030-SLLR-SLLR-1991-V2-PREMADASA-RODRIGO-V.-CEYLON-PETRLEUM-CORPORATION.pdf
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[1991] 2 Sri L.R.
PREM&DASA RODRIGO,
V
CEYLON PETROLEUM CORPORATION.
SUPREME COURT-
BANDARANAYAKE, J., FERNANDO. J.. AND AMERAS1NGHE. J.
S.C. APPEAL NO. 29/88.
S. C. SPECIAL LA NO. 50/88.
C. A. NO. 305/83
T. NO. I/ADD/2643/80.
SEPTEMBER [0th,i991.
Industrial Law – Termination of employment – Tests of misconduct anddisobedience justifying dismissal – Compensation.
In the sale of used household and other equipment to the employer theappellant who was the Assistant Manager (Stores) purchased a large amountof the goods on sale defying some of the instructions and procedure set outin circulars issued by the management and circumventing others by falseentries.
Held:
Loss of confidence must be based on established grounds of mis-conduct which the law regards as sufficient. An employer's response to themisconduct in question musl be reasonable. It must not be flagrantly unjust.In applying these principles a tribunal or court is not seeking to impose itsown views on what an employer ought to have done.
Per Amerasinghe, J:
“There is a band of reasonableness within which, in the circumstances,employers in that very type of business may well have acted differently.Within that band, there can be no single correct or incorrect decision."
The test is not that a dismissal would be unfair only if no reasona-ble employer would have dismissed the employee.
sc
Premadata Rodrigo v. Ceylon Petroleum Corporation
383
The concerns of a tribunal or court in considering an allegation ofunfair dismissal should be —
Were the alleged grounds of misconduct sufficiently established byevidence? What was the quality and nature of the misconduct?
Are there proved reasons, or legitimate inferences from the evidenceavailable with regard to how and why the business of the employerwas, or might be reasonably expected to be adversely affected directlyor indirectly by the act or omission in question?
Was the misconduct taken by itself, sufficient?
Are there, established by evidence, aggravating circumstances orexonerating or extenuating facts that change the quality and natureof the act or omission?
In the light of the answers to these questions, is it reasonable to con-clude that the employee's misconduct was repudiatory in nature?
Per Amerasitighe J:
“Hvcr since Adam ate the forbidden fruit, disobedience has beenviewed askance as something to be regarded as contemptible, somethingdeserving punishment. The law relating to industrial relations reflects thesevalues, h permits punishment, for inexcusable, wilful neglect or refusal tosubmit to or comply with or the transgression or violation of a command,order or direction of an employer, or that of a person lawfully and properlyacting for and on behalf of an employer”.
Not every act of disobedience would merit dismissal. The act mustbe qualitatively appropriate for the purpose. For instance, unless the personissuing the relevant order had the authority to do so, there can be no dis-obedience of the employer’s order. Moreover, the order must be dearpositive and unambiguous; it must have been communicated to theemployee and within his knowledge. It must not be impossible, unreasonableor unlawful to obey the order.
It was his inordinate and overpowering greed, rather than zeal orany sense of duty that motivated the appellant to act in defiance of theorders of the employer. There were no extenuating factors.
Where his misbehaviour encourages subordinates to act in derelic-tion of their duties, a supervisory employee is guilty of misconduct, the rec-urrence of which the management is entitled to prevent by strong action.
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The appellant iw>t merely failed to exercise his supervisory functions, heactively assisted his subordiiftitc in the violation of superior orde*s. to heable to carry out his own improper designs and his culpability is thereforethat much more serious.
8. If the de minimis principle is applicable a warning or admonitionmight be appropriate. Here the goods were deliberately sold at a concession-ary price. They were hard to get and valuable. The scramble for the itemsdemonstrates this. The appellant could not be said to have taken the troublehe took and risk so much for trifles. He cannot take refuge in the de mii-imis principlc.
In failing in his duty as a supervisor, and in tailing to maintain hisauthority as a supervisor, the appellant acted in breach of implied, butessential conditions of his employment. No business organization could everbe successful unless employers could depend on supervisors to do what isexpected of them. The successful running of a business is committed to itssupervisors.
Apart from his obligations in general as a supervisor and seniorhand, the appellant was entrusted with the custody and safety of theemployer's property. As Assistant Stores Manager, he was in a special posi-tion of confidence with regard to the goods entrusted to him. As the personin charge of the implementation of the scheme of sale, he was in a sensitiveor strategic position, It was a high risk to keep the appellant in such a posi-tion after he had misused or abused his position and onft suspicion hadstarted.
11. Although in certain circumstances, compensation may be payablewhere reinstatement is not feasible, if the employee’s conduct had inducedthe termination, he cannot in justice and equity have a just claim for com-pensation.
Cases referred to:
Laws v. London Chronicle [19591 – ALL ER 285.
Michael v. Johnson Pumps AIR 1975 SC 661.
The Lever Brothers Dispute ID 66 11549 of 19.10.1985.
Lanka Estate Workers Union v. Superintendent of Vellai Ova Estate.Hatton ID 8. CGG 11095 of 22.03.1937.
Democratic Workers Congress v. Superintendent of Kahagalla Estate.Haputale ID 11, CGG 11068 of 15.12.1957.
Trust Houses Forte Leisure Ltd. v. Aquilar [1976] I-RLR 251.
British Leyiand (UK) Ltd. v. Swift [1981] 1-RLR 91.
Vickers Ltd. v. Smith [1977] 1-RLR 11.
SC Premadasa Rodrigo v. Ceylon Petroleum Corporation [Ameraswghe, J.]385
Hing Construction & Engineering Co., Lyj, v. Their Workmen 1965 2SCR 85, 88.
AH Ceylon Oil Companies Workers’ Union v. Standard Vacuum Co. ID237 CGG 12034 of 08.01.1960.
tl. Ceylon Transport Board v. Sa mast ha Lanka Motor Sewaka Samithiya(1962) 65 NLR 566.
Ceylon Workers' Congress v. Janatha Estates Development Board {1987,2 Sri LR 73, 77.
Adam v. Maison de Luxe Ltd. 1924 35 Comm. LR 143, 151-152.
Youngash v. Sasketchewan Engine Co. 1911 4 Sask, LR 63 16 WLR 268.
Power v. Rengsami (1891) 9 S.C.C 149, 152.
Winthrop v. Madasamy, (1913) 16 NLR 467.
Handyside v', Wirappu & Others (1858) 3 Lorensz 114.
Hattingh v. Sutterheim Div. Council 1910 SALR E.D.L.D. 342.
United Elec. Rad. and Mach. Workers v. Canada Wire and Cable Co.1950 Can. Lab. Arb. Cas. 492, 493.
Mckellar v. Macfarlane (1852) 15D. 246, 248, 2 Stuart 123 25 Jur. 156.
Cawnpore Sugar Works Ltd. v, Rashtriya Chini Mill Mazdoor Sangh,(Uttar Pradesh Gazette, of 05.03.1960 Pt 1 – B (ii),P. 508, 512 (Lab. ct.)
Rv. Milne 1950 4SALR 604, 607.
Murray v. Velaiden (18.99) Tambyah 32,
Mysore Premier Metal Factory v. Workmen, (Fort St. George Gazette,29.05.196.1 Pt. 11, Section l(supp.)p.2 Mad. Lab. ct.)
United Packinghouse Workers v. Robin Hood Flour Mills Ltd. (1961) 12Can. Lab. ^rb. Cas. 69.
Sarangpur Cotton Manufacturing Co. v. Idu Ismail, (1955) Bombay Ind.Ct. Ref. 262.
United Auto Air & Agric. Imp. Co. v. Massey-Harris Co. 1949 1 Cam.Lab. Arb. Cas. 311, 316.
Champdany Jute Mills v. Ali (Jan. 1952 Lab, App. Cas. 583)
Moradabed Water Supply Co. v. Abdul H. Khan 1951 2 Lab. L. J. 296
Ford Motor Co. v. Dhomdu S. Mayekar 1953 Bomb. Ind. ct. Refs. 418.
National Rayon Corp. v. Gajaman D. Bankeer 1954 Bomb. Ind. Ct. Rep.161.
Khulma N. Employees Union v. Khulna Newsprint Mills Ltd. (1963)Pakistan Lab. L. Cas. 874, 875.
Baidva V. Das v. Angus Co. (Calcutta Gazette Feb. 9 1961 Pt. 1 P. 445,446.
United Elec. Rad & Mach, Workers v. Canadian Gen. Elec. Co. 1949 ICan. Lab. Arb. Cas. 320
H. G. Jayasekera v. Ceylon Transport Board ID/LT/8/69, CGG 14359 of26.03.1965.
386
Sri Lenka Law Reports
(1991) 2 Sri L.R.
Ceylon Cold Stores Ltd. v? Industrial & General Workmens Union 1982 1Sriskantha's I.aw Reports 7.
The International Union, United Automobile, Aircraft and AgriculturalImplement Workers of America (UAWC 10) Local 199, in Re MckinnonIndustries Ltd.(195l) 2 Can. Lab. Arb. Cas. 644.
Bcrec (Ceylon) Ltd. t Walpola 45: Offers SC 96/75 SC Minutes of14.08.1978.
Ceylon Oil & Petroleum Workers (:nion v. Ceylon Petroleum Corporation(1978 – 79) 2 SLR 72. 78.
Saverimuttu v. Board of Directors. CWE, CGG 15000 of 03.03,1972.
Glaxo Allenburv’s (Ceylon) Ltd, v. Fernando SC 250/71, SC Minutes of22.10.1974.
Jayasuriya v. SLPC, SC Minute of 30.05.1991
Caledonian (Ceylon) Tea and Rubber Estates Ltd. v. Hillman (1977) 79(1) NLR 421.
Piliyandala Polgasowita Multi Purpose Co-op Soc. v. Liyanage (1971) 74NLR 138.
Wataraka Mulfi Purpose Co-op Soc. Ltd. v. Wickramachandra (1968) 70NLR 239.
The Group Superintendent Dalma Group v. Ceylon Estate Staffs Union(1971) 73 NLR 574.
Rumblan v. Ceylon Press Workers Union (1973) 75 NLR 575.
Karthigesu v. Sri Lanka Sugar Corporation 111 Sriskantba LR 42.
Somawathie v, Baksons Textile Industries Ltd, (1973) 79 fl) NLlt 202.
Binny Ltd. v. Their Workmen, AIR 1973 SC 1403, 1404.
Appeal from a Judgment of the Court of Appeal.
R.K. W. Goonesekera with S. M. Senaratne for appellant.
S.B. L. de Silva for respondent.
Cur. adv. vvlt.
December 16, 1991.
AMERASINGHE, J:
This an appeal from the decision of the Court of Appealaffirming the Order of a Labour Tribunal that the terminationof the appellant’s employment was justified. The question fordetermination is whether, in the circumstances of the case, thetermination was warranted.
SC Premadasa Rodrigo v, Ceylon Petroleum Corporation [Amerasinghe, J ]387
The* circumstances of the ease arc as follows: After thevacation of homes occupied by expatriate staff upon the com-pletion of their assignments with the Ceylon Petroleum Corpo-ration, the Corporation, hereinafter referred to as ‘theemployer’, announced by a Circular dated 27 June 1978 (PI),that it proposed to sell to its employees the household equip-ment used by the former expatriate staff, Employees wererequested to make their applications for the items in a pres-cribed manner. If there was competition for items, the goodswere to be allocated by lottery. Goods not purchased withintwo weeks, the Circular said, would be sold to others.
The Manager, (Stores and Supplies) informed the Chair-man by a memorandum (P2) that 2506 applications werereceived in response to the advertisement, and because thedemand greatly exceeded the available items, he said he would,with the help of a computer, try to ascertain particulars of theitems applied for, it was stated in the memorandum that theTender Board had decided that (a) items of cutlery were to belimitetf to silt per person; (b) where applicants were married,the husband and wife would, nevertheless, be each entitled tohis or her quota as an individual employee; (c) where the sameitem was repeated by an applicant in several applications, theitem should be struck out; (d) the deadline for applicationsshould be extended to August 4; and (c) the Chairman shoulddecide on the applications of temporary employees.
On 6th September, 1978, the Manager (Stores and Supplies),by letter, informed the Assistant Manager (Stores), the appel-lant, that some of the items wbuld be required for the futureuse of other “foreign personnel due to arrive in the Islandshortly in connection with Corporation activities”. The kindsand the number of items required were specified. The appel-lant was directed to "set aside” these items from the bestavailable and to “segregate” them in a “separate location”from the others.
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On 11th October 1978 the Manager (Stores and Supplies)issued a Circular to all the Heads of Departments (P5)announcing that, further to the Circular of 27 June 1978 (PI),there would be a lottery conducted with the assistance of acomputer, for the household items applied for by employeeson 17th October 1978, in the employees’ recreation hall. TheChairman, Working Director and Director in-charge of per-sonnel, it was said, were expected to be present. The Circular(P5) also stated that (1) three items from the list originallyadvertised, viz., items 40, 41 and 47 were withdrawn from thesale; and (2) that, while the results of the lottery, it was hoped,would be announced on or before 20th October 1978, thegoods should be paid for and removed between 23rd Octoberand 10th November 1978; and (3) that goods not disposed ofon or before the closing date, would be sold to thoseemployees mentioned in an additional reserve list.
On 24th October 1978 the Manager (Stores and Supplies)by a Circular to all Heads of Departments (P7): (1) sent theresults of the lottery; and (2) directed that the winners should,between 27th October and 10th November 1878, pay theamounts due for the purchase of the items they were entitledto, after establishing their personal identities in the mannerspecified.
On 2 December 1978 the appellant, who was in charge ofthe disposal of the items on sale, wrote to the Manager (Storesand Supplies) as follows ,(P8):
“SALE OF HOUSEHOLD AND OTHER EQUIP-MENT TO EMPLOYEES-
After the lottery and sale of goods to the respectiveemployees which ended on the 17th of November 1978.the following goods are left with us. A list of such itemsis attached hereto. Though there were some employeeswho appled to take their goods after the 17th ofNovember 1978. we rejected the offers, as it was decided,that some persons had been selected at that lottery qual-
SC Premadasa Rodrigo v. Ceylon Petroleum Corporation [Amegasinghe, J.]389
ifying them to purchase the goods which might be leftunsold. However, we have to face difficulties in sellingthese leftover items as some times the number of itemsare more or less than the number of specified qualifiedpersons.
If the lottery system is adopted to solve this problem,it would take approximately one month, and this wouldseriously hamper our day-to-day official functions."
The Manager (Stores and Supplies) on 12th December 1978responded that, since it had been earlier resolved that if thefirst winner did not exercise his right of purchase, the secondand third “etc" (sic) in line should be called upon to purchasethe items, the Tender Board had decided that the second andthird should be called upon “ to pay and remove the leftovergoods”. The Manager added that “If the 2nd and 3rd partiesalso failed to pay and remove the goods, the Tender Boarddecided that we should throw open to any officer of the Cor-poration the opportunity to purchase such leftover items on afirst-come first-served basis"
The Appellant was asked to ‘take action accordingly”
Although he had not become entitled to do so in terms ofthe luck of the draw at the lottery, the appellant, according tothe Stores Invoice Order of 20 December, 1978 (P14), pur-chased for himself 12 saucepans. 12 table spoons, 12 forks, anLP Gas Cooker and 2 foam rubber mattresses.
On 22nd December, 1978, the appellant issued a Circularto all Heads of Departments (P9) stating as follows:—
“SALE OF USED HOUSEHOLD AND OTHEREQUIPMENT TO THE EMPLOYEES.
This letter is further to my Circular dated 24.10.1978 andthe letters dated 26.10.1978 and 09.11.1978 issued by theAssistant Manager (Stores).
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After the lottery, a list of workers was prepared, hav-ing regard to the number of items to be sold. Othernames were also picked at the same lottery to deal withthe eventuality of some goods being left unpurchased bythe winners. The names of workers, selected for the saleof unsold goods, are stated against the particular itemsthey are eligible to purchase in a list.
These workers should, between 26th December 1978and 5th January 1979, pay the amounts due for the pur-chase of the items to which-they are entitled, establishingtheir personnel identities in the manner specified. Goodsarc to be sold in the condition in which they are found.
Please inform your respective departments of this let-ter and advise those whose names appear on the list topay and collect the goods before the deadline mentionedabove.
Assistant Manager (Stores)”
No reference was made by the appellant to the wav inwhich the goods not purchased by the winners at the lotterywere to be sold.
In terms of invoice 192284, dated 24 January 1979, (P14),the appellant purchased a breadknife, ten tea spoons and abread-board. The sale of these items had been approved on4th January, 1979, which in terms of the Circular issued by theappellant (P9) was the day immediately preceding the last datefor purchase by those qualified to purchase in terms of the lot-tery.
Complaints were made to the management by employeesabout the appellant helping himself to the items referred toabove (a) none of which he was qualified by lottery to pur-chase; (b) some of which no one could have purchased in suchquantities and (c) others which could not have been purchasedby anyone at all, because they had been withdrawn from thesale. A domestic inquiry was held into the appellant’s conduct.
SC fYeoadiM Rodrigo r. Ceylon Petroleum Corporation [Ameysinghe, J.]391
and his services were terminated with effect from 25th May,1979. His appeal to the Labour Tribunal was without success,save and except to the extent that the Tribunal on 6th April,1983 ordered the payment of a gratuity of Rs. 12,792/50 forthe services rendered by the appellant. In the Court of Appeal,on 11th March, 1988, Mr. Justice Palakidnar affirmed thedecision of the President of the Labour Tribunal.
On 21st July, 1988 this Court (Atukorale, Actg. C.J.,G.P.S. de Silva, J, (as he then was) and Jameel, J.), observingthat the “only point urged by the learned Counsel for the peti-tioner” was “whether in the circumstances of this case thepunishment meted out to the petitioner is warranted”, granted“special leave to appeal to this Court from the judgment ofthe Court of Appeal dated 11th March, 1988,”
The matter was argued before us on 10th September, 1991.At the request of the Court, learned Counsel filed additionalwritten submissions: The appellant did so on 16th Septemberand the respondent on 7th October 1991.
Mr. Goonesekere, learned Counsel for the appellant, sub-mitted that, although an employer ought to have the right todecide on what punishment is appropriate in the event of mis-conduct, it is not every mistake or act of disobedience thatwould make dismissal a just and equitable way of dealing withthe matter. Where the employer has acted mala fide, or wherethe punishment is disproportionate to the offence, a LabourTribunal should, he said, intervene to give relief. A Tribunal,learned counsel for thp appellant submitted during his address,should regard a dismissal as unfair if no reasonable employerwould have dismissed him. No reasonable employer, learnedcounsel submitted, would have dismissed the appellant. How-ever, in his written submissions later on 26th September, 1991.Mr. Goonesekere submitted that a tribunal or court should beguided by the test, Would a reasonable employer have decidedthat the employee’s conduct was sufficiently serious to warrantthe penalty of dismissal? Mr. Goonesekere cited S. R. de Silva,
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Legal Framework of Industrial Relations, 592-595; Malhotra,Dismissal, Discharge, Termination of Service and Punishment,7 Ed., 274-275 and Steven D. Anderman, The Law of UnfairDismissal, 1985, pp. 149 – 172, in support of his submissions.Mr. Goonesekera drew our attention to the fact that Ander-man (op.cit.) quoted Lord Evershed, MR in Laws v. LondonChronicle (1) as stating that “an act of” disobedience can jus-tify dismissal only if it is of a nature which goes to show ineffect that the servant is repudiating the contract or one of itsessential conditions.” Mr. Goonesekere submitted that theappellant’s conduct “cannot even remotely be considered grossmisconduct” and that, therefore, the termination could not bejustified.
It was never suggested at any time that the employer in thiscase acted mala fide. Therefore, that matter does not need toengage our attention.
Whether the termination of :he appellant’s services was jus-tifiable or not, whether it wa:,, as Mr. Goonesekere claims“disproportionate”, depends on what he did or gmitte^ to doand whether what he did or omitted to do, as a matter of law,and not as a mere whim or fancy of the employer, warranteddismissal. (Cf. Michael v. Johnson Pumps (2) at p. 666 para.22, per Krishna Iyer, J.). I agree with learned counsel for theappellant that an employer cannot claim to have a right todismiss an employee merely because he says he has lost confi-dence in an employee. As Justice Krishna Iyer pointed out,with great respect, albeit somewhat quaintly, in Michael v.Johnson Pumps, (supra) at p.666 para. 19, loss of confidenceis “no new armour for the management : otherwise security oftenure, ensured by the new industrial jurisprudence andauthenticated by a catena of cases of the Supreme Court, canbe subverted by this neo-formula.”
Loss of confidence must be based on established groundsof misconduct which the law regards as sufficient. An employ-er’s Vesponse to the misconduct in question must be reasona-ble. It must not be flagrantly unjust. (Cf. The Lever Brothers
SC Premadasa Rodrigo v. Ceylon Petroleum Corporation (Amerasinghe, J.)393
Dispute^3), see also ID/LT/4/30 CGG 13441 of December21, 1962). It must be emphasized, however, that, in applyingthese principles, a tribunal or court is not seeking to imposeits own views .on what an employer ought to have done. Ingeneral, tribunals and courts must recognize the fact that theemployer is in the best position to judge what punishment isappropriate for his employee’s misconduct. (E.g. see LankaEstate Workers Union v. Superintendent of Vellai Oya Estate,Hatton) (4) Democratic Workers Congress v. Superintendentof Kahagalla Estate, Haputale (5) see also ID 66 CGG 11549of October 10, 1958). The question for a tribunal or court isnot what such tribunal or court would have done if it hadbeen the employer. [See Trust Houses Forte Leisure Ltd. v,Aquilar, (6)].
Nor is a tribunal or court concerned with what a reasona-ble employer might have done. There is a band of reasonable-ness within which, in the circumstances, employers in that verytype of Susinets may well have acted differently. Within thatband, there can be no single, correct or incorrect decision. Onereasonable employer might have retained his services. Another,equally reasonable, employer might have dismissed him.
I am unable to accept the ether test suggested by learnedcounsel for the appellant, namely, that a dismissal is unfaironly if no reasonable employer would have dismissed theemployee. 1 know that this seems to have been the standardsuggested in British Leyland (UK) Ltd. v. Swift (7) Cf. alsoVickers Ltd. v. Smith (8) Perhaps it was the same criterion theIndian Supreme Court had in mind in Hind Construction &Engineering Co. Ltd. v. Their Workmen, (9), at p.88 whenJustice Hidayatullah, (Gajendrugadar, C.J., and Wanchoo, J.agreeing), said: “In respect of punishment it has been ruledthat the award of punishment for misconduct under the StandingOrders, if any, is a matter for the management to decide, and
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• •
if there is any justification for the punishment imposed, thetribunal should not interfere. The tribunal is not required toconsider the propriety or adequacy of the punishment orwhether it is excessive or too severe. But where the punishment•is shockingly disproportionate, regard being made to the par-ticular conduct and the past record, or is such, as no reasona-ble employer would ever impose in like circumstances, thetribunal may treat the imposition of such punishment as itselfshowing victimization or unfair labour practice.”
The decisions in British Leyland (supra) and Hind Construc-tion & Engineering Co., in my view, impose unacceptable fet-ters on Labour Tribunals in making their decisions in terms ofthe Industrial Disputes Act. including decisions under section33 (6) of that Act. The application of the no reasonableemployer test would drive tribunals, and eventually employers,to seek the lowest standards of conduct. Concerned as we arewith the pursuit of excellence, better performance and greaterproductivity in our places of work, I have no hesitation inrejecting the “no reasonable employer” standSrd proposed byMr. Goonesekera. Employers should not be compelled toscrounge in the lowest depths of the relevant standards of per-formance and behaviour to justify their actions.
A reading of the decisions leads me to the view that theconcerns of a tribunal or court in considering an allegation ofunfair dismissal are these: Were the alleged grounds of mis-conduct sufficiently established by evidence? What was thequality and nature of the misconduct? Are there proved rea-sons, or legitimate inferences from the evidence available, withregard to how and why the business of the employer was, ormight be reasonably expected to be adversely affected, directlyor indirectly,' by the act or omission in question? (Cf. All Cey-lon Oil Companies Workers' Union v. Standard Vacuum Co.,(ID). Was the misconduct, taken by itself, sufficient? Are there,established by evidence, aggravating circumstances or exoner-
SCPremadate Rodrigo v. Ctylott Petroleum Corporation (Amerasinghe, J.)395
ating or extenuating facts that change the quality and natureof the act or omission? in the light of the answers to thesequestions, is it reasonable to conclude that the employee’smisconduct was repudiatory in nature?
What did the appellant do or omit to do in this case?
The appellant was disobedient. Not once, but over andover again. Although on 6th September, 1978 he had beendirected by the Manager (Stores and Supplies) to set apartand, subsequently on 11th October, 1978 the Manager (Storesand Supplies), in Circular (P5) announced that those items (40,41 and 47) had been withdrawn from the scheme of sale to theemployees, the appellant, nevertheless, made personal pur-chases of two of tho&e items, namely teaspoons (item 40) andstainless steel spoons (item 41).
The appellant was also disobedient, when he purchaseditems of household equipment for himself, because in terms ofthe schejne set out in the employer’s several Circulars, includ-ing one issue3 by the appellant himself for and on behalf ofthe employer (P9), he was not qualified at all to make suchpurchases.
The appellant was disobedient once again when he pur-chased 12 table spoons, 12 forks and ten tea spoons, since themaximum number of such items of cutlery as were permittedto be sold was limited to six per person.
The appellant was disobedient again when he failed toinform employees in his Circualr (P9) of the manner in whichgoods remaining after 5th January, 1979 would be sold. Heincorporated in his Circular only some of the instructions hehad been ordered to communicate.
What is the nature and quality of an act of disobedience?Ever since Adam ate the forbidden fruit, disobedience hasbeen viewed askance as something to be regarded as contempt-ible, something deserving punishment. The law relating to
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industrial relations reflects these values. It permits punishment,for inexcusable, wilful neglect or refusal to submit to orcomply with or the transgression or violation of a command,order or direction of an employer, or that of a person lawfullyand properly acting for and on behalf of an employer. (Cf.Ceylon Transport Board v. Samastha Lanka Motor SewakaSamithiya (11) Ceylon Workers’ Congress v. Janatha EstatesDevelopment Board (12) at p.77 per Atukorale, J. See also theAustralian case of Adam v. Maison de Luxe Ltd (13) at pp.151-152 per Isaacs ACJ; and the Canadian case of Youngashv. Sasketchewan Engine Co. (14).
Alfred Avins, Employees’ Misconduct, 1968 Ed., pp. 125-126 explains why obedience to orders is essential to a business,why it is an essential condition of every contract of employ-ment and why disobedience must be regarded as misconduct,in the following way:
I
“Disobedience to lawful commands is a most noxiousoffence, and the most dangerous in nature, for#it goes atohee to the utter annihilation of all authority.
The authority and desires of superiors, be they employ-ers or supervisors, are expressed through orders. With-out a willingness by an employee to accept the authorityof superiors, no business organization of any kind, orindeed any other kind of organization, could function.Every employee would do just what he chose, and nocentral plan could be put in operation or successfullycarried out. The objects and aims of the employer wouldnever be accomplished, the very purpose of the contractof employment/’
I agree with Mr. Gooncsckerc’s submission that not everyact of disobedience merits dismissal. The act must be qualita-tively appropriate for the purpose. For instance, unless theperson issuing the relevant order had the authority to do so,there can be no disobedience of the employer’s order. This is an
SC Ptemadasa Rodrigo v. Ceylon Petroleum Corporation (Ameraqnghc, J.)397
a
old, well-established principle in our law, going back ahundred years at least. (E.g. see Power v. Rengsami, (15) seealso Winthrop v. Madasamy (16) Moreover, the order must beclear and positive and unambiguous; it must have been com-municated to the employee and within his knowledge; Other-wise, how could he be disobedient? Moreover, it must not beimpossible, unreasonable or unlawful to obey the order.
No questions were raised in the case before us of lack ofauthority, or clarity, or misinterpretation or impossibility orillegality and similar extenuating or exonerating circumstances.Had these questions been raised, I would have consideredthem in deciding whether these circumstances made the appel-lant's conduct qualitatively less serious than disobedience, oforders might usually be.
However, it was in evidence that the appellant did thinkthat the scheme, from the point of view of implementation,was somewhat problematical. It was not a case where theorder was so unreasonable as to make the disobedience excu-sable. (Cf. Handyside v. Wirappu & Others (17)-a case of aprosecution for the disobedience of an employer's orders underOrdinance 5 of 1845). This is not a case where performancewas impossible or dangerous or illegal. The implementation ofthe scheme ordered by the employer was, in the appellant’sview, disruptive of his other work, inconvenient, perhaps, andsomething of a nuisance. But no more than that. He expressedhis views in his letter to the Manager (Stores and Supplies) on2nd December 1978 (P7). Due consideration, no doubt, was givento the disruptive effects alleged; but the appellant wasinformed in the clearest of terms, by the Manager (Stores andSupplies) on 12th December 1978, that his views were notacceptable, and he was told what he should do. Whatever hisprivate views were, and however desirable his personal motivesmight have been, the appellant should have complied with theorder of the Manager (Stores and Supplies) dated 12th December
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1978 given, as it was said, in consultation with the TenderBoard. Avins (op. cit. p. 289), referring to numerous authori-ties in support of his views, says this:
“While excessive zeal or other good motives may lessenthe punishment to be imposed on an employee who dis-obeys orders, unless the superior is mistaken as to thefacts in which they are to operate, good motives do notconstitute a defence. A subordinate has no right to sub-stitute his own opinion for that of a superior, and anydisobedience in so doing will be considered wilful andnot merely due to forgetfulness or carelessness. Anemployee cannot refuse to obey an order because hebelieves the work called for is unnecessary or the orderis unwise… Disobedience of a positive order to do some-thing in one way is not excused because the employeebelieves he has a better method of accomplishing thesame result. Likewise, it is no excuse for disobeyingorders that obedience might endanger the employer'sprpperty, when this has been explained (p the^employerand he has said that he would take the risk.”
According to the evidence, it seems to me that it was hisinordinate and overpowering greed, rather than zeal or anysense of duty that motivated the appellant in this case to act indefiance of the orders of the employer. There were no exte-nuating factors.
How did the appellant disobey the orders of his employer?He did so by committing several additional acts of misconductwhich aggravated his disobedience.
For one thing, he falsified entries in the relevant documen-tation to enable him to purchase the twelve saucepans. Thereis abundant authority for the proposition that an employeewho makes false records, a fortiori to benefit himself, is guiltyof, serious misconduct, warranting dismissal. fE.g. see Avins,op. cit. at p. 483 et seq. p. 489 et seq., p. 5} 1 et seq.). Indeed,
SC Premadasa Rodrigo v. Ceylon Petroleum Corporation (Amerasinghe, J.)399
generally, any abuse of authority to gain a personal advantagewould, prima facie amount to misconduct. Thus in the SouthAfrican case of Hattingh v. Sutterheim Div. Council, (18) itwas held that a supervisor who, without authority, altered thehours of work of the gang under him, so that he could get to adance on time, was guilty of misconduct, although theyworked the same number of hours as usual.
A superior officer is expected to set a good example to hissubordinates. His misconduct serves to demoralize his entiredepartment. (See United Elec. Rad and Mach. Workers v.Canada Wire and Cable Co., (19). The appellant violated theemployer’s orders in circumstances of great aggravation, sincehe made a subordinate officer accessory to open and deter-mined breach of such orders. He thereby destroyed respect forhimself and his authority as Acting Assistant Stores Managerand lowered himself in the eyes of other employees by showinghimself to be so completely the slave of his cupidity. (CfMckellar v. Macfarlane) (20). In the words of a decision in anold SherTffs Court case in Scotland, “this was a fault of thehighest kind.”
Where his misbehaviour encourages subordinates to act indereliction of their duties, a supervisory employee is guilty ofmisconduct, the recurrence of which the management isentitled to prevent by strong action. In Cawnpore SugarWorks Ltd. v. Rashtriya Chini Mill Mazdoor Sangh, (14) atthe end of the last shift before a two day holiday, there wassome work yet to be completed. The Chief Engineer told theshift engineer to remain until the work was completed, but thelatter refused on the ground that he had arranged to go homeby the 2.30 a.m. train, leaving a half hour after the end of theshift, and that he had sent his family to the railway station towait for him. He also protested that he had not received priornotification of this work. Ultimately, he did not stay, and, for
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this act of disobedience, he was dismissed. The Uttar*PradeshLabour Court upheld the dismissal. After finding that therewas an emergency, it said:
“The shift engineer, being next to the chief engineer, ….was… second in command. When such a person was tobehave in the manner Sri Daya Ram did, it gave encour-agement to other subordinates and this is why…. the
chief engineer was put in trouble and had to ask SriDaya Kam and others to make haste and bring theworkmen who were leaving the shift and were going outof the gate. It one visualises the situation which pre-vailed at the moment, he would no doubt think that itwas like one second-in-command letting down the com-mander and the whole army was running away helter-skelter. I am afraid when such a chaotic condition is ledby the action of a responsible employee, no managementwould like to tolerate it… [and mustj take strong actionso as to put an end to recurrence of it… Further…. therewas no harm if Sri Daya Ram had stayed for a fewhours and could have gone by the second train whichwas leaving at 7 a.m. The distance to Gorakhpur whichhe was to cover was a little over 40 miles. To the familywhich he alleged to have sent to the station in advancehe could have sent a message through a peon or anyother workman of his department to await for the nexttrain. By taking employment and the responsibility ofshift engineer, he subordinated his personal interests tothat of the concern. He should have kept before him themotto ‘Service before Self. When Daya Ram could putup an excuse for not overstaying in his own shift, it wasnot proper for him to suggest before this Court that thechief engineer could have sent for shift engineers of theprevious shifts, one of which was over sixteen hoursback and the other eight hours back.”
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A supervisor is ultimately responsi&le for the operationswithin the section or unit under his charge. It is his duty to
devise ways and means by which the overall plans and objectsof his employer are carried out. (See R. v. Milne (22). It is theduty of a person in a supervisory position to see that the plansand directions of the employer are executed. (Murray v.Velaiden (23) Mysore Premier Metal Factory v. Workmen (24).•A superior officer is obliged to ensure that subordinatescomply with the legitimate orders of the employer. He mustprevent a dereliction of duty by subordinates. Where he culpa-bly fails to do these things, he is guilty of misconduct.
In permitting his subordinate, Jayasekera, to violate theinstructions given by the employer, the appellant was guilty ofmisconduct in that he failed to exercise his supervisory duties.
In this case, the appellant not merely failed to exercise hissupervisory functions, he actively assisted his subordinate inthe violation of superior orders, to be able to carry out hisown improper designs and his culpablity is therefore thatmuch more serious. (United Packinghouse Workers v. RobinHood F/*ur Mills Ltd. (25) Smangpur Cotton ManufacturingCo. v. Arb idu Ismail (26))Jayasekera, his subordinate, "auth-orized” the appellant’s irregular purchase on 20th December;and the appellant returned the favour by approving Jayaseke-ra’s unauthorised purchases on 27th December, 1978. (Vide
P-16).
The authority to deviate from the scheme could have beengiven only by the employer, In authorizing Jayasekere's pur-chase, the appellant, therefore, was guilty of a further act ofmisconduct, namely usurping functions htf did not possess.(See United Auto Air & Agric. Imp. Co. v. Masscy-Harris Co.(27)
Counsel for the appellant argued that the penalty of dis-missal was unfair, having regard to the value of the propertyinvolved. I agree that where the de minimis principle might beapplicable in the circumstances of a case, a warning or admo-nition might be more appropriate than dismissal. However,
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dismissal is justified wliere the nature of the miscoflduct isserious. Quantitative considerations must be taken intoaccount but only in relation to the nature and quality of theact in question. For instance where an employee is guilty oftheft the value of the thing stolen is not necessarily conclusiveof the matter, although dismissal would be usually consideredreasonable. [E.g. see Champdany Jute Mills v. Ali (28) Mora-dabed Water Supply Co. v. Abdul H. Khan (29) Ford MotorCo. v. Dhomdu S. Mayekar (30) National Rayon Corp v. Gaj-aman D. Bankcer (31) Kbulma N. Employees Union v. KhulnaNewsprint Mills Ltd. (32) Baidya V. Das v, Angus Co., (33).
In United Elec. Rad & Mach. W. v. Canadian Gen. Elec.Co. (34) an employee who was ordered to sell to otheremployees items at the canteen at the price he got them for,was dismissed for charging one cent extra per item. Theamount involved did not render the misconduct trivial.
The case of H.G. Jayasekera v. Ceylon Transport Board(35) also supports the view that the amount is not conclusive.The amount involved was Rs. 1/40, but the employer whoattempted to defraud the employer of this amount earned justdismissal.
In Ceylon fold Stores Ltd. v. Industrial & General Work-mens Union (36) the Court of Appeal reversed the order of theLabour Tribunal and held that the dismissal of an employeewho was “caught with a few sundry items of small value at thegate of the” employer’s premises was justified because theemployee had been working in a “responsible position”. Hehad disobeyed an order prohibiting employees from bringingthings from outside into the premises without notice to thesecurity officers.
SC Preaadasa Rodrigo v. Ceylon Petroleum Corporation (Amerasinghe, J.)403
In th8 case before me, the price fixecl was no indication ofthe value of the articles. The goods were deliberately sold at aconcessionary price. Moreover, they were hard to get and theywere therefore valuable. The scramble for the items amplydemonstrates this. The appellant himself complained that dueto the large numbers flocking to his stores in search of thegoods, his other work was disrupted. Did the Chairman andimportant officials waste their time in attending a lottery ofitems of little use or value? Were the elaborate steps taken tosell the items consistent with the sale of discarded trash? Didthe appellant abuse his position of trust and manipulate therecords and, not only fail to exercise his supervisory dutiesbut, also support disobedience on the part of his subordinate,Jayasekera, thereby demeaning himself and undermining hisauthority, in order to acquire goods that were of little value?Did he take all the trouble he did, and risk so much, for tri-fles? He can scarcely take refuge in the de minimis principle.
What did the disobedience on the appellant’s part (and thatof his sjjiborcjjnate he helped to defy the employer’s orders)relate to? They concerned a scheme devised by the employer topromote good employer-employee relations. It is the law thatany wilful and inexcusable disruption by an employee of arelationship, which an employer has a legitimate interest inpreserving, is misconduct. (See Avins op. cit. 604 et seq.). Thismay relate to suppliers, customers or others, such as govern-ment officials, with whom the employer has dealings. Perhaps,the most precious of all connections an employer has, the mostimportant to the success of his business, is that he has with hisemployees. It is the very basis of production. Obviously, any-thing done to create disaffection amongst employees, would bea serious matter. Equally, anything done to frustrate orthwart or jeopardise a scheme of an employer to strengthen hisvalued connections, would be serious misconduct. In the casebefore us, not only had the employer generously offered togive its employees much-sought after goods at a concessionaryprice, it had also taken the most elaborate steps to ensure that
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employees would be satisfied by the equitable treatment metedout to them. The appellant’s conduct put the scheme of theemployer in jeopardy and drew understandable protests fromthe employees. His misconduct in this regard was properly, inmy opinion, regarded as serious enough to warrant his dismis-sal.
The case of the International Union, United Automobile,Aircraft and Agricultural Implement Workers of America(UAWCIO) Local 199 in re Mckinnon Industries Limited, (37)is instructive. At a time when new cars were scarce, and a per-son without priority had to wait for many months after plac-ing his order before he secured delivery, Mckinnon Industriesof Ontario made an arrangement under which its employeescould secure certain priorities when purchasing new GeneralMotor Cars. From 1948 until July 2nd 1950, 273 employeespurchased cars under this scheme. However, a few employees,in disregard of their obligations, sold the cars to others. Inorder to discourage future abuses, the company required itsemployees to sign an agreement under which they promisednot to sell the vehicles obtained under the scheme for twelvemonths. It was agreed that failure to live up to the terms ofthe agreement would incur discharge or other diciplinaryaction which the Company may deem advisable under the cir-cumstances.
An employee named Joseph Kormany purchased a car underthe scheme on July 14th, 1950. Kormany sold the car a fewmonths later. His position was that, since he had paid for thecar, he had the right to sell it when it pleased him. In anyevent, he was soon returning to Budapest and had no furtheruse for another car. Kormany was dismissed. He protested anddemanded reinstatement on the ground that he had beenunfairly treated. His Trade Union took up this matter. Thedispute was referred to an arbitrator – Professor J.C.Cameron. Kormany, it seems-, had not read the agreement and,in any event, did not realize that he was liable to be dismissed,
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if he soM the car he had purchased within twelve months. Thearbitrator held that if the employer had not read the agree-ment, he had nobody to blame but himself. He refused toremove or modify the penalty on the assumption that Kor-many did not intend to do wrong. To do so, he said, “wouldbe to encourage other employees who were disposed to breachthe agreement to do so in the hope that they too would bedealt with leniently. This practice, if indulged in, would cer-tainly mean cancellation of the priority plan.” The arbitratorconcluded that, “while- the punishment imposed upon Kor-many is severe, the circumstances of the case certainly do notwarrant me in setting aside the penalty”.
Reference might also be made to Berec (Ceylon) Ltd. v.WalpoJa & Others (38) In that case, six employees defrauded amedical scheme set up for the benefit of employees by theemployer. Collin Thome, J (Malcolm Perera, J agreeing) heldthat the six employees had been justifiably dismissed for“defrauding their fellow workers who had a stake in thescheme'.”
In deciding the nature of and evaluating the quality of anact of misconduct, regard must be had to the position of theemployee. I have already dealt with the duties and responsibil-ities of the appellant as a supervisor and his several failures asa supervisor. It is hardly necessary to add that, in failing in hisduty as a supervisor, and in failing to maintain his authorityas a supervisor, he acted in breach of implied, but essential,conditions of his employment as a supervisor. No businessorganization could ever be successful unless employers coulddepend on supervisors to do what is expected of them. Thesuccessful running of a business is committed to its supervi-sors. The appellant failed in more ways than one to dischargehis duties as a supervisor.
There are other aspects to the question relating to the spe-cific position of the appellant in the organization and the %ctof misconduct in question, apart from his obligations in
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general as a supervisor and senior hand. The appellant wasentrusted with the custody and safety of the employer’s prop-erty. As Assistant Stores Manager, he was in a special positionof confidence with regard to the goods entrusted to him. Asthe person in-charge of the implementation of the scheme ofsale, he was, what Justice Krishna Iyer in Michael v, JohnsonPumps Ltd., (2) called a person in a “sensitive or strategic”position. It was, as Krishna Iyer, J said in that case (at p.666),a “high risk” to keep the appellant in such a position after hehad misused or abused his position and once suspicion hadstarted, (See also Ceylon Oil & Petroleum Workers Union v.Ceylon Petroleum Corporation (39) per Tambiah, J,). In Save-rimuttu v. Board of Directors, CWE (40), a senior accoun-tant’s dismissal was upheld for acting contrary to orders pro-hibiting the authorization of the encashment of personalcheques, Where loss of confidence is based on proven miscon-duct which warrants dismissal, an employer should not becompelled to employ the workman, (Cf. Glaxo AUenbury’s(Ceylon) Ltd. v. Fernando (41): s
Learned counsel for the appellant submitted that if rein-statement was not possible, then the court should award theappellant compensation on the basis of the principles set outin Jayasuriya v. SLPC. (42).
Although, in certain circumstances, compensation may bepayable where reinstatement is not feasible, yet, as Sharva-nanda, J. (as he then was) observed in Caledonian (Ceylon)Tea and Rubber Estates Ltd. v. Hillman (43) “If theemployee’s conduct had induced the termination, he cannot injustice and equity have a just claim to compensation for lossof career as he has only himself to blame for the predicamentin which he finds himself.” (See also Piliyandala PolgasowitaMuti Purpose Co-op Soc.' v. Liyanage (44) Wataraka MultiPurpose Co-op. Soc. Ltd. v. Wickramachandra (45). The
SC Premadasa Rodrigo v. Ceylon Petroleum Corporation (Amerasinghe, J.)407
Group *Superintendant Daim'd Group v. Ceylon Estate StaffsUnion (46) Rumblan v. Ceylon Press Workers-Union (47) Kar-tbigesu v. Sri Lanka Sugar Corp (48) also Somawathie v. Bak-sons Textile Industries Ltd. (49).
The appellant is, in my view, solely to blame for the pre-dicament in which he finds himself. He had acted in a manneron account of which the employer could possibly have no con-fidence in him for the future and, therefore, I do not think hehas any claim to be compensated. (Cf. per Grover, J. in BinnyLtd. v. Their Workmen. (50)).
For the reasons stated, I hold that the dismissal of theappellant was justified. The decision of the Court of Appeal isaffirmed. The appeal is dismissed. Each party will bear hisown costs.
Bandaranayake, J. — I agree.Fernando, J. — I agree.
Appeal dismissed.