thefollowing reasons :
the petitioner was interdicted without pay, while the saidRajendra was not interdicted, but allowed to continue inservice until he was 56 years of age;
the petitioner was interdicted without pay contrary to theprovisions of the Disciplinaiy Code of the 1st respondentBank;
while the petitioner was dismissed from service, the saidRajendra was allowed to retire with all retirement benefitseven though he was found guilty of seven charges;
although the General Manager of the 1st respondent Bankwas of the view that the petitioner should not be dismissedfrom service, the petitioner was dismissed contrary to theprovisions of the Disciplinary Code;
the recommendations of the Inquiring Officer had not beentaken into consideration by the 1st respondent and/or the2nd to 11th respondents.
The petitioner accordingly alleges that by the said actionof the 1st respondent Bank, his fundamental rights guaranteed
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under Articles 12 and 14 of the Constitution and moreparticularly by Article 12(1) had been violated.
This Court granted leave to proceed in respect of thealleged infringement of Article 12(1) of the Constitution.
The grievance of the petitioner is that he has beensubjected to unequal treatment by the 1st respondent Bank.The basis of the petitioner’s complaint is that at a time whenthe petitioner and Rajendra were ‘similarly circumstanced’,the petitioner was treated unequally, in violation of Article12(1) of the Constitution.
The charges against the petitioner are in respect oftransactions conducted at the Queens Street Branch of the1st respondent Bank and relate to the period 01. 01. 1993 to
07. 1993. The 1st respondent Bank claims that the saidtransactions caused a loss of Rs. 72.85 million.
It is the position of the petitioner that the relevanttransactions relate to two companies, namely TIL and RadhikaEnterprises. TIL maintained two Bank accounts at the QueensStreet Branch and was given Bill purchasing facilities. Chequesdrawn by TIL were presented through the clearing system tothe account of the said Company. At the time the chequeswere presented, there was no money in the account, but theBank Manager permitted the cheques to be realised as wasthe practice which was prevailing on the basis that TIL woulddeposit all monies to cover the said cheques prior to the endof the day. In keeping with this practice, TIL deposited moneyto cover all cheques prior to the end of the day.
In these circumstances, it was apparent that,
each cheque presented was a request for an overdraft;
the Bank Manager had the discretion to permit suchan overdraft which in fact he had permitted; and
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the Bank account of TIL was never overdrawn at theend of the day.
The respondents have made comprehensive submissionson the transactions of TIL with the 1st respondent Bank.According to the respondents, the cheques drawn by TIL whichwere presented to the Bank were paid in the morning withoutsufficient funds in the respective accounts. RandikaEnterprises cheques were deposited to the TIL account andpurchased after Banking hours so that those cheques couldnot be presented for clearing on the same day. The onlysignatory of the cheques drawn by Randika Enterprises onSeylan Bank of Old Moor Street Branch was the CommercialManager of TIL and one of the authorised signatories of theCurrent Accounts maintained with People’s Bank, QueensStreet Branch. The Branch Manager of the Queens StreetBranch purchased the cheques from Randika Enterprisesexceeding the limit of Rs. 15,000,000/- drawn in favour ofTIL on Seylan/Sampath Bank cheques. By this transactionTIL received immediate credit before the cheques were realised.The cheques drawn by TIL which were presented to the Bankwere paid in the morning without sufficient funds. RandikaEnterprises cheques were despatched to the TIL account andpurchased in the evening so that cheques could not bepurchased for clearing on the same day.
A report dated 21. 07. 1993 was sent by an Inspector(Branches) to Assistant General Manager (Inspection) throughthe Chief Inspector (Branches) on the purchase of cheques toTIL at People’s Bank Queen’s Streets Branch. In this report,which runs into 23 paragraphs, the following observationswere made :
”… According to the reports . . . majority of the chequesdrawn by M/S Translanka Investments Ltd., on bothaccounts (A/C 1140202379 and 1140202642) didn’t havesufficient funds. At this stage the Branch Manager should
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take a decision to either honour those cheques by grantingtemporary overdrafts or to dishonour those cheques.
The branch has not dishonoured the cheques, but retainedthe cheques without creating an overdraft to the accountsunder special passwords from the Manager.
Settlement clearing should reach the S.L.A.C.H before
noon. In majority of the cases the drawer (i.e. M/STranslanka Investments Ltd.) didn’t make any deposits(i.e. cheques or cash) to enable the branch to honour suchcheques.
Since no deposits had been made by the drawer, and thebranch had not dishonoured the cheques, it is consideredthat the branch had paid those cheques underunauthorised temporary overdraft, although it has notbeen reflected in the current account ledger print out.
. . . The mode of this operation is purely for the purpose ofobtaining credit without any adequate security. Thisoperation had started on a small scale in January 1993(somewhere on the 27th) and they were able to increasethe credit up to Rs. 86,114 million as at 1993. 07. 09 asat the day of our inspection. Now the amount unpaid isRs. 83,739 million (R2).”
It is common ground that in respect of these irregulartransactions, the 1st respondent instituted disciplinaryproceedings against five employees of the 1st respondent Bank.These five employees included the Manager and the secondofficer in charge of the Queens Street Branch, the RegionalManager of the Colombo Inner Region (Credit andAdministration), the Regional Manager of the Colombo InnerRegion Inspection and Branch Supervision and the petitioner,who was the Assistant Regional Manager Colombo InnerRegion. Rajendra was the Regional Manager Colombo InnerRegion (Inspection and Branch Supervision). According to the
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respondents, the 1st respondent Bank, after a due inquiry,took disciplinary action against all five employees who werefound guilty. This included the petitioner as well as the saidRajendra. The services of the petitioner and the other threeemployees were terminated while the services of Rajendra,who was on extension of service, was terminated by the refusalof a further extension for him.
The petitioner as the Assistant Regional Manager(Colombo Inner Region) was responsible for the supervisionof the credit facilities of the Queens Street Branch during theperiod the said irregular transactions took place. Thesetransactions in question related to the irregular and impropergranting of credit facilities which ultimately led to the loss ofRs. 83,739 million. The five officers of the 1st respondent Bankwho received charge sheets relating to the said transactionswere closely connected to the functions of the Bank Branchand the transactions in question. The alleged'transaction tookplace during a period of seven months, spanning from Januaryto July 1993. It was the position of the respondents that theservices of all those employees who were directly responsibleand involved during the entire period of seven months thealleged transactions took place, on an almost daily basis, wereterminated by the 1st respondent. This clearly included thepetitioner.
The position taken up by the 1st respondent Bank is thatRajendra’s duties as Regional Manager (Colombo Inner Region- Inspection and Branch Supervision) consisted of Inspectionand Branch Supervision in the Branches of Colombo InnerRegion. The respondents claim that the granting of creditfacilities to TIL did not fall within the purview of Rajendra’ssubstantive post and therefore he was not directly involved inthe transaction in question, except for a brief period of 15days out of a period of 7 months, where he acted for theRegional Manager (Colombo Inner Region – Credit andAdministration). Nevertheless, it is to be noted that the 1strespondent Bank took disciplinary action against Rajendra.
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At the time this incident occurred, Rajendra who was on his1st extension, was not granted an extension of service andwas made to retire.
It is also common ground that the petitioner wasfunctioning as the Assistant General Manager (Colombo InnerRegion) and was responsible for the supervision of the creditfacilities of the Queens Street Branch. His duties includedthe supervision of granting of credit facilities to customers ofthe Banks falling within his region. Throughout the periodthese irregular transactions took place, viz., from January1993 to July 1993, the petitioner was functioning in the saidpost. There is no evidence to show that the petitioner had atany stage prevented these irregular transactions from takingplace or detect any of these irregular transactions. Rajendra,who was the Regional Manager (Colombo Inner Region -Inspection and Branch Supervision) had acted for the RegionalManager (Colombo – Inner Region – Credit and Administration)only for a brief period during May and June 1993. Due to thelimited period he acted, Rajendra could not have been in aposition to obtain knowledge of the transactions carried outby TIL.
Learned Counsel for 1st to 11th respondents submittedthat in the context of this case where a difference in treatmentis alleged, in order to establish a violation of Article 12(1) ofthe Constitution, the petitioner must not only prove that hehas been adversely affected, but also that he has been treatedless favourably than those who are similarly circumstancedwithout any reasonable or rational basis.
In support of this contention, the learned Counsel reliedon
Wijesinghe v. The Attorney General111 Ceylon Paper SacksLtd., v. Janatha Estate Development Board,121 Ratnayake v. TheAttorney General,131 Perera v. Montague Jayawickrama141 andJayasinghe v. The Attorney General151 In Jayasinghe v. TheAttorney Generalisupra), the Court held that,
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“It is not enough for the petitioner to show that he hasbeen denied the protection of the law. He must also showthat he has been denied equal protection-that he wastreated less favourably than others similarly situated."
Discussing the provisions in the Indian Constitution andthe principles applicable to situations where equal treatmentis in question, Jain Kagzi is of the view that,
"The equals should not be placed unequally; and at thesame time unequals should not be treated as equals inmatters of promotion, retirement benefits etc., The equalopportunity requires that men placed similarly should betreated similarly. The subjection of unequals to the samerules for appointment through promotion and the paymentof gratuity and pension should not be ‘per se’discriminative. Equal opportunity is for equals, that is tosay, those who are similarly circumstanced in life. (TheConstitution of India, 5th edition, Pg. 238).”
Article 12(1) of the Sri Lankan Constitution guaranteesequal protection of the law. It requires that all persons similarlycircumstanced shall be equally treated. However, this doesnot imply that each act of different treatment amounts to aninfringement. A classification or a differentiation based onreasonable grounds would be lawful and valid. In Ram KrishnaDalmia v. Justice TendolkarJ61 and Lachman Das Kewal Ramv. State of Bombay,171 it was stated that, ‘for a classification tobe good and valid and not arbitrary, it should always befounded upon some differentia. For this purpose, twoconditions will have to be satisfied, viz:
the classification must be founded on an intelligibledifferentia which distinguish persons that are groupedin from others who are left out of the group; and
that the differentia must bear a reasonable, or arational relation to the objects and effects sought tobe achieved.
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In Arkansas Gas Co. u. Railroad Commission,181 it was saidthat,
“Inequality per se does not violate equal protection, forevery selection of persons for regulation pronouncesinequality in some degree. The inequality to offend theprinciple of equality must be actually and palpablyunreasonable and arbitrary. ”
In these circumstances, I am of the view that the petitionerhas not made out that he and Rajendra were similarly situatedor equally circumstanced. Nor has the petitioner shown thathe has been differently treated from Rajendra without anyreasonable basis. Rajendra and the petitioner have been foundguilty of acts of misconduct constituting a breach of discipline.The difference in treatment is clearly referrable to the degreeof culpability in relation to their respective acts and omissions.Although charges laid against two persons are the same, wherethere is discretion in imposing punishment, the degree ofculpability of each person should be considered and differentpunishments may be imposed. That is a permissible and validdifferentiation being in no way inconsistent with the equalprotection of the law guaranteed by Article 12(1). The petitionerhas failed to establish a violation of Article 12(1) of theConstitution. This application is accordingly dismissed, butin all the circumstances without costs.
S.N. SELVA, CJ.- I agree.
ISMAIL, J.-I agree.
Application dismissed.