018-SLLR-SLLR-2004-V-2-SERENDIB-COCONUT-PRODUCTS-LTD-In-Voluntry-Liquidation-AND-OTHERS-v.-COM.pdf
Serendib Coconut Products Ltd. (In Voluntary Liquidation)
CAand others v. Commissioner-General of Labour and others (Sripavan, J) 137
SERENDIB COCONUT PRODUCTS LTD.,(In Voluntary Liquidation) AND OTHERSv
COMMISSIONER-GENERAL OF LABOUR AND OTHERSCOURT OF APPEALSRIPAVAN, J.
C.A. NO. 1538/2000MARCH 25 ANDJULY 10, 2003 ANDMARCH 18 AND 25 ANDJUNE 16, ANDAUGUST 25, 2004
Termination of Employment of Workmen (Special Provisions) Act, No. 45 of1971, sections 2, 5 and 6(A)(1) – Permission sought after closure – Validity -Is voluntary winding up a closure?
Held:
Application for seeking permission to terminate the services was madeafter the closure of the activities of the company. This is in contraven-tion of section 2. It is null and void.
Voluntary winding up is a closure within the meaning of section 6A.
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Per Sripavan, J.
“The Termination of Employment of Workmen, (Special Provisions) Act isa special legislation which makes special provision in respect of the ter-mination of the services of workmen in certain employments by theiremployers. By closure the workmen are suddenly thrown out of employ-ment for no fault of theirs and have to face hardships; that is why the leg-islature gives a discretion to the Commissioner to make an order for com-pensation."
All what the court can do is to see that the power which is claimed fallswithin the four corners of the powers given by the legislature and thatthose powers are exercised in good faith.
APPLICATION for writ of certiorari
Browns Engineering Pvt, Ltd. v Commissioner of Labour and others -(1998) 1 Sri LR 88 at 91.
Kamani Chandrika Kumarasinghe v Someswaran and others – CA 242/9- CAM 24.8.2000
Associated Provincial Picture House Ltd v Wednesbury Corporation -(1948) 1 KB 223
Romesh de Silva, PC with Harsha Amarasekera for petitioner
Nihal Jayawardene, Senior State Counsel for 1 st and 2nd respondents
Chamantha Weerakoon Unamboowa for 3rd to 6th, 9th and 10th respondents.
Cur.adv.vult
August 27, 2004
SRIPAVAN, J.The petitioners are the joint liquidators of Serendib Coconut 01Products Limited (hereinafter referred to as the “Company”). Thefourth to tenth respondents were employees of the said companywho made complaints to the first respondent alleging that their ser-vices with the said company were terminated in contravention ofthe provisions of the Termination of Employment of Workmen(Special Provisions) Act, No. 45 of 1971 as amended. It wouldappear that the company closed down its factory for business on16th July 1999 even though salaries were paid to its employees tillthe end of July 1999. However, as evidenced by the document 10
Serendib Coconut Products Ltd. (In Voluntary Liquidation)
CA and others v. Commissioner General of Labour and others (Sripavan, J) 139
marked X3 an application was made on 27th July 1999 by theDeputy Chairman and Chief Executive of the company, to the firstrespondent seeking permission to terminate the services of theemployees of the company effective from 31st July 1999.
Learned President's Counsel for the petitioner submitted thatthe company was suffering losses in 1995 as shown by the AuditedAccounts marked X1 and the company’s products manufactured inSri Lanka became un-competitive in the world market resulting infurther losses being incurred by the company; it was in those cir-cumstances, a decision was taken to voluntarily wind-up the affairs 20of the company and the petitioners were appointed in order to over-see the liquidation proceedings. Nevertheless, the company madean application to the first respondent to terminate the services of itsworkmen for the reasons set out in X3.
As observed by Jayasuriya, J. in Browns Engineering Pvt Ltd vCommissioner of Labour and others^) “had such an applicationbeen made, the Commissioner of Labour would undoubtedly havehad the opportunity to inquire and investigate into the actual neces-sity for closure and also the opportunity to regulate and supervisethe process of closure according to the attendant circumstances 30relating to the desired closure. That opportunity was denied due tothe hasty and sudden decision of the petitioner-company to effecta closure without seeking such permission and approval. The peti-tioner-company in law had the right to take the aforesaid decisionbut when such a decision is taken, they are liable in law to pay com-pensation to the employees in terms of the provisions of sec.6(A)(1) of the Termination of Employment of Workmen (SpecialProvisions) Act."
In the present application, it is observed that an application forseeking permission was made after the closure of the activities of 40the company. This is in contravention of sec. 2 of the said Act as noprior written consent of the workmen were obtained. Accordingly,section 5 of the said Act comes into operation and the effect of suchtermination is that it shall be null and void and be of no effect what-soever. If an act is a nullity, it is automatically null and void anddeprived of any legal effect.
Learned President's Counsel strenuously contended that “vol-
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untary winding up” is not a “closure" within the meaning of section6 A of the said Act. With all due respect, I am unable to agree withthis submission. The Termination of Employment of Workmen so(Special Provisions) Act is a special legislation which makes spe-cial provisions in respect of the termination of the services of work-men in certain employments by their employers. Permission of thefirst respondent is mandatory prior to such termination unless theworkman gives his-consent in writing, in advance. Neither the priorwritten consent of the workmen nor the written approval of the firstrespondent was obtained b.efore the closure of the company.Further, by closure the workmen are suddenly thrown out ofemployment for no fault of theirs and have to face hardships. Thatis why the legislature gives a discretion to the first respondent to 60make an order for compensation. J.A.N. de Silva, J. (as he thenwas) in Kamani Chandrika Kumarasinghe v Someswaran and oth-ers<2> observed that the Commissioner of Labour is vested with adiscretion to order compensation in terms of section 6 A of the Act.Parliament commits to the first respondent the discretion to decideand if that discretion is bona fide exercised, no court can interferewith his decision. All what the court can do is to see that the powerwhich is claimed falls within the four corners of the powers given bythe legislature and that those powers are exercised in good faith.
As the petition does not disclose any mala fide against the first 70respondent, this court is reluctant to interfere with his findings.
I agree with the submission of the learned Counsel for therespondents that the company failed to comply with the mandatoryprovision of the Act and as such the order made by the first respon-dent directing the company to make a payment of two monthssalary as compensation for each year of employment cannot beconsidered as unreasonable. It could not have been the intention ofthe legislature to leave a workman helpless after having providedthat termination of his services is null and void. Patent unreason-ableness as a ground of challenge was described in Associated soProvincial Picture House Ltd v Wednesbury Corporation^) as“where a decision is so unreasonable that no reasonable authoritycould ever have come to it, then the courts can interfere;to prove a case of that kind would require something overwhelm-ing."
CA
Ran Banda and another v. Piyadasa and others
fSomawansa. J.)
141
When subjecting some administrative act or order to judicialreview, the court is only concerned with its legality, namely, whetherthe order under attack shall be allowed to stand. I do not see anyabuse of discretionary power on the part of the first respondent.Since the company is under liquidation the amounts ordered by thefirst respondent has to be paid by the liquidators. The order soughtto be quashed is accordingly varied and the liquidators of the com-pany are directed to pay the amounts ordered by the first respon-dent. Subject to this variation, the petitioners’ application is dis-missed, in all the circumstances without costs.
Application dismissed; order varied.
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