SUDANDARALINGAM v. RONNIE DE MEL, MINISTER OF FINANCE AND OTHERS

041-SLLR-SLLR-1983-2-SUDANDARALINGAM-v.-RONNIE-DE-MEL-MINISTER-OF-FINANCE-AND-OTHERS.pdf


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Sri Lanka Law Reports
[1983] 2 Sri L. R.
SUNDARALINGAM
v.
RONNIE DE MEL, MINISTER OF FINANCE AND OTHERS
COURT OF APPEAL
H. DE ALWIS. J. AND B. E. DE SILVA. J.
A. NO. 217/81
C. COLOMBO 3133/Z
11.12 AND 24 JANUARY 1983
Pension — Conversion from sterling — RateHeld —
The appellant retired from the post of Professor of Mathematics on 15.10.40.That would be the date on which his pension fell due and since he is a SriLankan and continued to remain in the Island on retirement, the rate of paymentof his sterling pension under Regulation 1442 (Section 13 of the FinancialRegulations of 1947 Part II Establishments) which is the regulation that applieswill be Rs. 15/- to a sterling. It is at this rate that his pension had been paidfrom the date of his retirement and he is not entitled to anything more than whathe has already been paid. The Monetary (Amendment) Law No. 16 of 1977 hasno application because that is a law which relates to the rates at which theCentral Bank may buy and sell spot foreign exchange and not to pensions.
APPEAL from judgment of the District Judge of Colombo.
C. Ranganathan. Q.C. with R. Thevarajah for appellant.
K.D. K. T. Tennekoon. D.S.G. with K. C. Kamalasabayson. S.S.C.for respondents.
Cur. adv. vult
11. May 1983
H. DE ALWIS, J.
The appellant was employed under a contract of service by theGovernment of -Ceylon, as Professor of Mathematics at theCeylon University College on a Sterling salary of £960 perannum by the letter of the Colonial Secretary dated 7th October1922 (PI). The letter states that the Government of Ceyloncalculates the Sterling at Rs. 15/- for the purpose of thepayment of salary in the Colony, but that the rate is liable to
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alteration. Paragraph 5 of the letter states that the principal rulesas to pension are contained in the enclosed print. Eastern No.74. (PI A). Paragraph 8 of Eastern No. 74 relating to rules as toLeave. Pension etc. dated August 1920, states that theGovernment of Ceylon calculates a £ Sterling at Rupees 15 forthe purpose of the payment of salary or pension in the Colony.This rate was. however, liable to alteration.
Prior to Eastern No. 74, circular No. 23 dated 22.2.1906 (P2)issued by the Colonial Secretary applied. According to thiscircular a scheme for re-organizing the salaries of officers in thePublic Service had been approved by the Legislative Council andwas sanctioned by the Secretary of State, with effect from
905 and a scale of Sterling salaries was provided in lieu ofthe rupee scale then in force. Paragraph 4 of the Circular statedthat the sterling salary will be paid in Ceylon in rupees at a rate ofexchange periodically fixed and proclaimed. Pension if drawn inCeylon will also be so paid, the present rate being 1s. 4d. to therupee.
The appellant retired from Government Service on 15thOctober 1 940 and was granted an annual pension of £563. 16s.4d.. by letter dated 8.10.1 940. (P8).
The Rules relating to Rates of Exchange for Payment ofSalaries and Pension were later incorporated in the GovernmentFinancial Regulations. It is stated that the relevant regulation is1084 (11) (c) which was introduced by correction slip No. 142dated 14.9.36. (P4). It provided that an officer who is appointedafter January 1, 1905 is entitled to be paid at the rate of 1 s. 4d.to the rupee or the rate of the day. whichever is more favourableto the officer. If the salary due to the officer in sterling is requiredto be paid locally, it will be converted into rupees at the localbank's buying rate of exchange on the date of payment or will bepaid in accordance with the rupee scale, at the officer's option".
It is therefore stated that when the Monetary Law (Amendment)Law No. 1 6 of 1 977 came into operation on 1 5.11.77 and fixedthe rate of conversion at Rupees Thirty five thousand five hundred
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and fifty seven and cents fifty, plus or minus, (Rs. 35,557.50) toone thousand pounds sterling, subject to the official rate ofExchange as determined by the Governor of the Central Bank ofSri Lanka, from day to day it fixed the local bank's buying rate ofexchange from day to day at that amount. The appellant claims tobe entitled to receive his pension at this rate or in poundssterling according to the contract of service. He has annexed tohis plaint, a schedule marked A, setting out an account of themonies due to him on this basis. He prays, inter alia, for adeclaratory decree that he is entitled to the payment of hispension of Five Hundred and sixty three pounds sterling, sixteenshillings and four pence, calculated at the rate of Rs. 35/55 perPound Sterling (plus or minus) per annum from 16.11.77.
The position taken up'by the two defendants-respondents andthe necessary party (hereinafter referred to as the respondents) isthat the appellant was paid his pension at the rate of Rs. 1 5/-persterling pound calculated in terms of Financial Regulation 1442which in 1947 replaced the earlier regulations relating to theRates of Exchange for Payment of Pensions and Gratuities, andthat the Monetary Law (Amendment) Law No. 16 of 1977 whichdetermined the rates of buying and selling spot foreign exchangeby the Central Bank has no relevance to the pension payable tothe appellant. The respondents also pleaded that the plaint doesnot disclose any cause of action; that the Court has hojurisdiction to hear and determine the action; and that theappellant has no absolute right to a pension in terms of theMinutes on Pensions.
Fifteen issues were raised at the trial. The learned Judge heldthat the Court had jurisdiction to hear and determine the action;that the plaint disclosed a cause of action; and that thedeclaratory decree prayed for in paragraph (b) of the prayer tothe plaint is one that could be granted if the appellant couldprove that he was entitled to it. But at the same time the Judgeheld that the appellant was not entitled to be paid his pension atthe fluctuating rates of exchange fixed and published by theGovernor of the Central Bank of Ceylon in terms of the Monetary
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(Amendment) Law No. 1 6 of 1 977, as the Law was inapplicableto the payment of pensions and that the appellant was thereforenot entitled to claim the arrears mentioned in schedule Aannexed to the plaint. He accordingly dismissed the appellant'saction without costs and.it is from this judgment that theappellant now appeals.
At the hearing of the appeal the only matter that was arguedbefore us was the question of what was the correct rate ofexchange in rupees at which the appellant was entitled to bepaid his pension of £563 16s. 4d. per annum, from the date
1.1977, when the Monetary (Amendment) Law No. 16 of1977 came into operation.
The letter of appointment P1 placed the appellant on a sterlingsalary which the Government according to the letter, calculatedat the rate of Rs. 1 5/- for a pound sterling, although the actualrate of exchange at the time was only Rs. 13/33. The rate washowever liable to alteration. Paragraph (8) of the Rules relating tothe payment of salary or pension, Eastern No. 74 (P1 A), referredto in the letter of appointment, is in the same terms as paragraph(1) of the letter of appointment in regard to the value of the £sterling in relation to the local rupee currency, that is, Rs. 1 5/- toa £ sterling. The rate of exchange stipulated in the letter ofappointment dated 7.10.22, is in accord with that set out inEastern No. 74 issued by the Colonial office in August 1920.Prior to Eastern No. 74 there was circular No. 23 dated
906 (P2) issued by the Colonial Secretary, which states inparagraph 4 that the sterling salary will be paid in Ceylon inrupees at a rate of exchange periodically fixed and proclaimed.The pension if drawn in Ceylon would also be so paid. The thenrate was 1 s. 4d. to the rupee which is equivalent to Rs. 1 5/- to apound sterling. Be that as it may, P2 being a circular of an earlierdate is superceded by the later Rule Eastern No. 74 (P1A) whichfixed the rate of the pound sterling at 1 5 Rupees and it is on thatbasis that payment of the salary and pension of the appellant wasmade. P1A was annexed to the letter of appointment P1.
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Section 33 of the Minutes on Pension appearing in the CivilList of 1929 (P3) sets out the Rate of Exchange for Payment ofPensions, as follows: " Officers of the Ceylon Government onretirement residing in any part of Asia (except Cyprus) in anyrupee using country or in any country the currency of which isbased on a silver standard, will draw their pensions in the localcurrency at the current rate of exchange between the countryin question and Ceylon or England according as the pension ispaid direct by the Ceylon Government or through the CrownAgents"
By section 2 of Ordinance No. 2 of 1947 the Minutes onPensions is made part of the " written law " of Ceylon from1901.
Section 33 of the Minutes on Pensions is reproduced inidentical terms in the 1 936 Edition of the Ceylon Civil List. TheMinutes on Pensions are dated 5.2.1934 and cancel all theprevious Minutes on the subject of pensions.
In 1932 the first edition of the Financial Regulations of theCeylon Government came out and section 11 which containsregulations 1084 and 1085 at page 143 provided for the ratesof exchange for payment of sterling salaries. Correction slip No.38 of 28.8.1933 amended regulation 1085 and introducedRegulation 1086. Correction slip 142 dated 14.9.1936 (P4)relating to Rates of Exchange for Payment of Salaries deletedsection 11 as amended by correction slip No. 30 and substitutedin its place a new section consisting of regulations 1083 and1084. It further provided that the Regulations in the new section,were applicable, mutatis mutandis, to payment of pensions also.Regulation 1083 (11) was subsequently exempted fromapplication to payment of pensions.
Since the rate of exchange payable for pensions was nowprovided for in the Finance Regulations section 33 of theMinutes on Pensions dealing with it became redundant and wasthereafter deleted. Financial Regulations 1083 and 1084 from
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then onwards controlled the rates of exchange payable in respectof pensions and Rule Eastern No. 74 ceased to apply thereafterto this matter.
The appellant retired from Government Service in 1 940, and atthe time, regulations 1083 and 1084, as amended by Correctionslip No. 142 of 1936 (P4). were applicable.
It is on Regulation 1084 (11) (c) that learned Queen's Counselfor the appellant relies for the calculation of the exchange ratefor the payment of the appellant's sterling pension. An extract ofthat" Regulation which is marked P3B reads as follows: " Ifappointed after January 1. 1905, at 1s. 4d. to the rupee or therate of the day, whichever is more favourable to the officer. If thesalary due to the officer in sterling in required to be paid locally,it will be converted into rupee at the local Bank's buying rate ofexchange on the date of payment, or will be paid in accordancewith the rupee scale, at the officer's option ".
Learned Queen's Counsel submitted that the pension rights ofthe appellant under these regulations were unaffected by theConstitutions of 1948. 1972 and 1978. (P3H1. P3D1 and P2K)that came into force from time to time. Article 64(1) of theConstitution of Ceylon 1948 provided that: " All pensions,gratuities and other like allowances which have been or whichmay be granted to any persons who have been, and have ceasedto be, in the service of the Crown in respect of the Government ofthe island at any time before the date on which this part of thisOrder comes into operation, or to the widow, children ordependants of such persons, shall be governed by the writtenlaw under which they were granted, or if granted after that date,by the written law in force on that date, or in either case, by anywritten law made thereafter which is not less favourable. Therelevant article of the succeeding Constitutions are more or lessin similar terms.
The Monetary Law (Amendment) Law No. 16 of 1977 cameinto operation on 15.11.77. Learned Queen's Counsel thereforesubmitted that the appellant is entitled to take advantage of
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section 76A (1) and (2) as a written law which is " not lessfavourable " to the appellant, as enacted in the Constitutions.This section provided that the Governor of the Central Bankdetermines the rates at which the Central Bank may buy and sellspot foreign exchange and also the minimum and maximum rateat which any Commercial Bank may buy spot exchange. It istherefore argued that the appellant is entitled to have his sterlingpension paid at the official Bank buying rate of sterling poundswhich at the time, was as set out in column 3 of schedule Aannexed to the plaint. On 16.11.77 the buying rate of a sterlingpound, according to schedule 'A' to the plaint, was Rs. 29/04,and on 18.2.80 it was Rs. 35/27.
In my view the submission of learned Counsel must fail for thefollowing reasons: The first is that Regulation 1084 (11) (c)applies only to officers who draw Rupee salaries (and pensions)and not to those who draw sterling salaries (and pensions).Regulation 1084 is headed Rupee Salaries and sub paragraph(11) clearly indicates that it refers to officers drawing rupeesalaries. It reads as follows: " An officer will be paid his rupeesalary converted into sterling at the rate of exchange indicatedbelow in respect of all other periods . . The second reason isthat Financial Regulation 1084, and the connected regulationshave, prior to the promulgation of the 1948 Constitution, beenreplaced by new regulations 1410, 1441. 1442 in section 13 ofthe 3rd Edition of the Financial Regulations of 1947 Part IIEstablishments. Section 13 which deals with the Rates ofExchange for Payment of Salaries. Pensions and Gratuitiesbegins with the statement that " The regulations in this sectionwith the exception of 1440 (11). apply, mutatis mutandis, topayment of pensions. This edition of the Financial Regulations of1947 does not contain regulation 1984 (11) (c) either in Part Ior Part II. Part I of the 1947 edition of the Financial Regulationsends with regulations 1040 while Part II commences withregulation 1100. The obvious conclusion is that the interveningregulations have been deleted. As far as the regulations dealingwith the rates of exchange for payment of salaries and pensionsare concerned, of which 1084 (11) (c) formerly formed part are
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now replaced by regulations 1440. 1441 and 1442. These newregulations continue to remain in force after the EstablishmentCode came into operation in 1971. by virtue of the saving clausein Appendix 26 to the Establishment Code
With the deletion of Regulation 1084 (11) (c), learned Queen'sCounsel's submission that the local Bank's buying rate ofexchange is determined by the Central Bank under the Monetary(Amendment) Law No. 16 of 1977 section 76 A must fail. In anyevent, in my view, the Monetary (Amendment) Law relates to therates at which the Central Bank may buy and sell spot foreignexchange and has no application to the payment of pensions.
Regulation 1440 refers to sterling salaries and provides that"(1) An officer will be paid at the rate of £1 = Rs. 15/- inrespect of periods spent by him in Ceylon and India, includingjourneys between these countries . . . This regulation falls withinChapter XVI which deals with Leave and Passages and clearly,applies to Sterling officers on leave. It is the same withRegulation 1441 which in addition deals with Rupee salaries(and pensions) and is not applicable to the present case wherethe appellant is paid a sterling pension.
The only regulation that is applicable is 1442 which refers toRates of Exchange for Payment of Gratuities under the PensionMinutes. It applies, mutatis mutandis, to payment of pensions.Indeed learned Queen's Counsel for the appellant conceded thatthe payment of pensions would come under this regulation.
This regulation reads as follows:— " Gratuities under thePension Minute expressed in sterling will be paid Rs. 1 5/- = £1,if the gratuitant is in Ceylon or India on the date on whichpayment falls due . . . For the purpose of this regulation the dateon which payment falls due is . . . the date of retirement in thecase of all other gratuities ".
The appellant retired from the post of Professor ofMathematics on 15.10.40. That would then be the date on whichhis pension fell due and since he is a Sri Lankan and continued
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to remain in the Island on retirement, the rate of payment of hissterling pension under this regulation is Rs. 1 5/- to a £ sterling.Indeed it is the very rate of exchange specified in his letter ofappointment (P1) and Eastern No. 74 (P1A). It was at this ratethat his pension had been paid from the date of his retirementand he is not entitled to anything more than what he has alreadybeen paid. The Monetary (Amendment) Law No. 16 of 1977 asstated earlier, has no application at all to the question of the rateof exchange in regard to the payment of pensions.
Learned Queen's Counsel for the appellant also sought to relyon section 7 of the Minute on the Ceylon Civil Service, which isreproduced in the Ceylon Civil List of 1958 at page 589. Thatsection reads as follows:
" Salaries will' be paid to those on sterling salary scales inrupees at a rate of exchange periodically fixed andproclaimed. Leave pay and pension will be calculatedaccording to the sterling salaries fixed by this Minute
This Minute is clearly inapplicable to the appellant. It refers toofficers in the Ceylon Civil Service, whereas the appellant wasappointed as Professor.of Mathematics at the University Collegeand at the time, did not belong to the Ceylon Civil Service. Hetherefore cannot avail himself of section 7 of the Ceylon CivilService Minute.
I am of the opinion that the learned District Judge was right inholding that Financial Regulation 1084 (1 1) (c) is inapplicable tothis case and that the Monetary (Amendment) Law No. 1 6 of1977 has also no application to the payment of pensions.
Although it may appear at first sight, that a glaring injusticehas been caused to the petitioner in being paid his pension atthe rate of Rs. 15/- to a £ Sterling, when in 1977 by theMonetary (Amendment) Law the Bank's buying rate of spot
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exchange of sterling was fixed in the region of about Rs. 35/- toa £ Sterling, one cannot lose sight of the fact that the petitionerhas benefited to some extent by being paid his salary andpension from the date of his first appointment in 1922, for about55 years, at the rate of Rs. 1 5/- to a £ Sterling when the actualrate of exchange at the time was only Rs. 1 3/33 to a £ Sterling.
I accordingly dismiss the appeal, but in view of thecircumstances of this case I order no costs both here and in theCourt below.
B. E. DE SILVA, J. — I agree.Appeal dismissed.