006-SLLR-SLLR-1998-V-2-CEYLON-PRINTERS-LTD.-AND-ANOTHER-v.-WEERAKOON-COMMISSIONER-OF-LABOUR-AND-.pdf
SC Ceylon Printers Ltd. and Another v. Weerakoon, Commissioner of
Labour and others29
CEYLON PRINTERS LTD. AND ANOTHER
v.WEERAKOON, COMMISSIONER OF LABOUR AND OTHERS
SUPREME COURTG. P. S. DE SILVA. C.J.,
WIJETUNGA, J. ANDGUNASEKERA, J.
S.C APPEAL NO. 19/95 WITH 92/94CA APPLICATION NOS. 601/91, 642/91OCTOBER 27, NOVEMBER 28, 1997
Termination of Employment of Workmen (Special Provisions) Act – Complaintof Termination – Inquiry by an Assistant Commissioner – Variation of AssistantCommissioner's recommendation by the Commissioner of Labour – Decision basedon new material without notice to the employer – Natural Justice.
Whilst a dispute between the appellant companies and a Trade Union representingthe appellants' workmen was the subject of Arbitration under the Industrial DisputesAct, the workmen made a new demand coupled with a threat of strike action.The appellants informed the workmen that their conduct was unlawful and illegaland their services will be terminated if they failed to report for work on 20. 4.1988. An attempt to settle the dispute with the intervention of the Commissionerof Labour was unsuccessful. Thereafter, the Union complained to the Commis-sioner under the Termination of Employment of Workmen (Special Provisions) Actthat when the workmen reported for work after the strike, on 26. 7. 1988, theywere refused work. An Assistant Commissioner of Labour after a prolonged inquirydecided that the termination of employment of the workmen had been fordisciplinary reasons and recommended to the Commissioner that the applicationof the Union be dismissed. The Deputy Commissioner who considered therecommendation disagreed with it on the ground that the appellants had notresorted to disciplinary procedure in terms of a judgment of the Court of Appeal.The Commissioner of Labour agreed with the Deputy Commissioner and orderedthe reinstatement of the workmen with back wages. Two questions arose at thehearing of the appeal;
Whether there was a breach of the principles of Natural Justice by theCommissioner in departing from the determination of the AssistantCommissioner in favour of the appellants and acting purely on therecommendations of the Deputy Commissioner.
Whether the Commissioner failed to address his mind at ail to the issuesinvolved.
The state counsel conceeded that at the point of departure the appellants shouldhave been given an opportunity of challenging the new material on which theCommissioner acted.
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Held :
It is apparent from the order of the Commissioner that he had failed toduly consider the material produced at the inquiry before the AssistantCommissioner or the recommendations made by the AssistantCommissioner and the Deputy Commissioner.
In view of the failure by the Commissioner to give the appellants anopportunity of challenging the new material on which he acted, theCommissioner was under a duty to give reasons for his decision, particularlyin view of the fact that it was not he who held the inquiry and recordedthe evidence. In the result, the order of the Commissioner was in breachof the principles of Natural Justice.
Cases referred to:
Crofton Trust Investment Limited v. Greater London Rent AssessmentCommittee and Another (1967) 2 All ER 1103, 1109.
Karunadasa v. Unique Gem Stones Limited and other (1997) 1 Sri L.R 256,260.
Ratnayake v. Fernando SC 52/86 SCM 20.5.1991.
Minister of National Revenue v. Wrights' Canadian Ropes Ltd. 1947 AC 109at 123.
Rex v. Civil Service Appeal Board ex p. Cunningham 1991 4 ALL E.R 310at 543.
R. v. Home Secretary ex p. Doody 1993 WLR 154.
Padfield v. Minister of Agriculture, Fisheries and Food 1968 AC 997.
Faisz Musthapha, P.C with S. Mahenthiran and A. R. Surenthran for the appellants.
Uditha Egalahewa S.C for the 1st and 2nd respondents.
L V. P. Wettasinghe for the 3rd respondent.
Cur. adv. vult.
May 6, 1998.
GUNASEKERA, J.
The employees of the two petitioner-appellant companies who wereengaged in the Printing and Engineering Trades became entitled toenhanced salaries and other benefits consequent upon the extensionof two Collective Agreements Nos. 3J & 3 marked 'XI' and 'X21. Whilstthe said Collective Agreements were in force the 3rd respondent Union(The Eksath Kamkaru Samithiya) on behalf of its members by acommunication dated 7th January, 1983, marked 'X4' demanded interalia that the monthly salaries of its members in the petitioner-appellant
SC Ceylon Printers Ltd. and Another v. Weerakoon, Commissioner of
Labour and others (Gunasekera, J.)31
companies be increased by the addition of a sum representing theirmonthly non recurring cost of living gratuity payments and that eachmember be given an annual increment of Rs. 210 in addition to theincrements that were being paid to them. When the petitioner-appellantcompanies declined to accede to the said demands made by the 3rdrespondent Union on the basis that the matter was adequately coveredby the Collective Agreements a dispute arose between the partiesand the said dispute was referred to Arbitration in terms of section4 (1) of the Industrial Disputes Act and assigned No. 1996 A on 15thSeptember, 1986. When the aforesaid Arbitration proceedings com-menced a preliminary objection was taken in regard to the jurisdictionof the arbitrator and the decision of the arbitrator overruling theobjection that he had no jurisdiction was challenged by the petitionerswithout success before the Court of Appeal in CA application No.30/90 whereupon the Arbitration proceedings in A 1996 were resumed.During the pendency of the aforesaid Arbitration proceedings the 3rdrespondent Union demanded a general increase of the salaries of itsmembers by Rs. 1,000 per month by 'X7' dated 12th March, 1988.Thereafter by letter dated 23rd March, 1988 marked 'X8‘ the 3rdrespondent Union notified the petitioner-appellant companies that theirmembers would resort to strike action with effect from 25th March,1998 till their demands were granted. By letter dated 14th April, 1988('X9') the petitioner-appellant companies informed the workmen thattheir conduct by going on strike was unlawful and illegal and that theirservices would be terminated if they failed to report for work by 20thApril, 1988 and although the petitioner-appellant companies attemptedto arrive at a settlement with assistance of the Commissioner of Labourthe dispute could not be satisfactorily resolved. Thereupon the 3rdrespondent Union made a complaint to the Commissioner of Labourunder the Termination of Employment of Workmen (Special Provisions)Act alleging that its members were refused work when they returnedafter the strike on 26th July, 1988. This complaint was inquired intoby the 2nd respondent Assistant Commissioner of Labour and duringthe course of the said inquiry the petitioner-appellant took a preliminaryobjection that the 2nd respondent had no jurisdiction to inquire intothe complaint made by the 3rd respondent Union since the membersof the 3rd respondent Union were barred from resorting to strike actionduring the pendency of arbitration proceedings. When this objectionwas overruled the petitioners sought to canvass the said Order in theCourt of Appeal in application CA No. 45/89. The Court of Appealafter hearing submissions made on behalf of the parties dismissedthe said application on 6th December, 1989. Special leave to Appeal
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was sought by the petitioner-appellant companies against the Orderof the Court of Appeal dismissing the application of the petitioner-appellant companies in SC Special Leave to Appeal applicationNo. 27/90. This Court by its order dated 14th March, 1990 dismissedthe application for Special Leave reserving the right of the petitioner-appellant companies to lead evidence at the inquiry to be held bythe 2nd respondent Assistant Commissioner seeking to establish:
That the persons on whose behalf the application was madeto the Commissioner of Labour were not workmen on 25th July,1988, and
That their termination was by reason of punishment imposedby way of disciplinary action {vide X 15)
Consequent upon the said proceedings that commenced before the2nd respondent Assistant Commissioner under the Provisions of theTermination of Workmen (Special Provisions) Act and after a prolongedinquiry before the 2nd respondent the 2nd respondent came to adecision on 30th March, 1991, that the termination of employment ofthe workmen concerned had been for disciplinary reasons andrecommended to the 1st respondent that the applications made bythe 3rd respondent on behalf of its members should be dismissed(vide X 24).
The recommendation of the 2nd respondent was submitted by the1st respondent to his deputy for consideration and report. The DeputyCommissioner had by his recommendation (X 25) varied the recom-mendation of the 2nd respondent with which the 1st respondent hadagreed and the 1 st respondent had made order that the 22 workmenon whose behalf the 3d respondent had made the application bereinstated with back wages. Against the said findings the petitionersfiled an application in the Court of Appeal (CA No. 601/91) in orderto have it quashed by way of certiorari. After several dates of argumenton 27th June, 1994 the said application was dismissed (vide 27). Thepetitioners sought Leave to Appeal against the said judgment on thefollowing questions of law to the Court of Appeal. 1
1.(a) In view of section 11 (2) of the Termination of Employmentof Workmen Act which empowers the 1st respondent todelegate to any officer of the Labour Department any power,function or duty conferred or imposed on him under the Act,
SC Ceylon Printers Ltd. and Another v. Weerakoon, Commissioner of
Labour and others (Gunasekera, J.)33
has the 1st respondent conveyed in an authorised form tothe 2nd respondent, and identified sufficiently, the power,function or duty delegated to him in respect of the presentdispute?
If not, or in any event, is the 1st respondent empoweredby law to reverse the findings and/or recommendations ofthe 2nd respondent?
(a) Are not the findings and recommendations of the 2nd
respondent sound on the facts and in law?
(b)In any event, in the peculiar circumstances of this case, could
the 1st respondent have reversed the findings of the 2ndrespondent without assigning any reasons therefor?
(a) Should the 1st respondent and the Court of Appeal have
acted, or relied, upon the judgment of the Court of Appealin CA No. 45/89 in view of the judgment of the SupremeCourt in SC special leave to appeal application No. 27/90.
In any event should the 1st respondent, before acting onthe recommendations of Mr. Dayaratne, Deputy Commis-sioner of Labour, have given an opportunity to the petitionerto be heard on matters vital to its case including the judgmentof the Supreme Court in SC Special Leave to Appealapplication No. 27/90 regarding the applicability of thejudgment of the Court of Appeal in CA No. 45/89?
Since the 1st respondent did not give the petitioner suchan opportunity was there a failure of Natural Justice?
(a) In terns of section 40 (1) (m) of the Industrial Disputes Act,
is it lawful for a workman to commence, continue orparticipate in a strike after an industrial dispute in thatindustry has been referred for settlement by Arbitration toan Arbitrator but before an award in respect of such disputehas been made?
(b) If not, was the strike commenced by the workmen in thepresent case, during the pendency of the Arbitrationproceedings, an illegal strike punishable under section 40(1) (m)?
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If the said strike was illegal and punishable was it misconductwarranting disciplinary action for the said workmen toparticipate in the said strike?
Is it correct as a matter of law that an employer must holda domestic inquiry before terminating the services of aworkman on disciplinary grounds?
Was the 1st respondent's prior permission required as amatter of law for the termination of a workman's servicesas a punishment by way of disciplinary action?
Did the 3rd respondent engage in a strike which warranted
adverse findings against it by the 2nd respondent?
Having heard the submissions of counsel for the parties and aftera consideration of the questions of law submitted, the Court of Appealby its Order dated 15th July, 1994, granted leave to appeal to theSupreme Court on questions 1 (a) and 1 (b) and 4 (d) and 4 (e)only. Thereafter on 5th August, 1994 an application for Special Leaveto the Supreme Court was filed and in the said application an InterimOrder was sought to stay further proceedings and execution of thejudgment of the Court of Appeal and the operation of the purportedOrders contained in the determination made by the 1st respondent-respondent in his communication dated 24th May, 1991. Thisapplication for interim relief was supported on 8th September, 1994and after hearing counsel this Court made Order staying the executionof the Order made by the 1st respondent-respondent till the applicationfor Special Leave was supported (vide folio 27 of the record). On3rd February, 1995 when the application for Special Leave wassupported this Court having considered the submissions made onbehalf of the petitioners granted leave on the following matters aswell, in addition to the matters upon which the Court of Appeal hadgranted leave by its Order dated 15th July, 1994 namely : 1
1. (a) In terms of section 40 (1) (m) of the Industrial DisputesAct is it lawful for a workman to commence, continueor participate in a strike after an Industrial Dispute in thatindustry has been referred for settlement by Arbitration toan Arbitrator but before an award in respect of such disputehad been made?
SC Ceylon Printers Lid. 'and Another v. Weerakoon, Commissioner of
Labour and others (Gunasekera, J.)35
If not was the strike commenced by the workmen in thepresent case during the pendency of the Arbitration Proceed-ings an illegal strike punishable under section 40 (1) (m)?
(c) If the said strike was illegal and punishable was it misconductwarranting disciplinary action for the said workmen toparticipate in the said strike?
Did the 1st respondent and the Court, of Appeal misdirectitself in law in applying the judgment of the Court of Appealin application No. 45/89?
Did the 1st respondent act in breach of the rules of NaturalJustice in acting on the recommendation of Dayaratne, DeputyCommissioner of Labour? (vide folio 58 – 60 of the record).
At the hearing of this appeal it was agreed by the counsel forthe parties that the arguments and submissions would be confinedto the following issues only :
Whether there was a breach of the principles of NaturalJustice by reason of the Commissioner departing from thefindings of fact and the determination made in favour of thepetitioner companies by the Inquiring Officer, i. e. the 2ndrespondent, purely on the basis of an adverse recommen-dation made by the Deputy Commissioner of Labour.
Whether there had been a failure on the part of the 1strespondent to address his mind at all to the issues involved.
It was contended by the learned President's Counsel appearingfor the petitioner-appellants that the reversal of the 2nd respondent'srecommendation made in favour of the petitioner-appellants by the1st respondent Commissioner without hearing the petitioner is inviolation of the principles of Natural Justice. It was submitted that evenif the 1st respondent had the power of reviewing the recommendationof the 2nd respondent having regard to the very large volume ofevidence and documents produced at the inquiry the question arisesas to whether the 1st respondent could have reversed or departedfrom the said recommendation without hearing the petitioner-
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appellants? It was contended that the answer to the above questionshould be in the negative, for Natural Justice demanded that thepetitioner-appellants should have been given a fair hearing beforereversing the recommendation which was in their favour. It was thecase for the petitioner-appellants that the 2nd respondent AssistantCommissioner of Labour who held the inquiry after a considerationof the evidence led before him by his decision dated 3rd March, 1991,marked 'X24' had recommended that the applications made on behalfof the employees of the 3rd respondent Union to the 1st respondentbe dismissed. However, Mr. Dayaratne the Deputy Commissioner ofLabour when requested by the Commissioner to consider and reporton the findings of the Assistant Commissioner who held the inquiry,had taken into account new material, namely the judgment of the Courtof Appeal No. CA 45/89 in arriving at his conclusion that an employeecan be dismissed on disciplinary grounds as a punishment after adisciplinary inquiry is held and as it appears that no such disciplinaryprocedure had been resorted to by petitioners that the petitioners beordered to reinstate the workmen on whose behalf the application hadbeen made with arrears of wages. Therefore it was submitted thatthe decision of the 1st respondent to vary the recommendation of the2nd respondent who held the inquiry without affording an opportunityto the petitioners to canvass the new material that had been takeninto account by the 1st respondent was bad. In this connection learnedPresident's counsel cited De Smith (Judicial Review of AdministrativeAction) 4th edition page 211 which dealt with the subject of planninginquiries where Inspectors hold inquiries and report to the Minister whoin turn makes the order. It states that: "if the Minister has it in mindto disagree with the Inspector's recommendation he must notify themain parties of this fact and the reason for its disagreement. If hediffers from the Inspector on a finding of fact he must give the partiesan opportunity of making further written representations. If the reasonfor his disagreement is that he has received new evidence or hastaken into consideration new issues of fact which were not raised atthe inquiry he must reopen the inquiry if any of the parties so requests".Learned counsel relied on the observations of Lord Parker in CroftonTrust Investment Limited v. Greater London Rent AssessmentCommittee and another <’• where he stated: "it is quite clear thatwhenever a new point emerges something, which might take a partyby surprise, or something which the Committee has found out andof which parties would have no knowledge, fairness would clearlydictate that they should inform the parties and enable them to dealwith the points".
SC Ceylon Printers Ltd. and Another v. Weerakoon, Commissioner of
Labour and others (Gunasekera, J.)37
Therefore it was submitted by learned counsel that when the DeputyCommissioner of Labour Mr. Dayaratne had considered the obser-vations of Justice Anandacoomaraswamy at pages 4 & 5 of thejudgment in CA No. 45/89 which took the petitioner-appellants bysurprise and which were expressly excluded from being used to theprejudice of the petitioner-appellants that they should have been givenan opportunity to meet the material which was taken into consideration.It was further contended that the Deputy Commissioner had takeninto consideration extrinsic material to vary the recommendation ofthe 2nd respondent made in favour of the petitioner-appellants whichhe was not entitled to do. In this connection Wade – AdministrativeLaw 6th edition page 983 observes: "that it is fully established thatthe principles of Natural Justice do not permit the Minister, any morethan the Inspector, to receive evidence as to the local situation fromone of the parties concerned in the inquiry, without disclosing it tothe others and allowing them to comment. The Minister on his partmust also act judicially. He must only consider the report and thematerial properly before him. He must not act on extrinsic informationwhich the house owner has no opportunity of contradicting. It will begenerally a denial of justice to fail to disclose to a party specificmaterial relevant to a decision if he is thereby deprived of an op-portunity to comment on it”. Thus it was contended that the decisionof the 1 st respondent Commissioner to vary the recommendation ofthe 2nd respondent Assistant Commissioner made in favour of thepetitioner-appellants without affording an opportunity to them to meetthe new material that was taken into account was bad and is vitiatedon account of an error of law.
A further submission made on behalf of the petitioner-appellantswas that the Deputy Commissioner had taken into consideration thejudgment of a court namely that of CA No. 45/89 to override the factualevidence that was placed before the Assistant Commissioner who heldthe inquiry and that where the knowledge of the Deputy Commissionerwas to be used to override the factual evidence and to shape thefinal decision that the party affected ought to have been given noticeof the proposed finding and an opportunity to submit further evidenceor arguments. According to Whitmore (Review of Administrative Action1978 page 120): "the rationale behind this requirement of hearingparties before considering new material is the necessity to imposeeffective procedural checks to guard against a tribunal acting uponinaccurate information within its knowledge or misapplying its
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knowledge and to ensure that the parties are permitted to know andaddress submissions to all crucial issues”.
Learned counsel for the petitioner-appellants contended that in anyevent that the 1st respondent's order is bad in law as he has acceptedand adopted the Deputy Commissioner's recommendation withoutaddressing his mind at all to the evidence on record and the reasonsfor the recommendation of the 2nd respondent and as such that thesaid Order is not an Order at all and was therefore totally void. Itwas contended that the 1st respondent had purported to grant reliefto all the employees whose names appear in the Orders marked 'X17'& 'X18' which includes some of the employees who in fact and intruth had already accepted monetary payments from the petitionersand withdrawn their complaints having entered into fresh contracts ofemployment under the petitioner-appellant companies. An examinationof the recommendation of the 2nd respondent who held the inquirynamely 'X24' clearly bears out that he had given his mind to theevidence that was led before him, for in paragraph 8 of 'X24' heobserves thus: "another matter that transpired in the evidence ofKanagaratna who gave evidence on behalf of the companies was thatsome of the employees (K. J. Perera, M. P. Upali, W. T. Fonseka,Wasantha Athukorala, R. N. E. Nazar, A. S. Wasantha Kumara andHarischandra Athukorale) who had complained that their services hadbeen terminated had applied to join the companies as new employeeson fresh contracts of employment. Therefore they had accepted theposition that their services had been terminated by letter R25 dated14th April, 1988. Of them it appears that R. N. E. Nazar andS. Mohamed had accepted all monetary payments due to them fortheir service to the companies and are employed in the companiesas new employees on fresh contracts of employees as evident fromR122 A and R129".
In this state of the evidence I am unable to accept the contentionof the 1st respondent that he had carefully considered the notes ofthe inquiry, the recommendations made by Mr. Wijeweera the AssistantCommissioner of Labour and of Mr. Dayaratne the Deputy Commis-sioner of Labour and made the Order dated 24th March, 1991 directingthe petitioner to reinstate the workmen whose names appear in theOrders 'X17' & 'X18'. For had he done so, in my view, he could nothave directed the reinstatement of R. N. E. Nazar and S. Mohamedwho had withdrawn their complaints and secured re-employment inthe petitioner-appellant companies under new contracts of employ-ment.
SC Ceylon Printers Ltd. and Another v. Weerakoon, Commissioner of
Labour and others (Gunasekera, J.)39
Learned state counsel who appeared for the 1st & 2nd respondentsduring the course of his submissions conceded that at the point ofdeparture the petitioner-appellants should have been given anopportunity of challenging the new material that was taken intoconsideration by the Commissioner when deviating from the recom-mendation made by the Assistant Commissioner who held the inquiry,but however, submitted that there was no duty on the Commissionerto have given reasons for his Order in the absence of a statutoryrequirement to do so.
I am unable to agree with this contention. This question wasconsidered in the case of Karunadasa v. Unique Gem Stones Limitedand Othersi2) at 260 where attention was drawn to the following extractsfrom Wade – Administrative Law 7th edition dealing with reasons fordecision:
“The principles of Natural Justice have not in the past includedany general rule that reasons should be given for decisions.Nevertheless there is a strong case to be made for the giving ofreasons as an essential element of administrative justice. Unlessthe citizen can discover the reasoning behind the decision, he maybe unable to tell whether it is reviewable or not, and so he maybe deprived of the protection of the law. A right to reasons istherefore an indispensable part of a sound system of judicial review.Natural Justice may provide the best rubric for it, since the givingof reasons is required by the ordinary man's sense of justice. Itis also a healthy discipline for all who exercise power over others… (at 541-542 cited with approval in Ratnayake v. Fernandd31).
Although there is no general rule of law requiring the givingof reasons, an administrative authority may be unable to show thatit has acted lawfully unless it explains itself. . . Going still furtherthe Privy Council held that a Minister who had failed to give reasonsfor a special tax assessment had not shown that it was correctand that the taxpayer's appeal must be allowed (citing Minister ofNational Revenue v. Wrights' Canadian Ropes Ltd.m An award ofabnormally low compensation to an unfairly dismissed prison officerby the Civil Service Appeal Board, which made it a rule not togive reasons, was quashed by the Court of Appeal, holding thatNatural Justice demanded the giving of reasons both in decidingwhether the dismissal was unfair and in assessing compensation,
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since other employees were entitled to appeal to industrial tribunalswhich were obliged by law to give reasons (Rex v. Civil ServiceAppeal Board ex p. Cunningham)(S) at 543.
In a series of cases it has been held that statutory tribunalsmust give satisfactory resons in order that the losing party mayknow whether he should exercise his right of appeal on a pointof law . . . the House of Lords held that a life prisoner was entitledto be told the Home Secretary's reasons for rejecting the adviceof the trial judge as to the penal element in the sentence (citingR. v. Home Secretary ex p. Doodrf{6> the House of Lords hasindicated that if a Minister fails to explain a decision satisfactorily,it may be condemned as arbitrary and unreasonable (citing Padfieldv. Minister of Agriculture, Fisheries and Food&).
"Although the lack of a general duty to give reasons isrecognised as an outstanding deficiency of administrative law, thejudges have gone far towards finding a remedy by holding thatreasons must be given where fairness so demands; and thedecisions show that may now be the case more often than not.It has been held at first instance that English law has now arrivedat the point where the duty to act fairly imparts at least a generalduty to give reasons, subject to necessary exceptions, and thisconclusion seems well justified, (at 544 – 545)“.
The 1st respondent in his affidavit takes up the position that heis not required to give reasons for his order but having regard tothe above citations I am unable to agree and I am of the view thatgiving reasons for his order becomes all the more important becauseit was not he who held the inquiry and recorded the evidence.
On a consideration of the submissions made and for the reasonsstated I am of the view that this appeal should be allowed. ThereforeI set aside the judgment of the Court of Appeal dated 27.6.94 andquash the orders of the 1st respondent marked 'X17' & 'X18' dated24.5.91. There will be no costs.
G. P. S. DE SILVA, CJ. – I agree.
WIJETUNGA, J. – I agree.
Appeal allowed; Commissioner's order quashed.