042-NLR-NLR-V-79-1-THE-CALEDONIAN-CEYLON-TEA-AND-RUBBER-ESTATES-LTD.-Employaer-Appellant-and-.pdf
Caledonian Estates Ltd. v. Hillman
421
1977Present: Sharvananda, J. and Wanasundera, J.THE CALEDONIAN (CEYLON) TEA AND RUBBER ESTATES,LTD., Employer-Appellantand
J. S. HILLMAN, Applicant-RespondentS.C. 250/72—L.T. 1/27665Labour Tribunal—Finding that termination of services justified^—Juris-diction to award compensation—Distinction between damages andcompensation—Claim in justice and equity—Employer’s right toclose down business—Industrial Disputes Act as amended by ActNo. 4 of 1962, sections 31B, 31C, 33(1) (d).
Appeal from order of Labour Tribunal—In what circumstances willAppellate Court set aside a determination of facts—Standard ofproof required in respect of allegations of misconduct—Balanceof probabilities.
H was employed by the appellant as the Superintendent of anestate from 1959 to 1965. In January 1966 the appellant sold theestate. After giving notice to H, the appellant terminated his servicesin February 1966. On the date of termination of services H wasdrawing a salary of Rs. 1,800 per mensem plus the usual allowancesUpon termination of employment the appellant offered to pay, exgratia, a sum of Rs. 21,600 being one year’s salary but H refusedto accept the same. In an application filed in the Labour Tribunalby H, it was held that the termination of the services of H wasjustified but the appellant was ordered to pay H 10 years’ salary atRs. 1,800 a month as compensation.
It was contended on behalf of the appellant that the LabourTribunal had no jurisdiction to award any compensation inasmuchas the Tribunal had held that the termination of services wasjustified.
Held : That where the termination of employment was causedsolely by the act and will of the employer in pursuance of his desireto sell the estate, the relief of compensation is available to H, thedischarged employee.
Held further : (1) That inasmuch as an appeal lies from an Orderof a Labour Tribunal only on a question of law an appellant whoseeks to have a determination of facts by the Tribunal set aside,must satisfy the Appellate Court that there was no legal evidenceto suoport the conclusion of facts reached by the Tribunal, or thatthe finding is not rationally possible and is perverse even withregard to the evidence on record.
422
Caledonian Estates Ltd. v. Hillman
(2) That an allegation of misconduct in proceedings before aLabour Tribunal has to be decided on a balance of probabilities, andit is not necessary to call for proof beyond reasonable doubt asin a criminal case. In the present case, however, the fact that theTribunal adopted the standard of proof beyond reasonable doubthas not led to a miscarriage of justice as, even on the applicationof the standard of a balance of probabilities the case against theapplicant had not been established.
Per Sharvananda, J.—
“ A Labour Tribunal is thus entitled to grant compensation forloss of career if it thinks such relief is just and equitable in thecircumstances, even though the termination is consequent to theexercise by the employer of his fundamental right to close downhis business By exercising his right to close down his busi-
ness, the employer may frustrate the employee’s re-instatementbut he cannot escape his liabilty to pay compensation to theemployee for loss of employment
Cases referred to :
Inland Revenue v. Fraser, {1942) 24 Tax cases 498.
Edwards v. Bairstow (1955) 3 All E.R. 48; (1956) A.C. 14; (1955)
3 W.L.R. 410.
Associated Battery Manufacturers Ltd. v. United EngineeringWorker’s Union, 77 W.L.R. 541.
Wataraka Muli-Purpose Co-operative Society Ltd. v. Wickrama-chandra, 70 N.L.R. 239.
The Group Superintendent, Dalma Group v. The Ceylon Estate Staffs’Union, 73 N.L.R. 574.
Rumblan v. Ceylon Press Workers’ Union, 75 N.L.R. 575.
Ceylon Transport Board v. Wijeratne, 77 N.L.R. 481.
Superintendent, High Forest Estate v. Malapane Watu KamkaruSangamaya, 66 N.L.R. 14.
Highland Tea Co. v. National Union of Workers, 70 N.L.R. 161.
Ceylon Workers’ Congress v. Superintendent, Roseberry Estate, 70N.L.R. 211.
Lloyd v. Brassey, (1969) 1 All E.R. 382 ; (1969) 2 W.L.R. 310.Amblamana Tea Estates Ltd. v. Ceylon Estate Staff’s Union, 76N.L.R. 457.
United Engineering Workers’ Union v. Devanayagam, 69 N.L.R. 289(P.C.) ; (1968) A.C. 356; (1967) 2 All E.R. 367; (1967) 3W.L.R. 461.
The National Union of Workers v. The Scottish-Ceylon Tea Co.Ltd., 78 N.L.R. 133.
Dixon v. Calcroft, (1892) 1 Q.B. 458 ; 66 L.T. 554; 8 T.L.R. 397 : 61L.J.Q.B. 529.
Hall Brothers v. Young, (1939) 1 K.B. 748; (1939) 1 All E.R. 809 ;160 L.T. 402 ; 55 T.L.R. 506.
Taos Ltd. v. P. O. Fernando, 65 N.L.R. 259.
PPEAL from an order of the Labour Tribunal.
R.A. Kannav.ga.ra, with D. C. Amerasinghe and P. Sunthera-lingam, for the employer-appellant.
H. W. Jayeioardene, Q.C. with I. Perera and Miss S. Fernando,for the applicant-respondent.
Cur. adv. vult.
SHARV.ANANDA, J.—Caledonian Estates Ltd. v. Hillman
423
September 20, 1977. Shakvananda, J.
The applicant-respondent, coming from a family of up-countryplanters, nimselx turned to planting as a career. In August, 1954,he took up an appointment as Assistant Superintendent of Milla-kande Tea Estate under Rosehaugh Co. Ltd. While in the serviceof Rosehaugh Co., after serving on numerous estates, in 1953he was offered the post of Superintendent of Selegama Estate,owned at the time by Caledonian (Ceylon) Tea and RubberEstates Ltd., the employer-appellant. Up to the time the applicantwas appointed to Selegama Estate in 1958, all estates inwhich the applicant worked were owned by Rosehaugh Co.Ltd. The applicant was employed by the appellant during theperiod 1959 to 1965 as Superintendent of Selegama Estate,Mahawela. In January, 1966, the appellant sold Selegama Estateand found no further use for the applicant’s services. On orabout 28th February, 1966, after notice on that behalf, theappellant terminated the services of the applicant. On the dateof termination of his services, the applicant’s salary was Rs. 1,800per mensem plus the usual allowances ; upon termination ofhis employment, the appellant offered to pay the applicant exgratia a sum of Rs. 21,600, being one year’s salary, but theapplicant refused to accept the same. In May, 1966, the applicantfiled the present application for relief in the Labour Tribunal.The applicant alleged that the purported termination of hisservices on the ground that Selegama Estate was sold was dis-criminatory, wrongful and unjust. The appellant filed answerstating, inter alia, that Selegama Estate was sold in January,1966, and that it terminated the services of the applicant-respondent after adequate notice consequent upon the said sale.By its letter dated 28th September, 1965 (A91), the appellant-company had indicated to the applicant that it was negotiatingthe sale of the Selegama Group and that the company wouldnot be in a position to retain the services of the applicant. Byletter dated 21st January, 1966, the applicant refused to acceptthe position that the company was entitled to terminate hisservices and stated that “ in the event of Selegama being sold,you will be bound to offer alternate employment in keeping withmy services and seniority The appellant-company did notoffer the applicant any suitable alternative emplovment. Iahis application to the Tribunal, the applicant, stated that he hadalways executed his duties as Superintendent to the best of hisability and to the entire satisfaction of the employer-companyand that he had many recorded instances of his excellent andloyal service and that at all times before the termination he wasgiven the expectation of continued employment for the rest of
424
SHARVANANDA, J.— Caledonian Estates Ltd. v. Hillman
his active life. B„y its answer, the appellant, while justifying thetermination of the applicant’s services on the ground of the saleof Selegama Esate, denied, inter alia, the applicant’s avermentsthat he had always executed his duties to the entire satisfactionof the employer and that he was given the expectation ofcontinued employment for the rest of his active life.
At the inquiry, though the reason for the termination of theapplicant’s services was given as closure, yet the appellant leda large volume of evidence respecting the applicant-respondent’smisconduct alleged to have been discovered after the applicant’sservices were terminated. The position taken up by the employer-company was that the sale of the estate amounted to a closureand hence the termination was justifiable and that it was notnecessary to further justify the termination on the ground ofthe alleged misconduct of the applicant, but since the applicantwas claiming reinstatement or compensation, his character wasrelevant to determine whether he was entitled to such relief.After a long drawn out inquiry, the Labour Tribunal held asfollows :
"The Tribunal has carefully considered the evidence ledin this case and also has carefully considered the groundson which the respondent has terminated the services of theapplicant, namely that the applicant’s services were notrequired any further consequent on the sale of the estatewhere he worked and also he could not have fitted into theremaining only estate this company had in its business inCeylon. This Tribunal therefore accepts the position of therespondent that, in the circumstances, the termination ofapplicant’s services was justified, but considers the reliefoffered on the ground of termination of his services woefullyinadequate. ”
As regards the charges made against the applicant, the Tribunalcame to the following conclusion :
“ The Tribunal, having considered all the evidence anddocuments in support of these charges and since the chargesinvolved allegations amounting to moral turpitude of theapplicant the burden of proving the charges is beyondreasonable doubt, holds, after a clear assessment of theevidence placed before it, that none of these charges hasbeen proved beyond reasonable doubt. ”
The Tribunal held that the relief offered to the applicant wastotallv inadequate and concluded that ten years’ salary atRs. 1,800 a month as compensation would be just and equitable
SHAftVAJNAJNDA, J.—Caledonian Estates Ltd. v. Eillman
426
relief to the applicant. The Tribunal hence ordered the employer-company to pay the applicant a sum of Rs. 216,000 as compen-sation plus a sum of Rs. 5,000 as costs of the inquiry. From thisorder, the employer-company has preferred this appeal.
Under section 31.D (2) of the Industrial Disputes Act, an appealto the Supreme Court lies from an order of a Labour Tribunalonly on a question of law. Parties are bound by the Tribunal’sfindings of fact, unless it could be said that the said findingsare perverse and not supported by any evidence. With regardto cases where an appeal is provided on questions of law only,Lord Normand, in Inland Revenue v. Fraser, (1942) 24 Tax Casesp. 498, spelt the powers of Court as follows :
“ In cases where it is competent for a Tribunal to makefindings of fact which are excluded from review, the Appeal
Court has always jurisdiction to intervene if it appears
that the Tribunal has made a finding for which there isno evidence, or which is inconsistent with the evidence andcontradictory of it. ”
In this framework, the question of assessment of evidenceis within the province of the Tribunal, and, if there is evidenceon record to support its findings, this Court cannot review thosefindings even though on its own perception of the evidence thisCourt may be inclined to come to a different conclusion. “ If thecase contains anything ex facie which is bad in law and whichbears upon the determination, it is, obviously, erroneous in pointof law. But, without any misconception appearing ex facie, itmay be that the facts found are such that no person actingjudicially and properly instructed as to the relevant law couldhave come to the determination under appeal. In those circums-tances too, the Court must intervene. ”—per Lord Radcliffe inEdwards v. Bairstow (1956) 3 A.E.R. at 57. Thus, in order toset aside a determination of facts by the Tribunal, limited asthis Court is only to setting aside a determination which iserroneous in law, the appellant must satisfy this Court that therewas no legal evidence to support the conclusion of facts reachedby the Tribunal, or that the finding is not rationally possibleand is perverse having regard to the evidence on record. Hence,a heavy burden rested on the appellant when he invited thisCourt to reverse the conclusion of facts arrived at by theTribunal.
Both counsel for the appellant and respondent addressed usfully on the facts and subjected the evidence to a critical exami-nation with a view to persuading us that the findings of fact
I***—A 45068 (79/10)
426
SHARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
reached by the Tribunal on the several matters in dispute in thecase are capricious or unreasonable and should be reversed. TheLegislature has designated the Labour Tribunal as the propertribunal to determine the facts, and this Court should not seekto substitute its own view of the facts for that of the Tribunal.Since it cannot be said that the conclusions are unreasonableand not warranted by the evidence on record, this Court willhave to accept those findings and base its decision on thequestions of law arising on these findings of fact, even thoughit may, on a review of the evidence, be inclined to acceptCounsels’ criticism of the findings.
The Tribunal has held that the termination of the applicant’sservices, for the reasons given by the appellant (viz. that theapplicant’s services were not required any further, consequentupon the sale of the estate where he worked and also that hecould not be fitted into the only remaining estate of the appel-lant) was justified. The Tribunal has thus rejected the allega-tion made by the applicant that the termination was male fide,unfair and/or discriminatory. The Tribunal has also held that,though the evidence disclosed that the conduct of the applicantwas irregular, the appellant had failed to bring home the chargesof improper conduct against the applicant. It must be observedthat the Tribunal required the charges to be proved beyondreasonable doubt. The President was wrong in adopting such ahigh standard of proof in respect of the allegations of misconductagainst the applicant. I agree with the decision in AssociatedBattery Manufacturers Ltd. v. United Engineering Workers’Union, 77 N.L.R. 541, that an allegation of misconduct in pro-ceedings before a Labour Tribunal has to be decided on a balanceof probabilities and it is not necessary to call for proof beyondreasonable doubt as in a criminal case. However, in my viewthis lapse or misdirection has not led to a miscarriage of justice,as, even on the application of the standard of balance of proba-bilities, the case against the applicant respecting his misconductcannot be held to have been established. In the answer filedby the appellant, it did not make any of the specific chargesof misconduct that it sought to substantiate later at the inquiryThe only ground that the appellant urged for terminating theservices of the applicant was that Selegama Estate was sold.The termination of the applicant’s service was sought to bejustified before the Tribunal noc an the basis of these chargessubsequently made, but principally on the ground that theestate was sold. It is to be noted that by its notice of terminationdated 28th September, 1965, (A91), the appellant had under-taken to compensate the applicant for its inability to continuehim in service.
8HARVANANDA, J-—Caledonian Estates Ltd. v. Hillman
427
The main burden of the appellant's counsel’s argument wasthat the President, having held that the termination was justi-fied, had no jurisdiction to award any compensation in respectof the said termination ; and accordingly in awarding a sum ofRs. 216,000 by way of compensation tb the applicant, the Presi-dent had erred in law and had exceeded his jurisdiction. Hesubmitted that apart from the case of retrenchment compen-sation, an award for the payment of compensation by an employ-er is dependent on a finding that there had been a termination ofemployment, which is irregular, wrongful or unjust, and thatif the termination is held to have been justified, an order for re-instatement would not arise and no order for compensation canbe made. In support of his proposition, he relied on the followingauthorities :
Wataraka Multi-Purpose Co-operative Society Ltd. V.Wickremachandra (70 N.L.R. 239) ;
The Group Superintendent v. The Ceylon Estate Staff’sUnion (73 N.L.R. 574) ;
Rumblan v. Ceylon Press Workers Union (75 N.L.R. 575) ;
Ceylon Transport Board v. Wijeratne (77 N.L.R. 481 at489) ;
S.R. de Silva —“The Legal Framework of IndustrialRelations ” at p. 386.
In my view, the proposition urged by counsel has been toobroadly stated. The proposition will hold good if the terminationis justified on the ground of misconduct of the employeeand such terminations is by way of disciplinary measure. But,where an employee is in no way responsible for the terminationand the termination was consequent on the lawful exercise ofhis proprietary rights by the employer, as in the case where hecloses down the business and thus renders the employment of theworker purposeless, the proposition is not tenable. In the caseof closure of business, justification of termination of the emplo-yee’s services flows from the closure itself and not from theemployee’s misconduct.
In the case of Wataraka Multi-Purpose Co-operative SocietyLtd. v. Wickremachandra, 70 N.L.R. 239, the services of theworkman were terminated by the employer on the ground ofinefficiency. It was in that context that Tennekoon, J. stated :
“ If the respondent was in fact inefficient and there was neitherillegality nor any finding that the termination of services forinefficiency was an unfair labour practice, it is an error of lawto award any compensation under section 31 (1) (d) of the Act. ”
428
SHARVANAIsDA, J.—Caledonian Estates Ltd. v. Hillman
The facts in the case of Group Superintendent v. Ceylon EstateStaffs’ Union, 78 N.L.R. 574, were that the services of theworkman were terminated after due notice in view of the closingof the employer’s factory as an economy measure in order tomeet the increasing expenditure on production and as a resultof the amalgamation between Glendowen Estate where thefactory was situated and the adjoining Delma Group, whence anumber of employees at Glendowen Estate became redundant ;the employer had made a very reasonable offer of alternativeemployment, which the applicant refused purely on a questionof prestige. The President, having held that the termination ofemployment was unlawful, granted compensation in view of theworker’s enforced retirement. While setting aside the order ofthe President, Alles, J. observed :
“ In this case, no wrong has been done. On the contrary,Perera has been offered very favourable terms of employ-ment with a higher wage which he chose to discard on the
ground of prestigeIt is not possible to state in this
instance that the termination of the applicant’s services wasunlawful or contrary to the accepted standards of fair labourpractice.”
The right of a workman to compensation on closure of businessis designed to relieve the hardship caused by involuntary un-employment due to no fault of the employee. No unemployment-compensation is payable when suitable alternative employmentis offered and the workman wrongly refused to accept it.
In the case of Rumblan v. Ceylon Press Workers’ Union, 75N.L.R. 575, the workman was dismissed because he had causeddamage to the machine and it was held that the dismissal wasjustified. It was in these circumstances that de Kretser, J. heldthat where dismissal is proper and justified, no compensationcan be awarded. This case was referred to by Vythialingam, J.in Ceylon Transport Board v. Wijeratne, 77 N. L. R. 481 at 489,when he stated that where dismissal is justified, no compensationcan be ordered. The termination of services that he had in mindwas the dismissal of an employee as a disciplinary measure andnot the discharge of an employee as an economy measure. Theproposition of law “ apart from the case of retrenchment-com-pensation an award for the payment of compensation by anemployer is dependent on a finding that there had been a termi-nation of employment by the employer which is illegal, wrongfulor unjust ” stated in Silva—“ Legal Framework of IndustrialRelations ” at p. 387 cannot be accepted in its wide breadth. Itsapplicability must be confined to cases of dismissal as a discipli-nary measure and not to cases of discharge from employment
SHAJiVANANDA, J.—Caledonian Estates Ltd. v. Hillman
429
resulting from closure of business or any other act of theemployer. In the latter situation, though the termination may bejustifiable, a Tribunal has jurisdiction, in making a just andequitable order, to direct compensation to be paid to thedischarged employee.
The authorities relied on by counsel for the appellant are allcases of misconduct or other acts on the part of the workmanwhich justified the termination of his services. He also cited thecase of Superintendent, High Forest Estate v. MalapaneSangamaya, 66 N.L.R. 14, where T. S. Fernando, J. held that itis not open to a Labour Tribunal to grant equitable relief undersection 31. C (1) of the Industrial Disputes Act to a labourer’sspouse when her contract of service had been compulsorily termi-nated by the employer in terms of section 23 (1) of the EstateLabour (Indian) Ordinance in consequence of the lawful dis-missal of her husband. In view of the provisions of the EstateLabour (Indian) Ordinance, the employer had no alternative butto dispense with the services of the labourer’s spouse. The statuteimposed on the employer the obligation, under pain of punish-ment, of determining the contract of service of the spouse. Inthe circumstances, the termination of the spouse’s services wasinvoluntary. T. S. Fernando, J. held that no order which is inconflict with the law, as declared by the Legislature, can be justand equitable. In the case of Highland Tea Co. v. National Unionof Workers, 70 N. L. H. 161, Alles, J. while holding that thetermination of the services of the spouse was not wrongful orunlawful, took the view that the President had not erred in lawin making an order for compensation (taking into considerationthe period of service)—an order that was just and equitable inthe circumstances. In the case of Ceylon Workers’ Congress v.Superintendent, Roseherry Estate, 70 N.L.R. 211, Alles, J.observed that it was open to a Labour Tribunal to give relief, inan appropriate case, to an innocent spouse whose services hadbeen lawfully terminated under section 23 (1) of the EstateLabour (Indian) Ordinance whether a joint statement was filedor not.
The question that the Tribunal has to address itself is notwhether the employment has been terminated in terms of thecontract between the parties or according to law, but whetherthe employee has, in the circumstances of the termination, aclaim, in justice and equity, to compensation or other benefit forthe loss of career resulting from the termination. If theemployee’s conduct had induced the termination, he cannot, injustice and equity, have a just claim to compensation for loss ofcareer, as he has only to blame himself for the predicament in
430
SHARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
which he finds,himself. But where the termination was causedsolely by the act and will of the employer in the exercise of hismanagerial discretion to organise and arrange his business, aTribunal, exercising just and equitable jurisdiction, uninhibitedby limitations of law but actuated by postulates of justice, iswell entitled to grant relief in the nature of compensation to thedischarged employee, even though, in law, the employer wasjustified in discharging him from service on account of surplus-age. The jurisdiction that is vested in a Labour Tribunal by theIndustrial Disputes Act is not a jurisdiction of merely administer-ing the existing common law and enforcing existing contracts.The relations between the employer and his workman are nolonger governed by the contract of service. The Tribunal has theright, nay the duty, to vary contracts of service between theemployer and the employee—a jurisdiction which can never beexercised by a civil Court. In the course of adjudication, a Tribu-nal must determine the ‘ rights ’ and ‘ wrongs ’ of the claim made,and in so doing it undoubtedly is free to apply principles ofjustice and equity, keeping in view the fundamental fact that itsjurisdiction is invoked not for the enforcement of mere contrac-tual rights, but for preventing the infliction of social injustice.The goals and values to be secured and promoted by LabourTribunals are social security and social justice. The concept ofsocial justice is an integral part of Industrial Law, and a LabourTribunal cannot ignore its relevancy or norms in exercising itsjust and equitable jurisdiction. Its sweep is comprehensive as itmotivates the activities of the modern welfare state. It is foundedon the basic ideal of socio-economic equality. Its aim is to assistin the removal of socio-economic disparities and inequalities. Itendeavours to resolve the competing claims of employers andemployees by finding a solution which is just and fair to bothparties, so that industrial disputes can be prevented. The claimof the employer, based on a freedom of contract, has to be re-conciled with the claim of the employee for security of tenure ;the process may involve the imposition of an obligation on theemployer to make such provision as to relieve the hardshipcaused by the unemployment resulting from the exercise of hisrights by the employer. The jurisdiction is designed to produce,in a reasonable measure, a sense of security in a worker that incase he performs his duties efficiently and faithfully, he can bedischarged by the employer only with adequate compensationfor loss of employment. The employee should be assured jobsecurity. He should not suffer for no fault of his. An honestworker doing an honest job is entitled to a reasonable expecta-tion of permanency of employment. He should not be opnressedwith the sense of economic insecurity. The old principle of abso-
SHARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
431
lute freedom of contract and the doctrine of laissez-faire haveyielded place to new principles of social welfare and social jus-tice. These principles have imparted a new dimension to theconcept of justice and equality. The Labour Tribunal is one ofthe instruments chosen by the Legislature to achieve theseobjects. The freedom of contract which is fundamental to laissez-faire enabled an employer to ‘ hire and fire ’ the employeeaccording to the dictates of commercial expediency. Thisexposed the workman to the grave hazard of unemployment.But with the erosion of laissez-faire and the emergence of modemconcepts of social justice and of Labour Tribunals, geared tomaking just and equitable orders, the reasonably-generous-employer has been projected as the model employer, and theemployee has been assured of a certain measure of job security.The absolute right of discharging the unwanted employee, with-out adequate compensation for loss of employment, has not sur-vived these developments. Compensation enables the workmanto face the rigours of premature retirement. Hence, on groundsof social justice, compensation is substituted for re-instatement.An employer has the right to close his business and thus renderre-instatement non-feasible. But such a consequence does notrelieve him from liability to compensate the employee for theresulting loss of employment.
Lord Denning, in Lloyd v. Brassey, (1969) 1 A. E. R. 382 at383, has described the development as follows : —
“ A worker of long standing is now recognised as havingan accrued right in his job ; and his right gains in value withthe years. So much so that if the job is shut down, he isentitled to compensation for loss of the job—just as aDirector gets compensation for loss of office.”
Though this right of the employee is still an imperfect rightnot enforceable in a court of law, it is competent for a LabourTribunal, exercising equitable jurisdiction, to recognise it andenforce it. The Tribunal is thus able to correct and mitigate thedeficiency of the common law and evolve a reasonable balancebetween capital and labour in defining their mutual obligations.This wholesome jurisdiction enables the Tribunal to give validityto the legitimate expectation of an employee to the payment ofcompensation when, as a result of his employer exercising hisproprietory rights, he is thrown out of employment.
In Ambalamana Tea Estates Ltd. v. Ceylon Estate Staffs’ Union,76 N.L.R. 457, a Divisional Court held that where the termina-tion of employment was caused solely by the act and will of theemployer in pursuance of his desire to sell the estate, the
432
SHARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
employee, whose services are terminated for that cause, has ajust claim to grhtuity under section 31 B of the Industrial Dis-putes Act. In similar circumstances, under section 31 C and 33(1) (d) of the Act, the relief of compensation is available to thedischarged employee.
In the case of United Engineering Workers’ Union v. Deva-nayagam, 69 N.L.R. 289 P. C., it was argued that section 31 BCl) of the Industrial Disputes Act gives a workman the right toapply only if he has a cause of action, i.e., if he is alleging abreach by his employer of the contract of service or some obli-gation imposed by law on his employer. The Privy Councilrejected this argument and stated that it is not right to saythat a workman can apply for relief under section 31 B (1) onlyif he has a cause of action such as wrongful termination. TheCourt emphasized the importance of sections 31 B (4) and 31 C(1) in the legislative scheme. Section 31 B (4) reads asfollows: —
“ Any relief for redress may be granted by a LabourTribunal to a workman upon an application made under sub-section (1) notwithstanding anything to the contrary in anycontract of service between him and his employer.”
Section 31 C (1) defines the powers and duties of a Tribunalon application and provides Coat “ it shall be the duty of theTribunal to make all such inquiries into the application andhear all such evidence as the Tribunal may consider necessaryand make such order as appears to the Tribunal just andnecessary.”
Thus, a Labour Tribunal is vested with the unfettered discre-tion to do what it considers right and fair, whether the termina-tion is lawful or not. A workman can apply for relief in respectof the termination of his employment even when the terminationis in accordance with the terms of his contract and not inbreach of them and is sanctioned by law. On such an applicationthe Tribunal can order what it considers to be just and equitableeven though that is in excess of the legal rights of the employee.A Labour Tribunal is thus entitled to grant compensation for lossof career if it thinks such relief is just and equitable in thecircumstances, even though the termination is consequent to theexercise by the employer of his fundamental right to close downhis business. If the employer’s action, though justifiable in law,affects adversely the employee, the Tribunal is empowered togrant relief to the employee. The criterion is not law but justiceand equity. The circumstances of, and the motive for, the closureare, of course, relevant to the decision on the question of com-pensation to the employee. By exercising his right to close down
SHAKVANANDA, J.—Caledonian Estates Ltd. v. HUlman
433
his business, the employer may frustrate the employee’s re-instatement, but he cannot escape his liability to -pay compensa-tion to the employee for loss of employment. The relief of com-pensation is not an alternative to re-instatement but is availableeven where re-instatement is not possible.
“ In dealing with an application under section 31 B (1) (a)for relief or redress in respect of the termination of a workman’semployment by his employer, a Labour Tribunal may, in makingan order for compensation in respect of the termination ofemployment by the employer, take into account the possiblelimitation of the ultimate retiring gratuity which it might havebeen possible for the workman to obtain but for the untimelytermination of his services by his employer. ”—per Tennekoon, J.in The National Union of Workers v. The Scottish-Ceylon TeaCo. Ltd. (78 N. L. R. 133 at 155 and 156). Section 31 B (1) (a)read with sections 31 C (1) and 33 (1) (d) invests the LabourTribunal with powers to award compensation for loss of career.
It is a matter of significance that section 33 (1) (d) employsthe term ‘ compensation ’ and not ‘ damages ’. There is a distinc-tion between the terms ‘ compensation ’ and 1 damages ’ which isnot to be ignored. “ What is ‘ compensation ’ ? The expression‘ compensation ’ it not ordinarily used as an equivalent for
‘ damages ’. It is usedin relation to a lawful act which
has caused injury. Therefore, that word would not includedamages at large, such as injury to reputation.”—per Lord Esherin Dixon v. Calcroft ( (1892) 1 Q. B. 458 at 463). Compensationcan be awarded irrespective of any default in law on the part ofthe employer. On the other hand, damages are pecuniary recom-pense awarded in reparation for a loss or injury caused by awrongful act or omission. “ ‘ Damages ’ in English law importsthe idea that the sums payable by way of damages are sumswhich fall to be paid by reason of some breach of duty or obli-gation, whether that duty or obligation is imposed by contractor by the general law or legislation. ”—per Green M. R. in HallBrothers v. Young ( (1939) 1 K.B. 748 at 756). What is paid bythe employer to the employee on his lawful discharge is ‘ com-pensation ’ in terms of the Act. In the statutory context, the wordextends to any compensation recoverable from the employer inrespect of the loss suffered by the employee. Mr. Kannangaraplaced some reliance on the dictum of Alles, J. in the Superin-tendent, Dalma Group v. Ceylon Estate Staffs’ Union, 73 N.L.R.574 at 575, that “ compensation is payable only when a wrong hasbeen done ”. This dictum is not based on any authority and shouldnot be elevated into a decision. It is not ‘ compensation ’ but* damages ’ that is payable “ only when a wrong has been done ”.
434
SHAR VANANDA, J.—Caledonian Estates Ltd. v. Hillman
Though both, as sanctioning rights, share much in common,have different brientation. ‘ Damage ’ always signifies recompensegiven to a party for the wrong that has been done to him. On theother hand, ‘ compensation ’ includes recompense for pecuniaryloss or damage which involves no breach of duty. Under theWorkmen’s Compensation Ordinance, if personal injury is causedto a workman by accident arising out of and in the course of theemployment, the employer is liable to pay compensation eventhough he has not committed any wrong. Under the Land Acqui-sition Act, compensation has to be paid by the State for whatis acquired in terms of the law. Thus, compensation does notpredicate a wrong.
Counsel for the appellant drew the attention of this Court tothe provision of section 33(1) (d) as it stood prior to the amend-ment effected by Act No. 4 of 1962. The original unamendedsection 33(1) (d) of the Industrial Disputes Act provided thatthe order of a Labour Tribunal may contain a decision “ as tothe payment by an employer of compensation to any workman asan alternative to his reinstatement. ” The section was construedby a Divisional Bench in Taos Ltd. v. P. O. Fernando, 65 N.L.R.259 as folLows :
“In the instant case there was no decision as to re-instate-ment and the Industrial Court had no power to make a deci-sion for the payment of compensation. The power to makean order for compensation is confined to a case in whichthere is a decision as to re-instatement. The decision as topayment of compensation to a worker must be an alternativeto a decision as to re-instatement. Without a decision as tore-instatement, there can be no decision as to compensation. ”
The Industrial Disputes (Amendment) Act, No. 4 of 1962,amended section 33(1) (d) by the deletion of the words “ as analternative to his re-instatement.. ’’According to this amendment,a decision as to the payment of compensation to a worker is nomore postulated as an alternative to a decision as to re-instate-ment. The Divisional Bench judgment did not consider the effectof the amendment. Counsel submitted that as the law originallystood, prior to the amendment, an order for compensation couldbe made only as an alternative to an order for re-instatement andthat the connotation of the word ‘ compensation ’, in that con-text, thus came to be determined once and for all. He contendedthat a Tribunal can award re-instatement only if the termina-tion of the employee’s services is found to be mala fide or un-justifiable and on such a preliminary finding, the Tribunal may,as a matter of discretion, determine, according to the circumstan-ces, whether re-instatement or compensation would be the proper
SHARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
435
relief. Once it is found that a workman has been wrongfullyor illegally discharged or dismissed, he is normally entitled toclaim re-instatement. But this remedy is not absolute or of uni-versal application. There can be cases where it might not be ex-pedient, because of the presence of unusual features, to directre-instatement, and a Tribunal may think the grant of compensa-tion instead may meet the ends of justice. A Tribunal may havereasons why it does not think it proper to re-instate a workmanand may come to the conclusion that compensation in lieu of re-instatement would be adequate relief. Counsel submitted that ifcompensation is an alternative to re-instatement, it would followthat the grant of compensation is conditioned on a preliminaryfinding that the dismissal or discharge was wrongful and theTribunal will have no jurisdiction to award compensation if itfinds that the termination was not wrongful but is justified. Ifthis Court is to apply today the unamended provisions of section33 (1) (d) of the Industrial Disputes Act, as it stood prior to theamendment effected by Act No. 4 of 1962, I can appreciate thevalidity of Counsel’s argument. But this appeal has to be decidedunder the amended section 33(1)(d) which, in its present form,
does not condition the grant of compensation as an alternativeto re-instatement. As section 33(1) (d) stands amended today,the order for compensation is not limited to instances where itwould be an alternative to re-instatement, and hence its grantis not regulated by factors relating to re-instatement, such asthat the discharge complained of should have been wrongful. ATribunal would have jurisdiction to award compensation to adischarged workman even where it finds that the discharge isbona fide and justifiable and no breach of duty on the part ofthe employer is involved. Social justice or fair labour practice isthe justification for the grant. Mr. Kannangara further submittedthat though the Industrial Disputes (Amendment) Act No. 4 of1962 amended the original section 33(1)(d) by deleting the
words “ as an alternative to re-instatement ”, it has not alteredthe connotation which the word ‘ compensation ’ had acquired inthe context of the unamended section and that the concept of‘ compensation ’, in spite of the repeal effected by the amendment,still continued to suffer the limitation born from its associationwith re-instatement as an alternative thereto. I cannot accept thissubmission. On this submission, the Legislature has not achievedanything by the amendment, and the amendment would appearto be superfluous. The object of the amendment is clear. In myview, it was because the Legislature found that in the colloca-tion “ compensation as an alternative to re-instatement ” the word‘ compensation ’ might be construed to suffer under the limita-tJr,ns which circumscribed the grant of re-instatement and since
436
S HARVANANDA, J.—Caledonian Estates Ltd. v. Hillman
it desired to release ‘ compensation ’ from the said limitationsand restore the ordinary legal concept of ‘ compensation ’ thatit amended the provisions of section 33(1) (d) delinking therelief of ‘ compensation ’ from ‘ re-instatement The ordinarylegal signification of ‘ compensation ’ has been restored. Conse-quently, it is no longer necessary to establish wrongful termina-tion for the grant of compensation under section 33 (1) (d) ofthe Act.
For the reasons stated above, I agree with the President,Labour Tribunal, that the appellant is liable to pay compensationto the respondent for loss of employment resulting from the saleof the estate in which the respondent was functioning asSuperintendent.
The next question that has to be decided is the quantum ofcompensation. Counsel for the appellant brought to the attentionof this Court the two judgments of Vythialingam, J. in CeylonTransport Board v. Wijeratne, 77 N.L.R. 481, and in S.C. 33/73
T. 14/359/70 (S.C. minutes of 21.3.75), which considered thefactors that should be taken into account in computing the com-pensation that, is payable in lieu of re-instatement in terms ofsection 33 (5) of the Industrial Disputes Act. I agree with Vythia-lingam, J. that “ the amount should not mechanically be calcu-lated on the basis of the salary he should have earned till hereached the age super-annuation ”. But I cannot subscribe to theproposition that the amount “ should seldom, if not never, exceeda maximum of three years’ salary ” (77 N.L.R. 491 at 498 and499). The Legislature has wisely given untrammelled discretionto the Tribunal to decide what is just and equitable in thecircumstances of each case. Of course, this discretion has to beexercised judicially. It will not conduce to the proper exerciseof that discretion if this Court were to lay down hard and fastrules which will fetter the exercise of the discretion, especiallywhen the Legislature has not chosen to prescribe or delimit thearea of its operation. Flexibility is essential. Circumstances mayvary in each case and the weight to be attached to any particularfactor depends on the context of each case. It is to be notedhowever that in Case No. S.C. 33/73 L.T. 14/359/70, Vythialingam,
J.subsequently departed from the limitation of three years andawarded five years’ salary as compensation.
The applicant was 41 years old when his services were termi-nated and his remuneration was Rs. 1,800 per mensum plus theusual allowances. He was entitled also to certain fringe benefitsas free occupation of the estate bungalow and bonus. Theevidence shows that he was collecting every year a substantial
SHARVANANDA, J —Coledonian Estates Ltd. v. Hillman
437
amount as bonus, e.g., Rs. 3,000 for 1960/61, Rs. 3,000 for 1961/62,Rs. 1,800 for 1963/64. If the applicant had continued to be inservice and retired in the normal course at the age of sixty,he would have further earned a tidy amount by way of emplo-yer’s contribution to the Provident Fund and become entitledto a retired gratuity. At the time of the termination, theapplicant had reached the stage of a senior managerial positionin the business of running estates, and it was certainly difficultfor him to find suitable alternative employment. ConsolidatedCommercial Agencies Ltd., who were the agents in Ceylon ofthe appellant, had, in their letter dated 7th October, 1965(marked R. 23), referring to the question of compensationpayable to the respondent for loss of career, advised theappellant as follows :
“ As regards compensation for loss of career, the positionin Ceylon is very different from that obtaining in the UnitedKingdom as the opportunities of employment in this countryare far less than in Britain and there is no unemploymentrelief. ”
The respondent has x'eferred to the powerful forces that he hadto contend with in his search for employment. His evidence isas follows :
“ Q. Have you tried to secure alternative employment ?
A. I have tried very hard to get employment in some otheragency. I have tried at Carson Cumberbatch and Co.,Whittals, Aitken Spence, George Steuarts, ShawWallace, and I was called up for several interviews.Although they were quite satisfied that I was suitable,I did not get the billet.
Q. Why do you make that statement ?
A. The main reason may be that I am in this Court. AgencyHouses gang up and they could always refer to mylast employer. That is the reason I have not got a billetup to date.
Q. All these companies you referred to are AgencyHouses ?
A. Yes. ”
The relevancy of this evidence lies in the fact that the greatmajority of estates are run by Agency Houses and recruitmentof planters is done by these Agency Houses. The appellant ledno evidence to contradict the respondent’s evidence regardinghis inability to secure alternative empolyment because of thegang-up by the Agents.
438
SH ARYAN AND A, J.—Coledonian Estates Ltd. v. Hillman
At the sale of Selegama Estate, the appellant had arrangedwith the purchasers, inter alia, for the taking over and employ-ing the members of the labour force and of the sub-ordinate staff,but had significantly failed to make arrangements for the employ-ment of the applicant in (he service of the purchaser.
There is no evidence that the sale of Selegama Estate, in whichthe applicant was employed, was involuntary or forced by cir-cumstances, or that the employer had suffered any financial lossby the sale. It can be appreciated that if the employer was forcedby circumstances to sell the estate in order to avert a financialloss to him, as in the case where the market was falling, or ifthe estate was sold at a loss, then, of course, the Superintendenthas got to share the misfortune. But, in this case, it would appearthat the appellant sold the estate to enrich itself and reapeda profit. There is no question of any financial incapacity in theappellant to pay compensation for loss of future earnings.
The President, in arriving at the amount of compensationpayable to the applicant, has given his consideration to theaforesaid relevant factors and has ordered the appellant to paythe respondent a sum of Rs. 216,000 (which sum repersents 10years’ salary at Rs. 1,800 per mensem) as compensation. It is tobe noted that neither before the Labour Tribunal nor before uswas any issue of retrenchment in terms of the Industrial DisputesAct raised.
In the view of this Court, the grant of Rs. 216,000 errs on theexcessive side. A just and equitable decision, in the circumstan-ces, would be to order the appellant to pay Rs. 151,200, represen-ting seven years’ salary, as compensation to the applicant-respondent. It is a matter of relevancy to note that the applicanthas to date not had the benefit of any compensation for morethan eleven years, viz., from February 1966 when his serviceswere terminated by appellant.
Subject to the aforesaid variation in the amount of compen-sation, the appeal is dismissed with costs fixed at Rs. 1,050. Theemployer-appellant shall deposit the total sum of Rs. 157,250(Rs. 151,200 plus Rs. 5,000 (costs ordered by the LabourTribunal) plus Rs. 1,050 (costs of appeal) ) with the AssistantCommissioner of Labour, Colombo South, to the credit of theapplicant-respondent within one month of the record beingreturned to the Labour Tribunal.
Wanasundera, J.—I agree.
Appeal dismissed subject tovariation in amount ofcompensation.