031-SLLR-SLLR-2005-V-2-SOMATUNGA-AND-OTHERS-vs-CEYLON-FERTILIZER-COMPANY-AND-OTHERS.pdf
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Sri Lanka Law Reports
(2005) 2 Sri L R.
SOMATUNGA AND OTHERSvs.CEYLON FERTILIZER COMPANYAND OTHERSCOURTOF APPEAL,
SRIPAVAN, JBASNAYAKE, JCA 2370/2004JUNE 27TH, 2005
Conversion of Public Corporations or Government owned business undertak-ings into Public Companies Act, 23 of 1987. Sec. 2(1)- Sec. 3(1) (e) – Compa-nies Act, No. 17 of 1982 – Former Employees becoming employees of the NewCompany – Right to ask for extension ? – Legitimate expectation – Contractualor Statutory right ?
The 1st Respondent Company was stablished under the provsions of Act 23of 1987 (Converstion Act) to take over the business of the Ceylon FertilizerCorporation. All employees who were not offered employment were grantedcompensation and employees of the corporation to whom employment wasoffered became employees of the company. The Respondent refused theapplication of these employees for extension of service after the statutory ageof retirement till they reached the age of 60.
CA
Somatunga and others vs. Ceylon Fertilizer Company Ltd.
and others (Sripavan J.)
167
The Petitioner sought a Writ of Certiorari to quash the decision refusing theextension.
HELD
The Act 23 of 1987 does not deal with the question of extension ofservice of employees of the company at all.
If the refusal to grant extension was in breach of the terms of employ-ment contract the proper remedy is an action for declaration for dam-ages.
The Petitioners have no legal right to insist on the first Respondent toextend their services on the basis of a right conferred by any statutoryprovisions nor the first Respondent under a statutory duty to extend thePetitioners Service.
Application for Writ of Certiorari
Cases referred to :
Chandradasa Vs. Wijayaratne (1982) 1 Sri LR 412
Trade Exchange (Ceylon) Limited Vs. Asian Hotels Corporation Ltd. (1981)1 Sr. LR 67
Sunil Cooray with G. Rodrigo for Petitioner
Nimal Weerakkody for 1st and 2nd Respondent
Y. J. W. Wijayatillake – DSG for 3rd, 4th and 5th Respondents
Cur.adv.vult
July 11, 2005
SRIPAVAN, J.The petitioners are employees of the first respondent company. It iscommon ground that the first respondent company was established underthe provisions of Conversion of Public Corporation of Government OwnedBusiness Undertakings into Public Compaines Act, No. 23 of 1987 totake over the business of the Ceylon Fertilizer Corporation. In terms ofSection 2 (1) of the said Act where the Cabinet of Ministers considers itnecessary that a company should be incorporated in order to take overthe functions of a Public Corporation, the Minister may in consultationwith the Minister-in-Charge of the subject of Finance, forward a memoran-
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Sri Lanka Law Reports
(2005) 2 Sri L. R.
dum and articles of Association to the Register of Compaines, togetherwith a direction to register such Public Corporation as a Public Companyunder the Companies Act, No. 17 of 1982. On receipt of such direction,the Registrar of Companies is mandated to publish an order in the Ga-zette declaring that a Public Company is incorporated and shall allot allthe shares into which the share capital of the Company is divided to theSecretary to the Treasury in his official capacity for and on behalf of thestate.
In .terms of Sec. 3(1 )(e) of the said Act all officers and servants of theCorporation who are not offered employment with the company shall beentitled to the payment of compensation. Thus the employees of the Cor-poration to whom employments is offered become the employees of theCompany. The petitioners’ substantial complaint was that the petitionersbeing employees of the company have a legitimate right and expectationto ask for extensions of service after the statutory age of retirement tillthey reach the age of sixty ; and the the decision of the first respondentboard refusing to grant extension was ultra vires and unreasonable. Ac-cordingly, the petitioners seek to quash by writ of certiorari the lettersmarked P8(a), P9(a), P9(j), P10(a) and P11(a) whereby the extensionswere refused.
At the hearing, learned Counsel for the first respondent raised an objec-tion that the impugned orders were not made in the exercise of any statu-tory power but was one made in pursuarce of purely contractual rights.No doubt the company was established under Act, No. 23 of 1987. Butthe question is when the first respondent hoard refused extension did it doso in the exercise of any statuory power ? The Act does not deal with thequestion of extension of service of employees of the company at all. If therefusal to grant extension of service was in breach of the terms of theemployment contract, the proper remedy is an action for declaration fordamages. A similar sentiment was expressd by Thambiah, J in Chandradasl/s. Wijeyaratn&'K
CA
Somatunga and others vs. Ceylon fertilizer Company Ltd.
and others (Sripavan J.)
169
It may be relevant to consider the case of Trade Exchange (Ceylon)Limited l/s. Asian Hotels Corporation Limitecf2) where a three-judge benchof the Supreme Court held that the action of a-public commercial com-pany incorporated under the Companies Ordinance, although its capital.,was mostly contributed by the Government and was controlled by theGovernment, is a separate juristic person and its actions are not subjectto judicial review in an application for a writ of certiorari, Sharvananda, J(as he then was) at page 76 observed as follows :
“The actitivites of private persons, whether natural or juristic, areoutside the bounds of administrative law. A public commercial com-pany like the respondent, incorporated under the Companies Ordinancein which the Government or a Government sponsored Corporation holdsshares, controlling or otherwise, is not a public body whose decisions,made in the course of its business, can be reviewed by this court byway of writ.”
Moreover, the petitioners have no legal right to insist on the first respon-dent to extend their services on the basis of a right conferred by anystatutory provision. Nor the first respondent is under a statutory duty toextend the petitioners’ services. Thus, the petitioner’s application for reliefby certiorari must fail. Accordingly, the court does not see any justifiableground to extend the interim orders. The interim orders issued by thiscourt on 11.01.2005 and 19.01.2005 are not extended any further.
Basnayake, J-1 agree,
Application dismissed.