Sri Lanka Law Reports
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SUPREME COURTBritish Ceylon CorporationVC.J. Weerasekera & Others
S C- 34181 & S.C. 35/81 — C..A, 90/77 & C.A. 91/77
Industrial Disputes Act. Section 4(1) Validity of Minister's order challenged. Necessityof making Minister party to proceedings. Business Undertaking (Acquisition)Act Section 4(1) – Vesting of Rights and Liabilities of the Company in theGovernment.
2nd and 3rd Respondents were employees of the Appellant. Their serviceswere terminated on 30.9.63. They sought relief under Industrial Disputes Act.The Minister referred matter to Arbitration under S.4 (1) , but for variousreasons had to make a number of revocations and fresh references. Ultimately1st R as arbitrator made award stating that termination of services was notjustified. However, before award was made the business of the companytogether with its rights and liabilities under subsisting contracts and agreementsvested in the Government in terms of S.4 (1) of the Business Undertakings(Acquisition) Act. on 25.2.73. Appellants having failed is obtain Writ ofCertiorari in Court of Appeal appealed to Supreme Court.
Held (1) that the Minister should have been made a party to theproceedings since it was his orders that were being challenged.
(2) that as the contracts of employment of the Respondents wereterminated on 30.9.63 there was no subsisting contract or agreementwith any rights or liabilities on 25.2.73 (date of vesting) and theCompany was liable to pay the damages awarded.
British Ceylon Corporation v. Weerasekcrc (Victor Pcrera J J
APPEAL from a judgment of the Court of Appeal
Before:Samarakoon, C.J., Wanasundera, J, &
Victor Perera, J.
Counsel:Desmond Fernando with
S.H.M. Reeza for the Petitioners-Appellants inS.C. 34/81 and S.C. 35/81
S. Mahenthiran for.2nd respondent in S.C. 34/81, and
A. Mahendrarajahwith.S. Mahenthiran andA. Kirupaidasan for the 2nd respondent inS.C. 35/81.
H.L. de Silva with A. Mahendrarajah andR. Surendran for the 3rd respondent in S.C. 35/81.
Cur. adv. vult.
VICTOR PERERA, J.
These two appeals are from an order of the Court of Appeal dismissingthe petitions filed by the appellant-Company bearing Nos. C. A. 90/77 andC.A. 91/77 for mandates in the nature of writs.of Certiorari to quash theaward dated 23rd November 1976 made by the 1st respondent on areference to him of the dispute by the Minister of Labour in terms ofSection 4(1) of the Industrial Disputes Act No. 43 of 1950. By his awardthe 1st respondent had ordered the appellant-Company to pay the 2ndrespondent in case No.90/77 and the 2nd and 3rd respondents in caseNo.91/77 compensation for unjustified termination of their services andcosts.
The facts that were not disputed are that the appellant was a LimitedLiability Company, thqt the said respondents had been employees of theCompany and that then; services werfe terminated on 30th September 1963by letters of termination dated 27th September 1963. The respondentssought relief under the provisions of the Industrial Disputes Act No. 43 of1950. The Minister of Labour has purported to act under the powersvested in him under Section 4(1) of this Act. It reads as follows:-
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“4(1). The Minister may, if he is of opinion that an industrialdispute is a minor dispute, refer it, by an order in writing forsettlement by arbitration to an arbitrator appointed by the Ministeror to a Labour Tribunal, notwithstanding that the parties to suchdispute or their representatives do not consent to such reference, ”
He first referred the dispute.for settlement to Mr. S. A. Wijeyatilaka in1963 itself. It is clear that the Minister in exercising this purelyadministrative power took the,preliminary step.tp enable the adjudicationof a minor dispute speedily by settlement by an Arbitrator. In 1963Mr.S.A. Wijeyetilaka commenced proceedings but as a result of anappeal filed by the Company to the thenSypreme Court on a preliminarymatter in S.C. Application 340/64, the proceedings were stalled. Theappeal was dismissed by the Supreme Court on 28th August 1968 (71 NLR337) and the proceedings were resumed in October 1968 before Mr.Wijeyetilaka. After the evidence was concluded Mr. Wijeyetilaka fell illin 1969 and tendered his resignation to the Minister. No award was madeby him. In 1970 the Minister made order revoking the reference to Mr.Wijeyetilaka and a fresh reference was issued to the Labour Tribunal XVwhich was presided over by the 1st respondent. When proceedingscommenced before this Tribunal, the 2nd and 3rd respondents in caseNo.90/77 consented to the adoption of the evidence already led beforeMr. Wijeyetilaka, but the 3rd respondent the party in case No. 91/77objected. The Minister thereupon revoked this reference andmade twoseparate references to the same Tribunal for settlement. When bothmatters came up for disposal before this Tribunal, all the respondentsagreed to the adoption of the evidence , recorded before Mr.Wejeyetilaka. After, submissions on behalf of all the parties wereentertained the proceedings were adjournedfor the making of the award.But before the-award could be made the 1st respondent was appointedAssistant Secretary to the Ministry of Housing and Construction andtherefore ceased.to function as the President of the Tribunal XV. .
In the meantime, the Minister of Finance acting under the provisions ofSection 2 of the Business Undertakings (Acquisition) Act No.35 of 1971,made a vesting order in respect of the .business undertaking of theappellanbCompany on 25th February 1972and the business undertakingbecame vested in the Government and was thereafter managed by aCompetent.Authority, j
British Ceylon Corporation v. Weerasekere (Victor Perera J.)
In view of the incapacity of the 1st respondent to continue to functionas the President of the Labour Tribunal XV the proceedings were broughtto a temporary halt. The Minister of Labour thereupon by order dated 8thOctober 1973, revoked these references to Labour Tribunal XV andmade a fresh order of reference of the.dispute to Mr.G.W Ediriweera.Mr. Ediriweera did not commence any proceedings under this reference.The Minister then revoked this reference and by order' dated 17thDecember 1973 referred the dispute once again to the 1st respondent byname and not with reference to the Tribunal. All the parties appearedbefore the 1st respondent without any objection or challenge to his rightto take proceedings under this final reference. They acquiesced in theprocedure adopted by him to read the earlier evidence and submittedtheir written submissions. The only objection taken by the appellant-Company before the Arbitrator was that in view of the businessundertaking being vested in the government under the BusinessUndertakings (Acquisition) Act No. 35 of 1971, by virtue of Section 4(1)of that Act no award could be made against the Company. It wouidappear that the proceedings were concluded in 1974, but after a long lapseof over 2 years the 1st respondent made the award on 23rd November1976. The 1st respondent in his award held that the termination of theirservices was not justified. He did not order re-instatement as in his words“the Company is no longer manning the business” and awardedcompensation and costs.
On the 17th February 1977, the appellant-Company filed two petitionsin the former Supreme Court for mandates in the nature of writs ofCertiorari to have the award quashed. The matter came up for argufnentof the 23rd June 1980 before the Court of Appeal and after several datesof hearing the petitions were dismissed on the 28th November 1980. In thepetitions filed in that Court the appellant-Company relied on severalgrounds to challenge the legality or validity of the award but the principalgrounds were:- 1
(1)the reference made by the Minister of Labour followed bysubsequent revocations and fresh references culminating, in theeventual appointment of the 1st respondent as arbitrator in1973, were in excess of the Minister’s powers and jurisdictionand/or contrary to equity and justice and bad in law andoperated to vitiate the appointment of the 1st respondent and that
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by reason of the business undertaking being vested in theGovernment by virtue of the vesting order made under theBusiness Undertakings (Acquistition) Act No. 5 of 1971, the rightsand obligations under the contract of employment of the threerespondents vested in the Government and consequently theaward against the Company was illegal or void.
In their written objections filed in the Court of Appeal the contestingrespondents specifically took up the position that the petitioner-Companycould not maintain this application for writ, as the Minister of Labour thelegality or validity of whose official acts were being challenged orquestioned had not been made a party to the proceedings.
At the outset of the argument before us, Messrs A. Mahendrarajah andS. Mahenthiran, Attorneys-at-law, who had personally appeared at thehearing before the Court of Appeal stated that in terms of their writtenobjections they had raised and argued this question that the Company wasnot entitled to maintain their petitions for relief as the Minister of Labourhad not been made a party to the proceedings. Mr. Desmond Fernando,Attorney-at-law, who had himself appeared for the appellant-Companryagreed that this question was raised and argued before the Court ofAppeal, but that unfortunately the Court of Appeal had lost sight of thismatter and had proceeded to consider the other arguments that wereadduced before it and had come to a finding aigainst the appellant-Company on those matters. In. view of these statements we decided toconsider submissions on this matter.
It is clear that the appellant-Company in the petitions before the Courtof Appeal and in the appeal filed before us in questioning the legality orvalidity of every order,of reference or revocation made by the Minister ofLabour. Under the provisions of Section 4(1) of the Industrial DisputesAct No. 43 of 1950, the Minister of Labour is not called upon to exerciseany judicial function in regard to the actual industrial dispute. He hasmerely to form an opinion whether the dispute was a minor dispute thatcould be settled by compulsory arbitration. Once he forms that view he isonly concerned with taking the preliminary step of ordering a reference tohave the dispute settled by arbitration. The power he exercises is of apurely administrative nature and it is his duty to see that there is industrialpeace in the country. There is nothing in the Act itself to indicate thatonce he makes an order his powers are exhausted nor are there anyexpressed prohibitions on the exercise of that power. As the exercise of
SCBritish Ceylon Corporation v. Weerasckerc (Victor Pet era J.)185
the powers of the Minister of Labour were being questioned he shouldproperly have been made a party to the petition before the Court ofAppeal from the very outset. A similar situation arising under the FinanceAct No. 33 of 1968 was considered by the former Supreme Court in thecase of Ramasamy v. Ceylon Stale Mortgage Hank (78 NLR 510) and theSupreme Court held that though the Bank made a determination whichwas followed by a vesting order made by the Minister and the attack wasmade on thenietermination of the Bank alone, still the Minister was anecessary patty to the application for relief. In the present case, however,the presence of the Minister is absolutely necessary as the very orders ofthe Minister initiating the proceedings resulting in the award were beingchallenged in order to disturb the award.
In the case of Nadarajah v. Krishnadasan & others (-78 NLR 255) whichwas relied on before the Court of Appeal at the hearing on the questionof the legality of revocation of orders made by the Minister under Section4(1) of the Industrial Disputes Act, the Minister had been made a partyand Senior State Counsel had appeared for the Minister. Similarly in thecase of Aislaby Estates Ltd. v. Weerasekera (77 NLR 241) Where thelegality or validity of the order of reference under Section 4(1) wasconsidered, the Minister was a party respondent.
Without proceeding to examine the findings of the Court of Appeal inregard to the orders of reference and the orders of revocation, it will besufficient for the purpose of this appeal to hold that appellant havingfailed to make the Minister a party to the proceedings was not entitled tochallenge the Minister’s order and the petition should accordingly havebeen dismissed in the Court of Appeal.
The next matter raised in the petition of Appeal and argued on behalfof the appellant-Company was that liability arising from the contract ofemployment was one that was vested in the government by reason ofSection 4(1) of the Business Undertakings (Acquisition) Act No. 35 of1971. On the facts proved in this case the three employee-respondents hadbeen dismissed from service on 13th August 1963. Instead of approachingthe Courts for alleged illegal termination of their employment they optedto have their disputes investigated and settled under the IndustrialDisputes Act. While such proceedings were pending a vesting order dated25th February 1972 under Act No. 35 of 1971 was made thereby vestingthe business undertaking in the Government. Section 4(1) of this Actprovides that all rights and liabilites under any contract or agreement
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which relate? to the. purposes of that undertaking and which subsists onthe date of the vesting shall vest in the .Government. In this case theemployees were dismissed in 1963 and there was a termination of theircontracts of employment. The Company itself had repudiated thecontract of employment and the -employees were entitled to claimcontractual damages if they had gone to the Courts. Therefore at the dateof the vesting there was no subsisting contract but there remained only aright or.,liability to be determined… By resorting to arbitration under theIndustrial. Disputes Act, they, could have obtained reliefs on equitablegrounds outside the, contract such as re-instatement if the termination washeld to be unjustified. However, the contract stands terminated in law asfar as the appellant-Company is concerned from the date of the dismissaland therefore does not subsist within the meaning of section 4(1)aforesaid. In this case the Arbitrator by his award., thpugh he,found thatthe termination was not justified, did not even order,re-instatement butawarded only compensation. The liablility to pay this compensationrelates back to the termination of the contract and continued to be .theliability of the Company. Therefore the award cannot be disturbed on thisgroiind as urged by the appellant-Company.
The petitions for writ to the Court of Appeal and the appeals to thisCourt are hereby dismissed with costs.
SAMARAKDON, C.J. — I agree.
WAN ASUNDER A, J. — I agree..