002-NLR-NLR-V-66-STRATHEDEN-TEA-CO.-LTD.-Petitioner-and-R.-R.-SELVADURAI-et-al.-Respondents.pdf
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Stratheden Tea Co. Ltd. v. Selvadurai
1963Present: Weerasooriya, S.P.J., and Herat, J.STRATHEDEN TEA CO. LTD., Petitioner, andR. R. SELVADURAI et al., Respondents
8. C. 428—Application for the issue of a Mandate in the Nature of a Writ
of Certiorari
Industrial Disputes Act (Cap. 131)—Section 17 .(1)—Meaning of expression “ just andequitable ”—Invalidity of award ordering payment of compensation to a labourerwithout a decision as to re-instatement—Certiorari.
Although the power conferred by section 17 (1) of the Industrial DisputesAct on an arbitrator is a wide one, it must be exercised in accordance with justiceand equity, and not arbitrarily. As between two innocent parties, one of whombas sustained a loss, there is no ground in justice or equity for shifting theburden of the loss to the other party. The rule in such a case is that the lossmust lie where ft falls.
An estate labourer who sought employment in an estate was not selected bythe management of the estate. The arbitrator to whom the dispute was referred> under section 4 (1) of the Industrial Disputes Act held that there had been nocontract for the employment of the labourer but, nevertheless, awarded himcompensation on compassionate grounds.
Held, that the order for compensation was made on a misconstruction of theexpression “ just and equitable ” in section 17 (1) of the Industrial DisputesAct, and was an error of law. As the error of law appeared on the face of therecord, it was liable to be quashed by writ of certiorari.
Held further, that an order for payment of compensation could not be madeexcept as an alternative to re instatement.
Application for a writ of certiorari to quash an award made by anarbitrator in respect of an industrial dispute referred to him under section4 (1) of the Industrial Disputes Act.
JET. V. Perera, Q.C., with L. Kadirgamar, for the Petitioner.
M. Tiruchelvam, Q.C., with K. Kandaswamy, for the 2nd Respondent.
Cur. adv. vult.
WEERASOORIYA, S.P.J.—Stratheden Tea Co. Ltd. v. Selvadurai
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December 20, 1963. Weebasoobiya, S.P.J.—
This is an application for a writ of certiorari to quash an award made bythe 1st respondent in his capacity as an arbitrator in respect of an indus-trial dispute referred to him under section 4 (1) of the Industrial DisputesAct (Cap. 131) for settlement by arbitration. The dispute was whetherthe failure of the management of Henlold Estate, Lindula, to offer workto one Palaniyandy and six other members of his family named in thereference was justified and to what lelief they were entitled. The petitioner-company is the owner of Henfold Estate. .
Prior to the 5th July, 1958, Palaniyandy and the six others wereworking on Stanford Hill Estate. Towards the end of June, 1958, themanagement of Henfold Estate was desirous of recruiting about twenty-five additional labourers and this fact Was announced at the muster groundof the estate by the Kanakapulle Ponnusamy. Palaniyandy, who cameto hear of the proposed recruitment, decided that he and his family shouldleave Stanford Hill Estate and obtain employment on Henfold Estate.Having obtained their discharge tickets on the 5th July, 1958, from theSuperintendent of Stanford Hill Estate, who in this instance waived theusual one month’s notice, Palaniyandy and the six others went to HenfoldEstate on the following day, after informing Ponnusamy of their arrival.When they got there'Ponnusamy arranged accommodation for them in theestate lines pending their employment.
Just at this time the Superintendent of Henfold Estate was going onfurlough and the question of the employment of the newcomers was keptin abeyance. It was only on the 17th July that, while certain otherlabourers who had also come to the estate at the same time as Palaniyandyin search of employment were taken on, Palaniyandy and the six membersof his family were told that they would not be employed. This decisionwas made by the Acting Superintendent who, as a result of informationobtained by him in the meantime regarding the antecedents ofPalaniyandy, had come to the conclusion that it was not in the interestsof the estate to employ him or the others. In the result they were leftstranded as they had already terminated their employment on StanfordHill Estate. The 2nd respondent is a union of which the workersemployed on Henfold Estate were members. It is not clear whetherPalaniyandy and the six others were also members, but on their behalf the2nd respondent took up the position that the management of HenfoldEstate had, through their agent Ponnusamy, entered into a contract fortheir employment and that the refusal on the 17th July to give them workamounted to a breach of contract. This position was contested by themanagement. Hence the reference to arbitration.
Section 4 (1) of the Industrial Disputes Act provides for the referenceof a minor industrial dispute for settlement by arbitration notwithstandingthat the parties to the dispute do not consent to such a reference.Mr. Tiruchelvam, who appeared for the 2nd respondent-union, concededthat the award of the arbitrator on such a reference could be quashed bywrit of certiorari.
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WEEJiASOORXYA, S.P.J.—Strathedcn Tea Co. Ltd. v. Selvadurai
The 1st respondent held that there was no contract for the employmentof Palaniyandy and the other members of his family as contended for bythe 2nd respondent-union. He had several adverse comments to makeregarding Palaniyandy’s character and his temperament as a worker.He also held that the Acting Superintendent of Henfold Estate did notact unfairly in refusing to employ Palaniyandy and the six others and thatin the circumstances the non-employment of those persons was justified.He held, further, that no question of estoppel arose against the manage-ment in respect of the non-employment. Notwithstanding these findings,which were in favour of the management of Henfold Estate, the1st respondent ordered that Palaniyandy and the six others should becompensated by the management to the extent of paying each of themtwo and a half months’ wages and allowances, computed on thehypothetical basis that they had worked on every working day fromMonday the 7th July, 1958.
The 1st respondent held that it was “ but just and equitable ” thatPalaniyandy and his family should be compensated in the manner indi-cated. Section 17 (1) of the Industrial Disputes Act empowers an arbi-trator to whom a dispute is referred under section 4 (1) for settlement byarbitration to make “such award as may appear to him just andequitable ”. Mr. H. V. Perera submitted on behalf of the petitioner thatthe order for compensation is based on a misconception on the part of the1st respondent as to the meaning of the Words “ just and equitable ” insection 17 (1) and on that ground he asked that the order be quashed foran error of law on the face of the record.
In making the order for compensation, the 1st respondent stated that hetook into account that Palaniyandy and his family threw up their jobs onStanford Hill Estate, that they were put to the expense of moving fromthere to Henfold Estate and that they had been “ induced ” to do so on theunderstanding that they would be employed on Henfold Estate. But thefindings of the 1st respondent on tin issue relating to the alleged contractof employment absolve the management of Hehfold Estate from anyliability, legal or moral, towards Palaniyandy And his family. On thesefindings it is clear that whatever inducement was offered to them as aresult of which they terminated their employment on Stanford HillEstate came from a quarter other than the management. It wouldappear that there is a universal practice requiring an applicant for employ-ment on one estate to produce his discharge ticket from another estatewhere he had previously worked. This practice was condemned by the1st respondent as “ thoroughly pernicious ”, but, even so, he held thatwhen Palaniyandy and his family obtained their disct.arge tickets fromStanford Hill Estate before setting out for Henfold Estate, it was a riskwhich they knowingly took and that the management of HenfoldEstate was not liable in damages on that ground.
WEERASOORIYA, S.P.J.—Stratheden Tea Co. Ltd. v. Selvadurai
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The question, then arises whether in the circumstances stated above itwas open to the 1st respondent to make an order for compensation againstthe management of Henfold Estate on the just and equitable ground insection 17 (1) of the Industrial Disputes Act. Although the power con-ferred by that section is a wide one, there are limitations to the exerciseof it which aTe implicit in the wording of the section. That is to say, thepower is to be exercised in accordance with justice and equity, and notarbitrarily. “ In the most general sense, we are accustomed to call thatEquity, which, in human transactions, is founded in natural justice, inhonesty and right, and which properly arises ex aequo et bono ”—Storyon Equity (2nd ed.) Vol. 1, page 1. As between two innocent parties,one of whom has sustained a loss, I can see no ground in justice or equityfor shifting the burden of the loss to the other party. The rule in such acase is that the loss must lie where it falls. As indicated by the PrivyCouncil in Davis & Go., Ltd. v Brunswick (Australia) Ltd.,1 where themeaning of the phrase “ just and equitable ” in the New South WalesCompanies Act, 1899, was considered, the Court is required to hold “ aneven hand ” between the conflicting interests.
The order for compensation in the present case seems to be basedentirely on charitable or compassionate grounds and, in my view, is notin accordance with the findings. I do not mean to say that an arbitratorshould put aside all considerations as these in determining what isjust and equitable. But such sentiments should not be the deciding factorin making an order to the detriment of a party who has been held to be asfree from blame as the party whom the order is intended to benefit-. In myopinion, the order for compensation made by the 1st respondent againstthe management of Henfold Estate has proceeded on a misconstructionof the expression “ just and equitable ” in section 17 (1) of the IndustrialDisputes Act, and is an error of law. As the error of law appears on theface of the record, I quash so much of the award as relates to the paymentof compensation.
Apart from the reasons which have weighed with me in coming to theabove conclusion, it was decided recently by a Divisional Bench of thisCourt in Taos Ltd. v. P. 0. Fernando and Others 2 that an order for pay-ment of compensation cannot be made in an award except as analternative to re-instatement. The decision in that case, which is bindingon us, proceeded on a consideration of section 33 (1) of the IndustrialDisputes Act. In the award of the 1st respondent there is, of course, noorder for re-instatement as the question did not arise. If the ratiodecidendi of the case which I have just cited is applicable to the presentcase, as I think it is, the order for compensation is ultra vires of the powersof an arbitrator appointed under the Industrial Disputes Act. This wouldbe an additional ground for quashing the order for compensation.
The 2nd respondent will pay the petitioner-Company the costs of thisapplication, which I fix at Rs. 262.50.
tj TTApplication allowed.
HERAT, o . -L R^r66,
1 {1936) 1 A. E. R. 299.
1 {1963) 65 N. L. R. 259.