Perera v. Dharmadasa
Perera v. Dharmadasa
COURT OF APPEAL.
COLIN-THOME, J. AND DE ALWIS, J.
c.a. (s.c.) 254/77 with s.C. 237/71—l.t. matara m/972.OCTOBER 8, 1979.
Labour Tribunal—Workman employed in accepting bets on horse races—Illegal trade—Whether contract of employment enforceable—Termina-tion of services—Right to relief—Betting on Horse Racing Ordinancei(Cap. 44) sections! 3, 11.
The applicant-respondent was employed under the employer-appellantas a clerk cum cashier. He did the work of accepting bets on horse racingand he received a percentage of the collection as commission. On hisservices being terminated, he made an application to the Labour Tribunaland obtained an order in his favour against the employer-appellantfor compensation. In appeal it was submitted on behalf of the employer-appellant that as the applicant-respondent was engaged in an illegaltrade such as accepting bets on horse racing he was not entitled in lawto claim any relief. The Betting on Horse Racing Ordinance made it anoffence to receive or negotiate a bet on a race other than a taxable bet.
On the evidence in this case the applicant-respondent was engaged asan agent' of the employer-appellant in work involving unlawful bets onhorse racing with his full acquiescence and knowledge. The aid of thelaw cannot be sought for the enforcement of such a contract and theapplicant-respondent was therefore not entitled to relief.
Cases referred to
Perera v, Dharmadasa, (1973) 77 N.L.R. 285.
Pearce v. Brookes, (1866) 1 Exch. 213; 14 L.T. 288 ; 36 J.P. 265.
Lloyd v. Johnson, (1798) 1 Bos. and P. 340.
Fernando v. Ramanathan, (1913) 16 N.L.R. 337.
APPEAL from an order of the Labour Tribunal, Matara.
J. W. Subctsinghc, tor the employer-appellant.
Jayawickrema, for the applicant-respondent.
Cur. adv. vult.
Sri Lanka Law Reports (1978-79) 2 S. L. R.
COLIN-THQME, J.The applicant made an application to the Labour Tribunal, Galle,that- he was employed as a clerk under the employer-appellantfrom October, 1960 to 9th January, 1971, and that his serviceswere unlawfully terminated. He sought compensation forunlawful termination, gratuity and back wages.
The President of the Labour Tribunal by his order dated5.10.1971 dismissed the application holding that the applicant wasemployed as a clerk in carrying on an illegal trade, to wit,accepting bets on horse racing and as such the applicant was notentitled to claim any relief.
The applicant appealed against the said order and the SupremeCourt by its order dated 15.1.1973 set aside the said order ofthe President and remitted the case back to the Labour Tribunalfor full inquiry and order.
The application was thereafter taken, up for hearing on anumber of dates and the President by his order dated 13.9.1977held that the applicant’s services were wrongfully terminatedand ordered the respondent to pay a sum of Rs. 7,200 (equal to2 years salary) as compensation and the costs fixed at Rs- 250,
Being aggrieved by the said order the employer-appellantappeals on the following grounds:—
that the said order is contrary to law and the weight ofevidence adduced in the caSje ;
that the evidence of the applicant proves that theemployment was of an illegal nature and as such the appli-cation cannot be maintained in law. It was also submittedthat the Supreme Court did not have the benefit of the sworntestimony of the applicant to consider the nature of the employ-ment at that s,tage;
the President erred in law when he stated in his orderthat: ‘ No objections touching on the validity of the application
was taken upHence, what is called for is only an
examination of the evidence on record ; ’ whereas
such evidence speaks of the illegal nature of the contract;
in any event the compensation awarded is excessive inthe circumstances of the case; wherefore the employer-appellant prays:
that the order of the President be quashed or in thealternative varied;
that the application made by the applicant be dis-missed ; and for costs and other relief.
Perera v. Dharmadasa (Colin-Thome, J.)
When this matter came up before the Supreme Court on theappeal of the applicant against the order of the President dated5.10.1971, no evidence was led at the inquiry and the SupremeCourt (per Rajaratnam, J., sitting alone—vide 77 N.L.R. 285)held that, as there was no evidence led the order was madewithout an inquiry as required by the Industrial Disputes Act-Chapter 131. In the course of the order Rajaratnam, J., madet wo irreconcilable observations as follows:
Legally the main test is whether the servant contractedto do something unlawful with his master. Hiring cabs, washingclothes, cooking meals, sweeping floors, etc., are not unlawfulengagements and are not contra bonos mores but on the otherhand are useful engagement in a society. The law will look intoeach case on its facts. For instance, a taxi driver who hires histaxi and thereby knowingly assists a murderer or burglar isengaged in an unlawful business and will not be able to sue forhis dues. In each case it will depend whether the servant hasentered into the pale of the offence as an intentional abettor inthe commission of the offence, under an agreement.”
Later in the order he observed:
“I do not think that a clerk engaged in an illegal businesswho keeps accounts, or a cook who serves meals to those patronis-ing a brothel should necessarily be denied of relief and redress,even where they knew that their • master was carrying on anillegal business. ”
The learned Judge then set aside the order of the Presidentand remitted the case back to the Labour Tribunal for a fullinquiry and order and directed that the applicant be entitledto costs fixed at Rs. 210.
At a subsequent inquiry before the Labour Tribunal both theapplicant and the respondent gave evidence. From the evidenceof the applicant it transpired that he had been working underthe respondent from October 1960 to 9th January, 1971, as aclerk cum cashier. During this period the respondent operateda bucket shop business from Colombo and he had agents inGalle, Ahangama, Weligama and Matara. He was given a carwith a driver to perform his duties which were to collect theracing sheets from Mukthar in Colombo and distribute them inthe outstations. He used to leave Colombo in the morning takingwith him the summaries showing the advance bets placed andA 60173
Sri Lanka Law Reports (1978-79) 2 S. L. R.
the payment money. He distributed the fresh betting cards andthe summaries. In the evening he kept the money with him andtook the betting chits to Colombo. He used to deposit the moneyin the Bank of Ceylon. The day’s collection amounted to aboutRs. 6,000. There was work right through the year except on. fourdays, that is, during the Christmas holidays. On week daysthere were English races, while on Sundays there were Frenchraces. He was paid at the rate of Rs. 300 a month, but actuallyhe received only Rs. 275. Rs. 25 was kept back in lieu of Provi-dent Fund to be paid at the termination of his services. He wasalso paid Rs. 15 as batta a day, although he did not mentionthis in his application. With batta his salary worked up to aboutRs. 750 a month. He was in custody of all the respondent’s cash.
Under cross-examination he stated that the work he did wasto accept bets on commission and he handed over the bets toothers such as Mukthar. When he gave the collections to therespondent he received 10% commission. He himself had placedbets and had won Rs. 6,000 once. He knew how to calculatewinning chits. He knew this from the time he attended school.He had been convicted and sentenced to jail for 5 years forthrowing acid at his wife. He knew that the police raided bucketshops and had filed actions against bucket shop owners. But hestated that he was not aware whether his work was illegal orlegal.
The respondent in his evidence stated that the applicantworked under him from 1960 to 1971 and he was in continuousemployment except for the period of 5 years during which heserved a term of imprisonment. In the early ’60s races werebanned in Ceylon and after that he accepted bets for racesconducted in India. Thaha and Mukthar accepted bets for racesconducted in England. The police had once stopped the car inwhich the applicant was travelling but he managed to escape.Since that time he had instructed the applicant to bring onlythe chits with him, and for the money collected in Matara tobe kept by him.
The main submission of learned counsel for the employer-appellant was that as the applicant was engaged in an illegaltrade, such as accepting bets on horse racing, he was not entitledin law to claim any relief.
In Pearce and another v. Brooks (2), it was held that one whomakes a contract for sale or hire with the knowledge that theother contracting party intends to apply the subject matter of
Perera v. Dharmadasa (Colin-Thome, J.)
the contract to an immoral purpose cannot recover upon thecontract. It is not necessary that he should expect to be paidout of the proceeds of the immoral act.
The defendant, a prostitute, was sued by the plaintiffs, coachbuilders, for the hiring of a brougham. There was no evidencethat the plaintiffs looked expressly to the proceeds of the defen-dant’s prostitution for payments ; but the jury found that theyknew her to be a prostitute, and supplied the brougham with aknowledge that it would be, as in fact it was, used by her aspart of her display to attract men. Held, that the plaintiffs couldnot recover. In this case Pollock, C.B., stated: “Nor can anydistinction be made between an illegal and an immoral purpose;the rule which is applicable to the matter is ex turpi causa nonoritur actio, and whether it is an immoral or an illegal purposein which the plaintiff has participated, it comes equally withinthe terms of that maxim, and the effect is the same; no causeof action can arise out of either the one or the other. ”
In Lloyd v. Johnson (3), the plaintiff was employed to washclothes for the defendant, who was a prostitute, knowing her tobe such. It was held that the use to which the clothes might beapplied, could not bar the plaintiff of an action for work andlabour. ,In this case the bill of particulars showed that the articleswashed consisted principally of expensive dresses and somegentlemen’s night caps. Buffer, J., observed that it was impos-sible for the Court to take into consideration which of thesearticles were used by the defendant to an improper purpose, andwhich were not.
Norman Scoble in the Law of Master and Servant in SouthAfrica—(1956 Edition) at page 94, has observed, referring to theabove cases, that: “ It is essential that the purpose or objectof an agreement of service should be one recognised as enforce-able in law, that is to say, it should not be illegal or contra bonosmores. There can, therefore, be no effective contracts for domesticservices between an owner of a gambling den and his cook ormaid employed therein if the cook or maid was aware of theillegal objects of their employer and could thus be said to beassociated with him in his unlawful purpose.”
Section 512 of the American Restatement reads:
“A bargain is illegal within the meaning of the Restate-ment of this subject if either its formation or its performanceis criminal, tortious, or otherwise opposed to public policy.”
Weeramantry in the Law of Contract, Volume I, para 341, hasstated that: “ a contract would be invalid for illegallity if it
292Sri Lanka Law Reports(1978-79) 2 S. L. R.
contravenes some specific provision of the Ordinance. ”—videFernando v. Ramanathan (4) ; quoting Wessels, s. 682; Digest3.19.2 at para 346 he adds : “ However it is not only at its forma-tion that the contract must be legal: it must be so also at thetime of performance, for unless it is legal at the time of perfor-mance it has no binding force ; ” and at page 397 he observes :“ The effect of illegality is to render the contract null and void
It follows that no action can be based on such a contract
The principle that no action may be based upon an
illegal contract is one common to Roman, Roman Dutch andEnglish Law.”
Under the Betting on Horse Racing Ordinance—Chapter 44,section 3 (3) (b) :
“ Any person who receives or negotiates a bet on a horse
race other than a taxable bet, shall be deemed to bet unlaw-fully at a horse race and shall be guilty of an offence.”
Under section 11 of this Ordinance :
“Every person guilty of an offence under this Ordinanceshall, on conviction after summary trial before a Magistrate,be liable :
for a first offence, to a fine not exceeding Rs. 1,000 or,in default of payment of such fine, to imprisonment of eitherdescription for a term not exceeding one year ; and
for a second or subsequent offence, to a fine notexceeding Rs. 2,000 or to imprisonment of either descriptionfor a term not exceeding 2 years, or to both uich fine orimprisonment. ”
In the instant case there is ample evidence that the applicant-respondent was engaged as an agent of the employer-appellantin work involving unlawful bets on horse racing with his fullacquiescence and knowledge. The maxim ex turpi causa nonoritur actio, lays down the principle that no action can befounded upon a tainted transaction, so that the aid of the lawcannot be sought for its enforcement. The basis for this ruleis that the law does not encourage or condone participati >n ina crime or its abetment.
For these reasons we quash the order of the President of theLabour Tribunal. There will be no order as to costs.
DE ALWIS, J.—I agree.