010-SLLR-SLLR-1985-V1-EQUIPMENT-AND-CONSTRUCTION-CO.-LTD-v.-RANASINGHE.pdf
EQUIPMENT AND CONSTRUCTION CO.. LTD.v.
RANASJNGHE
SUPREME COURT.
SHAflVANANQA. C.J.. WANASUNDERA, J. AND COLIN-THOmE. J.
S.C. APPEAL No. 28/84.
C.A.Nos. 1201. 1206 & 1034 OF 1979.
M.C. COLOMBO 82947/3. 83280/3 & 85259/3.
JANUARY 7, 1985.
Arbitration – Reference by Minister of Labour to arbitration – Validity of freshreference – Can objection to jurisdiction be raised at late stage ?
The applicant on being dismissed from the post of Engineer in the service of theappellant-Company made representations to the authorities alleging wrongfultermination. The Minister of Labour referred the dispute to the Labour Tribunal No. 1 forsettlement by arbitration. When the arbitrator was about to make his award the Ministeracting on ^presentations of misconduct made to him revoked the reference and madea fresh reference to another arbitrator who made an award. The appellant-Companyfailed to comply and was prosecuted in the Magistrate's Court. Objection was taken bythe Company that the award was a nullity but this was overruled. The Minister thenproceeded to make a third reference to still another arbitrator who made an awardsimilar to the one made on the second arbitration. Again the Company was prosecutedin the Magistrate's Court for failure to comply and again the objection was taken thatjhe award was a nullity. This was overruled and the Company was convicted. TheCompany appealed to the Court of Appeal but the Appeal was dismissed. The Companyappealed to the Supreme Court.
Held-
The second and third references are a nullity. Situations may arise which necessitate asecond reference as where the arbitrator dies or leaves the island. But here thefrustration of the first reference by the Minister was not brought about in this way but bythe applicant and the second and third references were bad.
As in a criminal case, an objection to jurisdiction can be taken at any stage.
Case referred to:
{1) Nadarajah Ltd. v. Krishnadasan (1975) 78 NLR 255.
A. Mahendrarajah. P.C. with S. Mahenthiran and 8. Balaraman for accused-appellant.Hector Yapa. D.S.G. with Mrs. S. Thilakawardana. S.C. for complainant-respondent.
Cur. adv. vult.
January 22. 1985.
WANASUNDERA, J.
After over 20 years of protracted litigation, a determination in thismatter is not yet in sight and what is most distressing is that thematter has to be referred back to its beginning for an inquiry de novo.This delay is due to mishandling of this case at various stages, and theapplicant himself must share a large part of the blame for his presentpredicament.
The applicant was an engineer employed by the respondentCompany. Upon a termination of his services, the applicant maderepresentations to the authorities against the wrongful termination ofhis services. Thereupon, as far back as 1965, the Minister of Labour,as he lawfully may, by Gazette No. 14,323 of 19th February 1965,referred the dispute to the Labour Tribunal No. 1 for settlement byarbitration.
It would appear that the arbitration proceedings were brought to ahalt in 1971, just before the arbitrator could make his award, by theMinister revoking the reference in view of certain representationsmade to him by the applicant. This, it has been stated before us, wasin the nature of allegation of misconduct against the arbitrator, in thathe was unduly delaying the proceedings.
Thereafter the Minister referred the dispute to Mr. Ivan Perera forsettlement by arbitration. The arbitrator, after about 40 days ofinquiry, made his award on 21st January 1975, awarding theapplicant a sum of Rs-. 89,500. He also ordered that this amountshould be deposited with the Assistant Commissioner of Labour in thefollowing manner
Rs. 25,000 within one month of the publication of the award.
Rs. 39,000 within three months of the publication of the award.
Rs. 25,000 within six months of the publication of the award.
Upon the employer Company failing to comply with this order, it wasprosecuted in three cases before the Magistrate's Court for recoveryof the amounts on the award. In the Magistrate's Court, objection wastaken that the award was null and void in terms of the ruling in the caseof Nadarajah Ltd. v. Krishnadasan (1) namely that once a referencehas been made to an arbitrator, it is not competent for the Minister tofrustrate the reference by divesting the arbitrator of his authority(except for certain specified reasons), and therefore the Minister hadno jurisdiction to make a second reference. This plea was upheld andfor these reasons the court held that the award was a nullity.
The Labour Department apparently chose to accept this ruling anddid not prefer an appeal. What the authorities then did is inexplicable inview of the legal position laid down in that case, namely, that theMinister was not empowered to refer the dispute to another arbitratorwhile the first reference is considered to be pending. But that wasprecisely what was done here and the Minister proceeded to make athird reference of the dispute to another arbitrator. It is theseproceedings that are now challenged before us.
Objections to the jurisdiction of the third arbitrator was taken, butwere overruled. The arbitrator proceeded with the matter and madean award in favour of the applicant which is similar to the earlier order.Upon the Company once again failing to comply with the award, it wasagain prosecuted in three cases in the Magistrate's Court. In theMagistrate's Court, the same defence, that the award was a nullity,was taken but overruled. The accused Company was found guilty andordered to pay the amounts on the award. The Company appealedfrom this conviction, but the Court of Appeal has dismissed theappeal.
While we agree with the statement of the Court of Appeal that,upon the declaration by the Magistrate's Court that the secondreference was a nullity, the dispute was still pending, we find that theCourt of Appeal has not sufficiently considered the question of theMinister's power to make a third reference in the light of the law as laiddown in the decided cases.
Mr. Yapa, who presented his case very fairly, did not dispute thecorrectness of these decisions, but sought to bring his case within one
of the exceptions laid down in those judgments. He relied on thedictum of the present Chief Justice in Nadarajah's case which hasbeen followed in later cases and is to the effect that –
'Situations may however arise necessitating a second reference ifjthe Arbitrator declines, resigns, dies or becomes incapable ofperforming his functions, or leaves Sri Lanka under circumstancesshowing that he will probably not return at an early date. Strictlyspeaking, in such an event there is no occasion to withdraw orsupersede any reference from the first Arbitrator; the first Arbitratorhas ceased to function and there is a frustration of the reference,and so there is in existence no Arbitrator who could act on suchreference."
Now the Deputy Solicitor General's submission is that the thirdreference is good because the first reference has been frustrated byreason of the removal of that arbitrator. If that is so, the sameconsideration should have applied to the second reference, but nosuch plea was found sufficient to ensure its validity. Apart from that,the reliance on the ground of frustration is in my view ill founded. If atall the first arbitration was frustrated, that result was brought about byan act on the part of the applicant himself – the Labour Tribunal beingalways ready and willing to conclude,the arbitration according to thelaw. The conduct of the applicant and the consequent action of theMinister in this regard are not legally defensible. What the Minister haddone – in so far as the material before us shows – was to act ex paneon allegations against the arbitrator made by one of the partie§ behindthe back of the arbitrator, the respondent Company, and also theproper disciplinary authority. The law has provided fair and openprocedures to deal with such situations, but the manner in whichaction was taken in this case is certainly not the way it should havebeen handled. In the result, we cannot but hold that the first referencecontinues to be valid notwithstanding the purported revocation andthe two subsequent references.*•
We are also unable to agree with Mr. Yapa's last submission thatthe appellant has acquiesced in the proceedings before the finalarbitrator and that he is now estopped from challenging that award.The proceeding before us is a criminal trial entailing punishment,andthe plea is one going to jurisdiction. We are of the view that it is alwaysopen to an aggrieved person in a criminal case to raise an issue goingto jurisdiction even at a late stage of the proceedings. In this case.
however, it would appear that the question or jurisdiction was verymuch in issue in the proceedings and had in fact been raised morethan once in the present proceedings.
For the above reasons we allow the appeal and acquit the accused.We declare the award made in the third arbitration proceedings nulland void and we direct Labour Tribunal No. 1. which is still seized ofthis matter notwithstanding the purported revocation, to proceed withthe inquiry de novo and conclude it as early as possible, giving itpriority.
The appeal is allowed without costs
SHARVANANDA, C. J. – I agreeCOUN-THOMl:, J. – I agreeAppeal allowed.
Case sent back to Labour Tribunal No. I.