SURANGANIE MARAPANA v. THE BANK OF CEYLON AND OTHERS

017-SLLR-SLLR-1997-V3-SURANGANIE-MARAPANA-v.-THE-BANK-OF-CEYLON-AND-OTHERS.pdf


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SURANGANIE MARAPANA
v.
THE BANK OF CEYLON AND OTHERS
SUPREME COURT.
DHEERARATNE, J.
WIJETUNGA, J. ANDANANDACOOMARASWAMY, J.
S.C. APPLICATION 749/96 (F.R.)
JUNE 17 AND 30,1997.
Fundamental Rights – Extension of Service – Employer's power to refuse anExtension – Duty to act fairly – Article 12( 1) of the Constitution.
The petitioner had an unblemished record of 25 years of service at the Bank ofCeyton. She was fully qualified and had received special training in Banking Lawand practice and allied subjects in London, Italy and Singapore. She was theChief Legal Office of the Bank from 1.11.88 during which period she hadenhanced the efficiency and streamlined the functions of the Legal Department.As she was to reach the age of 55 years on 27.11.96 she applied to the Bank on
for an extention of service for an initial period of one year. Her applicationwas recommended by the Personnel Department in its draft Board Minute, underexceptional circumstances. The Board of Directors took four months to decide onthe application and after lapse of a further month, the petitioner was informed on
that her application had been rejected and she would be retired from27.11.96. Officers who were of a comparable grade had been granted extentions.But she was refused for no reason. The Board failed to submit to Court itsdecision. The Chairman of the Bank stated in his affidavit that the refusal toextend her services was done bona fide and unanimously after a carefulevaluation of her application and the need of the Bank to increase the efficiencyof its Legal Department.
The Board failed to show the Court that valid reasons did exist for the refusal togrant the extension which was recommended by the corporate management.Instead, a veiled suggestion was made that the efficiency of the LegalDepartment was not up to expectations. This insinuation was baseless andunwarranted. Hence, the refusal to grant the extension of services sought wasarbitrary, capricious, unreasonable and unfair. It was also discriminatory andviolative of the petitioner's right to equal protection of the law under Article 12(1)of the Constitution.
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)157
Cases referred to:
Padfield v. Minister of Agriculture, Fisheries and Food (1968) A.C. 997.
Wijepala v. Jayawardene, S.C. Application 89/95 S.C. Minutes 30 June 1995.
Manage v. Kotakadeniya, 1997 1 SLR. 264.
Silva v. Upasena S.C. Application 472/96 S.C. Minutes 27 June 1997.
APPLICATION for relief for infringement of fundamental rights.
L. C. Seneviratne, P.C. with S. Mahenthiran for the petitioner.
E. D. Wickremanayake with L.V.P. Wettasinghe for 1st to 8th respondents.
Cur. adv. vult.
August 28,1997WIJETUNGA, J.
The petitioner who was the Chief Legal Officer of the 1strespondent ('the bank') complains of the violation of her fundamentalrights guaranteed by Articles 12(1) and 12(2) of the Constitution, byreason of the bank's refusal to grant her an extension of service for aninitial period of one year from 27.11.96, on reaching the age of 55years. Leave to proceed has been granted in respect of the allegedinfringement of Articles 12(1) and 12(2).
The petitioner is an Attorney-at-Law enrolled on 2.2.66 and is alsoa Solicitor of the United Kingdom. She joined the service of the bankas an Assistant Law Officer on 1.12.71 at the age of 30 years andwas confirmed in service on 1.12.72. She was promoted to the gradeof Senior Assistant Law Officer on 9.6.78 and as Legal Officeron 1.8.82. She became the Chief Legal Officer on 1.11.88, havingalready functioned as the head of the Legal Department since1986, upon the retirement of the officer holding that post. She hadacted for the Chief Legal Officer on several occasions even priorto 1986.
During her service at the Legal Department of the bank, she hadundergone training in Banking Law and Practice at Farrar & Co.,
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Solicitors in London in 1984, at the IDLI. Italy in 1990 and the EuroMoney Financial School in Singapore in 1992.
The Legal Department of the bank, the petitioner states, consistsof 33 Legal Officers and other support staff and also has provincialand branch legal units outside Colombo. In addition to beingresponsible for instituting legal action on behalf of the bank, the LegalDepartment has to advise the bank on all aspects of the working ofthe bank, particularly on changes in the law and its implications onbanking operations, on disciplinary and industrial relations, oninternational transactions, in particular in the Foreign CurrencyBanking Unit, the Treasury and the International Division, and on theBank Committees. It is also responsible for the training of the bankstaff on legal aspects of banking operations and the training of thelegal officers in their functions and duties in the Legal Departmentboth locally and abroad.
The petitioner further states that since she commenced her dutiesas Chief Legal Officer, she has been responsible for theestablishment and functioning of a number of schemes which havebeen set out in detail in paragraph 4(vi) of the petition.
She claims that during her period of service since December,1971, she has never been found wanting in the performance of herduties and has an unblemished record of service with the bank.
The petitioner says that she is entitled to apply for an extension ofservice on reaching the age of 55 years under Finance MinistryCircular No. MF/EB/100(1) dated 8.2.79 (P2). Although in terms of theagreement (Pt) dated 1.12.71 the petitioner was required to retirefrom the service of the bank on attaining the age of 55 years, theCircular (P2) aforesaid enables her to continue in service up to theage of 58 years.
As the petitioner was to reach the age of 55 years on 27.11.96, sheapplied to the bank through its General Manager, by letter dated24.5.96 (P6), for an extension of service for an initial period of oneyear. The bank, by letter dated 22.10.96 (P4), replied through itsGeneral Manager declining her request and intimated that it had
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)159
been decided to retire her from service from 27.11.96. No reason forsuch refusal was given.
She claims that it was the established practice of the bank to grantextensions of service to officers who sought such extensions onreaching the age of 55 years and has cited a number of instanceswhere such extensions have been granted, including those of officersof comparable rank in the bank’s service. In view of her unblemishedand extensive record of service and the aforesaid establishedpractice of the bank, she claims that she had a legitimate expectationthat her application would be favourably considered and theextension would be granted. As there were no valid or justifiablereasons for the Board of Directors to discriminate against her, shebelieves that the reason for such unequal and discriminatorytreatment accorded to her is based on political grounds in identifyingher as a supporter of the United National Party.
In this regard, she refers to an earlier instance in 1995 where theMinister for Livestock Development and Rural Industries appointedher as Chairperson of the Handicrafts Board by (P5), when theSri Lanka Freedom Party Lawyers’ Association sent petitions againstthe said appointment to the President, in her capacity as Minister ofFinance and the Ministry of Finance refused the secondment of thepetitioner to function as Chairperson of the said Board by (P6).
The Chairman of the Bank (2nd respondent) filed an affidavit dated
on behalf of himself and the 1st and 4th to 8th respondents.He stated that the 3rd respondent was out of the Island. He admitsthe fact of the Finance Ministry Circular (P2) and that the petitioner isin the category of a Deputy General Manager, but denies the otheraverments in paragraph six of the petition. It is his position that noreasons for refusing an extension of service need be given. Asregards the time taken to reply the petitioner’s request for anextension of service, he states that it was “because it took time tocarefully examine, evaluate and decide on her request".
Answering paragraph 11 of the petition where the petitioner gaveparticulars of eight officers, (two of whom were of a comparablegrade but had joined the bank’s service after the petitioner), who hadbeen granted extensions of service, the 2nd respondent states that
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“the applications for extension made by each of the severalemployees referred to therein were separately considered by theBoard of Directors and in each of the said cases the Board decidedthat there were exceptional circumstances warranting theextensions". He has annexed marked (2R6) (a) to (i) the memorandaaddressed to the Board of Directors in respect of each of the saidapplications and has drawn the attention of the Court to the fact thatall the said applications were considered and decided on the basisof a Board decision dated 13.2.89, in terms of which extension ofservice beyond the age of 55 years “would be considered by theBoard only under exceptional circumstances, depending on themerits of each case …“ The memorandum relating to the petitionerhas been produced marked (2R6) {j).
Further answering the averments in the petition, he states that theCircular (P2) which permitted extensions up to the age of 58 years onthe basis of annual extensions from the age of 55 years is not bindingon the bank, by reason of Finance Ministry Circular (2R1) (annexed tohis affidavit dated 24.11.96) which had ‘conveyed a decision madeby the Government to (a) exempt the Bank of Ceylon and thePeople’s Bank from the provisions of Part II of the Finance Act No. 38of 1971 and from all Treasury and Public Administration Circulars;and (b) grant these banks 'operational autonomy' to enable them toconduct their business on a commercial basis."
He further avers that “when the petitioner applied to be released toaccept an appointment as Chairperson of the Sri Lanka HandicraftsBoard for a period of three years, she opted out of serving as the ChiefLegal Officer with effect from May, 1995, which is even before her55th date of birth." While reiterating that the 1st to 8th respondentshad nothing to do with the refusal to release the petitioner from theservice of the bank to accept this appointment, he states that theyhad no political bias whatsoever for or against the petitioner. Heasserts that the bank had the right to terminate the services of thepetitioner at the age of 55 years after a bona fide consideration of herapplication for an extension of service. He claims that “the refusal toextend her service was done bona fide and unanimously after acareful evaluation of her application and the need of the bank toincrease the efficiency of its Legal Department at the present time”.
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijelunga, J.)161
In support of the bank’s contention that it has been exempted fromTreasury and Public Administration Circulars, the bank has by motiondated 25.6.97 tendered to Court, marked (2R7) (a) to (2R7) (d),copies of correspondence between the then General Manager of thebank and the Ministry of Finance. It appears that by (2R7) (b) dated4.5.92, clarification had been sought by the General Manager of thebank from the State Secretary for Finance in regard to theimplementation of Treasury Circular No. EA 02/BC/PB/01 onRestructuring of the Bank of Ceylon and the People's Bank (2R1),annexing thereto a list of 13 matters of the Personnel Departmentreferred to the Ministry of Finance for approval (2R7) (c). Item No. 1thereof relates to extension of service of employees beyond the ageof 55 years in the grade of Assistant General Managers and above.
The State Secretary for Finance, by his letter dated 20.5.92 (2R7)
, states that he had discussed this matter with the Secretary to theTreasury and that “the thirteen personnel items mentioned by youshould also be handled by the Board of Directors of your Bank otherthan item two where official travel by employees overseas forconferences, seminars, training etc. for which Ministry andGovernment approval should be obtained as at present,"
It would be relevant at this stage to consider the manner in whichthe Board of Directors had granted extensions of service beyond theage of 55 years. It appears from (2R6) (a) to (2R6) (i) that the practicewas for the Personnel Department to submit a memorandum to theBoard of Directors under the hands of the Asst. General Manager,Personnel and the Deputy General Manager, Human Resourcessetting out the relevant material for the consideration of the Board,together with the bio data submitted by the officers concerned.Where an extension of service was recommended, such amemorandum included a ‘draft minute' in these terms: "DRAFTMINUTE – Considered the Memorandum of the Assistant GeneralManager (Personnel) and the Deputy General Manager (HumanResources) dated (…) and decided that the Board will not exerciseits option to retire (…) from the Bank's service but to extend his/herservice for a further period of one year with effect from (…) underexceptional circumstances.”
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The memorandum submitted in respect of the petitioner by thePersonnel Department dated 12.9.96, (2R6) (j) also contains theidentical draft Board Minute.
In respect of an officer referred to in the memorandum (2R6) (d)dated 5.1.94, who had been granted three annual extensions ofservice beyond the age of 55 years, but the Personnel Departmentdid not recommend an extension of service beyond the age of 58years, the draft Board Minute was in the following terms: “Consideredthe memorandum of the Assistant General Manager (Personnel) andDeputy General Manager (Human Resources) dated 5th January1994 in regard to the extension of service of (name and designationof officer) and the Board decided to exercise its option to retire (nameof officer) from the Bank's service with effect from 07.03.1994."
It is significant that the Board of Directors had consistentlyfollowed the recommendations of the Personnel Department inexercising its option to grant or refuse an extension to any officer, andwas guided by the memorandum submitted to the Board and thedraft Board Minute appended thereto. But, in regard to the petitioner,for reasons best known to the Board of Directors, it had departedfrom this established practice and decided not to grant her anextension of service beyond the age of 55 years, (being the very firstextension applied for), though the extension had been recommendedby the Personnel Department in its draft Board Minute, underexceptional circumstances. The Board did not assign any reasonfor such an unusual step being taken.
Undoubtedly, the Board of Directors is not bound to accept eachand every recommendation of the Personnel Department and can inappropriate circumstances take a decision contrary to suchrecommendation. But, as stated in de Smith’s 'Judicial review ofadministrative action' 4th edition, page 238 et seq., it is a long settledprinciple governing the exercise of discretion that persons exercisingsuch power must act fairly. In general, it means a duty to observe therudiments of natural justice in the exercise of administrative functions.Not only should there be a fair evaluation of the matter before it, but italso imposes a duty to be impartial and not to discriminate onunacceptable grounds. Such power must necessarily be exercisedreasonably.
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)163
Although the 2nd respondent has produced certain decisions ofthe Board of Directors in support of some of the averments in hisaffidavit, curiously, the most vital decision of the Board pertaining tothis matter, viz. the grounds of refusal of an extension of service tothe petitioner, has not been produced, though the 2nd respondentstates that it was a decision unanimously reached after a carefulevaluation of the petitioner's application.
In that context, the sequence of events which culminated in therefusal of the extension assumes significance. The petitioner appliedto the bank through its General Manager of an extension of serviceon 24.5.96 (P3). The Board of Directors arrived at the decision torefuse the said application for extension of service four months lateron 27.9.96. The General Manager (8th respondent) took a further onemonth almost to convey that decision to the petitioner by letter dated
(P4), leaving the petitioner barely one month to retire fromthe bank, an institution which she had served for almost twenty fiveyears. This inordinate delay has not been satisfactorily explained bythe bank.
It is the petitioner’s position that it has been the establishedpractice of the bank to grant extensions of service to officers who hadreached the age of 55 years, if they applied for extensions. The bankdoes not deny, and the documents furnished support, the petitioner’sposition that extensions have in fact been granted to certain officerseven up to the 58th year. The bank seeks to justify the refusal bystating that the task of determining whether or not there areexceptional circumstances is entirely a matter for the Board ofDirectors.
But, the question arises whether, in a situation such as this, wherethe granting of an extension is in the discretion of the Board ofDirectors, it is obligatory for the Board to give reasons in the event ofits refusal to grant such extension; more so, in the circumstances ofthe present case where the Personnel Department had, in keepingwith the established practice, recommended the grant of theextension sought by the petitioner, as is evidenced by the draft BoardMinute (2R6) (j).
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What was the fresh material available to the Board to take acontrary view? If there was new material which justified the Board'sconclusion that there were no exceptional circumstances to grant thepetitioner an extension of service, from which source did the Boardobtain such material? If, on the other hand, the Board relied on thesame material as contained in the 'Memorandum to the Board', didthe Board assign any reasons for rejecting the recommendation ofthe Corporate Management? Why has the Board refrained fromsubmitting a copy of that decision to the Court? Despite a surfeit ofother material placed by the bank before Court, these questions stillremain unanswered!
The bank’s contention that the petitioner's appointment asChairperson of the Sri Lanka Handicrafts Board and the request forher release from the services of the bank on a secondment basisindicate that the petitioner herself thought that the bank coulddispense with her services even long before she reached the age ofretirement, without the bank's Legal Department suffering a serioushandicap, is without merit, The question here is not whether herservices were indispensable. Her selection for a higher appointmentunder another Ministry indicates that her services were sought aftereven elsewhere. If the Legal Department could have managedwithout any serious handicap in the event of her temporary release, itis indeed a tribute to the sound footing on which the petitioner hadplaced that Department. There is nothing unusual in an officeragreeing to accept an appointment on a secondment basis, whichwould better her prospects. But, what the Corporate Managementhad to consider was whether there were exceptional circumstancesto retain her services at the stage when she applied for an extension.
In fact, the bank has even granted an extension of service beyondthe age of 56 years to an officer of a grade comparable to that of thepetitioner (2R6) (a), though that officer had held an appointmentabroad, on no pay leave, for a considerable length of time. If that wasno bar to being granted an extension of service, one fails to see howthe petitioner's selection for appointment as Chairperson of theHandicrafts Board on secondment could have been viewed withdisfavour by the bank, in considering her application for an extensionof service.
SC Suranganie Mampana v. The Bank of Ceylon and Others (Wijetunga, J.)165
It was the submission of learned counsel for the petitioner that thecontention of the respondents that the bank was conferredautonomous powers by the Circular (2R1) cannot be sustained for thereason that a plain reading of that Circular makes it evident that itwas issued not for the purpose of granting the bank autonomouspowers in respect of its administration, but to grant autonomy inregard to its commercial activities. He relied inter alia on thedocuments produced in these proceedings relating to the question ofrelease of the petitioner to take up the post of Chairperson, Sri LankaHandicrafts Board, in support of this proposition. He submitted thatthe letter (2R4) from the 2nd respondent to the Secretary, Ministry ofFinance, which contains the decision of the bank to recommend therelease of the petitioner on a secondment basis, (2R5) by which the2nd respondent informs the petitioner that her release from the bank’sservice will be recommended to the Ministry, and the letter (P6) fromthe Deputy Secretary to the Treasury refusing the petitioner’s releaseto take up the aforesaid appointment, clearly show that the decisionto release the petitioner is one that is taken by the Ministry and not bythe Board, which only has the power to recommend. He thereforesubmitted that these factors alone militate against the contention thatthe Circular (2R1) vested unfettered powers in the Board of Directorswith regard to its administration. It was his position that (2R1) doesnot revoke the Circular (P2). nor can the Board decision (2R3)supercede that Circular and hence the attempts by the bank tobypass the Circular (P2) should be rejected.
However, the letter (2R7) (b) dated 4.5.92 by the then GeneralManager of the bank, together with the annexures (2R7) (a) to (2R7)
. and the response of the Ministry of Finance through the StateSecretary for Finance by his letter dated 20.5.92 (2R7) (a), dealspecifically with Treasury Circular No. EA/02/BC/PB/01, i.e. (2R1). In(2R7) (a) the State Secretary for Finance prefaces the decisionsconveyed thereby with the statement that he discussed this matterwith the Secretary to the Treasury, thus indicating that thosedecisions had been taken in consultation with the Secretary to theTreasury.
I do not consider it necessary for the purposes of this case todecide whether the Circular (P2) continued to apply to the bank orwhether the bank enjoyed unfettered autonomous powers under the
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Circular (2R1). The decision of this case rests on whether thepetitioner had a legitimate expectation of being granted anextension of service. The power to grant an extension under eitherCircular is discretionary, though the degree of discretion may vary.
The bank had, by its Board decision (2R3), recognised thatextensions of service beyond the age of 55 years would beconsidered, but only under exceptional circumstances, dependingon the merits of each case. So, the Court has to examine whetherthere had been a proper exercise of that discretion.
Having sought clarification and guidance with regard to (2R1) fromthe Ministry of Finance, the bank was obliged to follow theinstructions contained in (2R7) (a), which had the stamp of authorityof that Ministry, under whose purview the bank was. The positiontherefore was that, when the petitioner s application came to beconsidered by the Board, extensions of service beyond the age of 55years of employees in the grade of Assistant General Manager andabove were to be handled by the Board of Directors of the bank, andMinistry or Government approval was not necessary therefore.
That the petitioner had a legitimate expectation that her applicationfor an extension of service would be considered fairly and on itsmerits is beyond question. As stated above and as is evidenced bythe draft Board Minute (2R6) (j), the Personnel Departmentrecommended that the petitioner’s service be extended for a periodof one year with effect from 27.11.96 under exceptionalcircumstances. If, therefore, the Board of Directors thoughtotherwise, it should have done so only for valid reasons and onreasonable grounds. Even though Public Administration CircularNo. 27/96 dated 30.8.96 (P8), which was an amendment to Chapter 5of the Establishments Code, does not have any direct application tothe matter before us, it clearly sets out the attitude of the State inregard to the question of extension of service of public sectoremployees, when it states that where extensions of service of Stateemployees are refused ‘there should be sufficient reasons to supportsuch decisions beyond doubt." Even if the bank failed to give thepetitioner the reasons for the refusal of her application for anextension of service, it undoubtedly became obliged in law to providesuch reasons to this Court when the decision of the Board waschallenged by the petitioner.
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijelunga, J.)167
Wade & Forsyth: Administrative Law, 7th edition, dealing with theprinciple of reasonableness states at page 390 that it "has becomeone of the most active and conspicuous among the doctrines whichhave vitalised administrative law in recent years … Its contribution toadministrative law on the substantive side is equal to that of theprinciples of natural justice on the procedural side."
Having referred to a number of authorities relevant thereto, theauthors go on to say at page 391 that "the common theme of all theauthorities so far mentioned is that the notion of absolute orunfettered discretion is rejected. Statutory power conferred for publicpurposes is conferred as it were upon trust, not absolutely – that is tosay, it can validly be used only in the right and proper way andat page 393 that “there should in principle be no such thing asunreviewable administrative discretion, which should be just as mucha contradiction in terms as unfettered discretion."
On the aspect of abuse of discretion, the authors refer to the caseof Padfield v. Minister of Agriculture, Fisheries and Food"' and stateat page 413 that “there could scarcely be a better example thatstatutory powers, however permissive, must be used with scrupulousattention to their true purposes and for reasons which are relevantand proper." They further state that “the House of Lords also rejectedthe Crown s argument that the minister need have given no reasonsand that therefore such reasons as he volunteered to give could notbe criticised. Going still further, the House declared that if in such acase he refused to give any reasons, the court might have to assumethat he had no good reasons and was acting arbitrarily, In otherwords, the minister may not be able to disarm the court by takingrefuge in silence. In this way the court would have power to impose,in effect, an obligation to give reasons for discretionary decisions."
To my mind, these dicta apply with equal force to the decisions ofthe Board of Directors of the bank. As pointed out earlier, the bankhas failed to submit to this Court the decision of the Board pertainingto the refusal of an extension of service to the petitioner, despite thatdecision being challenged in these proceedings. The 2ndrespondent Chairman’s averment in paragraph 21 of his affidavitdated 10.12.96 that “the refusal to extend her services was done
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bona fide and unanimously after a careful evaluation of herapplication …" is no substitute for the Board decision, whichpresumably would have incorporated the reasons therefore. The bankwas duty bound to disclose the reasons to Court; and the bestevidence perhaps of the ‘careful evaluation’ to which the petitioner'sapplication had been subjected, (incidentally over a period of twomonths), would have been the minutes of such Board meeting. TheBoard having failed to discharge its obligation to give reasons, theCourt is well entitled to assume that it had no good reasons for suchdecision and was acting arbitrarily. Having regard to the unusual steptaken by the Board in acting contrary to the recommendation of theCorporate Management without assigning any reasons, such aninference becomes irresistible.
I would, in this context, refer to some of the recent decisions of thisCourt which have a bearing on the matter under consideration.
In Wijepala v. Jayawardenem where the petitioner who was theChief Valuer complained that his fundamental right under Article12(1) had been violated because the Executive did not permit him toenjoy an extension of service which had been duly granted to him,Fernando, J. held that the decision was arbitrary and capricious anddirected the State to permit the petitioner to function as Chief Valuerand also awarded him arrears of salary, compensation and costs.
In the course of that judgment, Fernando. J. stated inter alia asfollows: "The petitioner insisted, throughout, that established practiceunquestionably entitled him at least to his first extension, and thatthere was no relevant reason for the refusal of an extension …Although openness in administration makes it desirable that reasonsbe given for decisions of this kind, in this case I do not have todecide whether the failure to do so vitiated the decision. However,when this Court is required to review such a decision, if the petitionersucceeds in making out a prima facie case, then the failure to givereasons becomes crucial. If reasons are not disclosed, the inferencemay have to be drawn that this is because in fact there were noreasons – and so also, if reasons are suggested, they were in fact notthe reasons which actually influenced the decision in the first place."
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)169
Again, in Manage v. Kotakadeniya and others13*, where a PostMaster’s application for an extension of service upon reaching theage of 55 years was refused, Amerasinghe, J. having noted thatthough the Chief Post Master, Nugegoda and the DivisionalSuperintendent of Posts, Colombo had recommended the extensionof the petitioner’s service, the 1st respondent had retired thepetitioner from service, dealt with the circumstances relevant theretoand was of the view that “the refusal to extend the services of thepetitioner was not based on adequate grounds". Accordingly, hequashed the order of retirement made by the 1st respondent,observing that the petitioner had been the victim of unequal treatmentand discriminatory conduct, and awarded him compensation andcosts.
I cannot accept the ‘reasoning’ of the bank when it states in itswritten submissions that “the petitioner who was the Chief LegalOfficer knew that an extension of her service could be granted only ifthe Board of Directors decided that there existed exceptionalcircumstances warranting an extension. So, she and all others awareof this requirement must necessarily know that if an extension is notgranted it is because the Bank does not see exceptionalcircumstances. Her application for an extension of service containedan account of her performance. Therefore, the communication of aninability to extend her services necessarily carries with it theimplication that the Board of Directors think that there are no existingexceptional circumstances.”
This submission merely states the obvious. But, the matter in issueis ‘Why did the Board of Directors think so?1 The CorporateManagement, in the normal course, having considered thepetitioner’s application for an extension of service, hadrecommended to the Board that she be granted such extension. TheBoard had, in all the instances cited by the petitioner, followed therecommendation of the Corporate Management both for granting aswell as for refusing extensions of service. No material has beenplaced before us to the contrary by the bank. The departure from thisusual and accepted practice makes it obligatory for the Board to
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show the Court that valid reasons did exist for the refusal to grant theextension that was recommended by the Corporate Management.The failure to do so indicates either that there were no reasons, or novalid reasons for such refusal. The question at that stage is notwhether the Board had the power, which indeed it had, but how theBoard exercised that power in coming to the conclusion that therewere no exceptional circumstances, when the CorporateManagement had in no uncertain terms recommended otherwise.
For the Board to take a contrary view, surely there should havebeen cogent reasons which justified it, Administrative fairness andtransparency require that, in those circumstances, acontemporaneous record of the reasons and the material on whichsuch decision is based, be made; and when such a decision ischallenged in proceedings of this nature, a full and fair disclosure ofall the attendant circumstances be made to Court. In the matterbefore us, the bank has regrettably failed in its aforesaid duty.
Its feeble attempt to justify the decision makes the position evenworse. As if to add insult to injury, the Chairman of the bank in hisaffidavit dated 10.12.96 states in paragraph 21 that "the refusal toextend her services was done bona fide and unanimously after acareful evaluation of her application and the need of the Bank toincrease the efficiency of its Legal Department at the presenttime.” Implicit in the words in italics is the veiled suggestion that theefficiency of the Legal Department was not up to the expectations ofthe Board and its efficiency could not be increased so long as thepetitioner remained as Chief Legal Officer. But, not an iota ofevidence has been placed before Court in support of this suggestion,which thus remains a hollow statement.
But the petitioner, on the other hand, has by her counter affidavitdated 17.12,96, sought to refute this suggestion effectively. Shestates that the Board of Directors and the Management have notraised any query about the alleged lack of efficiency of the LegalDepartment and reiterates that she has had an unblemished recordof service and a successful career as the Chief Legal Officer. Quite
SCSuranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)171
unlike the 2nd respondent Chairman, she supports her position withcopies of memoranda addressed to the General Manager, marked(P13), (P14) and (P15), which demonstrate the initiative taken by herfrom about 1995 to enhance the efficiency and streamline thefunctions of the Legal Department. Those memoranda deal not onlywith the urgent problems relating to the cadre position of thatDepartment, (which she bemoans had not received dueconsideration of the Management, despite her requests for highpriority), but they also contain valuable suggestions as to how thebank’s customer service as well as its recovery procedures could beimproved. She has thereby amply demonstrated her concern forsafeguarding the bank's interests, while at the same time ensuringthat her staff remain contented, so that they would be motivated togive of their best to the bank.
Even when meeting the Board’s attempt to discredit her, she hasdisplayed a high degree of professionalism, befitting the office thatshe held. In fairness to the petitioner, it should be placed on recordthat the Chairman’s insinuations as regards her lack of efficiency arebaseless and unwarranted.
For the reasons aforesaid, I have no hesitation in holding that thedecision of the Board of Directors not to grant the extension ofservice sought by the petitioner was arbitrary, capricious,unreasonable and unfair. It was also undoubtedly discriminatory, asthe bank has not been evenhanded in the exercise of its discretion inrespect of the petitioner. The impugned decision is, therefore,violative of the petitioner's fundamental right to equality before the lawand the equal protection of the law, enshrined in Article 12(1) of theConstitution.
Learned President’s Counsel for the petitioner did not seriouslypress the allegation of discrimination on the ground of politicalopinion. In any event, the material placed by the petitioner is quiteinsufficient to come to a finding that the Board of Directors of thebank was biased against the petitioner on political grounds. I,therefore, hold that the petitioner has failed to establish the allegedinfringement of Article 12(2).
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Sri Lanka Law Reports
11997] 3 Sri L.R.
This brings me to the question of relief. The petitioner has beendeprived of her legitimate expectation of continuing in service as theChief Legal Officer of the bank, initially for a period of one year from
on attaining the age of 55 years. She was at the zenith ofher career in the Legal Department which she had served loyally andwithout any blemish for about 25 years. The bank has been unable toadduce any reason for rejecting the recommendation of theCorporate Management in this regard.
Learned counsel for the bank and its Board of Directors gave thefollowing undertaking to Court on 26.11.96, (when this matter cameup for an interim order seeking to restrain the respondents fromretiring the petitioner from service:-
“The respondents will not make a permanent appointment to thepost of Chief Legal Officer until the final determination of this case;also, in the event of the petitioner succeeding in the application,she will be restored to the post for a period of one year from
together with all backwages and other remuneration.Until the final determination of this case, the petitioner will notfunction in the post of Chief Legal Officer."
Learned President’s Counsel for the petitioner wished to add thefollowing:-
“That the foregoing is without prejudice to the rights of thepetitioner to make a further application for the extension of servicefrom 27.11.97."
The Court made order accordingly.
As the petitioner has succeeded in her application, I direct the 1strespondent to restore her to the post of Chief Legal Officer forthwith,for a period of one year from 27.11.96, together with all backwagesand other remuneration. This would be without prejudice to her rightto make an application for a further extension of service from
27.11.97.
SC Suranganie Marapana v. The Bank of Ceylon and Others (Wijetunga, J.)173
There is no dispute between the parties that the petitioner's allinclusive salary is Rs. 29,577.48 p.m. But, they seem to be atvariance as regards her entitlement to the Entertainment Allowance ofRs. 800.00, Managerial Allowance of Rs. 1745.12 and Fuel Allowanceof Rs. 10,000.00. As, in terms of the aforementioned undertaking, thepetitioner has to be restored to the post of Chief Legal Officer witheffect from 27.11.96 (for a period of one year) together with ‘allbackwages and other remuneration’, she is deemed to have heldthat post during the relevant period. Her inability to function in thepost was due to the bank deciding that she should not function asChief Legal Officer until the final determination of this case. In thosecircumstances, I am of the view that the term 'other remuneration', asused in the terms of settlement, encompasses all allowances payableto the holder of such post, irrespective of whether she functioned inthe post or not. I, therefore, hold that the petitioner is entitled to theEntertainment Allowance, Managerial Allowance and Fuel Allowanceas well, from 27.11.96 for a period of one year and direct the 1strespondent to pay her all such arrears of salary and allowancesforthwith.
Her restoration to the post with backwages and other remunerationdoes not in any way disentitle her to be adequately compensated forthe infringement of her fundamental right under Article 12(1). Havingregard to the above order for restoration to the post, with payment ofbackwages and other allowances, I direct the 1st respondent to paythe petitioner a sum of Rs. 100,000/- as compensation.
The petitioner will also be entitled to costs in a sum of Rs. 25,000/-payable by the 1st respondent.
DHEERARATNE, J. -1 agree.
ANANDACOOMARASWAMY, J. -1 agree.Relief granted.