046-SLLR-SLLR-1998-1-RAJAPAKSE-AND-OTHERS-v.-DISSANAYAKE-LABOUR-OFFICER-AND-ANOTHER.pdf
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RAJAPAKSE AND OTHERS
v.DISSANAYAKE, LABOUR OFFICER AND ANOTHER
SUPREME COURT
P. S. DE SILVA, CJ„
WIJETUNGE, J. ANDANANDACOOMARASWAMY, J.
S.C. APPEAL NO. 50/96
C. COLOMBO NO. HCMCA 441/95M.C. COLOMBO NO. 91879/3AUGUST 27TH, OCTOBER 23RD, 1997.
DECEMBER 15TH,1997, JANUARY 28TH, MARCH 16TH AND
MAY 18TH, 1998.
Shop and Office Employees Act – Failure to pay remuneration to an employee- Offence under S. 52 (1) read with s. 19 (1) (b) (Hi) of the Act — Burden ofproof as to payment – Meaning of *employee" – Sections 20 and 68 (2) of theAct.
Appellants who were the employers of Cecil Perera employed at the office ofLucksun Industries as its General Manager were convicted of the offence of failingto pay remuneration due to Cecil Perera in contravention of S. 19 (1) (b) (iii)of the Shop and Office Employees (Regulation of Employment and Remuneration)Act, an offence punishable under s. 52 (i).
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Rajapakse and Others v. Dissanayake, Labour Officer
and Another (G. P. S. de Silva, CJ.)
399
Held:
In terms of s. 52 (4) of the Act the burden of proving that the remunerationdue was paid is on the employer.
In the light of sections 20 and 68 (2) of the Act, Cecil Perera thoughdesignated as General Manager was an ‘employee* within the meaningof the Act.
Per G. P. S. de Silva, CJ.
‘On a reading of the entire Act, it seems to me that there is no warrant forgiving a narrow or restrictive meaning to the word "employee". To do so wouldtend to defeat the object of the Act and render its salutory provisions largelynugatory.'
APPEAL from the judgment of the High Court of Colombo.
R. K. W. Goonesekera with Crosette- Tambiah for the appellants.
U. Egalahewa S.C for respondents.
Cur. adv. vult.
May 21, 1998
G. P. S. DE SILVA, CJ.
The appellants who were the employers of Cecil Perera were chargedin the Magistrate's Court with having failed to pay the balanceremuneration due to the said Cecil Perera for the months of (i) 1.11.84to 30.11.84, (ii) 1.12.84 to 31.12.84, (iii) 1.1.85 to 31.1.85, incontravention of section 19 (1) (b) (iii) of the Shop and Office Em-ployees (Regulation of Employment and Remuneration) Act, an of-fence punishable under section 52 (1). It was the case for theprosecution that Cecil Perera was employed at the office of LucksunIndustries, 379, Prince of Wales Avenue, Colombo 14, as its GeneralManager on a salary of Rs. 15,000 per month. The prosecutionalleged that out of the said sum of Rs. 15,000 Cecil Perera was infact paid only Rs. 3,000 per month and the balance remunerationdue to him was Rs. 12,000 per month.
Cecil Perera was appointed General Manager of Lucksun Industrieswith effect from 1.3.84. Vide the letter dated 23.2.84, written by the1st appellant (Managing Partner of Lucksun Industries) marked P1.
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It is in evidence that prior to his appointment as General Manager,Cecil Perera was a self-employed businessman who sold importedgoods, electrical equipment, etc., and maintained an "after salesservice" at his workshop. The 1 st appellant was a customer of CecilPerera for about 5 years prior to March, 1984 and there developeda close friendship between them over the years. Since 1982 CecilPerera "provided at his workshop the technical service facility forRowenta household appliances sold by Lucksun Industries virtually tothe exclusion of (his) other business and customers" (vide paragaph3 of A4).
The case for the defence was that the remuneration payable toCecil Perera as General Manager of Lucksun Industries was onlyRs. 3,000 and that the said sum of Rs. 3,000 was duly paid to him.The defence further contended that an additional sum ofRs. 12,000 was payable to him on the basis of the technical servicesprovided by Cecil Perera for Rowenta appliances sold by LucksunIndustries. In short, the position of the defence was that although atotal sum of Rs. 15,000 per month was payable to Cecil Perera, yetthe remuneration due to him as General Manager of LucksunIndustries was no more than Rs. 3,000. Receipts were produced toprove the payment of Rs. 3,000 per month.
The case for the defence, however, is totally inconsistent withthe documentary evidence, placed before the court. The two crucialdocuments are P1 and P2.
P1, the letter of appointment, reads thus:
(P1)
Lucksun Industries,
23 February, 1984.
“Mr. E. Cecil Perera,
'Devika'
45, Off Templar Road,
Mount Lavinia.
My dear Cecil,
Having made my initial contact with you as a customer almost fiveyears ago and our close association ever since, both socially and inbusiness, particularly in respect of your wholehearted collaboration
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Rajapakse and Others v. Dissanayake, Labour Officer
and Another (G. P. S. de Silva, CJ.)
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with me in providing the technical service facility for Rowenta forthe past two years to date which you have handled so very well forLucksun Industries, and to the numerous other opportunities I havehad, to be able to judge at first hand, your dynamic, energetic, self-motivated manner with a senior and mature outlook, and your abilityto relate well and to communicate effectively with different types ofpeople at various levels of responsibility in commercial, industrial andgovernment sectors – coming naturally from your rich and wide workexperience of the past, and your proven skills in widely different fieldsin management and industry with international organisations; it is mypleasure to invite you to join the management of my organisation ona full-time basis with effect from 1st March, 1984.
In view of this total involvement with LUCKSUN INDUSTRIES Inaturally will expect you to phase out all your present personalbusiness activities other than the continuation under your total controlof the ROWENTA TECHNICAL FACILITY, within the next three months,when such private business activities should cease, in the best interestof the company.
As General Manager, Lucksun Industries, you will report directto me and will be responsible to identify, analyse, develop and rec-ommend significant changes as may be necessary or desirable to raiseand enhance the corporate image of LUCKSUN INDUSTRIES and willassume responsibility to expand and enlarge the scope of the companyin areas of Imports and Exports, Marketing and Distribution, Advertisingand Sales Promotion, Manufacturing, Investments, Acquisitions, JointVentures, Technology and Personnel Upgrading and Training, coveringall aspects of Services, Trading and Management for LUCKSUNINDUSTRIES.
Considering your past very successful and proven Senior Manage-ment experience and the challenge of the present opportunity in today'scontext as General Manager, Lucksun Industries, I propose to provideyou a very generous and competitive compensation package, whichwould include a company car and other perquisites, comprising:-
A salary of Rupees fifteen thousand per mensem.
A company-maintained car for official and private use.
Reimbursement of business and entertainment expenses.
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Membership cover under scheme A of the Insurance Corpo-ration of Sri Lanka under the Surgical and Hospital expensesscheme, applicable to employee, spouse and children.
Eligibility and participation in the EPF and other statutory funds/taxes as applicable.
Needless to say that you will handle your interesting andchallenging assignment with the greatest diplomacy and tact and withthe strictest confidentiality in respect to the company's businessinterests – whilst being free at all times to seek my personal viewsand opinions on any matter whatsoever.
Please signify in the space below your acceptance of this letterof appointment made out in duplicate returning the duplicate copy formy records.
While welcoming you to the Lucksun family, you have my verybest and sincere good wishes for a long and successful associationfor our mutual benefit, and assure you of my fullest support andco-operation, in all your endeavours to enhance and upgrade thecorporate image and progress of the company.
Very sincerely yours,LUCKSUN INDUSTRIES
Sgd.
D. L. Rajapakse,Managing Partner.
Signed in acceptanceSgd.
E. Cecil Perera
Date: 23rd February, 1984."
The services of Cecil Perera were terminated on 7.3.85 by letterP2 written by the 1st appellant, P2 reads as follows:
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(P2)LLJCKSUN INDUSTRIES
“24th May, 1985.
Mr. E. Cecil Perera,
'Devika',
No. 45, Off Templar's Road,
Mount Lavinia.
Dear Sir,
Consequent to the Disciplinary Inquiry held against you by Mr. D. W.Fernando and the report that has been filed with me finding you guilty,I have now decided to dismiss you from service with effect from7th March, 1985.
I find from my records that a sum of Rs. 18,000 (Eighteen Thousandonly) made up as follows is due to you:
Salary for February, 1985Rs. 15,000/-
Salary for six days in March, 1985Rs. 3.000/-
Rs. 18,000/-
Please find an "A/C Payee" cheque No. B322-046560 forRs. 18,000 attached accordingly, I shall be glad to have your receiptfor same.
Thanking you,
Yours faithfully,
LUCKSUN INDUSTRIES
Sgd. D. L. RajapakseManaging Director."
On a reading of P1 and P2 it is clear beyond doubt that the salarypayable to Cecil Perera as General Manager of Lucksun Industrieswas fixed at Rs. 15,000 per month. However, Mr. R. K. W. Goonesekerafor the appellants referred us to the testimony of Cecil Perera andof the 1st appellant and strenuously contended that there was a
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subsequent oral agreement whereby the parties agreed to fix the salarypayable to Cecil Perera as General Manager at Rs. 3,000 per monthand the balance sum of Rs. 12,000 was payable for the technicalservices and facilities provided by Cecil Perera. On the other hand,state counsel relied on portions of the oral evidence given by CecilPerera which tended to negative the existence of such an agreement.Cecil Perera in his evidence stated that Lucksun Industries was atthat time in financial difficulties, and owing to the close associationbetween him and the 1st appellant for the past several years he didnot insist on the payment of the full sum of Rs. 15,000 as statedin P1. Cecil Perera stated in his evidence that he paid some of theworkmen “out of his own money" as he felt sorry for his friend, the1st appellant.
On a consideration of the entirety of the evidence in regard tothe alleged subsequent oral variation of the salary of Cecil Perera,it seems to me that the evidence is at best of an equivocal nature.The position taken up by the defence is manifestly in direct conflictwith the documentary evidence referred to above. I am of the opinionthat the Magistrate has correctly evaluated that oral evidence in thelight of the cogent and unambiguous documentary evidence and hasrightly held that a sum of Rs. 15,000 per month was the salary payableto Cecil Perera, and of this sum only Rs. 3,000 per month was infact paid to him. There is no satisfactory evidence to prove that thebalance sum of Rs. 12,000 was paid to Cecil Perera. In this connectionthe Magistrate has in the course of her judgment correctly referredto section 52 (4) of the Act which expressly provides that the burdenof proving that the balance remuneration was paid lies on the employer.Thus, on the facts, the conviction is well-supported by the evidence,in particular P1 and P2.
The next submission of Mr. R. K. W. Goonesekera was that theShop and Office Employees (Regulation of Employment andRemuneration) Act has no application to the instant case.Mr. Goonesekera stressed the fact that Cecil Perera was holding a"senior managerial position"; his appointment was to a “senior execu-tive grade". Counsel contended that the Act was intended to "protect"persons who were below “the managerial level"; the focus was onthose who are not in a position to assert their rights and vindicatetheir claims against the “management". Reliance was placed on thedefinition of "employer" in section 68 (1) which reads thus :
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Rajapakse and Others v. Dissanayake, Labour Officer
and Another (G. P. S. de Silva, CJ.)
405
"Employer –
in relation to any office, means the person carrying on, orfor the time being responsible for the management of,the business for the purpose of which the office is main-tained,"
On the other hand, state counsel referred us to section 3 (5) ofthe Act and argued that the persons excluded from the purview ofthe Act are those who hold "an executive or managerial position ina public institution. . The expression “public institution" is definedas “any corporation, board or other body established by or under anywritten law, other than the Companies Ordinance, with capital whollyor partly provided by the Government by way of grant, loan or otherform". State counsel also referred us to section 68 (2), the materialpart of which reads thus: "For the purposes of this Act, a person shallbe deemed to be employed in or about the business of a shop oroffice if he is wholly or mainly employed.
in the service of the employer upon any work, whether in theshop or office or outside it, which is ancillary to the businesscarried on in that shop or office, and notwithstanding that he'receives no reward for his labour; but he shall not be deemedto be so employed if his only employment in the service ofthe employer is in the capacity of a caretaker or watcher."
In considering the question whether Cecil Perera who wasappointed as General Manager in terms of P1 falls within the purviewof the Act, it is intensely relevant to note that the Shop and OfficeEmployees (Regulation of Employment and Remuneration) Act is animportant piece of social legislation enacted in 1954 in the contextof the emerging concept of a welfare state. Part III of the Act whichdeals with "regulation of remuneration" defines the expression "em-ployee" in very wide terms – “In this part, employee means a personemployed in or about the business of a shop or office". On a readingof the entire Act, it seems to me that there is no warrant for givinga narrow or restrictive meaning to the word "employee". To do sowould tend to defeat the object of the Act and render its salutryprovisions largely nugatory. The facts in this case reveal that CecilPerera, though designated as General Manager, was in as vulnerable
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a position as any employee subordinate to him. I hold that the Actdoes not envisage a distinction between persons holding "a managerialposition" (ike Cecil Perera and other subordinate employees, ascontended for on behalf of the appellants.
Finally, Mr. Goonesekera submitted that the Magistrate was ingrave error in imposing a fine of Rs. 135,000 on the appellants. Withthis submission, I agree. Apart from the balance remuneration duefor the 3 months set out in the charge, the Magistrate has, contraryto the provisions of section 53 (1) of the Act taken into account afurther period of 8 months. In so doing the Magistrate has overlookedthe fact that section 53 (1) expressly limits the period to "four yearspreceding the date on which complaint under section 136 of the Codeof Criminal Procedure Act was made to court". It was agreed thatthe relevant date was 19.10.88. State counsel rightly conceded thatthe total fine the Magistrate could have lawfully imposed on theappellants is Rs. 41,000 (Rs. 36,000 for the 3 months set out in thecharge plus Rs. 5,000). I accordingly set aside the fine of Rs. 135,000imposed on the appellants, and substitute therefor a fine ofRs. 41,000.
Subject to the aforesaid variation in the quantum of the fine, theappeals are dismissed.
WIJETUNGA, J. – I agree.
ANANDACOOMARASWAMY, J. – I agree.
Appeal dismissed.
Quantum of fine varied.