Nadaraja Ltd. v. Krishnadasan
1975 Present: Walgampaya, J., Sirimane, J., and Sharvananda, J.
NADARAJA LIMITED (in Voluntary Liquidation) and 3
others, Petitioners, and N. KRISHNADASAN and 3 others.
S. C. 461/72—Application for a Mandate in the nature of a Writof Certiorari under Section 42 of the Courts Ordinance
industrial Disputes Act—Order made under Section 4—WhetherMinister has power to revoke such order, once duly made—Applicability of Section 18 of Interpretation Ordinance to suchorder—Sections 16, 17, 18, 19, 20, 31, 36(5), 40(1)(b). 40(1) (/),40(1) (tn) of said Act.
( 1) Where the Minister has duly made an order under Section4(1) of the Industrial Disputes Act referring an industrial disputefor settlement by arbitration he has no power to revoke the saidorder of reference.
(2) The rule of construction embodied in Sec‘ion 18 of theInterpretation Ordinance was not intended to apply to an orderof reference made under Section 4 of the Industrial Dispu es Actand cannot be invoked to revoke or rescind the order of referencemade in terms of sction 4 of the said Act.
SHARVANANDA, J.—Nadaraja Ltd. v. Krishnadasan
A PPLICATION for a Writ of Certiorari.
N. Satyendra, with P- Sunthar cling am. for the Petitioners.
S. W. B. Wadugodapitiya, Senior State Counsel, with M. H. M-Ashroff, Slate Counsel for the 3rd and 4th Respondents.
Cur. adv. vult.
December 4, 1975. Sharvananda, J.—
The question that arises on this application for a Mandate inthe nature of a Writ of Certiorari is whether the Minister hasexpress or implied power to cancel, withdraw, revoke or super-sede an order of reference once he had referred an industrialdispute for adjudication under section 4(1) of the IndustrialDisputes Act.
By order dated 13.6.70, published in the Government Gazetteof 25th June, 1970, the Minister of Labour (hereinafter referredto as the Minister), acting in terms of section 4(1) of the Indus-trial Disputes Act, referred the industrial dispute that existedbetween the United Workers’ Union and Messrs. Nadarajah Ltd.,the proprietor of the Nadarajah Press, in respect of the mattersspecified in the statement of the Commissioner of Labour whichaccompained that order, to Mr. G. E. Amarasing’ne for settle-ment by arbitration and appointed him the Arbitrator in termsof that section. The said order was in terms of section 16 of theAct, accompained by a statement prepared by the Commissionerof Labour setting out each of the matters which, to hisknowledge, was in dispute between the parties.
The said Mr. Amarasinghe accepted this appointment asArbitrator and commenced proceedings upon the aforesaid orderof reference. The proceedings were assigned No. A 892 and theArbitrator, in terms of Regulation 21 of the Industrial DisputesRegulations, called upon the parties to transmit their respectivestatements setting out their case in regard to the matters indispute. After the parties had complied with this requirement,he fixed the hearing of the dispute for 28th July, 1970. On thatday, the hearing was postponed for 15.8.70. When the matterwas taken up for hearing on 15.8.70, the 2nd respondent Unionapplied for a postponement on the following ground, which isrecorded as follows : —
Mr. Mallawaratchi (on behalf of the Union) :
“ I wish to bring to your notice that this matter is to berevoked. Already the order has been made and we wereexpecting the letter about three days ago. Actually, for this
SBAF.VAKANDA, J.—Nadaraja Ltd. v. Krishnadasan257
reason, our Union did not make arrangements for thismorning. Anyway, the letter should have come, and weexpect it will come in a day or two, to revoke this. Orderhas been made. I think, therefore, if Your Honour couldpostpone this, it is alright.”
The petitioner Company stated that it had no objection to apostponement if the Trade Union was not ready, but stated thatit would not acquiesce in the position that the Minister hadpower to revoke the reference once proceedings had commenced.The Union’s application for a postponement was allowed andthe hearing was again postponed for 16.9.70.
In the meantime, the Minister, by further order dated 25.8.70published in the Gazette of 4.9.70, revoked his earlier orderdated 13.6.70, made under section 4(1) of the Industrial DisputesAct, referring the said dispute for settlement by arbitration byMr. G. E. Amarasinghe. No reason for the purported revocationwas given. All that the further order chose to clarify was :
“ And whereas it is now deemed that the said order
(dated 13.6.70) be revoked, I Minister of Labour, .
do hereby revoke the said order and further make orderthat no proceedings be taken upon the said order dated13.6.70 ”. '
Thereafter, the Minister, by order dated 24.9.70 published inthe Gazette of 2nd October, 1970, purported to refer the samedispute to another Arbitrator, namely, the 1st respondent,Mr. N. Krishnadasan, and the latter proceeded to call upon theparties afresh to submit their respective statements. The freshproceedings before the 1st respondent were assigned No. A. 918.When the matter was taken up for hearing on 11.11.70, thepetitioner Company raised a preliminary objection to thehearing of the dispute by the 1st respondent on the ground thatthe Minister had no power to re-refer the dispute to the 1strespondent. Without making any order on the preliminaryquestion as to his jurisdiction to hear the matter, the 1strespondent proceeded to hear the parties, not only on thematters in dispute between them as set out in the Commis-sioner’s statement but also on additional matters raised by theUnion, and finally made the award which has been challenged'respecting its validity and regularity in these proceedings. Theobjection raised, in limine, before this Court by Counsel for thepetitioner was that the 1st respondent had no power or jurisdic-tion to entertain, hear, determine or make an award in respectof the reference purported to be made to him by the Ministerunder section 4(1) of the Industrial Disputes Act. If the
S [1 AliVAJNANDA, J.—Nadaraja Ltd. v. Krishnadagan
reference to the 1st respondent is not warranted by law, the1st respondent had no legal authority to determine the disputeand make the impugned award, and the award would be anullity.
Mr. Satyendra, Counsel for the petitioner Company, submittedthat it was not competent for the Minister to supersede theearlier order of reference dated 13.6.76 made to Mr. G- E.Amarasinghe, and, consequently, the second reference dated24.9.70 made to Mr. Krishnadasan, the 1st respondent, wasultra vires the Minister and invalid in law. In this connection,he strongly relied upon the judgment of the Supreme Court ofIndia in the case of The State of Bihar v. D. N. Ganguli (A.I.R.1958, S.C. 1018).
The primary question is whether the Minister has any powerto revoke a reference that he has, in terms of section 4 of theIndustrial Disputes Act, duly made. The Act makes no expressprovision whatsoever in respect of revocation. Can such powerof revocation be implied in the scheme of the Act ? Counselfor the State contended that the power of revocation is in anyevent referable to section 18 of the Interpretation Ordinance.
Section 4 of the Act confers powers on the Minister to refer,by an order in writing, an industrial dispute, if he is of theopinion that the industrial dispute is a minor dispute, forsettlement by arbitration to an Arbitrator appointed by him.The order of reference is an administrative act of the Minis-ter who has to form an opinion as to the factual existence orapprehension of an industrial dispute.—Aislaby Estate Ltd. v.Weerasehera (77 N.L.R. 241 at 253). Once he has made the orderof reference in terms of section 4, the Arbitrator appointed byhim becomes seized of the dispute and he is charged by section17 “to make all such inquiries into the dispute as he mayconsider necessary, hear such evidence as may be tendered bythe parties to the dispute and thereafter make such award asmay appear to him just and equitable ”. This provision stressesthat after the reference by the Minister, the Arbitrator alonecan exercise the jurisdiction in respect of the dispute until theproceedings culminate in his award. The Minister, on makingthe reference, becomes functus. The Arbitrator takes over andcontinues to function for the purpose of making an award andis in control of the proceedings. In this connexion, section 16authorises him to admit, consider and decide any other matterwhich is shown to his satisfaction to have been a matter indispute between the parties prior to the date of the order ofreference, provided that such matter arises out of or is con-nected with a matter specified in the statement prepared bythe Commissioner. Section 36 (5) of the Act supplements this
S HAK VANANDA, J.—Nadaraja Ltd. v. Krishnadaian
power. The provisions of sections 16 and 17 of the Act cannotbe reconciled with the power claimed by the Minister tosupersede, cancel or withdraw the reference. There are otherprovisions which repel any such suggestion of such powerbeing retained by the Minister. Sections 18, 19 and 20 deal withthe award of the Arbitrator and speak of incidents, attributesand tenure of the award made by the Arbitrator. Thesesections read with section 17 can refer only to the award ofthe Arbitrator appointed in terms of section 4 of the Act. Healone is competent to make the award which can have legalconsequences in relation to the industrial dispute that had beenreferred for arbitration.
Further, the provisions of section 31 of the Act militateagainst the contention of State Counsel. These provisions wouldbe superfluous if the Minister is impliedly vested with thepower to revoke any reference as and when he chooses. Expressenactment of such provisions dealing with vacancies as theyoccur in the Industrial Court tend to show that the Ministeris not vested with the inherent power to create vacancies andfill them up as and when he pleases. Section 31 contemplatesactual instances of vacancies occuring in the Industrial Courtby supervening events. That section does not provide for vacan-cies arising as a result of the Minister revoking, withoutreasonable cause, the appointment of any member of thatCourt-
Thus, according to the scheme of the Act, the Minister doesnot come into the picture once he had made a reference undersection 4(1), and he cannot frustrate such reference on secondthoughts. That Arbitrator proceeds with the reference withoutinterference and directions from the Minister. Once he hasacquired jurisdiction over the dispute between the parties, theMinister cannot divest him of that jurisdiction. Situations mayhowever arise necessitating a second reference if the Arbitratordeclines, resigns, dies or becomes incapable of performing hisfunctions, or leaves Sri Lanka under circumstanies showing thathe will probably not return at an early date. Strictly speaking,in such an event there is no occasion to withdraw or supersedeany reference from the first Arbitrator; the first Arbitratorhas ceased to function and there is a frustration of the reference,and so there is in existence no Arbitrator who could act onsuch reference.
The question of the State withdrawing or superseding a refer-ence was raised in relation to similar provis;ons in theIndustrial Disputes Act in India in the case of The State of
Bihar V. D. N. Ganguli (1958 A.I.R. S.C. 1018). The SupremeCourt of India, after examination of the provisions and
Sil AH VAX AND A, J.—Nadaraja Ltd. v. Kriahnadasan
scheme of the Act, rejected the claim of the State. There alsothe State relied On section 21 of the General Clauses Act of1897, corresponding to section 18 of our Interpretation Ordi-nance. In the course of a lucid judgment, Gajendragadhar J.stated: “It is well settled that this section (section 21 of theGeneral Clauses Act) embodies a rule of construction, and thequestion whether or not it applies to the provisions of a parti-cular statute would depend on the subject matter, context andthe effect of the relevant provisions of the said statute. In otherwords, it would be necessary to examine carefully the schemeof the Act, its object and all its relevant and material provisionsbefore deciding whether by the application of the rule ofconstruction enunciated by section 21, the appellant’s conten-tion is justified that the power to cancel the reference
can be said to vest in the appropriate Government by necessaryimplication. If we come to the conclusion that the context andeffect of the relevant provisions is repugnant to the applicationof the said rule of construction, the appellant is not entitledto invoke the assistance of the said section. We must, there-fore, proceed to examine the relevant provisions of the Actitself.” After examining the relevant provisions, the SupremeCourt held that during the continuance of the reference pro-ceedings, it is the Tribunal which is seized of the dispute, andit is only the Tribunal which can exercise jurisdiction in respectof it. The Court further held that the scheme of the relevantprovisions (corresponding to the provisions of our Act) would,prima facie, seem to be inconsistent with any power in theappropriate Government to cancel the reference and thatsection 21 of the General Clauses Act cannot be invoked.Following this judgment of the Supreme Court, the HighCourt of Calcutta held in Shellac Industries Ltd. v. The Work-men (A.I.R. 1966 Cal. 371) that the Industrial Tribunal continuesto exist till an award is made and consequently there is noprovision in the State Government to abolish a Tribunal whena dispute is referred to it till it makes its award.
In this connection, it is relevant to refer to certain otherprovisions of the Act which make it an offence:(a) for the
parties, during the pendency of the reference proceedings, tocommence, continue or participate in a lock-out or strike afteran industrial dispute in that industry has been referred forsettlement by arbitration to an Arbitrator, but before anaward in respect of such dispute has been made (section 40(1)(b) (m) ); or (b) for the employer, during the pendency of anarbitration but before an award is made, to terminate the servi-ces of, or punish in any other way, without the approval iniwriting of such Arbitrator, any workman concerned in suchdispute, or alter, to the prejudice of any workman concerned
SHAK.VAN.ANT> A, J.—Nadaraja Ltd. v. Krishnadasan
in such dispute, his conditions of service applicable to suchworkman immediately before the reference of such dispute tosuch Arbitrator (section 40 (1) (f) ). These provisions are intend-ed to preserve the status quo during the pendency of arbitrationproceedings. If the power to cancel or supersede the referencemade under section 4 is held to be implied, the proceedingsbefore the Arbitrator can be terminated and superseded atany stage and obligations and liabilities incurred by the partiesduring the pendency of the proceedings would be materiallyaffected and proceedings before the Arbitrator would be renderedwholly ineffective or nugatory by the exercise of such power bythe Minister.
Apart from these provisions of the Act, on general principlesit would appear that the order of reference made by theMinister under section 4 would not fall within the scope andambit of ‘orders’ contemplated by section 18 of the Interpreta-tion Ordinance. That section reads as follows : —
“Where any enactment, whether passed before or afterthe commencement of this Ordinance, confers power on anyauthority to issue any proclamation, or make any order ornotification, any proclamation, order, or notification so issuedor made may be at any time amended, varied, rescinded orrevoked by the same authority and in the same manner, andsubject to the like consent and conditions, if any, by or inwhich or subject to which such proclamation, order, or notifi-cation may be issued or made. ”
Though the order of reference under section 4 may beadministrative in motivation, yet the order, according to thescheme of the Act, is designed to eventuate by a quasi-judicialprocess, in an award potent with consequences to the parties.The Arbitrator has to act judicially in making the ultimateaward which is binding on the parties. His function is judicialin the sense that he has to hear the parties, decide facts andapply rules with judicial impartiality. His decision is as objec-tive as that of any Court of Law, though ultimately he makessuch award as may appear to him just and equitable. In thiscontext, it is necessary to remember that it is a cardinal prin-ciple of administration of justice that justice should not onlybe done but appear to be done and that the Judge should actwithout fear or favour. The contention that the Minister hasan unfettered power to cancel his order of reference infringesthis paramount principle and impairs judicial independence. Ittends to make the Arbitrator a creature of the Minister or of •interested parties. The statement made by the Union represen-tative, quoted earlier in support of his application for apostponement of the proceedings before Mr. Amarasinghe on
SHARVANANDA, J.—Naaaraja Ltd. v. Krishnadasan
15.8.70, is not only intriguing, but is also illustrative of the evilinvolved in the acceptance of the proposition that section 18of the Interpretation Ordinance is available to the Minister.Behind the back of the employer and the Arbitrator, moveswere going on for the revocation of the reference for no osten-sible reason. Exercise of judicial functions impartially by .anArbitrator is rendered difficult on the rule of constructionenunciated in section 18 of the Interpretation Ordinance. Thehypothesis of an Arbitrator’s tenure of his office under thereference of being dependent on the pleasure of the appointingauthority is repugnant to all notions of justice. Such a situationis not conducive to the proper discharge of his judicialfunctions by the Arbitrator. Risk of interference is inherentin the construction contended for by the State. The power torevoke the reference claimed for the Minister is an absolutepower. If permitted, it can be exercised at any stage of thearbitration proceedings so as to frustrate the proceedings. It isnot as if the exercise of the power is subject to any condition.If the Legislature had intended to confer on the Minister theabsolute power to revoke an order made under section 4, theLegislature would have made specific provision in that behalfand would have prescribed appropriate limitations to theexercise of such power. In my view, the rule of constructionembodied in section 18 of the Interpretation Ordinance was notintended to apply to the order of reference made under section4 of the Industrial Disputes Act and cannot be invoked to revokeor rescind the order of reference made in terms of the provi-sions of the said section 4. The context militates against suchpower and construction.
It is to be noted that the bona fides of the Minister insuperseding the first reference and making the second referenceis not canvassed, nor that of Mr. Krishnadasan, the secondArbitrator, in accepting the second reference. But, the bonafides of the Minister is not relevant for determining the ambitof the powers under section 4 of the Act. If, on a proper cons-truction of the various provisions of the Industrial DisputesAct, the claim of the Minister is found to be inconsistent withthe scheme of the Act, the bona fides of the Minister cannotvalidate the impugned revocation or supersession.
Senior State Counsel appearing for the Minister brought tothe notice of Court the unreported judgment of the SupremeCourt in the case of Lever Brothers Ltd. v. Krishnadasan andothers (S.C. Aooln. No. 166 of 1967. S.C. Min. dated 5.7.68)where the question arose as to whether the Minister’s orderof reference under section 4(2) of the Industrial Disputes Acthad been va'id'v revoked. The Court there said that thoughthere is no particular section in the Industrial Disputes Act
SHARVANANOA, J.—Nadaraja Ltd. v. Krishnadasan
which, in terms, empowers a revocation of an order of refe-rence, there was nothing in the Act which prohibits theauthority making the order from revoking it. The Court referredto section 18 of the Interpretation Ordinance and observed:“In our view, the word ‘order’ in section 18 includes an execu-tive order, such as the one made under section 4(2) of Chap.131, and not merely orders which have legislative effect.” Inthat case, the Arbitrator had upheld a preliminary objectionraised by the Employer, prior to the judgment of the PrivyCouncil in The United Engineering Workers’ Union v. Deva-nayagam (69 N.L.R. 289), that the reference made by the Minis-ter under section 4(2) was bad in law- In view of theArbitrator’s order, the Minister revoked the order of referencemade by him. After having induced the Arbitrator to upholdhis tenuous objection that the reference was bad in law, theEmployer, after the Privy Council judgment, sought a Writ ofMandamus against the Arbitrator directing him to proceedwith the reference ignoring the Minister’s order of revoca-tion. It is to be noted that in the circumstances of that case,the revocation by the Minister had the effect of merelydeclaring the reference as non-existent as the order had beendeclared null and void by the Arbitrator. According to thethen current conception of judicial powers, prior to the PrivyCouncil judgment referred to above, it was thought that therewas no valid reference by the Minister. Hence, on the facts ofthat case, the question whether the Minister was entitled torevoke a valid reference did not actually arise for decision. Thegranting of a writ of Mandamus being a discretionary remedy,the Court refused the application mainly on the ground of thepetitioner’s conduct. The observation made by the Court, in thecourse of its judgment on the present issue, was obiter only.The question was not fully examined in all its aspects.
Counsel for the petitioners cited the judgment of theSupreme Court in S.C. 291/63, S.C. Min. 23.7.64, where it heldthat a Minister having referred an industrial dispute forsettlement under section 4(2) cannot thereafter refer the sameindustrial dispute to another Industrial Court for settlement.It reasoned that “where an industrial dispute arises, there is anoccasion for the Minister to exercise his power under section4(2) of the Industrial Disputes Act by referring that industrialdispute to an Industrial Court for settlement, and if such poweris so exercised, the occasion for exercising such power in respectof that industrial dispute is exhausted, and the Ministercannot again exercise such power in respect of the industrialdispute'’ and held that the second Industrial Court had no
PATHiRANA, J.—Ebert v. The Additional Public Truelee
jurisdiction to inquire into the industrial dispute between thepetitioner and the 4th respondent. This judgment did notconsider the impact of section 18 of the Interpretation Ordi-nance on the question in issue and did not examine thevarious relevant provisions of the Industrial Disputes Act inorder to arrive at a considered conclusion.
For the reasons set out above, I am of the opinion that thepurported revocation, of the original reference to Mr. G. E.Amarasinghe and the re-reference to Mr. N. Krishnadasan areinvalid in law as being in excess of the powers of the Minister.The 1st respondent had no jurisdiction to inquire into the saidreference and his award is null and void.
In view of my opinion on the question of jurisdiction of theMinister and of the 1st respondent, it is not necessary toconsider the other grounds urged by Counsel for the petitionersfor quashing the award made by the 1st respondent.
Accordingly, a Mandate in the nature of a Writ of Certiorariis issued quashing the proceedings held by the 1st respondentin A.918 and his award published in Gazette No. 10 dated 2ndJune, 1972. The petitioners’ application is allowed, but there willbe no order for costs.
Walgampaya, J.—I agree.
■S humane, J.—I agree
NADARAJA LIMITED (in Voluntary Liquidation ) and 3 others, Petitioners, and