IN THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA In the matter of an Appeal in terms of Article 154(P)of the Constitution read with Section 31 D D of the Industrial Disputes Act (as amended) and Section 9 of the High Court of the Provinces (Special Provisions) Act No. 19 od 1990 S.C. Appeal: 201/2017 W.P.R.P. Devanagala SC/(Spl.) L A / 89 /2017 No: 26/135, HC/AMP/LT/APP/432/2016 Kumudugama, LT No. 44/610/2012 Dadayamtalawa APPLICANT -VS-

Sarvodaya Economic Enterprises Development Services (Guarantee) Ltd (SEEDS)

No. 45, Rawatawatte Road, Moratuwa RESPONDENT AND W.P.R.P. Devanagala No: 26/135, Kumudugama, Dadayamtalawa APPLICANT – APPELLANT -VS-

Sarvodaya Economic Enterprises Development Services (Guarantee) Ltd (SEEDS)

No. 45, Rawatawatte Road, Moratuwa RESPONDENT – RESPONDENT AND NOW BETWEEN Sarvodaya Economic Enterprises Development Services (Guarantee) Ltd (SEEDS)

No. 45, Rawatawatte Road, Moratuwa RESPONDENT-RESPONDENT -

APPELLANT -VS-

W.P.R.P. Devanagala No: 26/135, Kumudugama, Dadayamtalawa APPLICANT-APPELLANT-

RESPONDENT BEFORE: P. PADMAN SURASENA, J K.K. WICKREMASINGHE, J MAHINDA SAMAYAWARDHENA, J COUNSEL: Malik Hannan for the Respondent- Respondent – Appellant instructed by R.A.N.C. Gunatilake V. Puvitharan PC with Subhani Kalugamage and Anuja Rasanayakham for the Appellant-Appellant-Respondent WRITTEN SUBMISSIONS: By Respondent-Respondent-Appellant on

04.12.2017 and 13.01.2022 By Applicant-Appellant-Respondent on

14.05.2018 ARGUED ON: 01.11.2021 DECIDED ON: 05.12.2023 K. KUMUDINI WICKREMASINGHE, J This is an appeal from the judgement of the High Court of the Eastern Province (holden in Ampara) dated 08.03.2017. The crux of this matter centers around the questions of law based on which leave to appeal was granted, which are;

● Did the Honourable Judge of the Provincial High Court of the Eastern Province (holden in Ampara) err in law in varying the Labour Tribunal Order by awarding 04 years arrears of salary amounting to Rupees Seven Hundred and Twenty-Four Thousand Eight Hundred and Sixteen (Rs. 724,816,00) as well as Rupees Two Million (Rs. 2,000,000.00) as compensation?

● Did the Honourable Judge of the Provincial High Court of the Eastern Province (holden in Ampara) err in law in awarding 04 years arrears of salary as well a compensation when the Applicant-Appellant-Respondent has not placed any substantial evidence with regard to actual financial loss caused to the Appellant-Appellant-Respondent as a result of termination of his service by the Respondent-Respondent-Appellant?

Prior to addressing these questions of law, I will briefly set out the factual background of the case as follows:

The Applicant-Appellant-Respondent was employed at Sarvodya Economic Enterprises Development Services (Guarantee) LTD (SEEDS)- the Respondent- Respondent-Appellant, as a Divisional Project Manager. At the time of the alleged incident and when he was interdicted, he was the Deputy District Manager of the organisation and had served the Appellant- institution for more than 12 years. On the recommendation of the societies and the field officers, the SEEDS granted loans to four borrowers for a number of purposes. When the repayment of the loan was defaulted, it was discovered that either there were no persons as such or the borrowers mentioned in the application did not receive any loans from SEEDS. According to the Appellant, the field officers had committed fraud on the institution.

The Respondent-Employee was charged with the following

1. Issuing loans to 4 applicants without inspection and qualification of such applicants

2. Bad Supervision

3. For Financial loss to the institution as a result of not taking steps to recover the dues and non-payment of dues following the loan to the borrowers.

After an Inquiry, the Respondent-Employee‟s services were terminated on 17.01.2012. The Applicant-Appellant-Respondent instituted a Labour Tribunal proceedings against the Respondent-Respondent-Appellant on the 16^th of July 2012 for termin