040-SLLR-SLLR-2007-V-1-DISTILLERIES-COMPANY-OF-SRI-LANKA-v.-DEPUTY-COMMISSIONER-OF-LABOUR.pdf
CA
Distilleries Company of Sri Lanka v Deputy Commissioner of
Labour
361
DISTILLERIES COMPANY OF SRI LANKAv
DEPUTY COMMISSIONER OF LABOUR
COURT OF APPEALIMAM, J.
SARATH DE ABREW, J.
CA (PHC) 76/2005HC GALLE (REV) 91/2001MC GALLE 52480
Payment of Gratuity Act, 12 of 1983 – Section 5 (1) Amendment 62 of 1992 -section 5 (1) section 5(4) – Companies Ordinance – Conversion of PublicCorporations or Government owned Business Undertakings into PublicCompanies Act No. 23 of 1987 – section 2 – Corporation converted into acompany – Liability to pay surcharge on gratuity payable to an employee – Isit mandatory? Alternative remedies available – Exceptional circumstances?Rule 3(1) a of the Court of Appeal Rules 1990 – stare decisis.
The petitioner company sought to revise the order of the High Court which heldthat the petitioner company was liable to pay a surcharge under the Paymentof Gratuity Act. The employee concerned was employed by the DistilleriesCorporation which was later converted into the petitioner company in terms ofthe provisions of Act 23 of 1987. The petitioner company contended that, theemployee was not entitled to gratuity for the period he served as a workmanunder the Corporation. The Magistrate's Court held that, the petitioner is liableto pay. The High Court rejected the revision application on technical grounds.The petitioner sought to revise the said orders. It was contended by therespondent that under section 3 2(1 )b of Act 23 of 1987 the petitioner is liablein law to pay gratuity for the entire period of service in both the Company andCorporation, and the liability to pay the surcharge is a mandatory provision.
Held:
Section 5(1) of the Payment of Gratuity Act, No. 12 of 1983 imposes onemployees' liability to pay gratuity to workman employed under them. Theliability arises on termination of the services and gratuity has to be paidwithin a period of 30 days. Section 5(A) introduced by the amending Act62 of 1992 makes an employer liable to pay a surcharge if gratuity is notpaid as provided under section 5(1).
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Section 3 2(1)b of Act 23 of 1987 clearly envisages that the petitioner isliable to pay gratuity for the entire period of service in both the Companyand the Corporation.
Per Sarath de Abrew, J.
’Where the Superior Courts interpret the provisions of the Payment of GratuityAct to mean that the petitioner company is liable to pay gratuity to itsemployees on termination even for the period they served under theCorporation, the liability to pay arrears is not from the date of the correctinterpretation but from the due date – that is within one month of thetermination."
Invoking revisionary powers of an appellate court is a discretionaryremedy and its exercise cannot be demanded as of right unlike a statutoryright of appeal.
The doctrine of stare decisis would mean that people in arranging theiraffairs are entitled to rely on a decision of the Highest Court which appearsto have prevailed for a considerable length of time.
APPLICATION in Revision from an order of the High Court of Galle.
Cases referred to:
Abeysundara v Abeysundara – 1998 – 1 Sri LR 185.
T. Varapragasam and another v S.A. Emmanual – CA (Rev) 931/84 -CAM. 24.7.1991.
Dulinda Weerasuriya with Amila Vithana for respondent-petitioner-petitioner.Ganga Wakistarachchi SC for appellant-respondent-respondent.
November 30, 2007
SARATH DE ABREW, J.
The Respondent-Petitioner-Petitioner (hereinafter sometimesreferred to as the petitioner), namely Distilleries Company of SriLanka Ltd, has filed this application to revise and set aside therespective orders of the learned High Court Judge of Galle dated
(P16) in case No. Rev. 91.2001 and of the learnedMagistrate of Galle dated 20.09.2001 (P9) in case No. 52480 holdingthat the petitioner company was liable to pay surcharge amounting to14,917.50 under the provisions of Payment of Gratuity Act No. 12 of1983 as amended by Acts No. 41 of 1990 and 62 of 1992. TheApplicant-Respondent-Respondent (hereinafter sometimes referred
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Distilleries Company of Sri Lanka v Deputy Commissioner of
Labour (Sarath de Abrew. J.);
363
to as the respondent), namely the Deputy Commissioner of Labourhas filed action against the petitioner to recover surcharge ongratuity payable to an employee of the petitioner company oneJ.A.D. Peter. As the learned Magistrate has upheld the applicationfor recovery and determined that the petitioner was liable to pay,the petitioner has sought to revise this order in the High Court ofGalle where the learned High Court Judge has refused reliefupholding a preliminary objection that the petitioner had violatedRule 3(1 )(a) of the Court of Appeal (Appellate Procedure) Rules1990, by failing to submit originals or duly certified copies of thedocuments. The present application to this Court of the petitioner isto challenge the above impugned orders by way of revision.
A perusal of the petition dated 17.02.2005 unravels the factualbackground to this application. The Distilleries Corporation wasconverted into the petitioner company namely the DistilleriesCompany of Sri Lanka Ltd. on 17.22.1989 under section 02 of theConversion of Public Corporations or Government OwnedBusiness Undertakings into Public Companies Act No. 23 of 1987.The employee material to this application, one J.A.D. Peter joinedthe service of the aforesaid Corporation on 27.03.1974 and onreaching age of 55 years, retired from the service of the aforesaidpetitioner company on 20.11.1998 with a last drawn salary ofRs. 6630/- and was entitled to receive gratuity as a retrial benefit.
The question arose for determination as to whether J.A.D. Peterwas entitled to gratuity for the period he served as a workmanunder the Corporation too under the provisions of Payment ofGratuity Act No. 12 of 1983. Around this time, in a similar matterinvolving another employee who had retired earlier, one K.A.D.Abeynayake, the High Court of Colombo in Case No. HCA 812/96(P2) had given an interpretation to the provisions of the Payment ofGratuity Act on 03.04.1998 holding that the petitioner was liable topay gratuity to a workman only for the period such workman hadserved the petitioner company and not for the period he servedunder the Corporation. Guided by this authority, the petitionertherefore has paid gratuity to J.A.D. Peter only for the period heserved under the company.
However, the Labour Department moved in revision and in theApplication No. C.A. 58/98, the Court of Appeal had overturned the
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aforesaid High Court judgment and held on 23.06.2000 that thepetitioner company was also liable to pav gratuity to the workmanconcerned for the period he had served under the Corporation aswell fP3). As the Application for Special Leave to Appeal to theSupreme Court has been refused (P4), the aforesaid latterinterpretation of the provisions of Payment of Gratuity Act becamesettled law on the matter.
Henceforth, the petitioner Company has belatedly taken steps topay gratuity to J.A.D. Peter for the period he has served under theCorporation on 20.10.2000. Arising out of this situation, therespondent has filed action in the Magistrate Court of Galle in caseNo. 52480 to recover unpaid gratuity amounting to Rs. 64,642.50on the basis that gratuity has not been paid to J.A.D. Peter for thetotal period 27.03.1974 to 19.11.1998 (P5). However therespondent has later limited the claim to Rs. 14,977.50 being theamount due on the surcharge. The learned Magistrate allowed theapplication and made order holding the petitioner liable for recoveryof the surcharge. The revision application to the High Court wasrejected on technical grounds. Hence arose the petitioner's presentapplication in revision to this Court.
I have carefully perused the petition, statement of objections,counter objections filed in this case together with all the annexeddocumentation. In addition to the oral arguments presented by bothparties I have also perused the illuminating written submissionstendered by both the petitioner and the respondent.
The solution to the dispute basically rests on the correctinterpretation that should be given to the provisions with regard tothe mechanics as to the generation of liability in respect ofsurcharge on gratuity as contained in the provisions of Payment ofGratuity Act and its amendments.
The main contention of the petitioner company is that it paidgratuity to the employee concerned within 30 davs the petitionercompany became liable to pav gratuity and therefore as there is nodefault, a surcharge cannot be imposed. Accordingly, the petitionerhas argued as follows:
The key words in section 5(4) of the Act are the words "liableto pay any sum as gratuity."
Distilleries Company of Sri Lanka v Deputy Commissioner of
CALabour (Sarath de Abrew, J.) 365
For the period of service under the petitioner company,
J.A.D. Peter has been paid gratuity within 30 days of the duedate, namely the date of retirement.
For the period of service under the Corporation, thepetitioner company became liable to pay gratuity only afterthe delivery of the Supreme Court order (P4) on 29.09.2000refusing Special Leave, and accordingly within 30 days fromthe date liability arose, namely on 20.10.2000, the petitionerhas paid the gratuity and therefore the petitioner is not liablefor payment of surcharge.
In support of its arguments with regard to the question as to how andwhen the liability arises, the petitioner has chosen to adduceAbeysundara v AbeysundaraP) where I had the good fortune of pro-nouncing the original judgment in the Magistrate's Court of Galle in1992.
On the other hand, the learned State Counsel appearing onbehalf of the respondent has raised the following contentions.
the issue that has to be decided is the liability to paysurcharge on payment of gratuity which is a mandatorystatutory provision and is not a question of law.
No exceptional circumstances are urged by the petitioner toattract revisionary jurisdiction.
Section 3(2)(1)(b) of the Conversion of Public Corporationsor Government Owned Business Undertakings into PublicCompanies Act No. 23 of 1987 clearly envisages that thepetitioner is liable in law to pay gratuity for the entire periodof service in both the Company and the Corporation.
The attempt on the part of the petitioner to seek refuge underthe defence that it paid gratuity in conformity with the orderof the learned High Court Judge (P2) cannot succeed as theHigh Court order was only persuasive and not binding, asthe petitioner was well aware that the matter has beenchallenged in the higher forum, namely the Court of Appeal.
There is no discretion attached in law in determining theapplicability of the surcharge as it is a mandatory provisionof the law.
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The petitioner has not exercised the alternative remedyavailable to him in law. (paragraph 13 of the statement ofobjections).
The petitioner has suppressed material facts (paragraph 13of the objections)
Before dealing with the several contentions raised by bothparties it must be reiterated that invoking revisionary powers of thisCourt is a discretionary remedy and its exercise cannot bedemanded as of right unlike the statutory remedy of Appeal. Certainpre-requisites have to be fulfilled by a petitioner to the satisfactionof Court in order to successfully invoked the exercise of suchdiscretionary power. This is best illustrated in T. Varapragasam &another v S.A. Emmanuel2) where it was held that the followingfacts have to be applied before the discretion of the Court of Appealis exercised in favour of a party seeking the revisionary remedy.
the aggrieved party should have no other remedy.
if there was another remedy available to the aggrieved party,then revision would be available if special circumstancescould be shown to correct it.
the aggrieved party must come to Court with clean handsshould not have contributed to the current situation.
the aggrieved party should have complied with the law atthat time.
the acts complained of should have prejudiced hissubstantial rights.
The acts or circumstances complained of should haveoccasioned a failure of justice.
In the above context, the following features in this applicationmilitate against the successful invoking of revisionary jurisdiction.
Failure on the part of the petitioner to seek the alternativeremedy of Appeal against the impugned order of the HighCourt. (P16).
The refusal of relief by the High Court is on a technicalground and not on a consideration of the substantive merits
Distilleries Company of Sri Lanka v Deputy Commissioner of
CALabour (Sarath de Abrew, J.)367
of the application. No exceptional circumstances have beenurged in relation to the Order of the learned High CourtJudge.
The failure of the aggrieved party to comply with themandatory provisions of the Payment of Gratuity Act and itsamendments has contributed to the current situation.
The petitioner has suppressed a very material fact and hasfailed to show uberima tides towards the Court due to thefollowing reasons. J.A.D. Peter has retired from service on
according to the petition. Paragraph 13(iv) of thestatement of objections by the respondent alleged that thepetitioner has paid gratuity for the first time on 24.12.1998;which is more than one month from the due date ofretirement and is therefore liable for a surcharge to beimposed. This averment in the statement of objections is notspecifically denied in the counter objections filed by thepetitioner. Therefore the contention of the petitioner thatthere was no default even on the first occasion of paymentof gratuity appears to be a myth. On the above groundenumerated (a) to (d) above alone this application is liable tobe dismissed.
However, in her written submissions, the learned State Counselhas taken up the position that the argument in this case by thepetitioner would only be confined to the question whether thepetitioner is liable to pav the surcharge on the gratuity paid asdemanded by the respondent. The learned Magistrate in his Orderon 20.09.2001 (P9) has answered this question in the affirmativebut apparently has not adduced good and sufficient reasons. As thepresent application before this Court is also to revise and set asidethe Order of the learned Magistrate, based on an importantquestion of law, the above could be construed as sufficient specialcircumstances for this Court to explore and analyse the severalcontentions and come to a finding.
Section 5(1) of the Payment of Gratuity Act No. 12 of 1983imposes liability on employers to pay gratuity to workmanemployed under them. The liability arises on termination of theservices and gratuity has to be paid within the period of 30 days.
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Section 5W introduced bv the Amending Act No. 62 of 1992 states"Any employer who being liable to pav anv sum due as gratuity toa workman or his heirs, as the case may be under subsection (1),fails or defaults to pav that sum on or before the due date, he shallbe liable to pav that workman or his heirs, as the case may be, inaddition to the sum due as gratuity, a surcharge on that sumcalculated in the following manner
The key words in this section are "he shall be liable to pay asurcharge on that sum". The liability arises on the failure to pay thesum due on or before the due date, that is within one month of thetermination of employment of the workman concerned, and notwithin one month of the correct interpretation of the statue by aSuperior Court. The petitioner cannot seek refuge behind anerroneous order made by a single Judge in the High Court as thedecision of such a single Judge is only persuasive and has nobinding effect as a compelling authority. No finality can be attachedto such a decision. Once the Supreme Court has interpreted thestatute correctly, the correct interpretation operates not from thedate of interpretation but from the date where liability arises in thefirst place, that is within one month of the termination ofemployment. The petitioner should have been well aware that theorder of the learned High Court Judge (P2) has no binding effect asthe matter was being canvassed in a higher forum. The doctrine ofstare decisis would mean that people in arranging their affairs areentitled to rely on a decision of the highest Court which appears tohave prevailed for a considerable length of time. Therefore thecontention of the petitioner in this regard should fail.
In the interpretation of statues the final arbiter is the SuperiorCourt by virtue of its appellate and supervisory jurisdiction. Oncethe meaning of an Act of Parliament has been authoritativelyinterpreted, that interpretation become law unless it is thereafterchanged by Parliament. Even though it is the function of Courtalone to declare the legal meaning of an enactment, the legal effectof the proper construction or interpretation of the statue concernedwill take effect not from the date of the interpretation but from thedate of the operation of the said statute. Therefore where theSuperior Courts interpret the provisions of Payment of Gratuity Actto mean that the petition company is liable to pay gratuity to its
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Distilleries Company of Sri Lanka v Deputy Commissioner of
Labour (Sarath de Abrew. J.)
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employees on termination even for the period they served underthe corporation, the liability to pay arises not from the date of thecorrect interpretation but from the due date, that is within onemonth of the termination.
On the basis of the above findings, the question of law raisedby the petitioners has to be decided in favour of the respondent.Therefore, the contentions raised by the petitioner company withregard the liability to pay surcharge on gratuity cannot succeed.
In view of the above finding, and for the reasons set out earlierin this judgment, this Court is of the view that this is not a fit caseto invoke the discretionary revisionary powers of this Court infavour of the petitioner. Therefore, I refuse to grant any of the reliefssought by the petitioner in the prayer to the petition. Therefore theapplication of the petitioner is dismissed. In all circumstances inthis case I make no order as to costs.
The Registrar is directed to forward copies of this Oder to thelearned High Court Judge and learned Magistrate of Galle.
IMAM, J. – I agree.
Application dismissed.