010-SLLR-SLLR-1996-1-SHANMUGAM-V.-MASKELIYA-PLANTATIONS-LIMITED.pdf
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SHANMUGAM
V.
MASKELIYA PLANTATIONS LIMITED
SUPREME COURT.
G.P.S. DE SILVA C.J.,
RAMANATHANJ.,
ANANDACOOMARASWAMY J.,
S. C. APEAL NO. 45/96.
C.A. APPLICATION NO. 73/95.
ARBITRATION NO. 2346/93.
25 JULY AND 01 AUGUST, 1996.
Industrial Dispute – Extensions of service – Reference to arbitration underthe Industrial Disputes Act, section 4(1) – Contractual entitlement toextension – Industrial Disputes Act, section 17(1).
The appellant had been granted three extensions and his application for afourth extension was refused. The arbitrator held with the employer thatthe employee had no contractual right to an extension.
Held:
The award is vitiated by an error of law which goes to jurisdiction in that thearbitrator approached the applicant’s case from the stand point of acontractual right when the relevant section 17(1) of the Industrial DisputesAct enjoined him to make such award as may appear to him just andequitable.
APPEAL from judgment of the Court of Appeal.
Faiz Mustapha P.C. with R. K. S. Suresh Chandra for the Appellant.
Gomin Dayasiri with S. Perera for the 2nd Respondent.
Cur. adv. vult.
26 August, 1996.
G. P. S. DE SILVA, C. J.
The appellant was employed as the personnel officer under the2nd respondent, the Maskeliya Plantations Ltd., at the time material tothe dispute. He had been previously granted three extensions of serv-ice after he had reached the optional age of retirement, namely 55
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years. However, his application for the fourth extension of service wasrefused.The appellant made representations to the Commissioner ofLabour in this regard and the dispute was ultimately referred to arbitra-tion in terms of section 4(1) of the Industrial Disputes Act. The rel-evant part of the reference to arbitration reads thus: “Whether the de-nial of future extensions of service to Mr. K. T. Shanmugam from No-vember 1993 by the Maskeliya Plantations Ltd., is justified and if notwhat relief should be granted to him.” (emphasis added). After an in-quiry, the arbitrator held that “the circulars quoted by the workman donot support the right he claimed for him to go on in the service ofMaskeliya Plantations Ltd., till he is 60 years of age.” In the award thearbitrator stated, “The main matter in dispute is the denial of futureextensions of service to the workman. The learned Counsel for thecompany stated in his preliminary address to court that there must beproof of a right claimed, for there to be a denial. I agree.” The arbitratorexamined the circulars relating to extensions in service after reachingthe age of 55 years from the point of view of a right claimed by theappellant; he held that there was no such right and that the matter fellentirely within the discretion of the 2nd respondent.
Aggrieved by the decision of the arbitrator the Appellant sought awrit of certiorari to quash the award. The Court of Appeal dismissedthis application. Hence the appeal to this Court. Special leave toappeal was granted on the following question. “Was the Court ofAppeal in error in considering the question of extension in service solelyas a matter of contractual right and not on the basis whether therefusal of extension of service was justified.”
The approach of the Court of Appeal to the matter in dispute isclearly indicated in the following passage in the judgment. “The crucialquestion in issue, has the petitioner a right to continue in employmenttill he reached 60 years? … In my view the petitioner was aware thatthe extension was at the discretion of the management. As a matter ofright he was not entitled to get an extension.”
Mr. Mustapha for the appellant submitted that both the Court ofAppeal and the arbitrator were in serious error in considering the mat-ter in dispute from the standpoint of a contractual right. Counsel urgedthat this was clearly contrary to the relevant statutory provision, namely,
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section 17(1) of the Industrial Disputes Act which required the arbitra-tor to “make such award as may appear to him just and equitable”. Mr.Mustapha also drew our attention to the terms of reference of the dis-pute, where the words used are “whether the denial of future exten-sions of service … is justified.”
Mr. Mustapha rightly conceded that the Appellant has no contrac-tual right to an extension in service after the optional age of retire-ment, namely 55 years. Admittedly, the appellant was granted 3 exten-sions of service after he reached 55 years but was refused his 4thextension of service. The question then is whether the refusal of the4th extension was justified in the particular facts and circumstancesof this case. This was the true issue before the arbitrator and I agreewith Mr. Mustapha that the arbitrator erroneously viewed the disputelargely, if not, entirely, as a matter of contractual entitlement.
What then are the facts which resulted in the refusal of the appel-lant’s application for his 4th extension in service? By P 7 dated 7.4.92he applied for his 3rd extension in service.The endorsements made onP7 expressly states that his work and general conduct are good andthe extension in service applied for was recommended by the Chair-man of the Sri Lanka State Plantations Corporation. The Secretary tothe Ministry of State Plantations by his endorsement on P7 dated25.5.92 allowed the Appellant’s application for the 3rd extension inservice. It is of relevance to note that the 3rd extension was to expireon 18.11.93.
The decision to grant the Appellant his 3rd extension in servicewas communicated to him by P6. It is a letter dated 23.9.92 addressedto the Appellant by the General Manager of Maskeliya Plantations Ltd.It seems to me that it is P6 that has given rise to the dispute betweenthe parties and the Appellant’s complaint is founded largely on P6. P6reads thus:
“23rd September, 1992.
Mr. K. T. Shanmugam,
Personnel Officer,
Maskeliya Plantations Limited,
“Glencroft”, Nonwood.
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Dear Sir,
Application for extension of serviceWe refer to your application dated 7.4.92 requesting the S.L.S.P.C.Management to grant you an extension in your current employment byanother 01 year.
Considering your request, we have decided to grant you anotherextension upto 18th November, 1993. Please note that we are unableto extend your services after 18th November, 1993, and that no furtherextension would be granted.
You are therefore, requested to finalise your retirement arrange-ments by that date.
Yours faithfully,
Maskeliya Plantations Limited
General Manager.”
The Appellant’s reply to P6 is P8 which reads as follows:
‘Through the Plantations Director.
The General Manager,
Maskeliya Plantations Limited,
45/12, Ocean Lines Building,
3rd Floor, Colombo 2.
Dear Sir,
Application for extension of serviceI have for acknowledgement your letter dated 23rd September, 1992on the above subject. I
I observe from the 2nd paragraph of your letter, that you are unableto extend my services after 18th November, ^993, and that no furtherextension would be granted. I have also been advised to finalise myretirement arrangements by that date.
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In this regard I respectfully submit that my 3rd extension whichexpires on 18.11.93 had already been granted by the Ministry of Plan-tations Industries on 25th May, 1992 and your letter under referenceconfirms only that position. Since the extension granted upto 18.11.93is my 3rd extension, I am entitled to further 2.extensions, i.e. 4th and5th. In these circumstances, I will be forwarding my application for the4th extension at the appropriate time and I will not be finalising retire-ment arrangements as advised by you.
Yours faithfully,
Maskeliya Plantations Limited,
K.T. ShanmugamPersonnel Officer.”
The heading of P6 is “Application for extension of service.” It ex-pressly states that the application for the 3rd extension in service madeby P7 has been granted. This means that the appellant can now re-main in service until 18th November, 1993. At the same time, P6 statesthat the Appellant will not be granted any further extensions of serviceafter 18th November, 1993. The relevant circulars provided that theextension of service on completion of 55 years “shall be at the discre-tion of the management and will be considered annually on receiptof applications from those who wish to have their services ex-tended.” What needs to be stressed is that P6 effectively precludedthe management from considering on its merits the Appellant’s subse-quent application for his 4th extension in service.The Appellant in factapplied for his 4th extension in service by letter dated 26.4.93. By P9dated 3.5.93 the appellant was informed that “As already indicatedyou will not be given extension of service beyond November, 1993”.P6 in effect made retirement compulsory at the age of 58, in so far asthe Appellant was concerned. This was a decision which was unrea-sonable and arbitrary. Neither the arbitrator nor the Court of Appealviewed this matter in the light of the mandatory provisions contained insection 17(1) of the Industrial Disputes Act and the terms in which thereference to arbitration was made.This clearly Is an error of law whichgoes to jurisdiction. The arbitrator has posed the wrong question andhas failed to consider the true question which arose for decision.
Mr. Gomin Dayasiri for the 2nd Respondent strenuously contendedthat P6 was in accord with the relevant circular which required the
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management to give the Appellant one year’s notice of retirement. Coun-sel urged that the Appellant in his evidence conceded that the relevantcircular required the management to give one year’s notice to the work-man in the event of a refusal of extension of service and that preciselywas the purpose of P6.1 find, however, that the appellant in his evi-dence has also stated, “My position is that the .notice refusing exten-sion given to me was irregular as that notice was tagged on to exten-sion granted to me . . .It should have been given to me only when Imade my application for the 4th exension.” More importantly, the un-reasonable and arbitrary character of P6 is explicitly set out by theappellant in his statement filed before the arbitrator. Referring to thecontents of P6, the Appellant states: “In other words what the Secre-tary of the Ministry of Plantations granted me once has been re-grantedagain by the General Manager of Maskeliya Plantations Ltd., with no-tice that no further extensions would be granted or put it in anotherform, they converted my 3rd extension into a period of notice, butthey themselves gave no extension which means that they did notgive extension but revoked what was given.” (emphasis added).
It is also a matter of significance that no reasons were given forthe refusal of the 4th extension of service. The Appellant repeatedlyso stated in his evidence and the documents support that position.
On a consideration of the matters set out above, I am of the opin-ion that Mr. Mustapha’s submission that the award is vitiated by anerror of law which goes to jurisdiction is well founded. I accordingly setaside the judgment of the Court of Appeal and direct that a Writ ofCertiorari do issue to quash that part of the award which relates to theAppellant’s claim for extension in service.
In all the circumstances I make no order as to costs of appeal.RAMANATHAN, J. -1 agree.
ANANDACOOMARASWAMY, J. -1 agree.
Appeal allowed.
Certiorari issued.