COLOMBO APOTHECARIES LTD. AND OTHERS v. COMMISSIONER OF LABOUR

046-SLLR-SLLR-1998-V-3-COLOMBO-APOTHECARIES-LTD.-AND-OTHERS-v.-COMMISSIONER-OF-LABOUR.pdf


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COLOMBO APOTHECARIES LTD. AND OTHERS
v.COMMISSIONER OF LABOUR
COURT OF APPEALDR. RANARAJA, J.
C.A. NO. 659/90
M.C. COLOMBO NO. 64031/5
JULY 14, 1997.
Industrial Dispute – Failure to pay Employees Provident Fund – Certificate underEmployees Provident Fund Act S. 38 (2) – Jurisdiction – Validity of certificate- Liquidator not the employer during the relevant period is not liable.
On receiving the certificate of the Commissioner of Labour under S. 38 (2) ofthe Employees Provident Fund Act, the Magistrate of Colombo issued notice onthe petitioners and held that they had failed to show cause why the said sumshould not be recovered from them and directed that the sum be deemed tobe a fine imposed by a sentence on the employer.
The petitioners moved in revision to have the order set aside.
Held:
The power of revision vested in the court is discretionary. The power willbe exercised when there is no other remedy available to a party. It isonly in very rare instances where exceptional circumstances are presentthat courts would exercise powers of revision in cases where an alternativeremedy has not been availed of by the applicant. Thus the general principalis that revision will not lie where an appeal or other statutory remedyis available. It is only if the aggrieved party can show exceptional circum-stances, for seeking relief by way of revision, rather than by way of appeal,when such appeal is available to him as of right, that the court will exerciseits revisionary jurisdiction in the interests of due administration of justice.
The petitioners had the right of appeal from the order passed by theMagistrate.
Under section 38 (2) of the Act as amended by Act No. 1 of 1985, theCommissioner had to issue a certificate to the Magistrate having jurisdictionin the division in which the place of work of the member or members
CA Colombo Apothecaries Ltd, and Others v. Commissioner of Labour 321
of the fund in respect of whom default is made is situate. The Magistratewho had jurisdiction within that division was bound to summon the employerto show cause. But here there was no evidence that the place of workof the relevant members of the Fund was not situated within the judicialdivision of the Magistrate's Court, Colombo.
Further the distinction to jurisdiction was taken for the first time only inthe written submissions. Section 39 of the Judicature Act and Article 138(1) of the Constitution operate as a bar to the objection.
There is a distinction between the class of cases where a court may lackjurisdiction over the cause or matter or parties and those when court lackscompetence due to failure to comply with such procedural requirementsas are necessary for the exercise of the power of the court. Where thewant of jurisdiction is patent, no waiver of objection or acquiescence cancure that want of jurisdiction because parties cannot confer jurisdiction ona tribunal which has none. In the other class of cases when the wantjurisdiction is contingent only, the judgment or order of court will be voidonly against the party on whom it operates, but acquiescence, waiver orinaction on the part of the person may estop him from making any attemptto establish that the court was lacking in contingent jurisdiction.
The lack of territorial jurisdiction of court is a latent lack of jurisdictioncurable by waiver or conduct of the party seeking to attack the order ofcourt on lack of jurisdiction.
Section 38 (2), of the EPF Act requires the certificate of the Commissionerto contain particulars of the sum due and the name and place of residenceof the defaulting employer. Here the certificate had the required particularsand more – the period during which default in paying the contributionstook place.
Section 38 (3) provides that the certificate shall be sufficient evidence thatthe amount due has been duly calculated and that the amount is in default.
Clearly a liquidator comes within the definition of an employer but theliquidator is not liable to be punished for the acts of the employer. Theliquidation proceedings commenced long after the period of default. Theemployer during the relevant time is liable.
Cases referred to:
Attorney-General v. Gunawardena (1996) 2 Sri LR 149, 156.
In Re Insolvency of Hayman Thornhill 2 NLR 105.
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Rustom v. Hapangama & Co. (1978-79-80) 1 Sri LR 352, 356.
Gunawardena v. Orr 2 ACR 172.
Ameer v. Rasheed 6 CLW 8.
Perera v. Silva 4 ACR 79.
Alima Natchiya v. Marikar 47 NLR 82.
Fernando v. Fernando 72 NLR 549.
Perera v. Commissioner of National Housing 77 NLR 361.
City Carriers v. The AG (1992) 2 Sri LR 257.
Free Lanka Trading Co., Ltd. v. Commissioner of Labour (1982) 1 Sri LR97.
Liquidators of the River Valleys Development Board v. Hendrick Appuhamy,1997 3 SLR 236.
APPLICATION in Revision of the order of the Magistrate of Colombo.
D. S. Wijesinghe P.C for the 1st petitioner.
M. A. Bastianz for 3rd petitioner.
Hugo Anthony with Anura Ranawaka for respondent.
Cur. adv. vult.
July 14, 1997.
DR. RANARAJA, J.
The Facts
On 6.11.1985, the respondent Commissioner of Labour, institutedproceedings against Colombo Apothecaries Co., Ltd., in the Magis-trate's Court, Colombo, for the recovery of a sum of Rs. 1,084,728/97 as arrears of Employees' Provident Fund contributions, for themonths of August, September, October 1981, January 1982 to June1985, as set out in the certificate (E1A) issued to the Magistrate interms of the provisions of section 38 (2) of the Employees' ProvidentFund Act. Summons issued on the employer company. As the com-pany was not represented on the summons returnable date, courtissued warrants on the Directors of the company. The three petitioners,as Directors of the company, surrendered to court on 4.10.86. Theywere released on bail. On an application made by the petitioners on30. 9. 87, court allowed notice to issue on the liquidator of the
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(Dr. Ranaraja, J.)323
employer company. On 20. 01. 88, an application was made by thepetitioners to terminate proceedings in the presence of the liquidator,who was present on notice. No order appears to have been madeon that application. On 20. 7. 88, the liquidator's presence wasdispensed with. On 31. 5. 89, the petitioners have filed "objections"to further proceedings for the recovery of the sum due. From the orderof the Magistrate, it appears that the only objection taken at that stagewas that the company was under liquidation and that similar proceed-ings instituted against the company in the Magistrate's Court, Fort,were stayed for that reason. However, a final order was deferred untilthe petitioners showed cause. Further submissions were made by therespective parties. On 27. 6. 90, the learned Magistrate held that thepetitioners had failed to show sufficient cause why the said sum shouldnot be recovered from the petitioners and directed that the sum bedeemed to be a fine imposed by a sentence on the employer. Thisapplication in revision is for a declaration that the said order is nulland void.
Revisionary Relief
Article 138 of the Constitution confers on this court, subject to otherprovisions of the Constitution or of any law, sole and exclusivecognizance by way of revision of all actions of which a Magistrate'sCourt may have taken cognizance.
“Revision like an appeal, is directed towards the correction of errors,but it is supervisory in nature and its object is due administration ofjustice and not primarily or solely, the relieving of grievances of aparty. An appeal is a remedy, which a party who is entitled to it, mayclaim to have as of right and its object is the grant of relief to aparty aggrieved, by an order of court, which is tainted by error.Revision is so much regarded as designed for cases in which anappeal does not lie". – See : Attorney-General v. Gunawardenam at156. In Re the insolvency of Hayman Thornhill,(Z). The power of revisionvested in this court is discretionary. The power will be exercised whenthere is no other remedy available to a party. It is only in very rareinstances where exceptional circumstances are present that courtswould exercise powers of revision in cases where an alternativeremedy has not been availed of by an applicant. –
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See : Rustom v. Hapangama & Co.Q) at 356, Gunawardena v. Ort*Ameer v. RasheedS), Perera v. Silvafi6), Alima Natchiya v. Marikaim,Fernando v. Fernanda.
Thus the general principle is that revision would not lie where anappeal or other statutory remedy is available. Where the law providesan effective remedy to any personaggrieved byanorder of a
Magistrate's Court, thiscourt willnot exerciseitsrevisionary
jurisdiction. It is only if the aggrieved party can show exceptionalcircumstances for seeking relief by way of revision, rather than byway of appeal, when suchan appealis available tohimas of right,
that court will exercise itsrevisionaryjurisdiction intheinterests of
due administration of justice.
Section 31 of Judicature Act provides:
“Any party aggrieved by any conviction, sentence or orderentered or imposed by a Magistrate's Court may subject to theprovisions of any law appeal therefrom to the Court of Appeal inaccordance with any law, regulation or rule governing the procedureand manner for so appealing1'.
The petitioners are aggrieved by the order of the Magistrate madeunder the provisions of section 38 (2) of the Employees' ProvidentFund Act. That section empowers the Magistrate to recover from anemployer who makes default in payment of any sum by way ofprovident fund contributions under section 10, on his failure to showcause why such sum should not be so recovered, as a fine imposedby a sentence passed on the employer for an offence punishable withimprisonment.
The Magistrate by his order sought to be revised has passed sucha sentence on the petitioners. The petitioners had a right of appealfrom that sentence to this court and also to the Provincial High Courtafter the 13th Amendment to the Constitution and Act No. 19 of 1990were passed. The procedure to be followed in appealing was set outin chapter XXVIII of the Code of Criminal Procedure Act, ie by lodgingwith the Magistrate's Court a petition of appeal, within fourteen daysfrom the date of the order.
CA Colombo Apothecaries Ltd. and Others v. Commissioner of Labour
(Dr. Ranaraja, J.)325
The petitioners were not in immediate peril of being imprisonedin default of payment of the fine. Time was given till 1. 8. 90 forpayment. Instead of appealing from the sentence, the petitionersmoved this court by way of revision and on 23. 7. 1990 obtaineda stay of proceedings in the Magistrate's Court till this application wasdisposed of. The ex-employees of the Colombo Apothecaries Co., Ltd.are still to receive their EPF contributions. Nowhere in their petitionhave the petitioners stated why they resorted to relief by way ofrevision, when they had a right of appeal from the impugned order.Nor have they shown any extraordinary circumstances why this courtshould exercise its revisionary jurisdiction. The application is thereforemisconceived.
The application could have been disposed of on that preliminarymatter alone. However counsel for the 3rd petitioner has filed writtensubmissions on three matters in support of the application which arealso dealt with.
Jurisdiction
It is submitted that the order of the Magistrate is null and void,because he had no jurisdiction to make the order. The submissionis based on the situation of the registered office of the defaultingcompany. Certificate E1A gives the address of the defaulting employeras No. 125, Glennie Street, Colombo. Counsel contends that GlennieStreet is in Slave Island, within the judicial division of the Magistrate'sCourt, Fort, and accordingly the Magistrate's Court, Colombo, had nojurisdiction to entertain the application or to exercise punitive powerprovided under section 38 (2) of the EPF Act.
Section 38 (2) of the Act was amended by Act No. 1 of 1985.By that amendment, the Commissioner had to issue a certificate tothe Magistrate having jurisdiction in the division in which the placeof work of the member or members of the fund in respect of whomdefault is made is situated. The Magistrate who had jurisdiction withinthat division was bound to summon the employer to show cause. Therewas no evidence placed either before the Magistrate or this court bythe petitioners, that the place of work of the relevant members of the
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Fund was not situate within the judicial division of the Magistrate'sCourt, Colombo. The submission of counsel is made on a wrongpremise.
As observed earlier, the petitioners appeared in court for the firsttime on 4. 10. 86. The objection to jurisdiction of the Magistrate's Court,Colombo, was taken for the first time when written submissions werefiled on 29. 12. 89. Section 39 of the Judicature Act provides:
"Whenever any defendant or accused party shall have pleadedin any action, proceeding or matter brought in any court of firstinstance, neither party shall afterwards be entitled to object to thejurisdiction of such court but such court shall be taken and heldto have jurisdiction over such action, proceeding or matter".
The petitioners when called upon to show cause why proceedingsshould not be taken to recover the sum due by way of EPFcontributions in the first instance, did not object to the jurisdiction ofthe Magistrate's Court of Colombo, but on 30. 9. 87 submitted to courtthat the company was under liquidation and sought notice on theliquidator. Once they submitted to the jurisdiction they had no rightto challenge the power of the court to continue proceedings.
Counsel for the 3rd petitioner has sought to support his submissionon jurisdiction by citing the judgment in Perera v. Commissioner ofNational Housing. However Tennkoon, CJ. there drew a distinctionbetween the class of cases where a court may lack jurisdiction overthe cause or matter or parties and those when court lacks competencedue to failure to comply with such procedural requirements necessaryfor the exercise of the power of court. Where the want of jurisdictionis patent no waiver of objection or acquiescence can cure want ofjurisdiction, because parties cannot confer jurisdiction on a tribunalwhich has none. In other class of cases when the want of jurisdictionis contingent only, the judgment or order of court will be void onlyagainst the party on whom it operates, but acquiescence, waiver orinaction on the part of the person may estop him from making anyattempt to establish that the court was lacking in contingent jurisdiction.His Lordship cited in support, Spencer Bower-Estoppel by Represen-
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tation – 1966 (2nd ed) pg. 308, where it is stated: "So too whena party litigant, being in a position to object that the matter in differenceis outside the local, pecuniary or other limits of jurisdiction of thetribunal to which his adversary has resorted, deliberately elects towaive the objection, and to proceed to the end as if no such objectionexisted, in the expectation of obtaining a decision in his favour, hecannot be allowed, when this expectation is not realized, to set upthat the tribunal had no jurisdiction over the cause or parties".
The lack of territorial jurisdiction of court is a latent lack ofjurisdiction curable by waiver or conduct of the party seeking to attackthe order of court on lack of jurisdiction. The principle set out in Perera(supra) is not in conflict with section 39 of the Judicature Act.
It is also relevant to note that proviso to Article 138 (1) of theConstitution which grants this court revisionary jurisdiction, stipulatesthat no judgment, decree or order of any court shall be reversed orvaried on account of any error, defect or irregularity, which has notprejudiced the substantial rights of the parties or occasioned a failureof justice.
Admittedly, it is the Magistrate who has the power to recover arrearsof EPF contributions under the provisions of section 38 (2) of the Actby way of a fine. Even if the Magistrate's Court of Colombo had noterritorial jurisdiction, as the petitioners have failed to show that theorder made by that court prejudiced their substantial rights oroccasioned a failure of justice, the petitioners will not, in any event,be entitled to relief on the ground of lack of jurisdiction.
Certificate under section 38 (2)
The Commissioner of Labour filed certificate under section 38 (2)of the Act to recover the EPF contributions, which the employer hadfailed to pay to the Fund under the provisions of section 10 of theAct. The period of default was set out in the certificate and the totalsum due was specified. Counsel submits that the certificate is notin terms of the provisions of section 38 (2). What that section requiresis for a certificate containing particulars of the sum so due and the
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name and place of residence of the defaulting employer. Howeverit is submitted that such a certificate was declared bad and invalidin City Carriers v. The AO'0). The relevant part of the judgmentBandaranayake, J. states: “Upon a perusal of XI which contains noparticulars of the sum claimed, we are of the opinion that there wasno certificate filed before the Magistrate Court in terms of section 38subsection 2 of the Employees' Provident Fund Act".
Learned counsel submitted that the passage cited establishes theprinciple that a certificate under section 38 (2) requires "particularsof the sum due" and a certificate which contains no particulars wasbad in law. With respect, the dictum of the learned Judge is devoidof any detail or explanation as to what is meant by “no particularsof the sum claimed" and in what manner a lawful certificate underthat section has to be prepared. For example, should such a certificateinclude details of the names of all the employees, contributions duefrom them and the employer, the period of time over which there hasbeen default? A "certificate" to recover contributions in default froman "employer" having 2,000 workers would then run into severalhundred pages, which would no doubt lead to much inconvenienceof the Commissioner and court in preparation and filing.
The employer has in certificate E1A been given the necessaryparticulars required by section 38 (2) and more, namely the periodduring which it defaulted in paying the contributions. It is the employer,who, originally gave the information to the Labour Department of thenumber of employees, the EPF contributions due from them and theemployer. It is the employer who is possessed of all the relevantparticulars. The certificate issued to the Magistrate for recovery asa last resort, after all attempts to recover sums in default from theemployer, is therefore based on information supplied by the employer.The employer who disputes the particulars in the certificate would havehad ample opportunity to correct any errors regarding the sums indefault both before the stage of issuing a certificate under 38 (2) andat the stage of showing cause. It is for that reason that the employeris given a final opportunity to show cause before the Magistrate. See:Free Lanka Trading Co., Ltd. v. Commissioner of Labour1'"'1. If sufficientcause is shown that the sum is not lawfully due or has been paid,the employer is discharged from further proceedings.
CA Colombo Apothecaries Ltd. and Others v. Commissioner of Labour
(Dr. Ranaraja, J.)329
Besides, section 38 (3) provides that the Commissioner's certificateshall be sufficient evidence that the amount due under the Act fromthe employer has been duly calculated and that such amount is indefault. The law casts the burden on the employer to show that thesum stated in the certificate is not due from him. In the circumstances,it cannot be disputed that the particulars that need be given in termsof section 38 (2) were not included in certificate E1A. It is relevantto note that section 39 of the Act provides that the burden of provingin proceedings under section 17, that the sum due was paid, lies onthe employer. The duty cast on the Commissioner in proceedingsunder section 38 (2) is to issue a certificate stating the sum due asEPF contributions reckoned in terms of the provisions of sections 10to 16 of the Act, the correctness of which cannot be questioned orexamined by court.
Liquidator
It is submitted that the Magistrate erred in holding that the liquidatorwas not liable to be brought in place of the employer to defend theaction.
The journal entry dated 20. 7. 88 shows that the liquidator'spresence has been dispensed with. The petitioners did not object tothat order. It appears that the question of adding or substituting theliquidator in proceedings under section 38 (2) does not arise on aconsideration of the provisions of the EPF Act.
The word "employer" means any person who employs or on whosebehalf any other person employs any workman and includes a bodyof employers (whether such body is a firm, company, corporation ortrade union), and any person who on behalf of any other personemploys any workman, and includes the legal heir, successor in law,executor or administrator and liquidator of a company, and in the caseof an incorporated body, the President or the Secretary of such body,and in the case of a partnership, the Managing partner or Manager;(section 47 (4)).
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Clearly, a liquidator comes within the definition of an "employer".But what is of importance is whether in proceedings under section38 (2), a liquidator is liable to be punished for the acts of the"employer" who at the time was not in fact the “liquidator". Theemployer who failed to comply with the provisions of section 10 ofthe Act by not paying the EPF contributions for the period set outin certificate E1A was the company whose directors were thepetitioners. The liquidation proceedings commenced long after thatperiod ie on 24. 2. 86.
Any person who contravenes any provision of the Act or of anyregulation made under the Act would be guilty of an offence in termsof section 34 (a) of the Act. Where an offence under the Act iscommitted by any body of persons, and if that body of persons isa body corporate every director and officer of that body corporatewould be guilty of that offence in terms of section 40 (a) of the Act,unless that offence was committed without his knowledge or that heexercised all due diligence to prevent the Commission of that offence.
A default in making payments due as EPF contributions, makesthe 'employer' at the relevant time, liable for contravening the pro-visions of section 10 of the Act. As an alternative to prosecution forsuch an offence under section 41 of the Act or civil proceedings undersection 17 of the Act, the Commissioner is empowered to instituteproceedings against the defaulting employer for the recovery ofcontributions due under the provisions of section 38 (2). The petitionersare thus liable, qua directors of the offending company, to be sum-moned before court in proceedings under section 38 (2) of the Actand sentenced to pay the sum in default by way of fine and servea term of imprisonment in lieu, if the fine remains unpaid.
It is relevant to note that section 21 of the Act provides that anysum due to be paid under the Act by an employer by way ofEPF contributions, would be the first charge on his assets,notwithstanding anything to the contrary in any other written law. Thusas at the date on which the Commissioner issued the certificate, thesum due on it was a first charge on the company's assets. Thepetitioners were under a legal obligation to pay the sum specified inthe certificate before liquidation proceedings commenced. As, oncethe liquidator was appointed, the administration of the company'saffairs and property passed to him. The petitioners, as Directors of
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the company, became functus officio and any property dispositions,from the date of filing for liquidation, by the petitioners became invalid.The liquidator's function was to secure the assets of the companyand pay up the creditors. In this context, the liquidator could havebeen added as a party in proceedings under section 17 of the Act,but not in proceedings under section 38 (2) of the Act. The reasonbeing that a sentence of fine imposed on the petitioner under section38 (2) may be recovered by distress and sale of any movable propertybelonging to them alone under section 291 of the Code of CriminalProcedure Act. The decision in Liquidators of the River ValleysDevelopment Board v. Hendrick Appuhamy,l'2), is of no relevance tothe facts of this case.
Conclusion
The petitioners have, without seeking the remedy by way of appealavailable to them as of right, sought revisionary relief, which this courtconsiders misconceived in the circumstances. The petitioners havefailed to satisfy this court that there has been a miscarriage of justiceor any exceptional circumstances requiring this court to exercise itsdiscretionary revisionary jurisdiction to interfere with the order of theMagistrate. The Magistrate had territorial jurisdiction, in the absenceof any evidence to the contrary that the place of work of theemployees was outside its jurisdiction, to entertain the certificate andproceed in terms of section 38 (2) of the Act. The petitioners havealso failed to establish that the certificate E1A was not in terms ofthat section or that the Magistrate was in error in not adding theliquidator as a party to the proceedings. The application is accordinglydismissed with costs fixed at Rs. 5,000.
Application dismissed.