029-SLLR-SLLR-2007-V-2-SAMARAWEERA-v.-THE-PEOPLES-BANK-AND-OTHERS.pdf

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In terms of the circular the retirement age being clearlystated as 55 years, ordinarily the petitioner could not haveentertained a legitimate expectation of continuing in servicebeyond 55 years, unless he can satisfy court that under thecriteria set out in the circular, e g.,
outstanding performance;
available staff cannot perform the specific duties
he qualified for an extension.
The onus of proving that the petitioner has an outstandingrecord of performance or that the available staff cannot performthe specific duties is on the petitioner. There is no materialbefore this court that the petitioner qualified for an extensionunder the criteria. Hence it is my conclusion that the petitioner
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has failed to establish that he had a legitimate expectation ofbeing extended in service in terms of the circular.
The petitioner has also complained that no reasons havebeen given by the respondents for the refusal to grant him anextension. Before the respondents explain why an extensionwas not granted to the petitioner, it is the petitioner’s duty toshow that he had a right to an extension.
For the reasons I have stated earlier I have.come to a findingthat he has failed to prove that he had a legitimate right underthe circular to be extended.
Even his complaint that others who were similarly placedhave been granted extensions by the Bank, cannot give rise toan expectation that the Bank should have extended theservices of the petitioner. It is only those who qualified underthe criteria in Circular No. 323/2001 who could have claimed anextension as a right. The mere fact that those not qualifiedunder the circular have been granted extensions will not entitlethe petitioner also to be granted an extension. A legal rightcannot arise on an illegal grant of a concession to another. Itmight be a ground for complaint of discrimination/unequaltreatment which I will deal with later.
For the above reasons I conclude that the respondents needgive reasons for the non-extension only when the petitioner hasmade out a prima facie case and in this case as the petitionerhas failed to establish a prima facie case that he had a legalright to be granted an extension the respondents were under noduty to give reasons for the non-extension of the services of thepetitioner. This has been the consistent view of this Court asevident from the earlier decisions of the Court in
Wijepafa v Jayawardena & others!');
Manage v. Kotakadeniya and others<2>;
Suranganie Marapana v. Bank of Ceylon and others#).
It is submitted on behalf of the petitioner that others withsimilar categorization have been granted extensions whilst thepetitioner has not been granted an extension. To use the
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petitioner’s own terms respondents have granted extensions toofficers whose services do not warrant extensions*’. As I haveheld earlier even if such allegation is true the petitioner is notentitled to an extension on that score. The petitioner will haveto stand or fall on the record of his own service.
However on the complaint of discrimination/unequaltreatment made by the petitioner, there is merit in his complaint.The respondents have granted extensions to others who havenot qualified for extensions under the circular. Some of therespondents have in violation of the circular granted extensionsto their favourites disregarding the criteria set out in CircularNo. 323/2001. To that extent the petitioner has succeeded insatisfying Court that the respondents have discriminatedagainst the petitioner.
On the one hand this Court does not wish to perpetuate orencourage the abuse of the circular. On the other hand thisCourt does not intend to condone the acts of some of therespondents who have abused their discretion andmisinterpreted the circular to grant extensions to employeeswho did not qualify for extensions under the circular.
It is my view that all circulars and other guidelines mustbe applied fairly and equally to all persons to whom theyapply.
Therefore, I hold that by failing to apply the said circular in auniform manner and in selectively granting favoured treatmentto certain employees by misapplying the circular the 1strespondent Bank and its management have infringed the rightof the petitioner to equality and equal protection of the lawenshrined in Article 12(1) of the Constitution.
In considering the relief to be granted, it is pertinent to notethat while the petitioner has asked for the extension of service,he has not asked for the cancellation of the extension of servicegranted to those whom he named as persons who have notshown outstanding performance or who can be immediatelyreplaced. This is proof of the fact that what the petitioner isseeking is the continuation of the abuse of the discretion under
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the circular and this time to his advantage. Had he sought suchan order, this court would have seriously considered cancelingthe extensions wrongfully granted, which is no doubt the crux ofthe wrong complained of in this case, what the petitioner hassought to achieve in this application is to construe themisapplication of the circular to his benefit and to takeadvantage of the arbitrary decisions of the management todisregard the provisions of the circular rather than give effect tothe clear provisions of the circular.
Therefore, we refuse to grant the petitioner the extension ofservice sought by him. However acting under Article 126 (4) ofthe constitution, which empowers this court to grant relief thatis just and equitable I direct the 1st respondent Bank to pay thepetitioner a sum of rupees Fifty thousand (Rs. 50,000/-) ascompensation and costs for the infringement of his fundamentalrights under Article 12(1).
We also considered whether those officers who wereresponsible for the abuse of their discretion should be directedto pay compensation personally. However, on this occasion Idesist from doing so because of the time lapse and that manyof them are no longer in service.
We direct that in the future the 1st respondent Bank mustinterpret the aforesaid circular or such other circulars that maybe in force, strictly and fairly, when granting extensions ofservice to its employees. In the future if any officer of the 1strespondent Bank is found to have abused the discretiongranted to him, he may be held to be personally liable and bedirected to pay both compensation and costs.
The sum of Rs. 50,000/- as compensation and costs orderedby this court to be paid within one month from the date of thisorder.
Relief refused. Compensation granted.
DISSANAYAKE, J. -I agree.
Relief refused and compensation granted.
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DR. SHIRANI BANDAR AN AYAKE, J.I have had the benefit of reading the judgment, in draft of mybrother Raja Fernando, J. Whilst I concur with the amount ofcompensation that should be awarded to the petitioner and thefinding in regard to the preliminary objection raised by thelearned President’s Counsel for the 1st to 6th respondents,
I regret that I am unable to agree with the reasoning andthe decision given in his judgment on the questions oflegitimate expectation and the duty by the Bank to givereasons for the refusal of the extension of service to thepetitioner for the following reasons.
The petitioner alleged that by the decision of the 1strespondent Bank (hereinafter referred to as ‘the Bank*) to retirehim from the service of the said Bank with effect from01.04.2004(P6) had violated his fundamental rights
guaranteed in terms of Article 12 (1) of the Constitution forwhich this court had granted leave to proceed.
The facts of the petitioner’s case, as submitted by him, arebriefly as follows:
The petitioner had joined the Bank as a Staff AssistantGrade III in 1972. Later he was promoted to Staff AssistantGrade II in 1978, Staff Assistant Grade l in 1985, AssistantManager in 1996 and to the Grade of Deputy Manager in 2001.Consequent to the said promotion in 2001, he was designatedas a Deputy Manager in the Audit Department of the Bank.
Since the petitioner was of the view that he had the capacityand the ability to serve the Bank upto the age of 60 years, inJune 2003 he had applied for his second extension of service,which fell due on 21.01.2004.
By letter dated 28.11.2003, the Bank had informed him thathis services were extended from 21.01.2004 to 01.04.2004(P6).
In October 2001, the Bank had introduced the Circular No.323/2001 dated 12.10.2001, that contained a new policy and
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scheme for extensions of service for the employees, whichcancelled all previous circulars relating to extensions ofservice. The employees of the Bank were instructed to makeapplications in terms with the aforementioned new circular.
The petitioner was surprised by the said decision of theBank to deny his extension of service as the following personswere granted extensions of services under the new scheme:
P. B. Ranasinghe
K. K. V. Sumathipala
P. A. O. Ariyadasa
E. S. Silva
M. D. Manasinghe
B. D. Sumanasena
The petitioner therefore had stated that the decision of theBank to retire him from service with effect from 01.04.2004 isillegal, unlawful, arbitrary, irrational and inconsistent with theprovisions of the Circulars No. 323/2001 (P2) dated 12.10.2001and thereby had violated his fundamental rights guaranteed interms of Article 12(1) of the Constitution.
The contention of the learned Counsel for the 1st to 6threspondents was 3 fold.
Firstly, it was submitted that the granting of extensions ofservice is at the discretion of the management of the Bank andthat there is no requirement to give reasons for such decisionstaken by the Bank.
Secondly, it was contended that the Staff Circular No.323/2001, (P2) clearly had designated and had laid down that‘the age of retirement of the Bank employees shall be 55 years’and therefore the legitimate expectation of all the petitionerswould have been to retire at 55 years.
Thirdly, considering the extensions granted, which werecited by the petitioner as persons who were similarlycircumstanced, it was contended that the said conclusions arenot ‘unreasonable, irrational or arbitrary’.
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Having stated the contention of the 1st to 6th respondents,let me now turn to consider the aforementioned submissionsseparately.
The need to give reasonsIt is common ground that the extension of service of theemployees of the Bank are governed by the terms specified inStaff Circular No. 323/2001 dated 12.10,2001. This Circulardeals with several aspects pertaining to granting of extension ofservice and whilst several clauses make provisions regarding thebasic requirements and the procedure for the extension ofservice implementation, clause 12 and clause 14(iii) refer to thespecific need to give reasons in the event of non-recommendation of an application. Clause 12 has to be readwith other clauses and therefore clause 11, clause 12 and clause14 (iii), are reproduced below and are in the following terms:
“Clause 11- All application forms duly filled as stated
above should be sent to the ChiefManager H.R. Department to be receivedby the Chief Manager on or before 20thJanuary 2002 without exception if they arerecommended. Staff Department shouldprocess all applications received by them,and submit their applications to theService Extension Committee by February10,2002. The Service Extension
Committee should sit from 10th Februarythrough 20th February 2002 and forwardpapers to General Manager, who willfinally decide on the individualapplications by February 25th 2002.
Clause 12In the event the applications is/are not
recommended, a separate report statingthe reasons why it was not recommendedshould be sent directly to DFGM (Est, HR,I and I) (emphasis added).
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Clause 14(111) • When any member of the linemanagement is not recommending anapplication for an extension, a separatereport has to be submitted by suchmanager, giving reasons for the sameto DGM (E, HR I and I) extension isreceived by such manager (emphasisadded).1’
A careful examination of clauses 12 and 14 (lii) of theaforementioned circular clearly specifies that, if an applicationis not recommended by the line management, a separate reporthas to be submitted by such manager, with reasons as to hisdecision for the non-recommendation. This aspect clearlyindicates that the Extensions of Service Committee needed ailthe relevant information including reasons for refusal, if any, fordeciding on each applicant on their extensions of service andtherefore the said Extensions of Service Committee shouldhave maintained records in relation to all applicants, who hadapplied for extensions of service.
Learned Counsel for the petitioner contended that, nodetailed reasoning has been given in terms of clauses 11, 12and 14(iii) of the Circular No. 323/2001 in relation to thepetitioner's extension of service.
The petitioner, as referred to earlier, had submitted theapplication for his extension of service on 09.06.2003 to hisimmediate Superior Officer. That officer did not merely make arecommendation on the application form, but clearly statedthat,
Thereafter the application was forwarded to the AGM, whohad strongly recommended his application on 30.06.2003,where he had stated that,
*This officer is a very effective audit officer. He is verycapable and hardworking, it is very difficult to replace anofficer like him. Hence extension of service by one year is

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strongly recommended. Please extend as the Department
has a service shortage of Staff – specially the efficient staff."
The contention of the respondents regarding therecommendations by the Superior Officers on the applicationmade by the petitioner was that such should be a strongrecommendation. Such a recommendation should not beconfined to mere words, but must depend on the type ofrecommendation made by the relevant officers. In fact on acareful examination, it is quite clear that both the immediateSuperior Officers of the petitioner had given strongrecommendations for the petitioner’s service to be extended.
In the circumstances of this application it is necessary tostate as referred to earlier, that 1 am of the view that, thestrength of the recommendation cannot be considered merelyon the words placed on the documents that has to beforwarded, but should be on the observations made by theimmediate Superior Officer of the applicant. Such an officerwould be in the best position to assess the performance of anapplicant and could indicate justifiable reasons for granting anextension to an officer. Therefore it would be necessary toconsider the observations of the immediate Superior Officer ofan applicant rather than give consideration only to the merephrase of ‘strongly recommended’ by a higher official.
The respondents have not made any reference to thedecisions of the Extensions of Service Committee andtherefore the reasons for the refusal of the extensions by theExtensions of Service Committee is not before this Court.
Thus it is apparent that, although there may not be arequirement for the Extension of Service Committee to givereasons for their decision to the petitioner, the 1st respondentBank owed a duty to this Court to reveal the reasons for theirdecisions. It would not be incorrect to presume that in order toarrive at a decision, the committee must consider severalaspects in terms with the relevant clauses of Circular No.323/2001 and more importantly that they should have revealedthe reasons for their decisions. As stated earlier, although thereasons were not communicated to the petitioner, the Bank
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should have revealed all such reasons to this Court and denialof tendering reasons for their decisions to this Court wouldundoubtedly draw an inference that there were no valid reasonsfor the refusal of the extension of service to the petitioner.
In general terms, considering the general rule, the positiontaken by Court is that there is no duty to state reasons forjudicial or administrative decisions Pure Spring Co. Ltd., vMinister of National Revenue^4) at 501, (Statements of Reasonsfor Judicial and Administrative Decisions, Michael Akehurst,MLR Vol. 33, 1970, pg.154). Accordingly as Michael Akehursthas clearly pointed out, ‘a statement of reasons is not requiredby the rules of natural justice, and therefore there is no duty tostate reasons for the decisions of Courts, juries, licensingjustices, administrative bodies and tribunals or domestictribunals' (supra).
Although the common law had failed to develop any generalduty to provide a reasoned decision Minister of NationalRevenue v Wrights' Canadian Ropes LtdSs> at 109, Rv GamingBoard for Great Britain, ex. p. Benaim and KhaidaW at 417, Rv Civil Service Appeal Board, ex. P. Cunningham^7) at 310,there are several exceptions to this general principle.
One clear method was through statutory intervention, whichcame into being by the recommendation of the FranksCommittee [Cmnd. 218 (1957)]. The Franks Committeerecommended the giving of reasons [(supra) paras 98, 351],that came into being through the Tribunals and inquiries Act,1958, which was replaced by the Tribunals and Inquiries Act,1992.
The Franks Report of 1957, [(supra), at para 98], in facthighlighted the issue as to why reasons should be given,referring to ministerial decisions taken, after the holding of aninquiry.
"It is a fundamental requirement of fair play that the parties
concerned in one of these procedures should know at the
end of the day why the particular decision has been taken.
Where no reasons are given the individual may be forgiven
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for concluding that he has been the victim of arbitrarydecision. The giving of full reasons is also important toenable those concerned to satisfy themselves that theprescribed procedure has been followed and to decidewhether they wish to challenge the minister's decision in thecourts or elsewhere. Moreover as we have already said inrelation to tribunai decisions a decision is apt to be better ifthe reasons for it have to be set out in writing because thereasons are then more truly to have been properly thoughtour.
Another method, and one which was extremely importantfrom the practical point of view, indirectly imposed arequirement that reasons be stated and if not had decided thatthe result reached in the absence of reasoning is arbitrary.Thus in the well known decision in Padfield v Minister ofAgriculture^*) at 997 the House of Lords decisively rejected thenotion that the absence of a duty to state reasons precludedthe pourt from reviewing the reasons for the decision. It wastherefore stated in Padfield (supra) that,
“If all the prima facie reasons seem to point in favour of his(the Minister’s) taking a certain course to carryout theintentions of Parliament in respect of a power which it hasgiven him in that regard, and he gives no reason whateverfor taking a contrary course, the court may infer that he hasno good reason and that he is not using the power given byParliament to carry out its intentions
Similarly in Minister of National Revenue v Wrights’Canadian Ropes Ltd., {supra), which considered an appealfrom an income tax assessment, the Privy Council stated that,
“Their lordships find nothing in the language of the Act or inthe general law which would compel the Minister to state hisreasons for taking action…. But this does not mean that theMinister by keeping silent can defeat the taxpayer’sappeal…. The court is always entitled to examine the factswhich are sworn by evidence to have been before theMinister when he made his determination. If those facts are
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insufficient in law to support it, the determination cannot
stand…..*
Accordingly an analysis of the attitude of the Courts sincethe beginning of the 20th century, clearly indicates that despitethe fact that there is no general duty to give reasons foradministrative decisions, the Courts have regarded the issue inquestion as a matter affecting the concept of proceduralfairness. Reasons for an administrative decision are essentialto correct any errors and thereby to ensure that a person, whohad suffered due to an unfair decision is treated according tothe standard of fairness. In such a situation without a statementfrom the officer, who gave the impugned decision or the order,the decision process would be flawed and the decision wouldcreate doubts in the minds of the aggrieved person as well ofthe others, who.would try to assess the validity of the decision.Considering the present process in procedural fairness vis-a-vis, rights of the people, there is no doubt that a statement ofreasons for an administrative decision is a necessaryrequirement. Referring to reasons, fair treatment andprocedural fairness, Galigan (Due Process and Fair Procedure,Clarandon Press, Oxford, pg. 437) stated that,
HIf the new approach succeeds, so that generally astatement of reasons for an administrative decision will beregarded as an element of procedural fairness, then variousdevices invented in the past in order to allow theconsequences of a refusal of reasons to be taken intoaccount will gradually lose their significance*.
The necessity to give reasons was quite succinctlyexpressed in Lloyd v McMahon(9) at 1118), where LordDonaldson, M. R. had concluded that the giving of reasons wasnecessary, where McCowan, L.J., stated that the Court was notrequired to tolerate the unfairness of reasons not being givenand Legalt L. J. had stated that the duty to act fairly extendedto the duty to give reasons. The need for reasons inadministrative decisions was described in very practical termsby Lord Mustill in Doody v Secretary of State for the HomeDepartment 0°) at 92, where he had stated that,
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“a perceptible trend towards an insistence on greateropenness, or if one prefers the contemporary jargon,
'transparencyin the making of administrative decisions
The necessity to give reasons was considered by this Court,as referred to in Bandaranayake, J’s judgment in LaiWimaiasena v Asoka Silva and Others <11> in Wijepaia vJayawardene^), Manage v KotakadeniyaW at 264, SuranganieMarapana v The Bank of Ceylon and Others<3> at 156 and inKarunadasa v Unique Gemstones<12> at 256. In Wijepaia vJayawardene (supra), considering the necessity to givereasons, at least to this Court, Fernando, J., was of the viewthat,
“The petitioner insisted, throughout, that establishedpractice unquestionably entitled him at least to his firstextension and that there was no relevant reason for therefusal of an extension…
Although openness in administration makes it desirable thatreasons be given for decisions of this kind, in the case l donot have to decide whether the failure to do so vitiated thedecision. However, when this Court is requested toreview such a decision, if the petitioner succeeds inmaking out a prima facie case, then the failure to givereasons becomes crucial. If reasons are not disclosed,the inference may have to be drawn that this is becausein fact there were no reasons – and so also, if reasonsare suggested, they were in fact not the reasons, whichactually influenced the decision in the first place*'(emphasis added).
In Manage v Kotakadeniya and others (supra), where anapplication of a Post Master for his extension of service, uponreaching the age of 55 years was refused, Amerasinghe, J.,was of the view that,
“the refusal to extend the service of the petitioner was notbased on adequate grounds
The order of retirement was thus quashed on the basis thatthe petitioner in that case was treated unequally and that there
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had been discriminatory conduct against the petitioner.
In Suranganie Marapana v The Bank of Ceylon and Others{supra), it was held that the Board failed to show the Court thatvalid reasons did exist for the refusal to grant the extension,which was recommended by the corporate management andtherefore it was held that the refusal to grant the extension ofservice sought was arbitrary, capricious, unreasonable andunfair.
It is noteworthy to refer to the views expressed by MarkFernando, J., in Karunadasa v Unique Gemstones {supra) withreference to the need to give reasons to a decision, where itwas stated that,
whether or not the parties are also entitled to be told thereasons for the decision, if they are withheld, once judicialreview commences, the decision “may be condemned asarbitrary and unreasonable"; certainly the Court cannot beasked to presume that they were valid reasons for thatwould be to surrender its discretion."
On a consideration of our case law in the light of the attitudetaken by Courts in other countries, it is quite clear that givingreasons to an administrative decision is an important feature intoday’s context, which cannot be lightly disregarded.Furthermore, in a situation, where giving reasons have beenignored, such a body would run the risk of having actedarbitrarily In coming to their conclusion. These aspects havebeen stated quite succinctly in the following passage, whereProf. Wade had taken the view that, (Administrative Law, 9thedition, pg. 522),
"Unless the citizen can discover the reasoning behind thedecision, he may be unable to tell whether it is reviewable ornot, and so he may be deprived of the protection of law. Aright to reasons is therefore an indispensable part of asound system of judicial review. Natural justice mayprovide the best rubric for it, since the giving of reasonsis required by the ordinary man’s sense of justice. It isalso a healthy discipline for all who exercise power overother, (emphasis added)”
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And more importantly,
“The only significance of withholding reasons is that if thefacts point overwhelmingly to one conclusion, the decisionmaker cannot complain if he has held to have had norational reason for deciding differently, and that in theabsence of reasons he is in danger of being held to haveacted arbitrarily”
In the light of the aforementioned, it becomes important torefer to the decision in Suranganie Marapana v The Bank ofCeylon and Others (supra), which was discussed in detail in W.P. A. Pathirana v The People’s Bank and Others^13).
In that case, the petitioner was the Chief Legal Officer of therespondent Bank. As she was to reach the age of 55 years on27.11.1996 she applied to the Bank on 25.05.1996 for anextension of service for an initial period of one year. Herapplication was recommended by the Personnel Department inits draft Board minute, under exceptional circumstances. TheBoard of Directors took four months to decide on theapplication and after a lapse of a further month, the petitionerwas informed on 22.10.1996 that her application had beenrejected and she would be retired from 27.11.1996. Officers,who were of a comparable grade had been granted extensions.But she was refused for no reason. The Board failed to submitto Court its decision. The Chairman of the Bank stated in hisaffidavit that the refusal to extend her services was done bonafide and unanimously after a careful evaluation of herapplication and the need of the Bank to increase the efficiencyof its Legal Department. This Court held that the Board failed toshow the Court that valid reasons did exist for the refusal togrant the extension, which was recommended by the corporatemanagement. Considering the question in issue the Courtstated that,
"… the Personnel Department recommended that thepetitioner’s service be extended fora period of one year witheffect from 27.11.1996 under exceptional circumstances. If,therefore, the Board of Directors thought otherwise, it shouldhave done so only for valid reasons and on reasonable
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grounds. Even though Public Administration Circular No.27/96 dated 30.06.1996 (P8), which was an amendment toChapter 5 of the Establishments Code, does not have anydirect application to the matter before us, it clearly sets outthe attitude of the State in regard to the question ofextension of service of public sector employees, when itstates that where extensions of service of State Employeesare refused “there should be sufficient reasons tosupport such decisions beyond doubt ” Even if the bankfailed to give the petitioner the reasons for the refusal of herapplication for an extension of service, it undoubtedlybecame obliged in law to provide such reasons to this Courtwhere the decision of the Board was challenged by thepetitioner, (emphasis added)”
The decision in Suranganie Marapana {supra) in my view isstrongly supportive of the view taken by several decisions thatsatisfactory reasons should be given for the decisions taken bya Committee. In fact Prof. Wade (Administrative Law, supra atp. 226-229) has clearly stated that,
“The whole tenor of the case law is that the duty to givereasons is a duty of decisive importance which cannotlawfully be disregarded.”
Having considered the necessity to adduce reasons foradministrative decisions, let me now turn to examine thequestion of legitimate expectation.
II. Legitimate expectationLearned President's Counsel for the Bank contended thatthe petitioner cannot be heard to say that her fundamentalrights guaranteed in terms of Article 12(1) of the Constitutionwas violated since she had a legitimate expectation to work forthe Bank beyond the age of 55 years, as, if there was any suchlegitimate expectation with regard to serving at the Bank, suchlegitimate expectation would have been to serve only upto theage of 55 years.
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This contention raises the basic issue as to how a legitimateexpectation could arise in a situation such as extensions ofservice.
In general terms legitimate expectation was based on theprinciple of procedural fairness and was closely related tohearings in conjunction with the rules of natural justice. As hasbeen pointed out by D. J. Galigan (Due Process and FairProcedures, A study of Administrative Procedure, 1996, pg.320),
“In one sense legitimate expectation is an extension of theidea of an interest. The duty of procedural fairness is owed,it has been said, when a person’s rights, interests, orlegitimate expectations are in issue.”
Discussing the concept of legitimate expectation, DavidFoulkes (Administrative Law, 8th Edition, Butterworths, 1995,pg. 290) has expressed the view that a promise or an
undertaking could give rise to a legitimate expectation. In hiswords:
“The right to a hearing, or to be consulted, or generally to putone’s case, may also arise out of the action of the authorityitself. This action may take one of two, or both forms; apromise (or a statement or undertaking) or a regularprocedure. Both the promise and the procedure arecapable of giving rise to what is called a legitimateexpectation, that is, an expectation of the kind which thecourts will enforce” (emphasis added).
An examination of the decisions pertaining to rights andprivileges in the field of Administrative Law, clearly indicatesthat since the decision of Lord Denning M.R., in Schmidt vSecretary of State for Home Affairs<14) at 149, the concept oflegitimate expectation had come into being to play an importantrole in the development of fairness. A long line of cases, sincethe decision in Schmidt (supra), had considered the concept oflegitimate expectation H v Gaming Board for Great Britain, ex.P. Benaim and Khaidai6), Mclnnes v Onslow – Fane <15> at 1520,Breen v Amalgamated Engineering Union<16'l at 175,
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Cinnamond v British Airports Authority^7) at 582, Ft v BarnsleyMetropolitan Borough Council, ex. P. HooAO0) at 1052.
Examining the decision in Schmidt (supra) and theAustralian decision in Attorney General for New South Wales vQu/n(10) at 1, P.P. Craig (Legitimate Expectations, A ConceptualAnalysis, L. Q.R. (1992) 108, pg. 79) had observed theapplicability of the concept of legitimate expectation inadministrative decisions. In his words,
“The foundation of the applicant’s procedural rights is notsimply that he has some legitimate expectation of naturaljustice or fairness. The basis of the applicant's claim toprotection is that he has a legitimate expectation of anultimate benefit which is in all the circumstances felt towarrant the protection of that procedure, in this instancehis continued presence in the country" (emphasis added).
Thus it is apparent that, as stated by David Foulkes, (supra)a promise or a regular procedure could give rise to a legitimateexpectation that could be enforced by Court. This position isclearly illustrated by the decisions in Attorney General of HongKong v Ng Tuen Shiui20) at 346 and Council of Civil ServiceUnions v Minister for the Civil Serviced) at 935.
In Ng Tuen Shiu, (supra), Ng was an illegal immigrant. Thegovernment had announced a policy of repatriating illegalimmigrants. According to the said policy each immigrant wouldbe interviewed and each case was treated ‘on its merits’ Ngwas interviewed and his removal was ordered.
Ng complained that at the interview he was not allowed toexplain the humanitarian grounds on which he would have beenallowed to stay, but was allowed only to answer the questionsput to him. It was stated that although Ng was given a hearing,it was not the hearing in effect, which was promised as whatwas promised was to give a hearing at which ‘mercy* could beargued. The Judicial Committee agreed that, on that narrowpoint, the government’s promise had not been implemented
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and that Ng's case had not been considered on its merits, andtherefore the removal order was quashed. Accordingly Ngsucceeded on the basis that he had a legitimate expectationthat he would be allowed to present his case arising out of thegovernment's promise that everyone affected would be allowedto do so.
In Council of Civil Service Unions (supra), the question oflegitimate expectation arose, not due to a promise as in Ng’scase (supra), but out of a regular practice, which couldreasonably be expected to continue. In this matter, the thenBritish Prime Minister Mrs. Margaret Thatcher, issued aninstruction that civil servants engaged on certain work would nolonger be permitted to be members of trade unions. The Houseof Lords held that those civil servants had a legitimateexpectation that they would be consulted before such actionwas taken, as it was an established practice for government toconsult civil servants before making significant changes to theirterms and conditions of service.
Having stated the applicability of legitimate expectation onthe grounds of a promise and a procedure, let me now turn toexamine the petitioner’s case in the light of the aforementionedposition.
It is not disputed that the 1st respondent Bank had beengranting extension of services to its employees beyond the ageof 55 years. It is also not disputed that the previous circulars,which dealt with the extensions of service did not refer to theage of retirement, but simply called for applications forextensions of service. For instance, clause 1 of Staff CircularNo. 286/97(2), which refers to ‘applications for extension ofservice' states that,
"As per instructions given in the above circulars, allemployees who wish to remain in service on the basis ofextension of service beyond 55 years of age should submittheir applications for extension to the relevant tineauthorities of the subject employee, six months prior to thedate of retirement
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However, by Staff Circular No. 323/2001, (P2) of October2001, amendments had been made to the existing policy forextension of service, which stated that the age of retirement ofthe Bank employees shall be 55 years. Although the age ofretirement was fixed at the age of 55 years, the Circular No.323/2001 had made provision for the grant of extensions. Infact it is pertinent to note that the said circular clearly refers tothe decision of the Board of Directors of the 1st respondentBank at their September 2001 meeting was to 'implement thepolicy and scheme for the extension of services' of theemployees of the Bank. The relevant paragraph of theaforesaid circular reads as follows:
"The Board of Directors at their meeting on September 28th2001 decided to implement the policy and scheme for theextension of services detailed as stated below:
The age of retirement of the Bank employees shall be 55years. However the General Manager/CEO and Manage-ment nominated by the CEO will grant extensions of theperiod of employment of a staff member for a specific periodbeyond 55 years of age and upto the age of 60 years at theirdiscretion taking into consideration the following factors
Accordingly, it is obvious that prior to the introduction of thenew policy regarding extensions of service, extensions wereconsidered and granted upto the age of 60 years and evenunder the new policy formulation, provision was made forextensions of service to be granted beyond the age 55 years.This position was incorporated in Clause 9 of Circular No.323/2001 (P2), where it was stated that,
"The new policy will be fully implemented with effect from 1stMarch 2002. In the meantime extensions will be consideredin the normal way….”
It is not disputed that the petitioner had joined the Bank wellbefore Circular No. 323/2001 came into effect. Moreover, hehad been given extensions of service more than on oneoccasion, in terms of the previous circulars.
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Learned Counsel for the petitioner strenuously contendedthat, although the age of retirement in the Bank was 55 yearsas was the case in most of the public sector establishments,this condition was subject to annual extensions being grantedupto the age of 60 years.
If one has to consider the petitioner’s position vis-a-vis theconcept of legitimate expectation, it is apparent that he comeswithin both the categories explained by David Foulkes (supra ),which contains a promise and a regular procedure, which inother words could be categorized as substantive andprocedural legitimate expectation.
It is to be noted that the doctrine of legitimate expectationhas been developed both in the context of reasonableness andin the context of natural justice. (Administrative Law, Prof.Wade, 9th Edition, pg, 500). In He Westminster City Council22)at 668, considering the question of legitimate expectation it wasstated that,
'The courts have developed a relatively novel doctrine in
public law that a duty of consultation may arise from alegitimate expectation of consultation aroused either by apromise or by an established practice of consultation
Considering the major aspects of legitimate expectation,Prof. Wade (supra, at pg. 372) has clearly indicated that,
“inconsistency of policy may amount to an abuse ofdiscretion, particularly when undertakings or statements ofintent are disregarded unfairly or contrary to the citizen'slegitimate expectation.”
Accordingly legitimate expectation must be given a broadinterpretation as it could be used in more than one way utilizingthe concept as the foundation for procedural fairness.Considering the concept of legitimate expectation being linkedto the concept of procedural fairness. P. P. Craig(Administrative Law, 3rd Edition, 1994, pg 294-296) stated thatthis could depend on three different ways. Firstly, it could be onthe basis of procedural rights for the purpose of protecting the
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applicant’s future interests. Secondly, the concept Is based onthe foundation of procedural rights. Thirdly, the legitimateexpectation could arise, where an applicant had relied on aparticular criteria, whereas the defendants had applied adifferent one.
Considering the aforementioned it is clearly evident that theBank had had a practice of granting extensions upto the age of60 years. As referred to earlier, the circulars, which wereintroduced prior to Circular No. 323/2001, had clear provisionsregarding such extensions, where the employees of the Bankhad continued upto the age of 60 years on extensions.Moreover, it is not disputed that even under the presentCircular, provision has been made for extensions beyond theage of 55 years. Although guide lines and/or criteria have beenlaid down for such extensions beyond the age of 55 years, thefact clearly remains that, in principle the Bank had accepted theposition that extensions would be considered beyond the age of55 years at least for a limited number of employees.
In such circumstances an employee of the Bank would,while knowing that he could retire at the age of 55 years, havea legitimate expectation to service upto the age of 60 years onextensions of his service and therefore it would not be correctto state that the legitimate expectation of an employee wouldbe to retire at the age of 55 years.
Having considered the aforementioned submissions let menow turn to examine the submissions made on the ground ofdiscretion and/or unequal treatment.
Discretion and/or unequal treatmentThe petitioner in paragraph 13 of his petition has set outseveral examples, where other officers were grantedextensions. Whilst some of the officers had received the 2ndextension, others had obtained the 4th or the 5th extensions ofservice.
Having considered the aforementioned aspects let me turn toexamine the aspects relating to equal treatment and discretion
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based decisions taken by the Bank and thereby the validity ot thedecisions that were taken without giving any reasons.
The petitioner’s complaint was that the refusal to grant her anextension of his service for a period of one year was arbitrary andunreasonable and violative of Article 12(1) of the Constitution forwhich this Court had granted leave to proceed under Article 12(1)of the Constitution. Article 12(1) of the Constitution, refers to theright to equality and reads as follows:
"All persons are equal before the law and are entitled to the
equal protection of the law”
The equal protection to all persons guaranteed by means ofconstitutional provisions, ensures that there would not be anydiscrimination between any two persons, who are similarly situated.However, this does not mean that there should not be any kind ofclassifications among a group of people. All classifications wouldnot become arbitrary and thereby invalid. What is necessary is that,such classification should be reasonable and is not based on anarbitrary decision. Therefore if the following conditions could besatisfied, such classifications would not become arbitrary orunreasonable classifications:
that the classification must be founded on an intelligibledifferentia, which distinguish persons that are grouped infrom others, who are left out of the group; and
that the differentia must bear a reasonable, or a rationalrelation to the objects and effects sought to be achieved{Ram Krishna Dafmia v Tendoikar)(23> at 538.
What is necessary for a justifiable decision is that equals shouldnot be treated unequally and the unequals should not be treatedequally and the only differentiation that could be justified is, whatcould be classified on an intelligible basis and with a close nexusto the objective of the classification. Accordingly it is evident that,those who are similarly circumstanced, should be treated similarly.
On a consideration of the circumstances of this application, it isnot disputed that all the officers referred to in the application, whowere either granted or refused extensions of service, belonged to
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the Bank. It is also not disputed that for all such employees theapplicable Circular relating to their extensions was the StaffCircular No. 323/2001 dated 12.10.2001 (P2). Accordingly it iscommon ground that the extensions of service were considered onthe basis of the provisions laid down in the aforementioned Circularto all the employees of the Bank without any reservations.Therefore regarding the extensions of service and the applicabilityof the Staff Circular No. 323/2001 (P2) there were no differentiationand all the employees of the Bank were grouped into one class. Insuch circumstances, it is apparent that there had been noclassification to distinguish employees and to group themseparately and therefore the Bank had regarded all of them asequals on the question of considering the employees, who hadcompleted 55 years of age for extensions. Accordingly, all suchapplicant employees would have to be considered equally andthere was no possibility for the petitioner to have been treated in amanner different to the treatment meted out to others, who were hisequals.
Having said that the next question that has to be answered isthe discretion that was vested with the Extensions of ServiceCommittee, which was empowered to decide on extensions ofservice of the employees. There is no doubt that in todays context,for efficiency and smooth functioning of departmentalmanagement, discretionary power has to be conferred onadministrative officers. However, such discretionary power cannotbe absolute or uncontrolled authority as such would be arbitraryand discriminatory, which would negate the equal protectionguaranteed in terms of Article 12(1) of the Constitution. It wouldtherefore be essential that a decision making authority exercises itsdiscretion taking into account relevant consideration on equalbasis. Examining the discretionary powers and stressing theimportance of the well-known House of Lords decision in Padfieldv Minister of Agriculture, Fisheries and Food ((1968) A. C. 997),Lord Denning M. R. in Breen v Amalgamated Engineering Union((1971) 2 Q. B. 175) stated that,
‘The discretion of a statutory body is never unfettered. It is a
discretion which is to be exercised according to law. That means
at least this: the statutory body must be guided by relevant
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considerations and not by irrelevant. If its decision is influencedby extraneous considerations which it ought not to have takeninto account, then the decision cannot stand. No matter that thestatutory body may have acted in good faith; nevertheless thedecision will be set aside. That is established by Padfield vMinister of Agriculture, Fisheries and Food, which is a landmarkin modern administrative law.”
Accordingly, although the Extensions of Service Committee wasgranted the authority to consider the extensions of service of theemployees of the Bank, they had to exercise their discretionaccording to law and undoubtedly having in mind the basicconcepts stipulated in terms of Article 12(1) of the Constitution.
The petitioner submitted that upon reaching 55 years of age, thepetitioner had preferred an application, which he had submitted tohis Supervising Officer for his consideration. The aforesaid officerhad recommended the petitioner’s application. Thus it appears thatthe officer, who was functioning in a superior as well as in asupervisory capacity had thought the petitioner was a person, whoshould be recommended for his extension of service for a furtheryear. As stated earlier, no reasons have been given for the refusalof the extension of service for the petitioner.
Clause 14(11) of the Staff Circular No. 323/2001 (P2) clearlystates that the Extensions of Service Committee has to ‘scrutinizeand recommend’ all applications on a ■case by case basis’.However, what has been produced before this Court does notindicate any kind of scrutiny and recommendations on a case bycase basis.
Thus considering the aforementioned factual position of thepetitioner’s case, it is obvious that the Extensions of ServiceCommittee had acted arbitrarily as well as unreasonably in relationto the application made by the petitioner.
There have been several cases pending before this Courtregarding extensions of service by the employees of the Bank. Aswas stated in W.P.A. Path/rana v The People’s Bank (supra,Bandaranayake, J-’s minority judgment), I am quite mindful of thecompetitive nature in the Banking sector and the efforts that have
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to be made in meeting with the challenges of the new millennium.However, there cannot be any dispute that the 1st respondent Bankis an Institution of the State. Therefore irrespective of thecompetitive nature in relation to their functions, the actions of theBank could be challenged in terms of the provisions pertaining tofundamental rights enshrined in the Constitution and therefore themanagement of the Bank will have to function having in mind suchguarantees that are enshrined in the constitution with regard tofundamental rights. Although the Bank undoubtedly should have itsfreedom to exercise its discretion in re-organizing their organizationand for that purpose to limit the grant of extensions of service, thishas to be carried out, without any infringement of the guaranteesenshrined in Article 12(1) of the Constitution. Article 12(1) of theConstitution, as pointed out earlier, deals with the right to equalityand therefore the Bank, being a State Institution should act withinthe four comers of the aforesaid constitutional provision. Theguarantee of equality before the law ensures that among equals thelaw should be equal and should be equally administered.
On a consideration of all the aforementioned circumstances, theonly conclusion that could be drawn is that the refusal of theextension of service was taken arbitrarily and unreasonably andtherefore I hold that the said refusal of the Bank to grant anextension of service to the petitioner is in violation of the petitioner’sfundamental right guaranteed in terms of Article 12(1) of theConstitution, I accordingly declare that the petitioner was entitled toan extension of service for a period of one year with effect from21.01.2004.
On a consideration of the totality of this matter, although therehad been a violation of the petitioner’s fundamental right in termsof Article 12(1) of the Constitution, it could not be possible for himto be given an extension of service since the petitioner has nowretired from the service of the Bank.
In the circumstances since the petitioner will not be granted anyextensions, I direct the 1st respondent Bank to pay to the petitionera sum of Rs. 50,000/- as compensation and costs. This amount tobe paid within one month from today.
Relief refused and compensation granted.