013-SLLR-SLLR-1994-V1-SAMALANKA-LIMITED-WEERAKOON-COMMISSIONER-OF-LABOUR-AND-OTHERS.pdf
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Samalanka Limited v. tyeerakoon,
Commissioner of Labour and Others
405
SAMALANKA LIMITED
v.
WEERAKOON, COMMISSIONER OF LABOUR AND OTHERS
SUPREME COURT.
G. P. S. DE SILVA. C.J..
KULATUNGA. J. ANDRAMANATHAN.J.
S.C. APPEAL NO. 34/94CA APPLICATION NO. 622/85.
SEPTEMBER 23RD. 1994.
Industrial Dispute – Writ of Certiorari – Grant of permission to terminateemployment under the Termination of Employment (Special Provisions) Act. No.45 of 1971, SS. 2(1 )(b). 2(4)(b). 2(2). 6A(1), 2(2)(f) – Non-employment -Interpretation Ordinance. Section 22.
The appellant was a company established with foreign collaboration. Theagreement with the foreign collaborator broke down and production came to astandstill in November 1983. On an application made by the appellant companythe Commissioner of Labour (1st respondent) granted permission to terminate theemployment of its workmen under the Termination of Employment of Workmen(Special Provisions) Act subject to the payment of compensation and gratuity.
Application was made for a writ of certiorari to quash the decision by the appellant(Samalanka Ltd.) on the ground that the award of 15 months gross salary for eachworkman was unjustified as it was fixed arbitrarily and no reasons were given.
Held:
In the absence of a statutory requirement there is no general principle ofadministrative law that natural justice requires the authority making the decision toadduce reasons, provided that the decision is made after holding a fair inquiry.
No inquiry under S. 6A(1) of the-Termination of Employment (SpecialProvisions) Act was competent. The impugned decision is attributable to S. 2(2)
Malone for the reason that on the available facts it cannot be said that there was atermination of employment of workmen in contravention of the Act which is acondition precedent to a valid inquiry under S. 6A(1). Where the employer doesnot or cannot provide work but nevertheless continues to pay wages there is notermination of employment within the ambit of S. 2(4)(b) i.e. non-employment inconsequence of the closure.
406
Sri Lanka Law Reports
[1994) 1 Sri LR.
Permission of the Commissioner is required not for the closure but for thetermination of employment of a workman in consequence of a closure.
The appellants application is a valid application for permission to termirilteemployment within the ambit of S. 2(1 )(b).
Section 2(2)(f) provides that the decision shall be final and conclusive andshall not be called in question whether by way of writ or otherwise. Read with S.22 of the Interpretation Ordinance the appellant cannot impeach the decision onthe ground of error of law on the face of the record.
The order cannot be said to be bad for want of procedural fairness or forbreach of the rules of natural justice.
Case referred to:
1. Petris v. The Commissioner of Inland Revenue 65 NLR 457.
APPEAL from Judgment of the Court of Appeal.
Romesh de Silva P.C. with Palitha Kumarasinghe for appellantP. A. Ratnayake S.S.C.. for 1st and 2nd respondents.
Curadv vult.
October 19th, 1994.
KULATUNGA, J.
On an application made by the appellant company the 1strespondent (Commissioner of Labour) decided to grant permission toterminate the employment of its workmen under the Termination ofEmployment of Workmen (Special Provisions) Act, subject to thepayment of compensation and gratuity. The appellant then made anapplication to the Court of Appeal for a writ of certiorari to quash thesaid decision. The Court of Appeal dismissed the application. Theappellant now appeals to this Court from the judgment of the Court ofAppeal.
The application before the Court of Appeal was supported on theground that the decision is bad for failure to adduce reasons and thatthe award of 15 months gross salary for each workman is unjustifiedin that the same has been fixed arbitrarily. The Court held that therewas no legal duty to adduce reasons and hence there was no breach
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Samalanka Limited v. Weerakoon,
Commissioner of Labour and Others (Kulatunga, J.)
407
of qatural justice. The Court also held that having regard to thematerial placed before it by the affidavit of the 2nd respondent(Deputy Commissioner of Labour) who held the inquiry, it could notbe said that the 1st respondent had failed to exercise his discretionlawfully.
No doubt it is desirable to give reasons for a decision, e.g. wherea right of appeal is provided against such decision. However, in theabsence of a statutory requirement, there is no general principle ofadministrative law that natural justice requires the authority makingthe decision to adduce reasons, provided that the decision is madeafter holding a fair inquiry. Hence, the reasoning of the Court ofAppeal cannot be faulted.
Before this Court, the appellant raised an additional groundnamely, that the respondent committed an error of law on the face ofthe record when he permitted the termination of employment on aninquiry conducted under S. 6A(1) of the Act. Special leave to appealwas allowed only on that question. The impugned decision made bythe 1st respondent itself does not specify the section under which it ismade but the point now taken has been raised on the basis of astatement made by the 2nd respondent during the inquiry into theappellant's application and certain averments contained in hisaffidavit filed in the Court of Appeal. Before I consider thesubmissions made by the parties on the question raised by theappellant, it is necessary to set out the relevant facts.
The appellant is a company established with foreign collaborationand engaged in producing fishing gear. The foreign collaborator,Samal & Company had agreed to supply the raw material and topurchase the finished products. The appellant states that thisagreement with Samal & Company had been breached by theCompany. In the result, the business suffered and the factorybecame idle and production came to a standstill, in November, 1983.Nevertheless, the appellant continued to pay the wages of itsworkmen but advised them not to report for duty so that they couldsave on travelling and other expenses.
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Sri Lanka Law Reports
[1994] 1 Sri L.R.
At a Board meeting held on 25.05.84 it was decided to seek thepermission of the Greater Colombo Economic Commission to closedown the factory until such time production could be resumed.Accordingly, the appellant addressed a letter dated 29.05.84 to theG.C.E.C. for permission to close the factory. The G.C.E.C. by its letterdated 01.06.84 advised the appellant to apply to the Commissionerof Labour for a temporary lay off of workers. In the meantime theappellant had been paying the salaries of workmen withoutinterruption upto and including June, 1984.
On 25.06.84 the appellant sought the permission of the 1strespondent for “temporary closure" with an undertaking to re-employthe workmen upon resumption of production. As it appears from thesubmissions of the Counsel for the appellant at the inquiry held bythe 2nd respondent, the application was for permission to terminatethe employment of workmen upon closure. This was an applicationunder S. 2(1 ){b) of the Act for in terms of S. 2{4)(b) ‘termination*includes non-employment of a workman in consequence of a closureby his employer of any trade, industry or business.
The said application by the appellant was treated by the 1strespondent as an application for permission to terminate employmentupon a closure in respect of which the 1st respondent is empoweredto make a decision under S. 2(2). However, in view of certainstatements of Counsel for the parties and an opinion expressed bythe 2nd respondent (inquiring officer) at the commencement of theinquiry (held on 13.08.84) learned President’s Counsel for theappellant argued before us that the inquiry was conducted underS. 6A(1) of the Act.
At the inquiry, Counsel for the appellant first said that themanagement was seeking permission to close down the factory andto terminate the services of the workmen. Counsel for the workmenalleged that the workmen had been sent on “compulsory leave" to
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Samalanka Limited v. Weerakoon,
Commissioner of Labour and Others (Kulatunga, J.)
409
which the appellant's Counsel replied that although the workmen didnot work, wages were paid. At the stage the 2nd respondent said –
"As the wages had not been paid for the month of July, Iconsider that the contract of employment the company had withthe workmen is frustrated and the application fails",
Whereupon the appellant’s Counsel requested the 2nd respondentto make an order under S, 6A(1),
In the appellant's application to the Court of Appeal, it has beenaverred that the order made by the 2nd respondent (which is said tohave changed the character of the inquiry into one under under S.6A(1)) was wrong in law. That position has not been repeated in theappeal to this Court. The appellant’s Counsel merely submitted thatby the remarks quoted above a decision to hold an inquiry under S.6A(1) had been taken; and that this fact is confirmed by the affidavitof the 2nd respondent filed before the Court of Appeal wherein hestates that by the failure to offer work or pay since July, 1984, therehad been “a de facto" termination of employment, contrary to S. 2(1).Counsel submitted that on the facts of the case, the inquiry wasunder S. 6A(1) (in view of alleged illegal termination of employment)and the only relief which could be granted upon such inquiry iscompensation as an alternative to reinstatement. As such, theimpugned decision of the 1st respondent which, in addition toordering compensation, grants approval to terminate the employmentof the workmen, is vitiated by error of Law on the face of the record.
Learned Senior State Counsel for the respondents submitted thateven where the inquiry is held under S. 6A(1), approval to terminatethe services may be granted. His reasoning is that the termination ofemployment which gives rise to such inquiry is void in terms of S. 5.Hence, the workmen have legally not ceased to be in employment;$s such the 1st respondent was competent, in addition to orderingcompensation under S. 6A(1), to grant approval to terminate theirservices under S. 2(2). Counsel argued that if the 1st respondent hasthe power to grant such approval, the failure to refer to S. 2(2) wouldnot invalidate the impugned order. In support, he cited the decision inPeiris v. The Commissioner of inland RevenueP
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Sri Lanka Law Reports
[1994] 1 Sri L.R.
Counsel for the appellant replied that s. 5 would not operate in acase covered by s. 6A(1); that once compensation is paid thereunderas an alternative to reinstatement, the employer is thereby fijjlydischarged; and hence no permission to terminate the employmentof workmen is legally required or grantable. He also submitted thatwhere the inquiry is held under S. 6A{1), the award of compensationcannot be justified by invoking S. 2(2). His reasoning for thiscontention is that compensation under S. 6A(1) and S. 2(2) areconceptually different in that under the former section it is awarded inview of an unlawful termination whereas under the latter sectioncompensation is awarded in respect of a lawful termination, with theapproval of the Commissioner.
On a careful consideration of the facts and the relevant legalprovisions, I find that no inquiry under S. 6A(1) was competent, andthe impugned decision (which makes no reference to any section) isattributable to S. 2(2) alone for the reason that on the available facts itcannot be said that there was a termination of employment ofworkmen in contravention of the Act which is a condition precedentto a valid inquiry under S. 6A(1). The reason for this finding may beelaborated thus:
from November 1983, the working of the factory came to astandstill, after which the workers were requested not to reportfor work, but they were paid their wages upto the time theappellant applied to the 1st respondent on 25.06.84 forpermission to terminate their services;
where the employer does not, or cannot provide work butnevertheless continues to pay wages, there is no termination ofemployment within the ambit of S. 2(4)(b) i.e. non-employmentin consequence of the closure. S. R. de Silva in his work “TheContract of Employment" (1983) p. 212 says –
"… apart from exceptional cases a contract of employmentdoes not oblige an employer to provide work but only to paywages. There appears to have been no necessity for thelegislature to cover cases of non-offer work so long as wagesare paid as it causes no real prejudice or damage to the
SamalanKa Limited v. Weerakoon,
SCCommissioner of Labour and Others (Kulatunga, J.)411
employee. The object of the Act was to exercise control oversituations of a non-disciplinary nature where there is a loss ofemployment involving a loss of earnings".
This in my view is a correct interpretation of the expression“non-employment”, As such, there was no termination ofemployment of workmen in consequence of a closure by theappellant.
permission of the Commissioner is required not for the closurebut for the termination of employment of a workman inconsequence of a closure. Thus S. R. de Silva says (page 214) –
“It is not a closure but only a non-employment of a workmanconsequent upon a closure that is covered by the Act”.
In the circumstances, the appellant’s application dated 25.06.84made to the 1st respondent is a valid application for permission toterminate employment within the ambit of S. 2(1 )(b). The inquiry wascommenced in terms of that section. It has been suggested that atthat stage the character of the inquiry changed to one under S. 6A(1)in view of the allegation that wages of employees had not been paidfor the month of July. There is no admission of the alleged default bythe witness who testified on behalf of the management. But even ifthere had been a failure to pay wages pending the inquiry, I do notthink that in the circumstances of this case, it could constitute a“termination” which would entitle the inquiring officer to convert theinquiry into one under S. 6A(1). I therefore agree with the appellant'ssubmission before the Court of Appeal that the order made by the2nd respondent which is said to have changed the character of theinquiry was wrong in law.
I hold that the inquiry held by the 2nd respondent was under S.2(2). At the conclusion of the inquiry the 1st respondent by his letterdated 22.10.84 approved the termination of services with effect from31.10.84 subject to the payment of compensation, in addition togratuity payable in terms of the law. In terms of S. 2(2)(e) such order
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Sri Lanka Law Reports
11994J 1 Sri L.R.
is made by the Commissioner “in his absolute discretion andS. 2(2)(f) provides that such decision “shall be final and conclusive,and shall not be called in question whether by way of writ or otherwise,.In view of this preclusive clause read with S. 22 of the InterpretationOrdinance the appellant cannot impeach the decision on the groundof “error of law on the face of the record”.
The total sum awarded as compensation for about 128 workmen isRs. 1.4 Million. The 2nd respondent states that this represents 15months salary for each workman inclusive of 3 months salary in lieuof notice. Learned Counsel for the appellant submitted that eventhough special leave to appeal was allowed on a limited question,this Court ought to consider whether the compensation awarded isarbitrary. Even if I were to entertain this request, 1 do not find anyground for quashing the impugned order in view of the manner inwhich compensation has been awarded, The inquiring officer hasquestioned the witness for the management on the question of assetsof the appellant. The fixed assets and stocks and raw materials total32 Million. There is due from Samal & Company 9.7 Million. Theliabilities of the appellant appear to total 26.6 Million.
Accordingly, I do not think that this Court can consider the meritsof the award of compensation. It cannot be said that the order is badfor want of procedural fairness or for breach of the rules of naturaljustice. Accordingly, I affirm the judgment of the Court of Appeal anddismiss the appeal with costs.
G. P. S. DE SILVA, C J. -1 agree.
RAMANATHAN, J. -1 agree.
Appeal dismissed.