017-SLLR-SLLR-1981-1-THE-INSURANCE-CORPORATION-OF-SRI-LANKA-v.-A.-F.-DABARE.pdf
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The Insurance Corporation of Sri Lanka v. A. F. Dabare
171
THE INSURANCE CORPORATION OF SRI LANKA
v.A. F. DABARE
SUPREME COURT
WEERARATNE, J., SHARVANANDA, J. AND WIMALARATNE, J.
S. C. 43/80 – C. A. 32/76L.T. NO.1 /ADDL./1144/76FEBRUARY 12.1981.
Termination of employment-Extension of employment after SS years—Public Adminis-tration Circular 95 of 4.4.1975—Can unsigned notes of a meeting with the Minister andrepresentatives of the Executive Officers' Association be regarded as part of contractualagreement?
According to Circular No. 95 of 4.4.1975 a State officer who reaches 55 years may begranted annual extensions of service up to the age of 58 years provided retention ofhis services is essential for the working of the Department by reason of the officer's specialtraining, skill or qualifications or for the completion of a task already allocated to him.The contents of the notes of a meeting by the Minister with the Executive Officers'Association of the Insurance Corporation whereby officers who were over 40years, as the applicant was, at the time of recruitment would be allowed the concession ofcontinuing till 60 years cannot be regarded as a contractual term. Hence the retirementof the applicant before he was 60 years of age was valid.
Appeal from judgment of Court of Appeal
Mark Fernando for the Appellant
Lyn Weerasekera with Messrs. Mano Devasagayam for the Respondent.
Cur adv vult
March 10, 1981WEERARATNE, J.
The question that arises for determination in this appeal is whetherthe Respondent's employment in the Insurance Corporation ofSri Lanka, hereinafter referred to as the Corporation, could beterminated at the age of 55 years or at the age of 60 years.
The Respondent commenced employment at the age of 42years. On the 11th December, 1976, his services were terminated,at which time he was 57 years of age. His complaint, in an appli-cation made to the Labour Tribunal was that his services werewrongfully terminated and he prayed for an order of re-instate-ment and/or compensation in lieu of re-instatement, and forgratuity.
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The Corporation in its answer averred that the Respondentwas not given an extension under the Public AdministrationCircular No: 95, dated 4th April 1975, marked (R1) and thatconsequently his termination was justified.
At the Inquiry there was no evidence led. Written submissionsand documents were given by agreement of the parties. The Courtof Appeal agreed with the decision of the President of the LabourTribunal which awarded compensation for 35 months in the sum ofRs. 70,000/- with costs, on the basis of his terminal salary ofRs. 2,000/- per mensem. In the appeal before this Court, Mr. MarkFernando, learned Counsel for the Corporation, submitted that hewas relying on paragraph 6 of the Respondent's letter of appoint-ment marked (A):
"6.
• You will be subject to the rules, regulations and orders which
may be issued by the Corporation from time to time."
Counsel ‘drew our attention to an Establishment DepartmentCircular (R2), No: 16 dated 31st August, 1964, which set outthe retirement age of Corporation employees to be 55 years,but that annual extensions up to 60 years of age would be consi-dered at the request of the employee. Counsel further referred usto Circular (R3), paragraph-2 by which notice is required to be givento the General Manager in respect of a request for an extension,at least 3 months before the age of optional retirement isreached. Circular No: 333, dated 10th June, 1974 (R4), sets outthat, "annual extensions up to the age of 58 will be consideredonly in special cases, on the recommendations of the Corporation,by the Cabinet with the approval of the Ministry." Paragraph 2requires the employees to apply through the Head of DivisionDepartment/Branch Manager, at least 6 months prior to reaching55 years. Mr. Mark Fernando then referred us to the last of theseries of Circulars on this subject, namely Public AdministrationMinistry Circular No:* 95 dated 4th April, 1975, (R1) under theheading, "State Officers and other Public Sector Officers" whichsets out that there have been a series of decisions which have beenfinally embodied in this Circular. It states:
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The Insurance Corporation of Sri Lanka v. A. F. Dabare
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"2.
… a State Officer who reaches the age of 55 years may begranted annual extensions of service up to the age of 58 yearsif the Minister in charge of the Department concerned is of theview that his retention in service is essential for the workingof the Department by reason df the officer's special training,skill or qualifications, or for the completion of a task alreadyallocated to him.''
''3.
Extensions beyond the age of 58 would be granted onlyupon a reference by the Minister concerned.''
Finally, the circular states that, "The same conditions as will apply
to state officers will apply to Corporationsexcept where the
law or a contractual obligation requires otherwise."
In terms of the above Circulars, the Respondent sought threeapplications for extension—two of which were granted-until hereached the age of 56 years. The third application was refused bythe Board which decided with the concurrence of the Minister thathis services should not be extended beyond the age of 57 years.Mr.Fernando submitted that there was no contractual obligationto keep the Respondent in service until he was 60 years. He statedthat this case was fought on the basis that the Public Administra-tion Circulars, which made the .Respondent subject to the rules,regulations and orders issued by the Corporation were applicable.
Counsel stated that the Minister can legally direct the Corpora-tion by general or special direction under Section 8 of the InsuranceCorporation Act No: 2 of 1961 and that so far as the Corporation isconcerned, there must be a variation of the relevant Circular. Inthis instance there was no such direction given by the Ministeror variation by the Corporation. The Corporation officers protestedagainst these Circulars which dealt with the retirement age at 55years. Then by Circular (A6) dated 3rd February, 1971, the Cabinetagreed intar alia that all employees of Corporations "should be per-mitted to continue in service till they reached 60 years of age?However, despite (A6), Circular (A7) dated 23rd July, 1971, in
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the paragraph dealing with Corporations, set out that those whohave passed the age of 55 years are permitted to continue in serviceuntil they reach the age of 60 years, subject to the general rulesand regulations governing extensions' of service in Corporations.Mr. Fernando submitted that the operative Circular governing thismatter is (R4) dated 10th June, 1974. The Respondent, at the dateof this Circular had reached the age of 55 years. He has therefore toapply for extension in terms of paragraph 2 of the Circular (R1),dated 4th April 1975, which application would be considered bythe Ministry on the recommendation of the Corporation. As men-tioned earlier Counsel's position was that this case has been foughton the basis that the Public Administration Circulars are"applicableand govern this matter, as would be seen from clause 6 of the Res-pondent's letter of Appoinment (A1) from which it is apparent thatthe Respondent agreed to be bound by the regulations.
The Respondent was retired by the Corporation on 7th May,1976, (A8). By his letter (A9) dated 3Uth April., 1976, he claimedthat in terms of the rules prevailing at the time of employment, andin accordance with the terms and conditions of his employment hewas entitled to serve until he was 60 years of age, and that despitethis he was retired at 57 years without valid reasons. TheCorporation, by its letter (A10) in reply drew the Respondent'sattention to the Manual of Procedure paragraph 10.
In his order, the President of the Labour Tribunal referred tothe document (A2) dated 3rd March. 1968, which bears the head-ing, "Notes of a Meeting that the Hon. Minister had with Represen-tatives of the Executive Officers' Association of the I.C.C." At thismeeting the Minister, General Manager and Chairman of the Insu-rance Corporation, as well as employees were present. The decisiontaken at this meeting which is relevant to this matter reads asfollows:
"However, in the case of officers recruited to the Corpora-tion from the private sector whose ages were over 40 years atthe time of the recruitment, would be allowed the concessionof continuing till 60 years with the option of the officers toretire at any time after 5 years, subject to the proviso that theBoard could initiate action to retire officers at whatever age inthe case of inefficiency."
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The President of the Tribunal, in accepting the contention made onbehalf of the Respondent stated that when the decision in (A2)was taken the Respondent was 49 years of age and thatconsequently such decision became a term of his employment withthe Corporation. The order of the President makes a reference toCircular (R1) No: 95 dated 4th April, 1975 which was relied uponby the Employer and which provides that an officer may be requir-ed to retire on completing the age of 55 years, but he may be gran-ted annual extensions up to the age of 58 years and even 60 years incertain circumstances. Reference was also made to Section C whichsets out that the same conditions would apply to employees"except where the law or a contractual obligation requires otherwise. . ” The President concludes that the exception just referred toenvisages a workman, in a case such as this, having regard to theagreement in the document (A2) referred to earlier. The Presidentfurther held that the Circular (R1) did not apply to the Respondent,and that he was entitled to be employed until he was 60 years ofage.
The learned Judges of the Court of Appeal were in completeaccord with the reasons given by the President of the Labour Tri-bunal, and in their judgment, incorporated the very language usedby him in arriving at a finding that the document (A2) constituteda term of the Respondent's employment and that Respondent wasnot a workman to whom the conditions in Circular No: 95 (R1)applied.
Counsel for the Corporation submitted that the President ofthe Labour Tribunal has not considered the question of a contrac-tual agreement, and that in any event he cannot conclude that thenotes of the Minutes of the conference (A2), constituted a contrac-tual agreement. He submitted that there was neither a contractualagreement nor a " fixed time contract," as contemplated in Circular(A3). It was further submitted that the learned Judges of the Courtof Appeal have merely considered the finding of the President ofthe Labour Tribunal and not other evidence in the case.
Mr. Lyn Weerasekera, learned Counsel for the Respondentsubmitted that the Circulars A3 and A4 (referred to by him in somedetail earlier), were contrary to the terms of the Conference, theminutes of which are set out in the document (A2) referred toearlier. Then, when the Corporation employees submitted amemorandum (A5) to the Minister of Trade expressing thehardships caused to them if they were compulsorily retired at theage of 55 years, a Cabinet Decision(A6) was arrived at on 3rd Feb-ruary, 1971, to the effect that all employees in Public Sector Cor-porations should be permitted to continue in service till they reach60 years. Counsel for the Respondent, relying on the Cabinet Deci-
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sion, submitted that consequently there was a reasonable and legi-timate expectation that retirement at the age of 60 years was a termof the Respondent's employment. Counsel for the Corporationhowever countered this when he submitted that a Cabinet decisionis ineffective unless it is implemented by, for instance, a resolutionin Parliament
Counsel for the Corporation in his reply stated that he was notconfining his case to the Public Administration Circulars. He set outthe grounds on which he further relied, inter alia on the final Circu-lar (R4) adverted to earlier and the Public Administration CircularNo: 95 (R1).
The question we are called upon to decide is, whether the Notesof the Minutes of the Meeting attended by the Minister, Chairmanand Representatives of the Executive Officers' Association of theCorporation held on 3rd March, 1968 marked (A2), constitutes a"contractual obligation" within the meaning of the words,". . .except where the law or a contractual obligation requiredotherwise," as appears in paragraph 4C in the document (R1) dated4th April, 1975 issued by the Ministry of Public Administration.As shown earlier in the judgment the President of the LabourTribunal in his order concludes in the manner of ar"ipse dixit",that the Notes P2 (in the portion dealing with the retiring age)constituted a "contractual agreement" between the Minister andthe Respondent, with no analysis or discussion leading to hisconclusion. The judgment of the Court of Appeal merely reiteratesthat finding.
The document (A2) still retains its informality as a note of ameeting with the Minister. There is nothing to indicate that thenotes were approved or incorporated in a Circular or acted upon.The Ministry has made no- subsequent ratification of the notes. ‘There is even nothing to indicate as to who recorded those notes,which bear no signature or initial. In these circumstances we findourselves unable to accept what appears to be an informal note inregard to which there is not the slightest evidence to indicate thatit was acted upon by the relevant authorities. If these notes wereacceptable to the authorities we would certainly have expected to.find a Circular bearing on it.
In this view of the matter, the very foundation of the findings ofthe President of the Labour Tribunal and the Court of Appealappear to us to be unsound.
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The Respondent was subject to the rules and regulations made bythe Corporation. The rules embodied in the final Public Adminis-tration Circular No: 95 (R1) dated 4th April 1975 issued by theMinistry of Public Administration would enable the Respondent toobtain annual extensions up to the age of 58 years, if the Minister
in charge of the department concernedis of the view that his
retention in service is essential for the working of the department
" The Respondent's application for an extension when
he reached the age of 56 years was refused by the Board, whichdecided with the concurrence of the Minister that his servicesshould not be extended beyond the age of 57 years. In this viewof the matter the orders made by the President of the Tribunal andthe Court of Appeal, which concurred with the order of thePresident cannot stand.
I accordingly set aside the order that the services of the Respon-dent have been unjustly terminated as well as the award ofRs. 70,000/- compensation made by the President of the Tribunaland confirmed by the Court of Appeal.
In regard to the relief prayed for, I have given anxious considera-tion and taken the view that the Respondent was led to believe thathe could continue in employment until the age of 60 years, as aresult of the assurances which were given to the Corporationemployees at the Conference attended by the Minister and represen-tatives of the Executive Officers' Association of the Corporation,the notes of which'were recorded in the document (A2). I haveearlier referred in some detail to the justifiable criticism that couldbe made in regard to the Notes of that Conference and shown thatthere was apparently no consequential action taken to give validityto the decisions set out in the said notes.
The Respondent has been awarded a sum of Rs. 70,000/- ascompensation for what the President of the Tribunal has describedas the unjust termination of his services, a finding with which we do. not agree. However, in all the circumstances of this case and havingregard to the reasons given, we deem it just to award compensa-tion in a sum of Rs. 12,000/- to the Respondent.
I accordingly allow this Appeal and set aside the Judgment ofthe Court of Appeal which affirmed the order of the President ofthe Tribunal and for the reasons given direct that a sum ofRs. 12,000/- be paid to the Respondent. We make no order as tocosts.
Sharvananda, J.—I agree
Wimalaratne, J.—I agree
Appeal allowed