by MH Law | December 23, 2024 | Case Spotlight
Overview
The case involved four appeals by former employees of a company under creditors' voluntary liquidation, contesting their terminations in the Industrial Court for alleged unfair dismissal.
On 7 October 2019, the respondent’s Board of Directors declared the company unable to continue business due to liabilities.
On 19 December 2019, the Court approved the Liquidator’s functions under Section 456 of the Companies Act 2016 (CA).
Subsequently, the respondent ceased operations, leading to the termination of all employees, including the appellants.
The appellants filed representations with the Director General of Industrial Relations, but reconciliation efforts failed. The Minister of Human Resources referred the matter to the Industrial Court under Section 20(3) of the Industrial Relations Act 1967 (IRA).
Issues on Appeal
First Issue: Minister’s Discretion and Leave of Court
Appellants’ Argument: The Minister’s decision was valid, and no leave was required under Section 20(3) IRA. They contended that Section 20(3) IRA, as a specific provision, overrides Section 451 CA.
Respondent’s Argument: Proceedings in the Industrial Court required prior leave of the Winding Up Court under Section 451(2) CA.
Court's Findings:
Section 451(2) CA requires leave for any proceedings against a liquidated company.
The Industrial Court qualifies as an adjudicatory body under Section 451(2) CA.
The case relied on by the appellants (Mariana Ghazali v Cooperative Central Bank) did not apply as it involved receivership, not liquidation.
The Minister exceeded his powers by referring the matter without ensuring compliance with Section 451 CA.
Second Issue: Proofs of Debt and Subsequent Claims
Appellants’ Argument: Submitting proofs of debt does not preclude claims for wrongful dismissal in the Industrial Court, as only the Industrial Court can adjudicate unfair dismissal claims.
Respondent’s Argument: By submitting proofs of debt, the appellants elected to resolve their claims through the liquidation process.
Court's Findings:
Lodging proofs of debt binds claimants to the liquidation process.
Following Craven v Blackpool Greyhound Stadium, courts discourage dual proceedings for the same claim.
Reinstatement was unavailable due to liquidation; monetary compensation suffices and must be pursued within the liquidation framework.
Key Precedents
The Court affirmed principles from:
Mosbert Berhad (In Liquidation) v Stella D’Cruz: Monetary claims in liquidation cannot be recovered elsewhere without leave.
Craven v Blackpool Greyhound Stadium: Dual claims for the same matter are impermissible.
Minister of Labour v Lie Seng Fatt clarified that while the Minister’s discretion under Section 20(3) IRA is broad, it is not unlimited.
Conclusion
The Court upheld the High Court’s ruling, confirming:
The Minister’s referral to the Industrial Court was invalid without prior leave under Section 451(2) CA.
The appellants’ submissions of proofs of debt precluded them from pursuing claims in the Industrial Court.
The appeals were dismissed, with RM10,000 costs awarded to each respondent.
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