JAYAWARDENA AND ANOTHER v. PEGASUS HOTELS OF CEYLON LTD., AND OTHERS

• Jurisdiction: Sri Lanka
• Date: 23 September 2004
• Type of Document: Case report

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JAYAWARDENA AND ANOTHER
v
PEGASUS HOTELS OF CEYLON LTD., AND OTHERS

COURT OF APPEAL
SALEEM MARSOOF PC, (P/CA) AND
SRIPAVAN, J.
CA. 1871/2003
JUNE 8, 2004
JULY 5 AND 7, 2004

Termination of Employment of Workmen, (Special Provisions) Act, No. 45 of 1971, sections 2(2) (a-d) and 12-Application to terminate services approved subject to payment of compensation - Commissioner acting arbitrarily-Computing compensation - Order unreasonable - No proper inquiry - Does writ lie? - Applicability of the preclusive clause read with section 22 of Interpretation Ordinance, No 10 of 1972 - Ceiling on Housing Property Law, No. 1 of 1972, section 39(3) compared-Finality of order - Rules of Court of Appeal, 1990, Rule 3 - Applicability - Who is a necessary party?

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The 1st petitioner (employee) and the 2nd petitioner (Union) sought to quash the order made by the Commissioner giving approval to terminate the services of 36 employees subject to payment of compensation. It was contended that the Commissioner failed to apply the law correctly in computing compensation, acted arbitrarily, did not make "all-inquiries" and the order was unreasonable.

The 8th respondent opposed the application and contended that all the employees are not named, especially those 30 employees who have accepted compensation, and that the record has not been tendered to court.

Held :

Per Saleem Marsoof, J. P/CA.

"There is no doubt that the 30 employees who have accepted compensation will be affected but it appears that the majority of them were members of the 2nd petitioner Union, which is entitled to represent them."

(1) There is not only failure to produce the "record" on the face of which the petitioners claim there is an error of law, but also non-compliance with Rule 3(1 )(a), which justifies dismissal in limine.

(ii) The preclusive clause in section 2(2)(f) has to be interpreted in the light of section 22 of the Interpretation Ordinance.

Per Saleem Marsoof, J. P/CA.

'The petitioner has not shown that the impugned decision is ex-facie not within the power conferred with the Commissioner or that there has been any failure to conform to the rules of natural justice or any mandatory provision of any law which is a condition precedent to the making of the award.

Application for writs of certiorari and mandamus.

Cases referred to:

(1) Sukumaran v The Maharaja Organisation and two others CA No. 1684/2003 - of 30.08.2004.

(2) Ramasamy v Ceylon State Mortgage Bank - 78 NLR 510

(3) Karunaratne v Commissioner of Co-operative Development - 79(2) NLR 193

(4) Abeyadeera and 162 others v Dr. Stanley Wijesundara - Vice Chancellor, University of Colombo and another- (1983) 2 Sri LR 267

(5) Ravaya Publishers and others v Wijedasa Rajapakse, Chairman Sri Lanka Press Council and others - (2001) 3 Sri LR 213

(6) Prabath Varma v State of Utara Pradesh - AIR (1983) SC 167

(7) Hewagam Korale East Multipurpose Co-operative Society Ltd., Hanwella v Hemawathie Perera and another - (1986) 1 CALR 535

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(8) Virakesari Ltd. v Fernando - 66 NLR 145

(9) Baldwin & Francis Ltd., v Patents Appeal Tribunal and others - (1959) 2 A11 ER433

(10) Wijerama v Paul - 76 NLR 241

(11) Jayaweera v Asst: Commissioner of Agrarian Services, Ratnapura and another - (1996) 2 SRI LR 70.

(12) Brown & Co. Ltd., and others v Ratnayake, Arbitrator and others - (1994) 3 SRI LR 91

(13) Blanca Diamonds (Pvt) Ltd., v Wilfred Van Else and others - (1997) SRI LR 360 at 362

(14) Alphonso Appuhamy v Hettiarachchi - 77 NLR 131

(15) Manickam v Permanent Secretary, Ministry of Defence and External Affairs - 62 NLR 204

(16) Samalanka Ltd., v Weerakoon, Commissioner of Labour and others- (1994) 1 SRI LR405

(17) Moosajees Ltd., v Arthur and others - (2001) 2 SRI LR 401

(18) Wijewardena v People's Bank, SL Appeal 3/80 Scm 20.05.1981.

(19) Perera v Lokuge - (1996) 2 Sri LR 282

(20) Sittamparanathan v Premaratne - (1996) 2 SRI LR 202

(21) Edmund v D.S. Fernando- (1995) 1 SRI LR 407

(22) Pure Beverages Company Executive Officers Association v Commissioner of Labour - (2001) 2 SRI LR 258 (Distinguished)

(23) Anisminic Ltd., v Foreign Compensation Commission - (1969) AC 147

(24) Abeywickrema v Pathirana and others - (1986) 1 SRI LR 120

N.D.R. Cassie Chetty for 1st and 2nd petitioners.

M.A. Sumanthiran with Vijula Arulanatham for 1st and 2nd respondents.

B.S. Mahendran State Counsel for 3rd respondent.

Cur. adv. vult

September 23, 2004
SALEEM MARSOOF, P.C. (P/CA)

The 1st petitioner to this application admittedly was an employ- ee of the 1st respondent, Pegasus Hotels of Ceylon Ltd which is managed by the 2nd respondent, Carsons Management Services (Pvt) Ltd. The 2nd petitioner is a registered trade union which rep-

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resented the 1 st petitioner and 35 other workmen of the 1 st respon-dent company at an inquiry conducted on the directions of the 3rd respondent, Commissioner of Labour with respect to the application dated 4th July 2002 (P1) made by the 2nd respondent in terms of section 2(a) of the Termination of Employment of Workmen (Special Provisions) Act, No. 45 of 1971, as subsequently amend- ed. It is common ground, that the 2nd respondent, Carsons Management Services (Pvt) Ltd, managed the business of the 1st respondent Pegasus Hotels of Ceylon Ltd, and also made the aforesaid application for the approval of the 3rd respondent for the termination of the scheduled employment of 60 employees of the 1st respondent including the 1st petitioner. The said application was supported by the affidavit of Deannath Jehan Kulatunge, a Director of Carsons Management Services (Pvt) Ltd, a copy of which affidavit has been produced marked P2. It appears from the said affidavit that the termination of the services of the workmen in question was sought on the ground that the business of Pegasus Hotel of Ceylon Ltd had run at a loss mainly by reason of the destruction of the prime beach frontage of the Pegasus Reef Hotel due to sea erosion. The said affidavit also states that the problem was aggravated by the condition of the approach road to the Hotel and its surroundings. The accumulated loss of the Pegasus Hotels of Ceylon Ltd as at 30th June 2002 amounted to Rs. 69,684,246 which necessitated restructuring of the operations of the hotel. The termination of services of the said employees of the Pegasus Reef Hotel was sought to be justified by the 1st and 2nd respondents on the need to "downsize its operations to about 50 rooms".

The 3rd respondent noticed the 1st petitioner and the 59 other employees to appear before him for an inquiry. The inquiry into the said application was conducted by the Assistant Commissioner of Labour (Termination Unit) M.N.S. Fernando. The 2nd petitioner initially represented most of the affected workmen at the inquiry, but towards the end of the inquiry only 36 employees, including the 1st petitioner, were interested in the proceedings as the others had been either re-employed by the 2nd respondent or had died, retired from service or were dismissed for misconduct. In the course of the said inquiry a further affidavit from an Accountant employed by the 2nd respondent, Chaminda Shalike Karunasena

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was tendered marked P4, and the said Karunasena gave evidence regarding the financial position of the 1st respondent. Although as stated in paragraph 6 of the 3rd respondent's affidavit filed in these proceedings, the said Accountant was "one among many other witnesses" called by the petitioners, only a copy of that part of the proceedings containing the evidence given by the said Accountant was produced marked P4A with the petition and affidavit of the petitioners. The entire record of proceedings containing all the evidence led at the inquiry and the recommendations made by the said M.N.S. Fernando to the 3rd respondent were not made available to Court by any of the parties. By the letter dated 31st July 2003 marked P8 the 3rd respondent gave his approval to the 1st and 2nd respondents for the termination of the services of the aforesaid 36 employees with effect from 15th August 2003 subject to payment of compensation. Annexed to the said letter was a separate schedule marked P8A indicating the compensation payable to the individual employees. The quantum of compensation was computed at the rate of 3 months salary for every completed year of service subject to a ceiling of 50 months salary. The total compensation package exceeded Rs.3 Million. The 3rd respondent has stated in his order his reasons for the said approval, one of which was the loss caused by sea erosion to the business of the 1st respondent.

The learned Counsel for the 1st and 2nd petitioners submitted that the petitioners are entitled to a mandate in the nature of certiorari to quash the impugned decision of the 3rd respondent contained in the letter marked P8 read with the schedule marked P8A, and an order in the nature of mandamus to compel the 3rd respondent to use the powers conferred by section 12 of the Termination of Employment of Workmen (Special Provisions) Act, and summon all witnesses and obtain all documents as may be necessary in order to arrive at a proper and reasonable decision and apply the law and the principles embodied in the said Act. The petitioners have alleged in their petition and affidavit that the evidence given by the said Accountant Karunasena and the Financial Statements produced at the said inquiry marked P5 did not bear out what the aforesaid affidavits of Kulatunge and Karunasena had stated, and the 3rd respondent failed to draw the necessary inferences from the testimony of the

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Accountant of the 2nd respondent. Learned Counsel for the petitioners submitted that the document marked P8 shows that the 3rd respondent has failed to apply the law correctly in computing the compensation for the termination of employment of the employees affected. He submitted that evidence collected...