Sri Lanka Law Reports
(2006) 1 Sri L R.
PUTTALAM CEMENT COMPANY LIMITEDv&
MUTUKIMARANA AND ANOTHERSUPREME COURT,
BANDARANAYAKE, J. ANDWEERASEKERA, J.
SC(AP) NO. 11/98H.C. CHILAW NO. 8/97L.T. CHILAW NO. 21/0277/887th JUNE AND 1st JULY, 1999
Incorporation of a Public Company under section 2(1)(ii) of the Conversion ofPublic Corporations or Government Owned Business Undertakings into Pub-lic Companies Act, No. 23 of 1987, to take over the functions of a public corpo-ration or part of the corporation, specified in the incorporation order – Whetherin view of section 3(2)(e) of the Act, Labour Tribunal proceedings which werepending in the High Court on the date of the incorporation of the new companymay be continued – Interpretation of statutes harmoniously for avoiding conflictbetween different parts.
The appellant company being a part of the 2nd respondent (Sri Lanka CementCorporation) was registered as a company in terms of section 2(2)(ii) of theConversion of Public Corporation or Government Owned Business Undertak-ings into Public Companies Act, No. 23 of 1987. What property, liabilities etc.,of the corporation vest in the new company are set out in section 3(1 )(a) to (c)and section 3(2)(a) to (g). Section 3(2)(e) refers to actions and proceedingsinstituted against the original corporation and pending on the relevant date(date of incorporation of the new company) and “specified in the order madeunder section 2(2)”
On the date of the order under section 2(2), there was pending before the Courtof Appeal (thereafter referred to the High Court) an appeal made by the 1strespondent against the 2nd respondent Cement Corporation seeking to varyan order of the Labour Tribunal. The High Court noticed the new company toappear before the court to be added as the employer in place of the 3rd re-spondent Cement Corporation, to continue proceedings against the new com-pany (the appellant).
Held:The appellant should be substituted as the employer in proceedingsbefore the High Court notwithstanding a preliminary objection by the
SC Puttalam Cement Company Limited vs. Mutukimarana and Another 55
appellant company that it could not be added as a party since theLabour Tribunal proceedings had not been “specified” in the incorpo-ration order under section 2(2) of the Act.
The words of a section of a statute should be interpreted harmoniouslyto avoid conflict between two provisions of an enactment on a properconstruction thereof.
Section 2(2) which enables incorporation of a new company of a corpo-ration or a part of a corporation and the relevant provision of section3(1) and 3(2) do not necessarily require that proceedings pending onthe date of incorporation must be specified in the incorporation order.The question is whether the words of section 3(2)(e) “and specified inthe order made under section 2(2)” refer to action or proceeding or tothe “corporation". That is not free from ambiguity.
Case referred to:
1. Distilleries Company of Sri Lanka Ltd. vs. Fernando SC (AP) 36/94SCM 20.03.95 (not followed)
APPEAL against the Order of the High Court.
Tilak Marapana, PC. with Anil Tittaweia and A. Rodrigo for appellant.
Daya Guruge with Samantha Vithana for respondents
Cur. adv. vult.
July 24,1999JUDGMENT OF COURT
Special leave to Appeal was granted by this Court on the followingquestions:
* Whether an action instituted against a Public Corporation whosefunctions have been taken over by a company incorporated under theprovisions of the Conversion of Public Corporations or Government ownedBusiness Undertakings into Public Companies Act, No. 23 of 1987,which action is not specified in the order made under S. 2(2) of the saidAct, could be deemed to be an action initiated against the Company.
Sri Lanka Law Reports
(2006) 1 Sri L R.
The 1 st Applicant-Respondent (1 st Respondent) was an employee ofthe 2nd Employer-Respondent (2nd Respondent) until his services wereterminated on 31.07.88. The 1 st Respondent made an application to theLabour Tribunal dated 17.08.1988 seeking relief in terms of section 31 (b)of the Industrial Disputes Act, No. 43 of 1950, against the 2nd Respondent.After inquiry, the Labour Tribunal, Negombo, dismissed the application ofthe 1st Respondent by order dated 15.03.1991. The 1st Respondentappealed to the Court of Appeal on or about 08.04.1991 against the orderof the Labour Tribunal. On or about 09.01.1997, the Court of Appeal referredthat appeal to the Provincial High Court of the North Western Provinceholden in Chilaw. When this matter came up before the Provincial HighCourt, Chilaw, it was submitted on behalf of the 2nd Respondent that byoperation of the provisions of the Conversion of Public Corporations orGovernment Owned Business Undertakings into Public Companies Act(Conversion Act) No. 23 of 1987, the Appellant should be substituted asEmployer instead of the 2nd Respondent and the 2nd Respondent shouldbe discharged from the proceedings, Pursuant to this application, theProvincial High Court Chilaw issued notice on the Appellant to appearbefore the High Court on 12.05.1997. The Appellant took a preliminaryobjection that it should not be substituted as the Employer because theschedule of the order made under Section 2 of the Conversion Act publishedin the Gazette Extraordinary No. 770/1 dated 07.06.1993, fails to refer tothe Labour Tribunal case filed by the 1 st Respondent. The objection wasoverruled and the appellant has now appealed to this Court from that order.The order made under Section 2 reads:
“J. C. de Alwis, Registrar of Companies, acting underparagraph (ii) of sub section (2) of Section 2 of the Conversion of PublicCorporations of Government Owned Business Undertakings into PublicCompanies Act, No. 23 of 1987, do by this order declare that a PublicCompany is incorporated in the name of “Puttalam Cement CompanyLimited” to take over the functions of such part of the Public Corporationas specified in the Schedule hereto.
The Puttalam Cement Works of the Sri Lanka Cement Corporationsituated in Puttalam being a part of Sri lanka Cement Corporation (havingits registered office at 130, W. A. D. Ramanayake Mawatha, Colombo
Puttalam Cement Company Limited vs. Mutukimarana and Another
2 established by the order made under Section 2 of the State IndustrialCorporations Act, No. 49 of 1957 and published in Gazette ExtraordinaryNo. 11,634 of January, 21959 as amended by order made under Section2 of that Act, and published in the Gazette Extraordinary No. 75/5 ofFebruary, 11,1980.
It is the submission of learned Counsel for the appellant Company, thatthe action filed by the 1 st Respondent in the Labour Tribunal, cannot bedeemed to be an action instituted against the appellant company in termsof sub section 3(2) of the Conversion Act. He submitted that for the deemingprovisions to be applicable the action against the corporation mustnecessarily be pending immediately preceding the relevant date andspecified in the order made under Section 2(2).
It would be convenient, in order to consider this submission, if we setdown here so much of the wording of Sections 2 and 3 of the ConversionAct, omitting therefrom references to Government Owned BusinessUndertakings and other matters not relevant to our decision in this case.After such truncation those sections would read as follows
2(1) Where the Cabinet of Ministers considers it necessary that acompany should be incorporated for the purpose of taking overthe functions of any public corporation or part thereof, the Ministerin charge of the subject of finance, forward a memorandum andarticles of association to the Registrar of Companies, togetherwith a direction to such Registrar to register such publicCorporation, or any part thereof a public company under theCompanies Act, No. 17 of 1982.
Notwithstanding any other provisions of the Companies Act,No. 17 of 1982, on receipt of a direction under sub section (1)the Registrar of Companies shall –
(Re certificate of incorporation-omitted)
Publish an order in the Gazette declaring that a publiccompany is incorporated in the name specified in the orderto take over the functions of the Public Corporation specifiedin the order or such part of the corporation as specifiedtherein.
Sri Lanka Law Reports
(2006) 1 Sri L R.
(Re allotment of shares – omitted)
(Re stamp duty – omitted)
3 (1) with effect from the date of publication of the order undersubsection (2) of section 2, in the Gazette (in this section referredto as “the relevant date”) the corporation, or part thereof, as thecase may be, to which the order relates shall vest absolutely inthe company referred to in that order.
(definitions of “Corporations” and “business undertaking” omitted)
(2) Without prejudice to the generality of sub section (1)
Re property – omitted
Re liabilities – omitted
Re officers and servants – omitted
Re contracts and agreements – omitted
all actions and proceedings instituted by or against –
a. the corporation; or
and pending on the day immediately preceding the relevant date, andspecified in the order made under Section 2(2) shall deemed to be actionsand proceedings instituted by or against the company;
(Re profits and income – omitted)
(Re losses – omitted)
The words and pending on the date immediately proceeding the relevantdate “unambiguously refer to “all actions and proceedings." The questionthen is whether the words “and specified in the order made under Section2(2) in (e) refer to actions or proceedings” or to “ the corporation” That isnot free from ambiguity. A plain reading of the sub section seems to suggest,that the words by their collocation, refer to actions and proceedings “Thatinterpretation commended itself to Kulatunga, J. in the case of DistilleriesCompany of Sri Lanka Ltd., v. Fernando.(,) Words in a section of statutecannot be interpreted in isolation; they must be given an interpretation toread in harmony with other provisions of the statute. Obviously, there is no
Puttalam Cement Company Limited us. Mutukimarana and Another
provisions in subsection 2(2) to enable the Registrar of Companies tospecify in the order made thereunder “action and proceedings" on theother hand, the sub-section mandates him to specify in the order “ thepublic corporation" either in whole or in part. Reference to a “part’1 of acorporation in sub-section 3(2) (a) would have been meaningless, as apart of a corporation is not a legal person by or against whom actions andproceedings could have possibly been instituted and pending as at therelevant date. It is to be noted that the words and specified in the ordermade under Section 2(2) appear in sub sections 3(2) (a), (b) and (d) aswell. If we were to agree with the interpretation advanced by learned Counselfor the appellant Company, we will render those words^uperfluous andmeaningless not only in sub-section 3(2) (e) but also in sub section (a) (b)and (d) as well.
Discussing the nature of conflicting provisions in a statute and howinconsistency is to be avoided, Bindra has stated that,
“A section of a statute should, if possible, be construed so that theremay be no repugnancy or inconsistency between its different portionsor members. If it is possible to avoid a conflict between the two provisionsof an enactment on a proper construction thereof, then it is the duty ofthe court to so construe them, that they are in harmony with eachother. A construction that involves reading two successive sentencesas flatly contradicting each other must be avoided if possible; all partsof a statue, should if possible be construed so as to be consistent withthe other “Bindra’s Interpretation of Statutes, Revised by Mahmoodand Yudhishthira, 7th Edition, 1984, pg. 565)
On a consideration of the aforesaid matters, we hold that the Appellantshould be substituted as the Employer in the proceedings before the HighCourt of the North Western Province holden in Chilaw, We affirm the ordermade by the High Court and dismiss the appeal. In all the circumstanceswe make no order as to costs.
DHEERARATNE. J., BANDARANAYAKA J„ WEERASEKARA J.Appeal dismissed.
PUTTALAM CEMENT COMPANY LIMITED vs. MUTUKIMARANA AND ANOTHER