LANKA MULTI MOULDS (PVT) LTD v. WIMALASENA, COMMISSIONER OF LABOUR A

019-SLLR-SLLR-2003-1-LANKA-MULTI-MOULDS-PVT-LTD-v.-WIMALASENA-COMMISSIONER-OF-LABOUR-A.pdf


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Lanka Multi Moulds (Pvt) Ltd v Wimalasena, Commissioner of
'Labour and others (Fernando, J.)
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LANKA MULTI MOULDS (PVT) LTD
v. .WIMALASENA, COMMISSIONER OF LABOURAND OTHERS
SUPREME COURTFERNANDO, J.EDUSSURIYA, J., ANDWIGNESWARAN, J.
S.C. APPEAL No. 60/2001C.A. APPLICATION No. 20/968TH OCTOBER, 2002
Termination of Employment — Termination of Employment of Workmen(Special Provisions) Act – Meaning of “prior consent” in section 2(1) -Commissioners’ power under section 6 to. order re-employment of the work-men and to order payment of wages and other benefits – Construction of “may”and “and" in section 6 as regards relief – Whether these words are conjunctiveor disjunctive – Commissioner’s duty to give reasons.
The 2nd respondent (“the workman”) a British national was employed by theappellant company (“the employer”) on 1.9.92 on contract for a period of 3years, subject to termination vyith 3 months’ notice by either party. The agree-ment restrained the workman from working for. a competitor in a rival businessfor 2 years on pain of liquidated damages in a sum of £2500/-
On 29,4.94 the employer terminated the employment of the workman vyitheffect from 30.7.94. However, the workman was exempted from working inJune and July but was paid his salary for that period. He was also granted costof repatriation in a sum of Rs. 193,000/- and relieved from the obligation not towork for a competitor.
He was paid one month salary as gratuity. He left the island on 18.6.94 havingcomplained to the Commissioner of Labour on. 17.06.94 against his termina-tion. He did not agree to the retrenchment but merely signed for the paymentsmade.
Ori 22.11.95 the 1st respondent (“the Commissioner”) ordered re-instatementof the workman with effect from 15.01.96 with back wages for 17 1/2 monthsfrom 30.7.94 to 15.1.96 a sum of Rs. 3,533,750/- (at the rate of Rs. 202,500/-a month).
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The Court of Appeal affirmed the order that the termination of employment isillegal for want of prior consent of the workman under section 2(1 )(a) of theTermination of Employment of Workmen (Special Provisions) Act, No. 45 of1971 ("The Act”)- The Court quashed the order for re-instatement and reducedback wages to 13 months, viz. the balance period of his contract of service, onthe ground that in fixing back wages the Commissioner failed to give reasonsor to adduce reasons in court.
Held:
“Prior consent” required by section 2(1 )(a) of the Act need not neces-sarily be contained in a single sheet of paper. It could be inferred fromthe attendant circumstances in each case.
Quaere – In the instant case the offer of benefits in writing by theemployer and the receipt thereof by the workman who signed receiptsfor the several payments did not constitute “prior consent in writing” totermination within the meaning of section 2(1 )(a) of the Act.
In interpreting section 6 of the Act which gives the Commissioner thepower to order re-instatement in respect of an unlawful terminationand to order payments and benefits in view of such termination, theword “may” should be construed to confer a discretion on theCommissioner and that “and” shall be interpreted disjunctively; hencethe Commissioner has the power to order wages and benefits withoutmaking an order for re-instatement. The Commissioner’s decision isnot unfettered. He must give reasons for his decision.
The payments and benefits received by the workman on terminationcould reasonably be assumed as equivalent to nine months salaryagainst thirteen months computed by the Court of Appeal. Hence thesalary ordered by the Court should be reduced to Rs. 810,000/-
Case referred to:
Samalanka v Weerakoon (1994) 1 Sri LR 405
Karunadasa v Unique Gemstones Ltd (1997) 1 Sri LR 256
Ceylon Printers v Commissioner of Labour (1998) 2 Sri LR29
Mendis v Perera (1999) 2 Sri LR110.148
Yaseen Omar v Pakistan International Airlines (1999) 2 Sri LR 375
Brook Bond Ceylon Ltd v Tea Rubber (etc) Workers Union (1973) 77 NLR 6
Ratnanayake v Fernando SC 52/86 SCM 20.5.91
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Sanjeewa Jayawardena for appellantNimal Malalsekera for 2nd respondentS. Barrie, State Counsel for 1st respondent
Cur.adv.vult
January 29, 2003FERNANDO, J.
This appeal involves three questions of law in regard to theinterpretation of sections 2 and 6 of the Termination of theEmployment of Workmen (Special Provisions) Act, No. 45 of 1971(“the Act”)
The 2nd Respondent-Respondent (“the 2nd Respondent”)is a British national who was employed by the Petitioner-Appellant company (“the Petitioner”) oh a monthly salary of 2,500sterling pounds, under a contract commencing on 1.9.1992 for“an initial period of three years”, subject to termination by eitherparty by giving three months notice. One of the terms of the con-tract was that the 2nd Respondent undertook not to work for anycompetitor (or have any interest in a rival business) in Sri Lankafor a period of two years after the termination of his employment,without the written consent of the Petitioner, and that in the eventof any breach of that undertaking the 2nd Respondent would payas liquidated damages a sum of Rs.1,500,000.
In April 1994 the Petitioner discussed with the 2ndRespondent an impending decision to terminate his services. Byhis letter dated 22.4.1994 the 2nd Respondent expressed his dis-may about such termination. By letter dated 29.4.1994 thePetitioner informed the 2nd Respondent of its decision to termi-nate his services, and gave him three months notice of termina-tion, effective 30.7.94; and it further undertook to enter into a sep-arate agreement regarding the settlement of all amounts due as
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remuneration, benefits, leave, repatriation costs, etc. He wasgiven an employment certificate dated 30.5.94, which stated thatconsequent to a recently concluded joint venture agreement andmerger with another company which provided for a transfer oftechnology, the services of the 2nd Respondent had becomeredundant. By another letter dated 30.5.94 the Petitioner agreedto pay the 2nd Respondent (a) his salary for June and July 1994,although he was released from the obligation of reporting for workin June and July, and was permitted to leave Sri Lanka on 18.6.94(b) one month’s salary as gratuity, and (c) the costs of repatriationto the United Kingdom, amounting to about Rs. 193,000. He didnot expressly signify his agreement by suitably endorsing orreplying to those letters; all he did was to sign receipts in respectof all those payments. On 17.6.94 he made a complaint to theCommissioner of Labour, the 1st Respondent, under section 6 ofthe Act.
In the meantime, after discussion, the Petitioner had alsoissued a letter dated 26.5.94 giving the 2nd Respondent its writ-ten consent to work for any competitor and to have any interest ina rival business in Sri Lanka without having to wait for a period oftwo years after the termination of his employment.
The relevant provisions of the Act are as follows:-
“2(1) No employer shall terminate the scheduled employ-ment of any workman without – (a) the prior consent in writ-ing of the workman….
6. Where an employer terminates the scheduled employmentof a workman in contravention of the provisions of this Actthe Commissioner may order such employer to continue toemploy the workman with effect from a date specified insuch order in the same capacity in which the workman wasemployed prior to such termination and to pay the workmanhis wages and all other benefits which the workman wouldotherwise have received if his services had not been termi-nated and it shall be the duty of the employer to comply withsuch order.” [emphasis added]
By his order dated 22.11.95 the 1st Respondent held thatthe 2nd Respondent was “workman” within the meaning of the
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Act, and had not at any stage submitted a letter expressing a wishthat his services be terminated. He ordered, in terms of section 6of the Act, that the 2nd Respondent be reinstated with effect from15.1.96, and paid back wages for 171/2 months (from 30.7.94 to15.1.96) in a sum of Rs. 3,543,750 (at the rate of Rs. 202,500 permonth). He made no reference whatever to the fact that the 2ndRespondent’s contract was to expire on 31.8.95 and to the termi-nal payments and concessions.
The Petitioner applied to the Court of Appeal for Certiorarito quash that order. The Court of Appeal held that the Petitionerhad failed to establish that the termination of the services of the2nd Respondent had been with his “prior consent in writing", andthat therefore the 1st Respondent had jurisdiction to entertain thecomplaint, but that-
“It is obvious from the order that the Commissioner has notgiven his mind at all to the. question that the contract was‘initially’ for three years. In directing that the 2ndRespondent be reinstated with effect from 15.1.1996 theCommissioner had effectively and unlawfully extended theduration of the 2nd Respondent’s contract of employmentwith the Petitioner indefinitely and beyond the fixed termperiod of three years which had already expired on30.7.1995 [31.8.95?]. As such the Commissioner has pur-ported to undermine the contractual volition of the contract-ing parties and exceeded the jurisdiction vested in him bystatute.
It is to be noted that no proper reasons had been adducedin support of the Commissioner’s impugned order andtherefore relevant adverse inference will have to be drawnagainst the order. No steps were taken to even produce thereasons before this Court and the Court has to come to theconclusion that he has no defensible reasons to give.”
The Court of Appeal confirmed the order that the termina-tion was illegal, quashed the order for reinstatement, and heldthat the 2nd Respondent “was entitled only to get wages for thebalance period of his three-year contract, viz, for thirteenmonths.”
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The 2nd Respondent did not seek special leave to appealagainst the order denying him reinstatement and restricting backwages, and this appeal proceeded on the basis that he was notentitled to reinstatement.
On behalf of the Petitioner it was contended that:-
The Petitioner’s letter dated 29.4.94 and 30.5.94, the 2ndRespondent’s acceptance of the several amounts paid tohim, and his signature on the receipts for those payments,constituted “prior consent in writing” to termination, withinthe meaning of section 2(1 )(a) of the Act;
While the Commissioner had a discretion whether or not toorder reinstatement under the first limb of section 6 , hewas not entitled to make an order for compensation underthe second limb unless he had first made an order for rein-statement; and
In any event, in making an order under the second limb ofsection 6, the Commissioner was under a duty to considerthe circumstances of the termination and the benefitsreceived by the 2nd Respondent, and to give reasons forhis decision, but failed to do so. I
I am inclined to agree that the “prior consent” required bysection 2(1 )(a) need not necessarily be contained in a singlesheet of paper. If for instance an employer were to make a writ-ten offer of a “golden handshake”, stating “if you agree to the ter-mination of your services, please accept the enclosed cheque forX rupees as your terminal benefits and sign and return theannexed receipt,” the written offer together with the acceptance ofthe cheque and the signing of the receipt would constitute a “priorconsent in writing” to termination within the meaning of section2(1 )(a). However, it is not necessary to decide that questionbecause, as learned State Counsel submitted on behalf of the 1stRespondent, there is a difference between consent to the termi-nation itself (which is what section 2(1 )(a) requires), and anagreement – as in this case – as to the quantum of terminal ben-efits in circumstances in which the termination itself is no longernegotiable or has already been unilaterally determined or effect-
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ed (which is not enough). The Petitioner’s letters and the 2ndRespondent’s acceptance of the payments were all subsequent tothe Petitioner’s unilateral decision to terminate the 2ndRespondent’s services, and are not proof of anything more thanhis agreement to the benefits payable consequent upon that deci-sion. The 2nd Respondent did not give prior consent, in writing orotherwise, to the termination of his services, but subsequentlyagreed to and accepted the terminal benefits offered.
Learned Counsel for the Petitioner contended that the word“may” in section 6 conferred a discretion on the Commissioner toorder the employer to continue to employ the workman; that theword “and” had to be interpreted conjunctively; and that an orderfor wages could not be made as an alternative to, but only in addi-tion to, an order for continued employment. It was his submissionthat section 6 authorized an order for “compensation” in additionto reinstatement, but not as an alternative to reinstatement.Compensation, he said, could only be awarded under section 6A,introduced by amendment in 1976, upon a termination in conse-quence of a closure of business. He drew our attention to provi-sions of the Industrial Disputes Act which expressly empower theaward of compensation as an alternative to reinstatement, a fea-ture lacking in section 6.
Section 33(1 )(a) of the Industrial Disputes Act affords someguidance. It provides that awards and orders “may contain deci-sions as to wages and all other conditions of service.” The word“may” confers a discretion to make a decision as to “wages”, butit can hardly be argued that a decision as to “other conditions ofservice” can be made if and only if there is first a decision as towages. If a tribunal has a discretion to grant relief in respect ofseveral matters – e.g. “wages, provident fund benefits, leave,hours of work, and transfers” – it cannot be said that unless thetribunal exercises the discretion to grant relief in respect of thefirst, no relief can be granted in respect of the second, and thatunless relief is granted in respect of the first and the second, norelief can be granted in respect of the third, and so on. The word“and” in such a context means “and/or”.
Furthermore, section 6 must also apply in situations wherereinstatement has become impossible pendente lite. A workman
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due to retire in one year’s time might complain of wrongful termi-nation. The anomalous consequence of the Petitioner’s interpreta-tion would be that if the Commissioner’s order was made beforethe due date of retirement, the workman could be awarded rein-statement and back wages up to that date; but if it was made evenone.day thereafter, he could get nothing. The contrary interpreta-tion, however, avoids anomaly, inconvenience and injustice: if theCommissioner finds himself unable to order reinstatementalthough he holds the termination to be unlawful, he can never-theless order the employer to pay the workman “his wages and allother benefits which the workman would otherwise havereceived”. It is unnecessary to consider whether that amounts to“compensation” or not, because section 6 expressly empowers theCommissioner to order payment of “wages” and “benefits”. ThePetitioner’s restrictive interpretation would create other anomaliestoo. Thus the Commissioner may find that although terminationwas not justified the workman was guilty of some lapse which mer-ited some punishment, and that therefore part of the back wagesshould be withheld. However, the Petitioner’s interpretation woulddeprive the Commissioner of the equitable power to order any-thing less than full back wages. In my view, the conferment of thepower to grant the greater relief includes the power to grant thelesser relief.
Accordingly, I hold that “may" in section 6 confers a discre-tion on the Commissioner; that “and” must be interpreted disjunc-tively; and that the Commissioner had the power to order paymentof wages and benefits for the balance period of the 2ndRespondent’s contract without making an order for reinstatement.The Court of Appeal was therefore entitled to order such paymentwhen setting aside the order for reinstatement.
I turn now to the quantum of back wages. Back wages can-not be awarded mechanically without taking all the circumstancesinto consideration. If the services of two workmen, with identicalfixed-term contracts expiring in one year’s time, were terminatedin identical circumstances, but one received from the employerterminal benefits amounting to six months’ salary while the otherreceived nothing, could the Commissioner award each of themone year’s back wages (giving the former a windfall of six months’
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salary)? Again, if an employer asserted that the age of retirementwas 55 years and retired a workman at that age, and immediatelypaid him pension, gratuity, and other retiral benefits, could theCommissioner hold one year later that the age of retirement was57 and order reinstatement with one year’s wages and benefits,without giving credit for the retiral benefits already received? Itwould be inequitable to interpret section 6 as requiring a mechan-ical order for back wages from the date of wrongful termination upto the date of reinstatement or the date on which the employmentcomes to an end. There is no doubt whatever that the object whichsection 6 intended to achieve was to annul an unlawful terminationand to restore – insofar as it was reasonably possible – the statusquo: to put a workman in the position in which he would have beenif his services had not been terminated. If there had been no ter-mination, the workman would not have received any terminal ben-efits, and accordingly any terminal benefits actually received mustbe refunded or set off. The workman cannot retain the benefitsreceived by him from the employer on the basis that the termina-tion was lawful, and at the same time receive the additional bene-fits ordered by the Commissioner on the contrary basis that thetermination was unlawful. Accordingly, when his termination isannulled, the status quo must be restored, and for that purposethe Commissioner must take into consideration all benefits whichthe workman received on termination.
In this case, upon the wrongful termination of his servicesthe Petitioner released, the 2nd Respondent from his contractualobligation not to work for a competitor in Sri Lanka for two yearsafter termination. The 1st Respondent’s order for reinstatement,without any cancellation of that release, amounted to an indefiniterenewal of the original contract, with a significant variation, name-ly on the terms that the 2nd Respondent was no longer restrainedfrom competing with the Petitioner immediately after termination.That shortcoming was partly corrected when the Court of Appealquashed the 1st Respondent’s order for reinstatement. However,when the Court of Appeal ordered back wages for the full period ofthirteen months from 31.7.94 to 31.8.95, that Court too did nottake into account the value to the 2nd Respondent of the benefitof release' from his obligation not to compete. It is likely that at the
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time of termination it was not worth Rs. 1,500,000 (over sevenmonths’ salary), but it had some value which was not taken intoconsideration. Further, neither the 2nd Respondent nor the Courtof Appeal took into account the facts that the 2nd Respondent waspaid for the months of June and July although he was allowed toleave Sri Lanka in mid-June, that he was paid one month’s salaryas gratuity, and that he was paid certain cost of repatriation.
Although the Commissioner has a discretion in respect ofboth limbs of section 6, that is not an unfettered or unreviewablediscretion. As the Court of Appeal observed, he must give rea-sons for his decision. Although in Samalanka Ltd v WeerakoonC),it was held by Kulatunga, J, (with G.P.S. de Silva, CJ. andRamanathan, J. agreeing) that the Commissioner was not undera duty to give reasons, I took the contrary view in Karunadasa vUnique Gemstones Ltd.W, (with Wadugodapitiya, J. andAnandacoomaraswamy, J. agreeing). That decision was consid-ered and followed by Gunasekera J. in Ceylon Printers vCommissioner of Labout<3). Since G.P.S.de Silva, CJ. agreedwith Gunasekera, J. on that occasion it is clear that he no longeragreed with Samalanka. In Mendis v Perera(4), I observed thatthe audi alteram partem rule does not merely entitle a party to apurely formal opportunity of placing his case before a tribunal,and that natural justice would be devalued if the tribunal does notconsider the evidence and the submissions, evaluate it properlyand not in haste, and give reasons for its conclusions. However,in Yaseen Omar v Pakistan International Airlines,Samalandawas followed, apparently without the attention of the Court beingdrawn to the subsequent decisions to the contrary and the rele-vant citations.
It is therefore necessary to reiterate what has long beenrecognized: that the statutory conferment of a right of appealagainst the decision of a tribunal has the effect of imposing a dutyon that tribunal to give reasons for its decisions (Brook BondCeylon Ltd v Tea, Rubber (etc) Workers Union,(®) Ratnayake vFernando(7)). The conferment of a right to seek revision or reviewnecessarily has the same effect. As the decisions cited show, ifthe citizen is not made aware of the reason for a decision he can-not tell whether it is reviewable, and he will thereby be deprived
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of one of the protections of the common law – which Article 12(1)now guarantees. Today, therefore, the conjoint effect of themachinery for appeals, revision, and judicial review, and the fun-damental rights jurisdiction, is that as a general rule tribunalsmust give reasons for their decisions.
In the absence of reasons, the order for back wages, evenas modified by the Court of Appeal, cannot stand. However, toremit the case to the 1 st Respondent for a fresh determination,seven years after his original order, would not serve the end ofjustice, the payments and benefits received on termination couldreasonably be assessed as equivalent to nine months’ salary (atthe rate of Rs, 202,500 p.m. fixed by the 1st Respondent). I there-fore vary the order of the Court of Appeal by substituting for thethirteen months’ salary ordered by the Court of Appeal, fourmonths’ salary (Rs. 810,000); the 1st Respondent’s order will bevaried accordingly. Subject to that variation, the appeal is dis-missed, but without costs.
WIGNESWARAN, J.
I have had the opportunity to read the judgement of mybrother Fernando, J. He referred to three submissions made bythe Counsel for the Petitioner pertaining to (i) “prior consent inwriting” as per section 2(1 )(a) of Act No. 45 of 1971, – (the Act),vis-a-vis this case; (ii) the scope of the preposition “and” inSection 6 of the Act; and (iii) the failure of the Commissioner (1stRespondent) in this case to have considered the circumstances ofthe termination and the benefits received by the 2nd Defendant.Brother Fernando, J. proceeded to deal with each of the said sub-missions in his judgement
With respect, there are certain matters therein I am unableto agree, particularly his interpretation of the word “and” disjunc-tively in Section 6 of the Act. Hence this dissenting view
I agree with brother Fernando, J. that “prior consenfrequired by Section 2(1 )(a) need to be contained in a formal sheetof paper in every instance. “Prior consent” could be implied fromthe attendant circumstances of each case.
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In this instance, the 2nd Respondent was employed byPetitioner on a fixed term contract. It provided for termination byeither party giving 3 months’ notice. Such a notice was in factgiven with the offering of benefits – more or less a “golden hand-shake”. (Vide para 3 of brother Fernando, J.’s judgment). Suchbenefits were accepted. The 2nd Respondent by P22 did not prayfor reinstatement in his application to the Commissioner. He onlyprayed for compensation for “termination” of employment. P23confirmed this. The application was made to the Commissionereven prior to termination. What happened in this case appears tobe that the 2nd Respondent readily accepted all benefits given tohim by his employer in consequence of a forced cessation ofemployment but wanting a little more like Oliver Twist, the 2ndRespondent made an application on 17.06.1994 to theCommissioner of Labour, a day after receiving his somewhat of a“golden handshake” (16.06.1994), and a day before leaving theshores of the Island (18.06.1994). The cost of his air passage toleave the Island was met by the employer. But as pointed out bybrother Fernando, J. “he did not expressly signify his agreementby suitably endorsing or replying” the letters sent to him. He onlysigned receipts in respect of the payments made. He felt that hewas not adequately compensated for the sudden terminationwhile his contract was still valid.
The application to the Commissioner, (P22), did not men-tion the Section under which relief was claimed. But what wasclaimed was compensation. At page 27 of the proceedings the2nd Respondent stated as follows in his examination in chiefbefore the Commissioner, Mr. M.R. Kannangara –
“Q – What is the relief you request from the Commissioner toaward you?
A – I am asking for the payments for the remaining part of my
contract of employment. In other words as stated earlierbalance of 13 months.
What is the other due you ask?
I was made to come to Sri Lanka for this inquiry.
Q
A-
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Q – How much have you spent?
A – 503 pounds for my flight. I spend nearly 100 dollars per
day
Q – How long have you stayed here?
A-(illegible)
Q – You ask expenses up to 4th February?
A-Yes.
Q – You are not asking for reinstatement?
A-No.”
Curiously on the next date (27.01.1995) the examination-in-chief went contrary to the evidence given on 26.01.1995. It ran as
follows:
“Q – You have further stated that at the moment you aredepending on the social insurance paid to you by theU.K.?
A-Yes.
Q – In that situation what is the relief that you would ask fromthe Commissioner?
A – Reinstatement with back wages.
Q – You know that after appearing before the Commissioneryou would return to U.K.?
A-Yes
Q – In the event the Commissioner makes ah order for rein-statement it would be necessary to travel back to SriLanka to resume employment?
A-Yes.
Q – Taking those matters into consideration what furtherrelief would you ask from the Commissioner?
A – The expenses or cost incurred in that travel, meaning,having to go back to the U.K. and return to Sri Lanka toresume employment.”
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When the Court of Appeal quashed the order for reinstate-ment, the 2nd Respondent did not seek special leave to appealagainst the order denying him reinstatement. Thus reinstatementwas not in the contemplation of the 2nd Respondent at the timeof application nor seriously pursued thereafter. The reason for thevolte face on 27.01.1995 appears to be the realization thatSection 6 of the Act did not permit the Commissioner to grantbenefits unless he made an order for reinstatement. Thus to mymind the Commissioner was legally correct to the extent that hegranted wages and benefits only with an order for reinstatement,while the Court of Appeal was legally in error in quashing theorder for reinstatement and yet allowing consequential benefits tostand.
In my opinion the word “and” in Section 6 of the Act mustnecessarily be interpreted conjunctively and not disjunctively asdone by brother Fernando, J. The reasons are not far to seek.
The Section reads as follows:
“6. Where an employer terminates the scheduled employ-ment of a workman in contravention of the provisions of thisAct, the Commissioner may order such employer to contin-ue to employ the workman, with effect from a date specifiedin such order, in the same capacity in which the workmanwas employed prior to such termination and to pay theworkman his wages and all other benefits which the work-man would have otherwise received if his services had notbeen so terminated; and it shall be the duty of the employ-er to comply with such order. The Commissioner shallcause notice of such order to be served on both suchemployer and the workman.”
The preposition “and” between the words “termination” and“to pay the workman” must be interpreted conjunctively due to thewording appearing after the word “and” viz. “and to pay the work-man his wages and all other benefits which the workman wouldotherwise have received if his services had not been terminated”.The words “all other benefits” in this clause must be interpretedejusdem generis. The “benefits” contemplated are such benefitsakin to wages which were payable if the workman was still in ser-
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vice. Benefits receivable by a person out of service could not beincluded therein. Wages mean remuneration payable while still atwork or in service. Arrears of wages could be ordered only for theperiod during which the workman still continued to work or isdeemed to have worked while being in service. “Wages” impliesthe continued service of the workman. Compensation for termi-nation of a contract prematurely will not fall into the category of“wages” payable. In this instance the Commissioner could haveordered arrears of wages coupled with reinstatement. An order forreinstatement (unless otherwise ordered) gives continuity to theprevious service of the workman and he is entitled to the wagesunpaid during a period of unlawful termination and also to “allother benefits which the workman would otherwise have receivedif his services had not been terminated”. The moment his servicesare terminated or deemed to be terminated or an order for rein-statement is quashed by a higher Court, the benefits receivableby him may include arrears of wages upto time of terrnination andother benefits which the workman would have been entitled toreceive upto the. date of termination and may be even wages fora period in lieu of a period of expected notice (of termination) butany other benefits such as compensation or even gratuity whichis a bounty paid on discharge from service in acknowledgementof service rendered, would not fall into the category of “other ben-efits which the workman would otherwise have received if his ser-vices had not been terminated”.
Thus when the Court of Appeal quashed the order of theCommissioner for reinstatement, the payment ordred by theCommissioner only in consonance with his order for reinstate-ment could not have been retained by the Court of Appeal,because such payments could not fall within the category of“wages and all other benefits” which the workman would other-wise have received if his services had not been terminated.
Such payments are contemplated in Section 6A(1) whichruns thus –
“6A (1) Where the scheduled employment of any work-man is terminated in contravention of the provisions of thisAct in consequence of the closure by his employer of anytrade, industry or business the Commissioner may order
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such employer to pay to such workman on or before a spec-ified date any sum of money as compensation as an alter-native to the reinstatement of such workman and any gra-tuity or any other benefit payable to such workman by suchemployer.”
The Section speaks of a “sum of money as compensationas an alternative to the reinstatement of such workman" and doesnot refer to wages. A sum of money calculated on the basis of theamount of wages paid to the workman cannot still be consideredas wages. Such a payment is neither “wages” nor “other benefits”a workman would otherwise have received if his services had notbeen terminated”.
When the Legislature brought in Section 6A into theTermination of Employment of Workmen (Special Provisions) Act,No. 45 of 1971 by Section 4 of Law, No. 4 of 1976, there was noneed for such Section if “compensation as an alternative to thereinstatement of such workman and any gratuity or any other(similar) benefit payable to such workman by such employer” wasalso contemplated under Section 6. In fact the Legislature thoughtit fit to have a separate Section (6A) without amending the word-ing of Section 6, due to the fact that compensation, gratuity etc.fell outside the purview of Section 6. But Section 6A only refers tothe closure of trade, industry or business by the employer and itsconsequences.
In this case it could have been argued that there was ineffect a closure of the old business (or trade or industry) due to itbeing amalgamated or merged with another business (or trade orindustry). Compensation then may have been payable underSection 6A but not under Section 6.
The limited scope of the phrase “and all other benefits” etc.in Section 6 could be inferred when the contents of Sections 7and 8 of the Act are considered. Failure to comply with the provi-sions of Section 6 of the Act is deemed to be an offence underSection 7 and is punishable. Section 8 refers to additional pun-ishment. Section 8(1 )(b) is relevant. It runs thus:
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“8. (1) On the conviction of an employer for an offence
under section 7 in respect of any workman, such employ-er shall be liable –
to pay, in addition to any punishment that may beimposed on such employer under that section, a fineof fifty rupees for each day on which the failure is con-tinued after conviction thereof;
and
to pay such workman the remuneration and suchother benefits which would have been payable to himif he had been in employment on such day and oneach day of the period commencing on the date onwhich he should have been employed according tothe provisions of section 6 and ending on the date ofconviction of such employer.”
The above Section clearly shows that Section 6 contem-plated reinstatement and payment of arrears of wages and atten-dant benefits lost due to termination. Such payments were direct-ed to be paid with an order for reinstatement (cf “payable to himif he had been in employment”)
The wording of the above Section 8(1 )(b) implies that whatwas contemplated by the word “wages” in Section 6 was remu-neration and not compensation. And the “benefits” referred to inthat Section were benefits payable to him while he was in employ-ment or deemed to have been in employment after the order forreinstatement (back wages etc.). Section 8 does not make anyprovision for the recovery of compensation or gratuity.
On the other hand Section 6A(1) and (2) deal with compen-sation and recovery of such compensation. It is my view thereforethat Section 6 cannot be interpreted to include compensationpayable as an alternative to reinstatement.
Section 33(1 )(a) of the Industrial Disputes Act cannot bejuxtaposed with Section 6 of the Act and compared since theclause after the word “and” in Section 6 as above referred to,specifically refers to the previous part of the Section which dealswith reinstatement. There is no part, portion or clause in Section
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. 33(1 )(a) of the Industrial Disputes Act similar to the phrase “wouldhave otherwise received if his services had not been terminated”as in Section 6 of the Act. Hence I find it inappropriate to bring inSection 33(1 )(a) of the Industrial Disputes Act to interpret Section6 of the Act. The meaning of a doubtful word must be ascertainedby reference to the meaning of words associated with it. (Noscitura sociis). The sense and meaning of a law can be collected onlyby comparing one part with another and by viewing all the partstogether as one whole and not one part only by itself. {Nemo enimaliquam partem recte intelligere possit antequam totum iterumatque iterum perlegerit).
Therefore Section 6 must be construed after viewing all theparts of the Section together as one whole and not one part onlyby itself or by reference to other sections in other statues whichmay not give a clue as to the meaning of Section 6 as constitut-ed in the Act. Merely because a perceivably deserving case can-not be granted relief in terms of Section 6, we should not bend thelaw to go against the norms of interpretation.
I too am of view like brother Fernando, J. that the benefitsgranted to the 2nd Respondent by the employer were not suffi-cient. But he cannot retain the benefits already received by himfrom the employer on the basis that the termination was lawful, ifhe was to be granted any benefits by the Commissioner. I am alsoof the view that the Court of Appeal could not have quashed theorder for reinstatement and yet retained benefits attendant toreinstatement in terms of Section 6.1 am also unable to determinein this case that there was in fact a closure of the trade, industryor business on account of merger without adequate evidencebeing placed before us.
As pointed out by brother Fernando, J. there are, no doubt,anomalous consequences that could arise if the interpretation ofSection 6 is restricted to reinstatement and attendant benefits.But it is my view that benefits could be granted in such instancesto meet the ends of justice without in any way perverting theinterpretation of Section 6. Thus in respect of the case mentionedby brother Fernando, J. where termination takes place just beforethe due date of retirement, the Commissioner could hold underSection 5 that the termination was illegal, null and void and then
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proceed to order reinstatement as on the date of retirement giv-ing the workman all benefits right upto his date of retirement.Such a discretion is vested in the Commissioner and of course hemust give his reasons for doing so. But to remit the present caseto the 1st Respondent fora fresh determination would not be pru-dent.The same modus operandi on the other hand could be usedin this instance too.
I would therefore set aside the order of the Court of Appealand correct and amend the determination made by theCommissioner of Labour (P26) to read as follows:-
Commencement of Service of Applicant -(2nd Respondent) in this case -01.09.1992
Date of Termination- 30.07.1994
Period of non employment as per contractfrom 30.07.1994 to 31.08.1995 -13 months
Monthly Wages paid
Rs. 202,500/-
Date of reinstatement as perSection 6 of the Act
31.08.1995 subject toterms of contract (P6)pertaining to termination
Order regarding back wages(arrears) and benefits
13 months’ wages less allbeneficial payments paidby employer (on the basisthat termination was lawful)assessed to amount to 9months’ salary (vide judgment by Fernando, J.)amounts to 4 months’ wages202,500 x 4 Rs. 810,000/-
It is to be noted that the date of reinstatement (31.08.1995)is the last possible date of employment in terms of the work con-tract P6. The determination of the work contract would take placeaccordingly on 3.08.1995 (the date of reinstatement).
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I agree with the quantum of amount payable as ordered andall other views expressed by brother Fernando, J. in his judge-ment save and except those dissented from hereto before.
WIGNESWARAN, J.
EDUSSURIYA, J.
Having carefully considered the reasons given by mybrothers Fernando J. and Wigneswaran J. in their judgements Ifind myself in agreement with the judgment of Fernando J.
Appeal dismissed subject tovariation of wages payable by appellant.