THE CEYLON ELECTRICITY BOARD, Petitioner, and W. E. DE ABREW and another, Res

019-NLR-NLR-V-78-THE-CEYLON-ELECTRICITY-BOARD-Petitioner-and-W.-E.-DE-ABREW-and-another-Res.pdf


TENNEKOON, C J.—The Ceylon Electricity Board v. De Abrew
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1975 Present : Tennekoon, C.J., Wijayatilake, J., and Ismail, J.THE CEYLON ELECTRICITY BOARD, Petitioner, and W. E.DE ABREW and another, Respondents
S. C. 890/73—In the mutter of an Application for a Mandate inthe nature of a Writ of Certiorari and-Prohibition
Removal from Office of the General Manager, Ceylon Electricity Board—Application to the Labour Tribunal for relief by the GeneralManager—Jurisdiction of Labour Tribunal—General Manager a“ workman ” within the meaning of the Industrial Disputes Act—The Electricity Board Act No. 17 of 1969 Sections 5, 11, 12, 13,31—Industrial Disputes Act Sections 31 B (1), 31 B (4), 48. 49—Local Government Service Act No. 18 of 1969 Section 13(2).
The General Manager of the Ceylon Electricity Board constitu-ted under The Electricity Board Act, No. 17 of 1969 was removedfrom office by the Board of Directors. Thereupon the GeneralManager made application to the Labour Tribunal for relief orredress by way of reinstatement or compensation and for gratuity.
In his application he alleged that the “purported termination” ofhis employment was “unlawful, unjustified, illegal, malafide, andprompted by extraneous considerations ”. It was contended onbehalf of the Board that the Labour Tribunal had no jurisdictionto entertain the application inasmuch as (a) the application to theLabour Tribunal was an invitation by the Tribunal to exercisesupervisory powers which are not an attribute of Labour Tribunals ;(b) that the General Manager is not a “workman” within themeaning of the Industrial Disputes Act.
Held, (1) that the application that has been made is sufficientto invoke the Labour Tribunal’s jurisdiction to grant relief orredress in the shape of reinstatement or compensation on theground that the termination of services was unjustified and forgratuity on the ground that the contract of employment has beenbrought to an end ;
(2) that the General Manager of the Electricity Board is a“ workman ” within the meaning of the Industrial Disputes Act.
“ It is clear that the General Manager has a contract of employ-ment with the Board ; although some parts of the contract may becontrolled by the statutory provisions contained in the Act, therelation between the Board and the General Manager cannot beexplained on any other hypothesis than on a contractual one.”
A PPLICATION for a writ of certiorari and prohibition.
Nimal Senanayake, with Bala Nadarajah, Miss S. M. Senaratneand Rohan Perera, for the Petitioner.
L. de Silva, with E. B. Mendis, for the 2nd Respondent.
Cur. adv. vult.
May 8, 1975. Tennekoon, C.J.—
The petitioner in this application for Mandates in the natureof Writs of Certiorari and Prohibition, is The Ceylon ElectricityBoard constituted under The Electricity Board Act No. 17 of
1* X 22863—2055 (9/76)
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TENNEKOON, C.J.—The Ceylon Electricity Board v. Be Abrew
of 1969 ; the 2nd respondent, W. E de Abrew, was functioning asthe General Manager of the Board from the 15th of September,1970, until he was removed from office by the Board of Directorsby its letter dated 17th January, 1972.
The 2nd respondent made application to the Labour Tribunalfor relief or redress by way of reinstatement or compensationand for gratuity. The applicant alleged that the “ purportedtermination ” of his employment was “ unlawful, unjustified,illegal, mala-fide, and prompted by extraneous considerations *.
The petitioner submitted to the Labour Tribunal that it had nojurisdiction to entertain the application of the 2nd respondentbecause:
the 2nd respondent was a State Officer in that, although
employed by the Board, the Board was merely anagency of the State ;
that the Labour Tribunal had no jurisdiction to enter upon
or decide the question as to whether the removal of the2nd respondent was a nullity ; and
that the 2nd respondent was not a workman within the
meaning of the Industrial Disputes Act.
The President of the Labour Tribunal having inquired intothese objections, made an interim order on the 21st of Septem-ber, 1973, rejecting the objections and holding that the 2ndrespondent was a workman within the meaning of the IndustrialDisputes Act, and that the Tribunal had jurisdiction to enter-tain the application of the 2nd respondent. The present petitionis for an order quashing that decision of the President of theLabour Tribunal and for a further order prohibiting him fromdealing with the application further.
Counsel appearing in support of this application before usstated that he was not now contending that the General Managerof The Ceylon Electricity Board was a servant of the State, andthat he would present his argument on the basis that the GeneralManager was an officer of the Board appointed in terms of theAct.
However, Counsel submitted:
that the application to the labour Tribunal was an invita-tion to the Tribunal to exercise supervisory powerswhich are not an attribute of Labour Tribunals ; assuch it is not an application within the 'meaning ofSection 3 IB (1) of the Industrial Disputes Act.
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that the General Manager is not a workman within themeaning of the Industrial Disputes Act, in that therelationship of master and servant did not subsistbetween the Board and the person appointed to be theGeneral Manager.
I shall now consider each of these submissions:
Is the application made by the 2nd respondent to theLabour Tribunal one which invites the Tribunal toexercise supervisory powers :
I think it can be safely assumed that a Labour Tribunal hasno jurisdiction to exercise the kind of supervisory jurisdictionwhich the Supreme Court enjoys.
This particular objection to the jurisdiction of the Labour Tri-bunal stems from the averment in the 2nd respondent’s applica-tion to the Labour Tribunal that the “ purported termination ofhis services was unlawful, unjustified, illegal, mala-fide andprompted by extraneous considerations
Counsel is no doubt right in his contention that the use of theexpressions, “ unlawful ”,“ illegal ”,“ mala-fide ”, and
“ prompted by extraneous considerations ” in relation to anorder of termination made under a Statute can be regarded asan invitation to the Tribunal before whom such allegations aremade to exercise powers similar to those exercised by the Courtsin the exercise of supervisory jurisdiction.
“ Supervisory jurisdiction ” has been broadly described asone that has been entrusted to the Supreme Court in order tosee tha't inferior Tribunals and administrative Tribunals actwithin their jurisdictions and on a proper understanding of thelaw. Failure to so act or to observe conditions precedent to theexercise of its powers renders the decisions of an inferior Tri-bunal a nullity.
This kind of jurisdiction, of course, a Labour Tribunal cannotexercise ; but there is before the Labour Tribunal also a claimby the 2nd respondent for relief or redress of the kind which itis within the power of a Labour Tribunal to grant on the groundthat the termination of the services was unjustified. This cer-tainly is a matter within the jurisdiction of the Labour Tribunaland there is therefore a sufficient matter bef°re the LabourTribunal which is within its jurisdiction.
Our attention has been drawn to the fact that the 2nd respon-dent has in his application to the Labour Tribunal described hisremoval from office as a “ purported ” termination of his employ-ment. However, the application while alleging that the termina-tion of the employment was unjustified, prays for orders for
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reinstatement, for compensation, and for gratuity. All the reliefsor remedies asked for can only be granted on the basis thatany contractual bond which existed between the 2nd respondentand the petitioner had been severed.
There is no allegation in the application that the removal fromoffice is a nullity, nor is there any request for a declaration thatthe 2nd respondent still holds the office of General Manager,despite the Board’s letter of removal dated 17.1.1972. It is sub-mitted for the petitioner that the application to the LabourTribunal contains an allegation that the petitioner had failed togive the 2nd respondent a fair opportunity of being heard beforemaking its order of removal. Assuming that the principle of“ audi alteram partem ” is applicable in cases of this nature,that would not necessarily imply that if that principle had notbeen complied with, the removal of the 2nd respondent is anullity. It would be open in such circumstances to the 2nd res-pondent to accept the act of termination, in the sense that thepurported act of termination had the legal effect of bringing con-tractual relationship to an end. It seems to me that it is open tothe Labour Tribunal to proceed upon that basis (i.e., that theletter of 17.1.1972 brought to an end the relationship of employerand employee that existed between the petitioner and the 2ndrespondent) and to proceed to inquiry only on the questionwhether there were circumstances justifying the termination bythe petitioner of the services of the 2nd respondent. While it istrue that a Labour Tribunal cannot grant relief on the basis of afinding that there has been no legally effective termination of acontract of employment, the application that has been made bythe 2nd respondent is sufficient to invoke the Labour Tribunal’sJurisdiction to grant relief or redress in the shape of reinstate-ment or compensation on the ground that the termination ofhis services was unjustified, and for a gratuity on the groundthat his contract of employment has been brought to an end incircumstances in which it would be just and equitable to orderpayment of any gratuity considered to be “ due ”.
The order made by the President of the Labour Tribunal makesit clear that he does not propose to enter upon any question otherthan whether the termination of the services of the 2nd respon-dent was or was not justified in the circumstances, and into thequestion of what relief should be granted on the basis that theservices of the 2nd respondent with the petitioner have beenterminated.
Is the General Manager of the Electricity Board a * work-man ’ within the meaning of the Industrial Disputes Act ?
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Reliance is placed for this contention on the provision con-tained in Section 5 of the Act. Sub-sections (2), (3), and (5) ofthat Section read as follows:—
“ (2) The General Manager shall, subject to the generaldirection of the Board on matters of policy, be charged withthe direction of the business of the Board, the organizationand execution of the powers, functions and duties of theBoard, and the administrative control of the employees ofth« Board.
The General Manager may, with the approval of theBoard, delegate to any other employee of the Board such ofhis powers, functions or duties as he may from time to timeconsider necessary, and any employee to whom any suchpowers, functions or duties are so delegated shall exercisethem subject to the. general or special directions of theGeneral Manager.
(5) The General Manager may not be removed from officeexcept for good and sufficient cause and without the priorapproval of the Minister. ”
Counsel for the applicant submits that these provisions indi-cate that the General Manager is the executive arm of the Elec-tricity Board. It is to be noted that sub-section (2) does not vestin the General Manager powers, functions and duties of theBoard which are set out in Sections 11, 12, and 31 and in manyother Sections of the Act. Upon a person being appointed GeneralManager he is charged by the statute with the execution of thepowers, functions and duties of the Board subject only to thegeneral directions of the Board on matters of policy. It is tobe observed that the Legislature when contemplating the possi-bility of any other person exercising any part of those powers,functions, or duties, has made that possible only if the GeneralManager so wishes, and he may delegate any of his executivefunctions with the approval of the Board.
It seems to me that the Board itself cannot relieve the GeneralManager of the executive functions with which he is charged bythe statute itself. For instance, the Board cannot decide that theChairman or one of its other members will be charged withcertain executive functions, and thus become a kind of “ exe-cutive member ” or “ managing member ” of the Board. If theBoard does so, it would be acting contrary to sub-section (2) ofSection 5. Under sub-section (3) while the General Managermay with the approval of the Board delegate some of his powers,functions or duties, the Board itself cannot designate any otheremployee of the Board to discharge and exercise any of thepowers, functions and duties of the Manager. There seems to be
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in these provisions a very deliberate legislative policy, namely,that the Board should not concern itself with the details of purelyexecutive functions and that the General Manager should not besubjected to directions from the Board in the form of specialdirections in matters of detail. On the other hand sub-section
of Section 11 provides—
“ It shall be the duty of the Board, with effect from thedate of the transfer to the Board of the Government Electri-cal Undertakings under Section 18, to develop and maintainan efficient, co-ordinated and economical system of elec-tricity supply for the whole of Ceylon other than the areaof authority of the Anuradhapura Preservation Board. ”
For the purpose of discharge of this duty, the Board is enjoinedwith certain duties (Section 11 (2) ) and vested with certainpowers (Sections 12, 13, 31 etc.). How would it be possible forthe Board to discharge this duty, if it did not have sufficientpowers of controlling and directing the General Manager in theexecution of his powers, functions and duties? It seems that theBoard itself would not be in a position to do its overall dutyunless it is in a position not only to make decisions on mattersof policy, but also to give directions of a general nature to theGeneral Manager in regard to the performance of his executivefunctions. It seems to me that when the Legislature imposedcertain duties on the Board, and vested certain powers and atthe same time charged the General Manager with the execu-tion of the duties and powers, the intention was that the execu-tion of those powers and duties by the General Manager shouldalso be subject to the control of the Board. It would be absurdto hold that it is an implication of sub-section (2) of Section 5that the Board has to stand by and hold its hands even if it thinksthe General Manager is executing his duties inefficiently orcorruptly. It is a clear implication of the law that administrativeand disciplinary control of the General Manager is vested in theBoard.
Even assuming that the General Manager is the executiveorgan of the Board, that circumstance does not prevent a con-tract of service coming into existence between the GeneralManager and the Board. The Board and the person for the timebeing holding the office of General Manager are two distinctlegal persons. As mentioned earlier the General Manager is nota member of the Board. If that was the situation, the questionas to whether a member of the body which constitutes the“ employer ” can also be an “ employee ” of that same body canwell arise. However, in the field of Company Law where onefrequently sees a director performing executive functions or
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even holding office under the Company, the general position inlaw is summed up by Palmer in his book on Company Law, 21stEd. pages 521-522. He says:
“ A director can hold a salaried employment or an officein addition to that of his directorship which may for thosepurposes make him an employee or servant and in such acase he would enjoy any rights given to employees as such;but his directorship and his rights through that directorshipare quite separate from his rights as employee. ”
In the case of Lee v. Lee's Air Farming Ltd., 1960 (3) AER.420 a question arose whether Lee was a workman within themeaning of the New Zealand Workers Compensation Act whichapplies only to persons who have entered into a contract ofservice with an employer. In this case the deceased was thesole governing director and principal shareholder of a ‘ one-mancompany ’. He entered into a contract with the Company as solepilot of the Company and died when the aeroplane he wasflying crashed. Lord Morris said at page 425:
“ It is well established that the mere fact that someone isa director of a Company is no impediment to his entering
into a contract to serve the Company Nor in
Their Lordships’ view were any contractual obligations in-validated by the circumstance that the deceased was solegoverning director in whom was vested the full governmentand control of the respondent Company. ”
In the case of Anderson v. James Sutherland 1941, S.C. 203,referred to by Palmer and also S. R. de Silva in his book “ LegalFramework of Industrial Relations ” page 234, Lord Normandstates:—
“ In my opinion, therefore, the Managing Director hastwo functions and two capacities. Qua Managing Directorhe is a party to a contract with the Company, and this con-tract is a contract of employment; more specifically I am ofopinion that it is a contract of service and not a contract forservices. There is nothing anomalous in this ; indeed it is acommonplace of law that the same individual may have twoor more capacities, each including special rights and dutiesin relation to the same thing or matter or in relation to thesame persons. ”
One finds a similar approach in Re Beeton & Co. (1913) Ch.279 where Neville, J. said:
“ It has been argued with some force that qua directorshe certainly cannot be a servant of the Company. Autho-rity to that effect has been cited, and it is a conclusion whichis fairly obvious. But it seems to me that in the present case
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the constitution of the Company allows of employment ofdirectors for special purposes and that she is a director doesnot prevent her also being a servant within the meaning ofthe Act. ”
I think that there can be no doubt that the General Manager isa person who works under a contract of service with the Elec-tricity Board. The word 1 workman ’ is defined in the IndustrialDisputes Act as follows: —
‘ workman ’ means any person who has entered into or worksunder a contract with an employer in any capacity,whether the contract is expressed or implied, oral or inwriting, and whether it is a contract of service or ofapprenticeship, or a contract personally to execute anywork or labour, and includes any person ordinarilyemployed under any such contract whether such personis or is not in employment at any particular time, and,for the purpose of any proceedings under this Act inrelation to any industrial dispute, includes any personwhose services have been terminated. ”
It is to be noted that, that Section contemplates work “ inany capacity That the nature of the work allotted to a personunder a contract of service is of a superior character to thatgiven to persons who serve in lesser capacities would make nodifference. Then again the term “ employer ” is defined asfollows: —
“ ‘ employer ' means any person who employs or on whosebehalf any other person employs any workman and in-cludes a body of employers (whether such body is afirm, company, corporation or trade union) and any per-son who on behalf of any other person employs anyworkman. ”
It is clear that the General Manager has a contract of employ-ment with the Board ; although some parts of the contract maybe controlled by the statutory provisions contained in the Actthe relation between the Board and the General Manager can-not be explained on any other hypothesis than on a contractualone.
A further aspect of Counsel’s submissions was that under Sec-tion 5 of the Electricity Board Act, the General Manager isappointed to an office and the power given under sub-sections (4)and (5) is for “ removal ” from an office and not for terminationof services. I think this is a highly technical argument consisting
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of nothing more than a play upon words. In this country weare used to the concept of persons “ holding office ” as “ a ser-vant of the Crown ” (see definition of “ public officer ” inSection 3 of the Ceylon Constitution and Independence Orders-in-Council 1946 and' 1947), or as a servant of the Republic (seethe definition of “ State Officer ” contained in Section 105 of thepresent Constitution of Sri Lanka, where a Stafe Officer is re-ferred to as any person “ holding a paid office as a servant of theRepublic. ”)
"Where a Statute creates an office, the holder of the office maybe in the Service of the State, or of the Institution in which theoffice exists. While a Statute may create the office and prescribesome of the terms and conditions pertaining to the office, thereis nothing to prevent a contract of service coming into existencebetween the State or the Institution on the one side, and theperson appointed on the other. For instance, the Statute mayprescribe that the office shall be held at pleasure, or it mayprescribe that the holder of the office shall not be removed ordismissed except for cause. In the State services there are manypersons holding appointments, whose relationship to the State isof a sufficiently contractual nature to enable them to sue forsalary earned in respect of services rendered as a servant of theState. Kodeswaran v. The Attorney-General, 72 N.L.R. 337.It is not unusual to find even in a private contract of employ-ment, that the employee may not be removed or dismissedexcept for cause. In such a case, although it is the employer whoin the first instance decides whether or not there is sufficientcause for dismissal, the Court is free in an action for wrongfuldismissal, to examine the question of the existence of sufficientcause. Section 5 (5) of the Electricity Board Act states : “ TheGeneral Manager may not be removed from office except forgood and sufficient cause and without the prior approval of theMinister. ”
It should be noted in the first instance that this sub-section isexpressed in the form of a limitation on the power of the Board.Secondly, that it does not take the form, which is sometimesthe case, of making the Board the final arbiter of the questionof whether there is good and sufficient cause ; nor is it a provi-sion which makes it obligatory on the Board to remove theGeneral Manager upon the happening of a certain event.
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It seems to be perfectly clear that a General Manager who hasbeen removed from office could institute action for wrongfuldismissal in the regular Courts on the ground that there was nogood and sufficient cause for his removal just as much as anemployee under a private employer whose contract containeda term to the effect that he could be dismissed only for causecould institute a similar action in the Courts.
The Electricity Board Act does not spell out all the terms andconditions subject to which a General Manager may be appointed.All these terms will have to be negotiated with the person tobe appointed and will undoubtedly form part of the terms of hiscontract with the Board.
In regard to the conditions for removal, Section 5 (5) makes itstatutorily a necessary term of every contract that every suc-cessive General Manager appointed by the Board be not dis-missed except for good and sufficient cause, and without theprior approval of the Minister. This term is not negotiable withevery prospective appointee. Any term introduced into any parti-cular contract with a General Manager contrary to Section 5 (5)will be inoperative, and the condition contained in Section 5must necessarily take its place.
Similarly, there is nothing in the Industrial Disputes Actwhich prevents a workman whose contract contained a clauseforbidding dismissal except for cause, from making an appli-cation in respect of the termination of his employment by hisemployer under Section 31B (1) (a) or (b) • Where the Legisla-ture intended to exclude any workmen from the operation of theIndustrial Disputes Act by reason of their being employed undera particular employer it has done so in express terms. Forexample Section 49 of the Industrial Disputes Act excludesemployees of the Government from the operation of the Act.Again we find a similar exclusion of members of the Local Gov-ernment Service excluded from the application of the IndustrialDisputes Act in Section 13 (2) of the Local Government ServiceAct No. 18 of 1969, a law which was enacted immediately afterthe Electricity Board Act No. 17 of 1969.
Another contention advanced by Counsel for the petitionerwas that Section 5 (5) of the Electricity Board Act contemplates“ removal ” of a General Manager from office and not a termina-tion of his employment. By whatever name called the act of theBoard removing a General Manager brings his employment toan end and there can be no doubt that there is in such circums-tances a “ termination of the services ” of the General Managerwithin the meaning of Section 31B (1) of the Industrial DisputesAct.
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Counsel’s further submission under Section 5 (5) of the Electri-city Board Act was that the requirement of the Minister’s priorapproval for removal was to render it illegal for any Tribunalto order re-instatement. It is sufficient in this regard to repeatthe words which Chief Justice H. N. G. Fernando used when asimilar submission was made in the case of Air Ceylon v. Rasa-nayagam, 71 N.L.R. 271.
“ Counsel for the petitioner also referred to the fact that,under the proviso of s. 14 (1) of the Air Ceylon Act, theGeneral Manager can only be dismissed or re-instated withthe approval of the Minister. He pointed out that if in thepresent case the Labour Tribunal orders re-instatement ofthe 2nd respondent, the Corporation may be unable to carryout the order because the Minister may not give his approvalfor re-instatement. It was urged on this ground that thenature of the particular employment was such that theIndustrial Disputes Act does not contemplate that the termi-nation of the 2nd respondent can be the subject of anapplication to a Labour Tribunal.
I do not propose here to express any opinion on the ques-tion whether or not a Labour Tribunal may or will orderre-instatement in such a situation. It suffices to observe forthe present that relief other than re-instatement is avail-able upon an application under s. 31B, and that the diffi-culties to which Counsel has referred, if substantial, arematters of which the Tribunal will take account in the exer-cise of its power to make a just and equitable order. ”
The President of the Labour Tribunal will no doubt bear inmind that although under Section 3IB (4) a Labour Tribunalis empowered to grant any relief or redress notwithstandinganything to the contrary in any contract of service between theworkman and the employer, the Tribunal cannot ignore anystatutory provision which has the effect of curtailing the extentof the Tribunal’s powers in granting relief.
For the reasons stated, I am of opinion that the GeneralManager of the Electricity Board is a workman within themeaning of the Industrial Disputes Act and that the LabourTribunal has jurisdiction to inquire into his application.
A submission was also made to the effect that the LabourTribunal should not hear the General Manager’s application asan inquiry would in this particular case involve the disclosureof some matters relating to public security. As Counsel for therespondent submitted, if questions of national security preclude
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a disclosure in public of the reasons for the termination of theservices of the 2nd respondent as General Manager, the hearingin regard to such matters could be held in camera in the interestsof public security.
The application for Writs of Certiorari and Prohibition isdismissed ; the 2nd respondent will be entitled to costs which Iwould fix at Rs. 350.
Wijayatilake, J.—I agree.
Ismaiu. J.—I agree.
Application dismissed.