Law-Report-part-12.pdf

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INDUSTRIAL DISPUTES ACT – Section 3(1)(d) – Of consent, parties to the 309
Industrial dispute refer the dispute for settlement by Arbitration to an
Arbitrator, for settlement by Arbitration. – Section 4(1) – Powers of the
Minister in regard to industrial disputes – Section 17(1) – Duties and
powers of Arbitrator – Section 36(4) – In the Conduct of Proceedings
in respect of an industrial dispute any industrial court, Labour Tribunal,
Arbitrator or the Commissioner is not bound by any provisions of the
Evidence Ordinance.
Brown & Company PLC V. Minister of Labour And 6 others
(Continued from Part 11)
VALIDITY OF A PROxY – objections raised belatedly after fve years, at the 328
very end of the proceedings – Failure to take jurisdictional objections.
Hatton National Bank Ltd.,V. M.S.Hebtulabhoy & Co. Limited And
Others

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 309
the rate of Rs. 35 per litre. It was alleged by the relevant
employees that the payment of such allowances were
necessary to ensure that they will not be worse off working
for Browns Engineering than when they worked for Brown &
Co.
Since the appeals made by the relevant employees to the
management of Browns Engineering and later to the Board of
Directors of Brown & Co., did not bring any favourable
results, the dispute was referred to the 2nd Respondent-
Respondent-Respondent Commissioner of Labour for
conciliation in or about January 1995. However, since this
too was unsuccessful, the 1st Respondent-Respondent-
Respondent Minister of Labour, having been satisfed that
an industrial dispute was in existence, by an order dated
30th May 1997, referred the dispute to the 3rd Respondent-
Respondent-Respondent Arbitrator for settlement by arbitra-
tion under Section 4(1) of the Industrial Disputes Act of 1956.
The statement of matters in dispute, which formed part of
the said order, set out several disputes involved primarily the
alleged withholding of offcial transport facilities, non-
payment of salaries and other ex-gratia payments and
professional fees, and the alleged non reimbursment of
certain medical bills, all of which arose after 1st June, 1992.
The Arbitrator commenced his inquiry into the matters
in dispute between the relevant employees, Brown & Co. and
Browns Engineering on 18th September 1997 and concluded
the inquiry on 25th October 2002. It is signifcant to note
that when the matter was inquired into by the Arbitrator,
despite notice being issued on Browns Engineering, it deliber-
ately refrained from participating in the said inquiry. On the
other hand, Brown & Co., which participated in the inquiry,

310 Sri Lanka Law Reports [2011] 1 SRI L.R.
took up the position that the grievance had arisen after the
relevant employees commenced working for Browns
Engineering, which it was submitted, was on a fresh contract
of employment, and that their contracts of services with
Brown & Co., had come to an end in January 1992.
At the conclusion of the inquiry, the Arbitrator concluded
that the relevant employees had continued to serve as
employees of Brown & Co. even after the transfer to Browns
Engineering, and that the original letters of appointment
issued to them had contemplated the possibility of such
transfers to or from “any of the company’s departments or
branches or associate or subsidiary companies, whether such
department, branch, or associate or subsidiary is or is not in
existence at the time of the commencement of this contract
of employment”. He specifcally determined that they had
not been issued with any letters of appointment by Browns
Engineering, and the letter of transfer dated 17th January
1992 served on them, did not in fact or in law, effect any
change in their status as employees of Brown & Co. He
also found that they were engaged in the work of Browns
Engineering for and on behalf of Brown & Co., and that they
had reasonable grounds to expect that the offcial transport
facilities provided to them by the latter will be continued
even after they were so transferred to Browns Engineering,
which expectation was strengthened by the fact that the said
facilities had been continued even after the date of the
transfer for fve more months.
The Arbitrator, taking all relevant evidence into consid-
eration, by his award dated 31st January 1996, which was
published in the Government Gazette bearing No. 1299/18
dated 1st August 2003, determined that the relevant employees

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 311
are each entitled to receive a sum of Rs. 270,000.00 as
travel expenses from 1st June 1992 up to the termination of
their services with effect from 23rd November 1994. He also
found that when the said amounts were added to the other
claims that the 4th, 5th and 6th Respondents had made, they
were entitled to receive respectively sums of Rs. 349,095.37,
Rs. 346,907.00 and Rs. 346,219.00 as total dues, and
further directed Brown & Co. to pay the said sums.
Being aggrieved by the said award of the Arbitrator,
Brown & Co. fled the writ application from which this appeal
arises, seeking a mandate in the nature of a writ of certiorari
quashing the said award and a writ of prohibition to prevent
the Commissioner of Labour from taking steps to enforce
the said award. Upon the conclusion of arguments, the
Court of Appeal by its judgment dated 30th November 2007,
dismissed the application of Brown & Co. and refused the
relief prayed for in the petition, without costs. This Court has
granted special leave to appeal, at the instance of Brown &
Co. against the said judgment of the Court of Appeal dated
30th November 2007 on the several substantive questions set
out in paragraph 29 of the petition of Appeal. These included
several questions as to the legality of the award against Brown
& Co. raised on the basis that the transfer from Brown & Co.
to Browns Engineering in effect constituted the termination
of the services of the relevant employees with the former and
the offer of employment by the latter with new and better
conditions of service, and the proper party against whom any
claim could be made, if at all, was Browns Engineering.
However, at the hearing before this Court, learned
President’s Counsel for the Appellant Brown & Co. indicated
that he would not press any of those grounds, and confned

312 Sri Lanka Law Reports [2011] 1 SRI L.R.
his submissions to the issue relating to the withholding of
offcial transport facilities, raised in paragraph 29(vi) of the
petition of appeal, which is quoted below in full:-
(vi) Did the Court of Appeal totally fail to take into
consideration that-
(a) the claim for cost of travelling was admittedly not
in the terms of the contract;
(b) the 4th to 6th Respondents (relevant employ-
ees) did not claim that they were entitled to a
company maintained vehicle, but only claimed
that the 7th Respondent (Brown Engineering) did
not provide a loan facility to purchase;
(c) the Arbitrator himself has stated in his award that
the provision of a vehicle by the company has not
been included as a term of the Letter of Appoint-
ment which is the Contract of Employment, and
therefore the provision of this facility cannot be
considered as obligatory on the employer; and
(d) in any event, the Arbitrator’s award granting the
cost of travelling for all 30 days of the month for
the entire period of 30 months is arbitrary and
capricious.
It is material to note that this particular dispute involving
the withholding of offcial transport facilities was set out in
the statement of matters in dispute, which formed part of the
order made by the Minister of Labour dated 30th May 1997
by which the reference to arbitration was made in terms of
Section 4(1) of the Industrial Disputes Act No. 43 of 1950, as
subsequently amended, in the following manner:-

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 313
“1 (a) whether the withholding of the transport facilities
of these three offcers (relevant employees), that is
vehicle maintained by the company and fuel from
the month of June 1992; and
(b) the withdrawal of the services of a driver to
Mr. S.N. Wickramasinghe (4th Respondent-
Respondent-Respondent) from the said date, is
justifed and if not, to what relief each of them is
entitled?”
The reasoning of the 3rd Respondent-Respondent-
Respondent Arbitrator contained in his Award dated 20th
June 2003 relating to the allowance of Rs. 270,000.00 for
travelling expenses incurred by the relevant employees after
1st June 1992 was as follows:-
“It is to be mentioned here that provision of a vehicle by
the company has not been included by the Company as
a term in the letter of appointment, which is the contract
of employment. Therefore the provision of this facility
cannot be considered as obligatory on the Employer. It
could rather be considered as a concession that had been
provided to the applicants. Therefore I would consider the
payment of Rs. 300/- as transport expenses per day for
the 30 days in question as a fair rate of calculation. I would
award Rs. 30x30x30 = Rs. 270,000/- as being a fair claim
in this regard to each Applicant.” (emphasis added)
Learned President’s Counsel for the Appellant Brown
& Co. submitted that the Arbitrator’s award was perverse,
insofar as the relevant employees had no legal entitle-
ment to offcial transport in terms of their letter of appoint-
ment. He also complained that the Arbitrator had awarded

314 Sri Lanka Law Reports [2011] 1 SRI L.R.
Rs. 270,000.00 to each of the relevant employees on the
basis that they had incurred an expense of Rs. 300 per day on
all 30 days of the month for the entire period of two and half
years (30 months), even though certain days included therein
may have been public holidays and Saturdays and Sundays,
which he submitted were non-working days. He submitted
that on an average, there were only 20 working days in each
of the months that fell within the relevant period, and that
the Arbitrator’s award was fundamentally fawed as it was
founded on the fallacious basis that the relevant employees
reported for work on all 30 days during the entire period of
30 months. He also contended that the Arbitrator had relied
upon the documents marked A, B and C which had been
tendered with the written submission of the relevant employees
after the conclusion of evidence, and to that extent, the said
award is irrational and was extraneous material.
Learned President’s Counsel for Brown & Co. submit-
ted that for all these reasons, the part of the award of the
Arbitrator relating to the offcial transport facilities ought to be
quashed on the ground of “Wednesbury Unreasonableness”,
which has acquired the well known tag from the recogni-
tion Green MR accorded to irrationality as a major ground
for judicial review of administrative action in the now
famous decision in Associated Provincial Picturehouses v.
Wednesbury Corporation(1). Lord Diplock in the later case
of Council of Civil Service Unions v Minister for the Civil
Service(2) identifed illegality, irrationality and procedural
impropriety as the three grounds for such review, and went
on to describe Wednesbury unreasonableness at 410 thus:-
“It applies to a decision which is so outrageous in its
defance of logic or accepted moral standards that no

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 315
sensible person who had applied his mind to the question
to be decided could have arrived at it.”
In my opinion, these words are applicable with equal
force to the discretionary powers exercised by an arbitra-
tor, such as the 3rd Respondent-Respondent-Respondent in
an industrial arbitration under Section 4(1) of the Industrial
Disputes Act. It is noteworthy that the said Act provides for
the resolution of Industrial Disputes in various ways. Such
disputes may be settled through collective agreements in
terms of Sections 5 to 10 of the said Act, and may also be
referred under Section 4(2) of the Act to an Industrial Court
for settlement. Industrial disputes may also be settled by
the Commissioner of Labour (which term includes a Labour
Offcer) by conciliation or any other means under Section 2
read with Section 3(1)(b) of the Act, or may be referred by
the Commissioner to an authorized offcer for settlement by
conciliation under Section 3(1)(c) read with Sections 11 to 15
of the Act. An Industrial dispute, irrespective of whether it
is a minor or major dispute, may be referred for arbitration
by the Commissioner with the consent of the parties to the
dispute as contemplated by Section 3(1)(d) read with sections
15A to 21 of the Industrial Disputes Act. In terms of Section
4(1) read with Section 15A to 21 of the said Act, the Minister
may also refer a minor industrial dispute for arbitration to a
Labour Tribunal or to an Arbitrator nominated by the Minister
“notwithstanding that the parties to such dispute or their
representatives do not consent to such reference”. The
dispute that arose between the relevant employees with
Brown & Co. and Browns Engineering, has been referred
for settlement by arbitration in terms of Section 4(1) of the
Industrial Disputes Act, and the parameters of judicial
review of such arbitration has been explored by this Court in

316 Sri Lanka Law Reports [2011] 1 SRI L.R.
decisions such as Thirunavakarasu v. Siriwardena and
others(3), and Brown & Co. Ltd., and Another v Ratnayake,
Arbitrator and Others(4). As this Court noted in Thiru-
navakarasu v. Siriwardena and others (supra), the
Arbitrator in such an industrial arbitration “has
much wider powers both as regards the scope of the
inquiry and the kind of orders he can make than an arbitra-
tor in the civil law” (per Wanasundera, J. at 191).
Arbitration under the Industrial Disputes Act is intended
to be even more liberal, informal and fexible than commercial
arbitration, primarily because the Arbitrator is empowered
to make an award which is “ just and equitable”. When an
industrial dispute has been referred under Section 3 (1)(d)
or Section 4(1) of the Industrial Disputes Act to an Arbitrator
for settlement by arbitration, Section 17(1) of the said Act
requires such Arbitrator to “make all such inquiries into the
dispute as he may consider necessary, hear such evidence as
may be tendered by the parties to the dispute, and thereafter
make such award as may appear to him just and equitable”.
In my view, the word “make” as used in the said provision,
has the effect of throwing the ball in to the Arbitrator’s court,
so to speak, and requires him to initiate what inquiries he
considers are necessary. The Arbitrator is not simply called
upon “to hold an inquiry”, where the ball would be in the
court of the parties to the dispute and, it would be left to
them to tender what evidence they consider necessary requir-
ing the arbitrator to be just a judge presiding over the inquiry,
the control and progress of which will be in the hands of
the parties themselves or their Counsel. What the Industrial
Disputes Act has done appears to me to be to substitute
in place of the rigid procedures of the law envisaged by the

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 317
“adversarial system”, a new and more fexible procedure,
which is in keeping with the fashion in which equity in
English law gave relief to the litigants from the rigidity of the
common law. The function of the arbitral power in relation
to industrial disputes is to ascertain and declare what in the
opinion of the Arbitrator ought to be the respective rights
and liabilities of the parties as they exist at the moment the
proceedings are instituted. His role is more inquisitorial, and
he has a duty to go in search for the evidence, and he is
not strictly required to follow the provisions of the Evidence
Ordinance in doing so. Just as much as the procedure before
the arbitrator is not governed by the rigid provisions of the
Evidence Ordinance, the procedure followed by him need not
be fettered by the rigidity of the law.
It is in this light that I proceed to examine the submissions
made by learned President’s Counsel for Brown & Co., learned
State Counsel who appeared for the Minister of Labour and
Commissioner General of Labour, and learned Counsel for
the relevant employees in the light of the evidence produced
in the course of the arbitration proceedings. As already noted,
the task of the Arbitrator was no doubt hindered by the fact
that Browns Engineering, which was presumably aware of
the material facts and circumstances, chose not to participate
in the inquiry and to present its case. Although, Brown &
Co. took up the position that it was not aware of the material
facts and circumstances relating to the dispute as it had
arisen after the transfer of the relevant employees to Browns
Engineering, a position which is not too convincing in the
light of the relationship between Browns & Co. and Browns
Engineering, the relevant employees have testifed before
the Arbitrator with respect to the material facts and circum-

318 Sri Lanka Law Reports [2011] 1 SRI L.R.
stances and they have been subjected to cross-examination
by learned President’s Counsel for Brown & Co.
Learned President’s Counsel for Brown & Co. has
submitted that the relevant employees had no legal entitlement
to offcial transport in terms of their letters of appointment,
which did not expressly provide that they were entitled to
the facility of a company vehicle for their offcial and/or
personal transportation. However, this submission completely
overlooks the facts that the jurisdiction of the Arbitrator is an
equitable one, and he is not constrained by the provisions of
the contract of employment. Furthermore, the Arbitrator had
in his award viewed the provision of a company vehicle as
a “concession” rather than a legal obligation, and the Court
of Appeal has in its impugned judgment, endorsed this view
and concluded that there was no error of law in the award
to justify the exercise of its supervisory jurisdiction. I see no
reason to differ from the approach of the Arbitrator and the
Court of Appeal.
It is clear from the testimony of the relevant employees
before the Arbitrator that they were each provided by Brown
& Co. with a company vehicle for not only offcial but also
personal travel, and that the vehicles so provided were in fact
sold to them within fve months of the transfer to Browns
Engineering. The 4th Respondent-Respondent-Respondent,
S.N. Wickramasinghe, who was the Assistant Works Manager
at the Ratmalana workshop has testifed that during the
period prior to 1st January 1992, he was provided with a
company owned petrol vehicle with a driver and 150 litres of
petrol (vide page 196 of the brief). He also produced in the
course of his testimony, a copy of the circular letter on the
subject of consumption of fuel dated 24th August 1989 marked

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 319
AB 19 signed by the Administration Manager of Brown & Co
(vide proceedings at page 207 and the document AB 19 at
page 613 of the brief), which is clear evidence of the fact that
a company vehicle had been provided to him and other senior
engineers in service for offcial and personal use. He further
testifed that just after the transfer to Browns Engineering,
the Management of that company “agreed to provide us with
better vehicles with the same facilities, but they did not keep
up the promise”. The testimony of this respondent as well as
the other two relevant employees clearly show that the facility
of a company vehicle had been extended to them even after
their transfer to Brown’s Engineering for fve more months
till the end of May 1992, which no doubt created a legitimate
expectation in their minds that the facility will be continued
throughout their service. It also appears from the testimony
of the 4th Respondent-Respondent-Respondent that in May
1992 Brown & Co. sold to them the offcial vehicles that had
been used by them, and the facility of providing a company
vehicle with a driver and fuel, was discontinued with effect
from June 1992. (page 196 of the brief).
The testimony of 6th Respondent-Respondent-Respon-
dent, S.T.N. Perera was substantially to the same effect, and
at pages 391 to 392 of the brief, he has stated that he too was
provided with a petrol vehicle for offcial and personal use.
He was specially questioned about the quantity of fuel he was
entitled to, and he responded in the following manner:-
Q- Who paid for the fuel?
A- The Company.
Q- Was there a limit on the fuel?
A- 150 Litres per month.

320 Sri Lanka Law Reports [2011] 1 SRI L.R.
Q- Were there any restrictive conditions attached to the
use of vehicles? Were you allowed to use for your
personal travelling?
A- Yes.
Q- If you use more than 150 Litres, then what will
happen?
A- I will have to pay for that.
It appears from the evidence of the 5th Respondent-
Respondent-Respondent, P.A.Q. Fernando, that unlike in the
case of the 4th and 6th Respondent-Respondent-Respondents,
he was provided with a diesel vehicle, and he has testifed
at page 418 of the brief that he was given Rs. 3000 worth of
diesel fuel per month, and that whenever he had to travel to
distant outstations like Nuwara Eliya, he was given an extra
fuel allowance.
It is also apparent from the evidence recorded by the
Arbitrator that the facility of a company driver was provided
only to S.N. Wickramasinghe, the 4th Respondent-Respon-
dent-Respondent, and the other two relevant employees
have been agitating that they too should be provided with
company drivers, or in the alternative an allowance suffcient
to hire a driver of their own. The divergence in the manner
in which the company vehicle was provided to each of the
relevant employees, is in fact refected in the different amounts
(set out in the table below) claimed by them as travelling
expenses on account of the said facility being discontinued
with effect from June, 1992. The amounts set out in the table
that appears below have been extracted from the claims of
the relevant employees which were tendered to the Arbitrator
along with their written submission marked A, B and C.

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 321
Respondent- Monthly Monthly Driver’s Total
Respondent rental for expense Salary claimed
(Rs)
Respondent the vehicle incurred per month
(Rs) for fuel (Rs)
for offcial
travel (Rs)
4th 15,000 5,250 3,000 23,250
5th 15,000 3,000 – 18,000
6th 10,000 3,500 – 13,500
Learned President’s Counsel has strongly objected to the
reliance placed by the Arbitrator on the documents marked
A, B and C, which were not marked in evidence and tendered
only with the written submissions of the relevant employees
to the Arbitrator. However, it is clear that these documents
were not intended to be evidence in the case, as learned Pres-
ident’s Counsel for Brown & Co. seems to contend, but were
merely summaries of their respective claims under different
heads which were helpful not only to the Arbitrator, but also
to the Court of Appeal and this Court in understanding their
case.
Learned President’s Counsel has also submitted that
the Arbitrator’s award was perverse, as a uniform sum of
Rs. 270,000.00 has been awarded to each of the relevant
employees on the basis that they had incurred an expense
of Rs. 300 per day on all 30 days of the month for the entire
period of two and half years (30 months), despite the differ-
ences in the facts and circumstances relating to the claims of
each relevant employee, and the fact that on an average, there
were only 20 working days in each of the months that fell
within the relevant period. There is no doubt that there was
some disparity in the nature of the transport facility extended

322 Sri Lanka Law Reports [2011] 1 SRI L.R.
by Brown & Co. and Browns Engineering to the relevant
employees, and it would appear that the Arbitrator has made
an award on the lower side, based on the comparatively lower
claim of the 6th Respondent-Respondent-Respondent, whose
total claim amounted to only Rs. 13,500.00 per month.
What has been awarded by the Arbitrator to all the relevant
employees was Rs. 9,000.00 per month (Rs. 300 x 30 = 9,000),
which is substantially lower than what has been claimed
by the relevant employees. In fact, the award at frst sight
appears to be grossly inadequate from the perspective of
the 4th Respondent-Respondent-Respondent, who was the
relevant employee who was actually provided with a company
driver, but he has chosen not to invoke the writ jurisdiction of
the Court of Appeal in this regard, and has suffered most by
reason of the long period of time to resolve the dispute.
I do not consider that there is any merit in the other
submission of learned President’s Counsel that any redress
afforded by the Arbitrator by his award should have been on
the basis of 20 working days per month. In the frst place,
there is clear evidence to the effect that the relevant employees
had to report for work of travel on duty even on non-work-
ing days, and in any event, the relevant employees have all
testifed that they were permitted to utilize the company
vehicles for their personal use as well, which is now the norm
in the private sector.
It is abundantly clear that the Arbitrator has relied on the
testimony of the said employees and the documents marked
in the course of their testimony, in arriving at his fndings.
The 4th Respondent-Respondent-Respondent, has produced
in evidence a copy of the circular letter on the subject of
consumption of fuel dated 24th August 1989 marked AB 19,

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 323
wherein it is specifcally stated that “it has been decided to
allocate a fxed quantity of fuel to each vehicle per month to
be used by the engineers” (vide proceedings at page 207 and
the document AB 19 at page 613 of the brief). He has testifed
that in his case the allocation was 150 litres of petrol per
month, which at the then prevailing price of petrol, which
learned President’s Counsel conceded was Rs. 35.00 per litre,
justifed the award of Rs.5,250 per month or Rs. 175 per day
as petrol allowance alone. I fnd that the rate of Rs. 300 per
day allowed by the arbitrator as travelling expenses was a
composite sum intended to cover three heads of expendi-
ture, namely, the rental value of the vehicles belonging to the
relevant employees which they had graciously made available
for their offcial travel from 1st June 1992, driver’s salary and
cost of fuel. It is relevant to note that with respect to each of
these heads the relevant employees had claimed much higher
sums in the documents tendered with the written submissions
marked A, B and C. Of course, it is in evidence that the 4th
Respondent-Respondent-Respondent, who used a diesel
vehicle, was paid only Rs. 3000.00 by Brown & Co. as the
monthly fuel allowance, which works out to only Rs. 100 per
month, and what the Arbitrator has endeavored to do was to
arrive at a reasonable and uniform fgure for the cost of fuel,
car rental and driver’s salary. In my considered opinion, even
if one takes Rs. 100 to be the daily cost of fuel, the award of
Rs. 300.00 per day as the travelling allowance, appears to
be very reasonable, as they had to use their own personal
vehicles and fuel for their offcial travel from 1st June 1992
and allowing an additional sum of Rs. 200 per day to cover
the car rental and driver’s salary is not excessive. The award
is certainly supported by evidence, and is very reasonable.
It is important not to lose sight of the fact that this
appeal arises from an application for the writ of certiorari to

324 Sri Lanka Law Reports [2011] 1 SRI L.R.
quash the award of the Arbitrator in an industrial arbitration,
and the Court of Appeal which refused the application in the
circumstances of this case did so in the exercise of its
supervisory jurisdiction and not in its capacity as an appellate
court. In this context, it is important to recall the following
words of Green MR in Provincial Picturehouses v. Wednesbury
Corporation (Supra), at 228 to 230:-
“As I have said, it must always be remembered that the
court is not a court of appeal. When discretion of this
kind is granted the law recognizes certain principles
upon which that discretion must be exercised, but within
the four corners of those principles the discretion, in my
opinion, is an absolute one and cannot be questioned in
any court of law. What then are those principles? They
are well understood. They are principles which the court
looks to in considering any question of discretion of this
kind. The exercise of such a discretion must be a real
exercise of the discretion. If, in the statute conferring the
discretion, there is to be found expressly or by implica-
tion matters which the authority exercising the discretion
ought to have regard to, then in exercising the discretion
it must have regard to those matters. Conversely, if the
nature of the subject matter and the general interpreta-
tion of the Act make it clear that certain matters would
not be germane to the matter in question, the authority
must disregard those irrelevant collateral matters……..
It is true the discretion must be exercised reasonably. Now
what does that mean? Lawyers familiar with the phrase-
ology commonly used in relation to exercise of statutory
discretions often use the word “unreasonable” in a rather
comprehensive sense. It has frequently been used and

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 325
is frequently used as a general description of the things
that must not be done. For instance, a person entrusted
with a discretion must, so to speak, direct himself
properly in law. He must call his own attention to the
matters which he is bound to consider. He must exclude
from his consideration matters which are irrelevant to
what he has to consider. If he does not obey those rules,
he may truly be said, and often is said, to be acting “un-
reasonably”………
It is true to say that, If a decision on a competent mat-
ter is so unreasonable that no reasonable authority could
ever have come to it, then the courts can interfere. That, I
think, is quite right; but to prove a case of that kind would
require something overwhelming, and, in this case, the
facts do not come anywhere near anything of that kind.
I think Mr. Gallop in the end agreed that his proposition
that the decision of the local authority can be upset if it
is proved to be unreasonable, really meant that it must
be proved to be unreasonable in the sense that the court
considers it to be a decision that no reasonable body
could have come to ……..” (emphasis added)
In all the circumstances of this case, I am of the con-
sidered opinion that the award is not vitiated by a failure to
consider relevant facts or taking into consideration irrelevant
facts and in particular does not suffer from what had been
termed “Wednesbury unreasonableness” and is certainly not
“outrageous” in the sense of the term used by Lord Diplock
in his dictum in Council of Civil Service Unions v Minister for
the Civil Service (supra) which has been quoted earlier in this
judgment.
For the aforesaid reasons, I hold that –

326 Sri Lanka Law Reports [2011] 1 SRI L.R.
(a) the Court of Appeal did not err in affrming the fnding of
the Arbitrator that although reimbursement of the cost
of travelling was not expressly provided for in the letter
of appointment issued to the relevant employees by
Brown & Co., it was just and equitable to award them an
allowance to meet the offcial travelling expenses, specially
considering the fact that they had been provided with a
company vehicle for their offcial and personal travel in
the past and the withholding of this facility had given rise
to an industrial dispute;
(b) the 4th to 6th Respondent-Respondent-Respondents had in
fact, claimed that they were entitled to a company main-
tained vehicle, and not merely a loan facility to purchase
a vehicle;
(c) the Court of Appeal has affrmed the fnding of the
Arbitrator that the provision of a company vehicle was not
obligatory but was a concession granted to the relevant
employees with respect to the continuation of which they
had a reasonable expectation and
(d) the Arbitrator’s award granting the cost of travelling for all
30 days of the month for the entire period of 30 months
was justifed and supported by evidence and was not
arbitrary or capricious.
I am of the opinion that the impugned award of the
Arbitrator is just and equitable, and there are no errors on
the face of the record to justify intervention by way of writ
of certiorari. However, before parting with this judgment, I
also wish to observe that the inquiry before the Arbitrator
which commenced on 18th September 1997 concluded on 25th
October 2002, and the lengthy proceeding and the consequent

Brown & Company PLC v. Minister of Labour And 6 others
SC (Saleem Marsoof, J.) 327
delay has defeated the objective of the reference for arbitra-
tion made by the relevant Minister in terms of Section 4(1) of
the Industrial Disputes Act. In particular, it is observed that
the proceedings before the Arbitrator very much resembled
court proceedings, and demonstrated a failure on the part of
the Arbitrator to take advantage of the equitable jurisdiction
conferred, and the fexibility in proceedings envisaged, by the
said Act, which has expressly provided in Section 36(4) that
the provisions of even the Evidence Ordinance will not apply
thereto. It is a great pity that due to the delay resulting from
the protracted arbitration proceedings and the subsequent
judicial proceedings, a minor dispute that arose in 1992 is
still unresolved after the lapse of nearly two decades.
I affrm the judgment of the Court of Appeal dated 30th
November 2007, and dismiss the appeal. In all the circum-
stances of this case, I award the 4th, 5th, and 6th Respondent-
Respondent-Respondents a sum of Rs. 35,000.00 each as
cost of this appeal.
J.A.N. DE SILVA, C.J. -I agree.
RATNAYAKE, J. – I agree.
Appeal dismissed.

328 Sri Lanka Law Reports [2011] 1 SRI L.R.
HATTON NATIONAL BANk LTD.,V. M.S.HEBTULABHOY & CO.
LIMITED AND OTHERS
SUPREME COURT
AMARATUNGA J.
IMAM, J. AND
SURESH CHANDRA, J.
S.C.APPEAL NO. 134 A/2009
C.H.C. CASE NO. 281/2001 (1)
SEPTEMBER, 17TH , 2010
Validity of a proxy – objections raised belatedly after fve years,
at the very end of the proceedings – Failure to take jurisdictional
objections.
The plaintiff fled action against the defendant on 19.11.2001 praying
for the recovery of a sum of Rs. 89.3 million together with interest there-
on. The case has proceeded up to the stage of fling of the answer and
thereafter much time has been spent on technical objections in connec-
tion with the fling of proxies by the plaintiff.
The substituted Plaintiff fled a petition and affdavit dated 10th
January 2008 along with a fresh proxy dated 9.1.2008 of the original
plaintiff signed by the Power of Attorney holder of the Plaintiff – bank
and prayed that the said proxy dated 9.1.2008 be accepted. The
defendant fled objections to the said application, the learned Judge
of the Commercial High Court delivered his order dated 8th July 2009
refusing to accept the said proxy dated 9.1.2008 on the ground that
the original Plaintiff was no longer a party in the case. Against order
substituted Plaintiff fled an application for leave to appeal to the
Supreme Court and the Supreme Court granted leave on the following
questions.
1. Has the learned High Court Judge erred in holding that the
substitution of the substituted Plaintiff Bank raised a legal bar to
the subsequent curing of any defect which may have existed in the
proxy fled by the original plaintiff bank;

Hatton National Bank Ltd.,V. M.S.Hebtulabhoy & Co. Limited And Others
SC (Suresh Chandra, J.) 329
2. Has the learned High Court Judge erred in failing to realize that
the substituted Plaintiff was entitled in law to tender the proxy
marked X17 of the original Plaintiff bank for the purpose of regu-
larizing the record if any defect had existed in the original proxy
marked X2;
3. Has the learned High Court Judge erred in failing to correctly
apply the principle of law that, a defect in a proxy can be cured
provided it is evident that the person executing the proxy intended
to grant the authority of that proxy to the Attorney-at-law in whose
favour the proxy has been executed.
4. Where the party whose proxy is sought to be rectifed is not before
Court, can a party substituted in his place rectify an error in the
original proxy and tender a new proxy for the original party.
Held:
(1) Once substitution had taken place and was affrmed by the
Supreme Court on being challenged by the Defendant, the appli-
cation of the Defendant regarding the validity of the proxy raised
after about fve years from the time of fling of the action should
not have been allowed.
(2) Jurisdictional objections are required to be taken at the frst
opportunity, the failure of which would constitute acquiescence to
jurisdiction of the Court”.
per Suresh Chandra, J.—
“The objections regarding the proxy was raised only after the
substitution of the Plaintiff had taken place, and after the said sub-
stitution was challenged in the Supreme Court, which objection
was taken by the defendant almost fve years after entering an
appearance in the case. Once the substituted plaintiff was in place
the case should have proceeded from that point.”
AppEAL from the order dated 8th July 2009 of the Commercial High
Court.
Cases referred to:
(1) Udeshi V. Mather – (1988) 1 SLR 12
(2) Paul Coir (Pvt.) Ltd. V.Waas – (2002)1 SLR 13

330 Sri Lanka Law Reports [2011] 1 SRI L.R.
(3) Pinto V. Trelleborg Lanka – (Pvt) Ltd. (2003) 3 SLR 214
(4) S.P.Gunathilaka V. Sunil Ekanayake – S.C. 26/2009 decided on
15.12.2010
Prasanna Jayawardena for substituted – Plaintiff – Appellant
C.J. Fernando for Defendant – Respondent
Cur.adv.vult
June 28th 2011
SuRESH CHANDRA J.
This is an appeal from the order dated 8th July 2009 of
the Commercial High Court.
The Plaintiff Bank fled action on 19th November 2001
against the defendant praying for the recovery of a sum of
Rs. 89.3 Million together with interest due thereon. The
Defendant fled answer on 26th February 2004 praying for
a dismissal of the plaintiff’s action. The case was thereafter
fxed for trial.
On 20th January 2005 the substituted Plaintiff made an
application to have itself substituted in place of the original
plaintiff in terms of section 404 of the Civil Procedure Code
on the ground that the business of the original plaintiff in
Sri Lanka had been transferred to the Substituted Plaintiff
Bank. On 9th May 2005 the Defendant fled its objections to
the proposed substitution. By order dated 5th August 2005
Court allowed the application for substitution.
The Defendant made an application against the said
order for substitution to this Court and the said applica-
tion was dismissed. On 30th January 2006 the defendant
had made an application in open Court to the effect that the

Hatton National Bank Ltd.,V. M.S.Hebtulabhoy & Co. Limited And Others
SC (Suresh Chandra, J.) 331
original proxy fled by the original plaintiff was defective and
the defendant stated it would make an application in future.
The Original plaintiff fled a fresh proxy dated 28th Febru-
ary 2006 by motion dated 3rd March 2006. The Defendant
on 13th March 2006 fled a motion and moved to have the
case dismissed on the basis that the original proxy fled by
the original plaintiff was defective. The substituted Plaintiff
fled its statement of objections to the said application of the
Defendant on 15th May 2006.
Thereafter the substituted Plaintiff by motion dated 7th
August 2006 tendered a fresh proxy dated 2nd August 2006
on behalf of the original plaintiff setting out the fact that
the substituted plaintiff had recently become aware that the
aforesaid proxy dated 28th February 2006 had been defective
due to inadvertent clerical and/or typographical errors and
moving that the said fresh proxy dated 2nd August 2006 be
accepted. The defendant fled written submissions objecting
to the proxy dated 2nd August 2006. The defendant’s then
registered Attorneys-at-Law withdrew the proxy fled by them
on behalf of the defendant and on 19th March 2007 a new
proxy given by the Defendant to another Attorney-at-Law was
tendered on behalf of the defendant and the defendant made
an application to fle a further statement of objections.
The defendant fled its statement of objections objecting
to the substituted plaintiff’s statement of objections dated
15th May 2006. Thereafter, the Commercial High Court
directed the substituted plaintiff to fle a petition in this
connection and when the case had been called on 21st
November 2007 for inquiry the substituted plaintiff withdrew
its earlier applications and moved to fle a petition praying
for the acceptance of a corrected proxy signed by the original
plaintiff.

332 Sri Lanka Law Reports [2011] 1 SRI L.R.
Accordingly the substituted plaintiff fled a petition dated
10th January 2008 along with an annexed affdavit and a fresh
proxy dated 9th January 2008 of the original plaintiff signed
by the Power of Attorney holder of the original plaintiff bank
and prayed that the said fresh proxy dated 9th January 2008
be accepted and that the said fresh proxy be fled of record.
The defendant fled its statement of objections dated 19th
March 2008 and the parties had agreed to have the matter
regarding the acceptance of the proxy dated 9th January 2008
be decided by way of written submissions which they fled.
The learned Judge of the Commercial High Court delivered
his order on 8th July 2009 refusing to accept the aforesaid
proxy dated 9th January 2008 on the basis that the original
plaintiff was no longer a party in the case.
The Substituted plaintiff on making an application
for leave to appeal to this court, leave was granted on 10th
November 2009 on the following question of law-
(i) Has the learned High Court Judge erred in holding
that the substitution of the substituted plaintiff Bank
raised a legal bar to the subsequent curing of any
defect which may have existed in the proxy fled by
the original plaintiff bank;
(ii) Has the learned High Court Judge erred in failing to
realize that the substituted plaintiff was entitled in
law to tender the proxy marked X17 of the original
plaintiff bank for the purpose of regularizing the
record if any defect had existed in the original proxy
marked X2;
(iii) Has the learned High Court Judge erred in failing
to correctly apply the principle of law that, a defect

Hatton National Bank Ltd.,V. M.S.Hebtulabhoy & Co. Limited And Others
SC (Suresh Chandra, J.) 333
in a proxy can be cured provided it is evident that
the person executing the proxy intended to grant the
authority of that proxy to the Attorney-at-law in whose
favour the proxy has been executed.
(iv) Where the party whose proxy is sought to be rectifed
is not before Court, can a party substituted in his
place rectify an error in the original proxy and tender
a new proxy for the original party.
This case which was instituted in November 2001 has
been proceeded with only up to the stage of the fling of
answer by the defendant so far and throughout the interven-
ing period much time has been spent on technical objections
regarding the fling of proxies, rectifcations and objections
regarding substitution. This is the second time that it has
come up to the Supreme Court as it had come up earlier
regarding the question of substitution which was rejected by
this Court in 2006.
It is rather disheartening to note that the objection
regarding the defect in the proxy had been raised by the
defendant for the frst time in January 2006 which was
after about fve years from the fling of the original action and
that too after the substitution referred to above had taken
place. From then onwards it had been a case of raising
objections to the fling of proxies which was done by the plaintiff
apparently to cure defects in the original proxy if any as
stated by them.
The plaintiff has fled three proxies thereafter seeking
to cure defects in the proxies. It is the last proxy dated 9th
January 2008 which is the subject matter of the present

334 Sri Lanka Law Reports [2011] 1 SRI L.R.
application before Court. It is to be noted it is only against the
last proxy that was fled by the plaintiff that the Court has
made an order.
This begs the question as to the validity of the other
three proxies fled on behalf of the plaintiff and the substi-
tuted plaintiff which remain in the record. There is of course
one thread running through all these proxies, it is the same
Attorneys-at-law who have been authorized by the plaintiff
and the substituted plaintiff which makes it clear that the
intention of the plaintiff and the substituted plaintiff to
authorise the same Attorneys-at-law regarding their action
against the defendant, which basis has been accepted in a
series of cases. Vide Udeshi v Mather(1) , Paul Coir (Pvt) Ltd v
Waas(2); Pinto v Trelleborg Lanka (Pvt) Ltd(3).
The learned High Court Judge has refused to accept the
proxy dated 9th January 2008 on the basis that a defective
proxy can be cured only if there was no positive rule of law
against such curing. Having considered the cases regarding
the curing of defective proxies the learned High Court Judge
has arrived at this conclusion.
The Defendant in their written submission have stated
that once the substitution has been effected (which was chal-
lenged by them and which failed) the original party has no
part to play in the action and the subsequent fling of the
proxy in 2008 has no validity. Although the substituted party
steps into the shoes of the plaintiff, it does not debar the
plaintiff to cure a technical defect such as the curing of a
proxy which is defective. The substituted plaintiff has taken
it upon itself after the defendant had raised a query regard-
ing the original proxy after the substitution had taken place,

Hatton National Bank Ltd.,V. M.S.Hebtulabhoy & Co. Limited And Others
SC (Suresh Chandra, J.) 335
to have taken steps to cure what it considered as defective
proxies if any while stating that the original proxy was valid
and went to the extent of stating that those steps were being
taken out of an abundance of caution without prejudice to
the validity of the original proxy. This would mean that the
original proxy was still considered valid by the plaintiff and
the substituted plaintiff.
It is my view that once substitution had taken place
and was affrmed by this Court on being challenged by the
defendant, the application of the defendant regarding the
validity of the proxy raised after about fve years from the
time of fling of the action should not have been allowed. In
the recent decision of the Supreme Court, S.P.Gunathilake vs
Sunil Ekanayake (4), Chief Justice J.A.N. de Silva has exhaus-
tively dealt with the effect of section 27 of the Civil Procedure
Code, taking into consideration all the relevant cases and in
respect of the objection taken belatedly regarding the defect
or absence of a proxy observed thus “if jurisdictional objec-
tions are permitted at the very end of proceedings and up-
held, all proceedings would have to be held void thus wasting
precious judicial time and resources and causing grave in-
justices. Therefore jurisdictional objections are required to be
taken at the frst opportunity, the failure of which would con-
stitute acquiescence to jurisdiction of the court.” In the pres-
ent case the objection regarding the proxy was raised only
after the substitution of the plaintiff had taken place, and
after the said substitution was challenged in the Supreme
Court, which objection was taken by the defendant almost
fve years after entering an appearance in the case. Once
the substituted plaintiff was in place the case should have
proceeded from that point.

336 Sri Lanka Law Reports [2011] 1 SRI L.R.
In the above circumstances I am of the view that the
order of the learned High Court Judge cannot stand and the
questions of law on which leave was granted by this Court are
answered in favour of the plaintiff. The appeal of the plaintiff
is allowed and the order of the learned High Court Judge
is set aside and the High Court is directed to proceed with
the trial in the case expeditiously. As both parties have
contributed to the delay in proceeding with the case on
technicalities, each party will bear its own cost.
AMARATuNGA J. – I agree.
IMAM J.-I agree.
Appeal allowed. The order of the High Court Judge is set aside
and the High Court is directed to proceed with the trial.