Ensoft Consulting Sdn Bhd v Uppalapati Sita Rama Raju (WA-25-249-04/2022)

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1 DI DALAM MAHKAMAH TINGGI MALAYA DI KUALA LUMPUR DALAM WILAYAH PERSEKUTUAN MALAYSIA (BAHAGIAN KUASA-KUASA KHAS) PERMOHONAN SEMAKAN KEHAKIMAN NO.: WA-25-249-04/2022 Dalam perkara permohonan oleh Pemohon untuk kebenaran/perintah certiorari berkenaan dengan Award Mahkamah Perusahaan Kuala Lumpur No. 453 Tahun 2022 bertraikh 17.03.2022 yang dibuat di dalam kes 22/4-1426/21; Dan Dalam perkara mengenai Seksyen 20, Akta Perhubungan Perusahaan 1967; Dan Dalam perkara Seksyen 25(2) Akta dan

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Jadual 1 Akta Mahkamah Kehakiman 1964; Dan Dalam Perkara Aturan 53, Kaedah-Kaedah Mahkamah 2012 ANTARA ENSOFT CONSULTING SDN. BHD. ...PEMOHON DAN 1. UPPALAPATI SITA RAMA RAJU ...RESPONDEN 2. MAHKAMAH PERUSAHAAN MALAYSIA-RESPONDEN JUDGMENT The Factual Background [1] The applicant is an information technology consulting and services company operating in Cyberjaya, Selangor. [2] By a letter of appointment dated 21.10.2016, the 1st respondent was appointed Senior Business Manager in the applicant company with a basic salary of RM5,000. The 1st respondent was confirmed by the applicant company vide a confirmation letter dated 14.2.2020. The job scope of the 1st respondent can be summarised as follows: (a) Selling the company’s services. (b) To bring in new clients and manage the clients. (c) To liaise in financial-related operations and activities for clients. (d) To manage the internal team assigned to assist the 1st respondent in dealing with the clients. [3] On 2.9.2020, the applicant’s CEO, Vijay Kumar Muvva, emailed the 1st respondent, terminating the 1st respondent’s employment. In the letter, the applicant asserted that: (a) The 1st respondent was badmouthing the CEO and the company with other members of the staff working in the applicant’s Malaysian office. (b) The COVID-19 pandemic had taken its toll on the applicant company, leading to business loss. The letter went on to state: The management has decided to let you go and let you find other opportunities in the market place as we are not in the position to still employ you in the company. [4] The applicant company gave the 1st respondent two options. The first is for the 1st respondent to cease employment immediately with one month's salary paid in lieu of the notice period. The second option was for the 1st respondent to serve the notice period of one month. [5] The 1st respondent replied on 3.9.2020, stating that there was a huge disconnect and misconceptions which could be sorted or cleared through internal discussion. On the other hand, the applicant, vide its email on the same day, indicated to the 1st respondent its refusal to revisit the decision. [6] In short, the applicant company maintained its decision to terminate the services of the 1st respondents on the alleged grounds of redundancy. [7] The 1st respondent, in his reply dated 4.9.2020, insisted that he had spent a crucial part of his career assisting the applicant company to grow with its then status with 18 new clients. In light of his sudden and unexpected termination, the 1st respondent requested the applicant to fulfil certain conditions, including the continued validity of his employment visa until he secures a new job in Malaysia. [8] The 1st respondent also demanded the applicant company to: (a) Pay him a monthly compensation of RM5,500 until he secures a new job; and (b) Pay him immediately all the incentive payments of RM401,002.70, which according to him, were due to him from November 2019 to date. [9] The applicant company refused to accede to the 1st respondent’s request, stating that it was only owing the salary for the month of August and the month in lieu of notice period. The email, dated 7.9.2020, states inter alia as follows: As per our records, we owe you only August month salary and one month in lieu of notice period. Nothing else. Yes, you are correct, we are an ethical company that’s why we have paid you close to 1 Million MYR until today and you have worked for us. We do not need to oblige to honour any of your requests mentioned below. [10] Dissatisfied with the termination of his employment, the 1st respondent reported the matter to the Industrial Relations Department. The matter was then referred to the Industrial Court for an adjudication and award pursuant to s 20 of the Industrial Relations Act 1967 (“IRA”). At the Industrial Court [11] At the Industrial Court, the learned Chairman, in his grounds of judgment, identified two main issues to be determined: (a) Whether a case of retrenchment has been made out; and (b) Whether the retrenchment of the 1st respondent by the applicant was made bona fide. [12] The learned Chairman took cognisance that the applicant had failed to file any pleadings, in particular its Statement in Reply, to respond to the 1st respondent’s case that his termination from the company’s employment had been made without just cause or excuse. The applicant had also failed to produce any documentary evidence, let alone appear in the Industrial Court, to justify that it had carried out a bona fide retrenchment exercise. [13] At the hearing before the Industrial Court, the learned Chairman took cognisance that the applicant had tendered documentary evidence of the commissions that had been accrued to the tune of RM401,002.70. [14] The 1st respondent, however, gave his evidence and tendered his witness statement. The learned Chairman then concluded that the 1st respondent’s evidence stood unrebutted since the applicant had failed to discharge its burden of proving that the 1st respondent’s retrenchment was made bona fide. [15] Since there was no justification for the 1st respondent’s retrenchment established by the applicant, the learned Chairman found that his dismissal was without just cause or excuse. [16] The learned Chairman found that an order of reinstatement is inappropriate, taking into account the circumstances of the case. [17] As to the remedy, the Industrial Court issued the following Award: (a) Compensation in lieu of reinstatement: RM5,500.00 x 3 months: RM16,500.00 (b) Backwages: RM5,500.00 x 18 months: RM99,000.00 (c) Accrued Commissions : RM401,002.70 TOTAL : RM516,502.70 At the High Court [18] Aggrieved by the said Award, the applicant then commenced this application for judicial review to quash the same. [19] Leave to commence judicial review was granted by this Court on 30.6.2022. [20] This application for judicial review is supported by the affidavit of Mohd Halim bin Zakaria in Encl 3 (“AIS-3”). Encik Mohd Halim is the director of the applicant company. [21] The grounds of the application can be summarised as follows: (a) The Industrial Court had erred when it found that the 1st respondent’s dismissal was without just cause and excuse. In any event, the 1st respondent did not dispute the applicant’s decision that he was made “redundant” due to the impact of the COVID-19 pandemic. (b) The Industrial Court had erred and acted irrationally when making a finding that the applicant purportedly agreed to pay a commission to the 1st respondent to introduce new customers without supporting evidence. According to Encik Mohd Halim, there was no term for such payment in the employment contract. (c) The Industrial Court had erred and had acted irrationally when making the finding that the 1st respondent’s testimony, either orally or documentary, was not contradicted by the applicant. (d) The Industrial Court had erred and acted without jurisdiction in awarding the remedy under s 20 of the IRA. Apart from the order to reinstate a workman, the Industrial Court can only make an award for the payment of backwages or compensation in lieu of reinstatement. (e) In the alternative, the Industrial Court erred and acted without jurisdiction in including the accrued commissions in the Award without deducting them from the calculation of the main Award. Analysis [22] The gist of the applicant’s complaint is, as I can see it, the applicant is putting the Industrial Court at fault for failing to consider the effect of the COVID-19 pandemic, which, according to learned counsel, had changed the business dynamics. [23] But the first question that comes to my mind is, whose burden is it to establish with concrete and cogent proof that there is actual redundancy on which the dismissal is grounded? I believe the answer to this can be found in the judgment of the Court of Appeal in Woo Vain Chan v Malayawata Steel Bhd [2016] 2 MLJ 848 CA. The Court of Appeal held that the burden is on the employer to come to the court with concrete proof to establish that the employee is actually redundant and that he is discharged as surplus age to the company’s requirement. [24] Applying the said proposition to the facts of the case, the burden therefore lies on the applicant to show that the COVID-19 pandemic had impacted the job function of the 1st respondent. Merely showing that the country was subject to the said pandemic at the material time is insufficient. I do not seriously think that an employer can rely on the exchange of emails without more, especially so in the absence of the Statement in Reply, to establish that the 1st respondent’s job function was reduced to such an extent that he was considered redundant. [25] I find support in the aforesaid proposition in the judgment of Abang Iskandar JCA (as the learned PCA then was) in Woo Vain Chan: Merely by showing that the company was undergoing restructuring exercise will not suffice. In order to bite it must be further exhibited through evidence that the exercise had impacted on the job function in such a manner that "it was reduced to such an extent that he was considered redundant". In other words, the exercise had rendered the employee a surplus to the manpower requirement of the company. If such a situation is successfully borne out by the evidence as led before the court, then an employee so affected could be validly retrenched or his services terminated on that ground (see the case of Bayer (M) Sdn Bhd v Ng Hong Pau [1999] 4 MLJ 361; [1999] 4 CLJ 155). [26] The only explanation given by Encik Mohd Halim in para 5.1 of AIS- 3 for the failure of the applicant to file the Statement in Reply is that its CEO, Vijay Kumar Muvva, was overseas and the applicant could not be certain as to when he would be back. [27] With respect, I find this to be wholly untenable. If indeed, the management of the applicant company is squarely anchored on the responsibility of Encik Vijay Kumar to the extent that nobody in the company could attend to it at the Industrial Court, why was Encik Mohd Halim, as the director of the applicant, able to affirm AIS-3 with clinical details? If Encik Mohd Halim is appraised with the details of the applicant’s claim at the judicial review stage, I find it improbable that he could not be made aware of the same at the Industrial Court stage. [28] Having said that, my considered view is that the applicant is the author of its own misfortune. In the absence of its Statement in Reply, even if the applicant’s representative were to attend the hearing before the Industrial Court, what he could do, at best, was to cross-examine the 1st respondent’s witness. [29] Since the burden is on the applicant to establish redundancy, it must first plead the grounds in his Statement in Reply. The applicant had failed to file its Statement in Reply. It is therefore, almost impossible to exhibit through evidence that the exercise had impacted on the 1st respondent’s job function in such a manner that it was reduced to such an extent that he was considered redundant. [30] My reason is this. The Federal Court in Ranjit Kaur S Gopal Singh v Hotel Excelsior (M) Sdn Bhd [2010] 8 CLJ 629 FC which held that: Pleadings in the Industrial Court are as important as in the civil courts. The appellant must plead its case and the Industrial Court must decide on the appellant’s pleaded case. The same proposition can be seen in the recent judgment of the Court of Appeal in Germanischer Lloyd Industrial Services Asia Sdn Bhd & Ors v Raza Amin & Anor [2022] 10 CLJ 333 CA. It held: On the point of condonation, we are of the view that it is not necessary for the court to consider as it was not pleaded. [31] On the payment of commission, in para 11 of his Statement of Case, the 1st respondent pleaded as follows: The Company besides giving the Claimant the basic salary, the Company agreed to pay commissions for any introduction of new clients to the Company. The commission payable was based on verbal commitment which were fulfilled partially and balance amount need (sic) to pay for service[s] rendered is RM401,002.70. This assertion was never rebutted and as alluded to earlier, the 1st respondent was never cross-examined on this. [32] The 1st respondent gave his evidence, which was accepted by the Industrial Court. It was not contradicted. His evidence, therefore stood unrebutted. I must stress that oral evidence is admissible in law. If any authority is needed for the said proposition, it can be seen in ABDA Airfreight Sdn Bhd v Sistem Penerbangan Malaysia Bhd [2001] 3 MLJ 641, Abdul Malik Ishak J (later JCA) held as follows: It was also erroneous to submit that oral evidence unsupported by documentary evidence was of no significance. In my considered view, oral evidence would, in the circumstances, be considered as the ‘best evidence’. [33] The general proposition of the law is that the finding of facts based on the credibility of the witnesses is immune from judicial review; see Colgate Palmolive (M) Sdn Bhd v Yap Kok Foong & Anor Appeal [2001] 4 MLJ 97 CA. The same proposition can be seen in another judgment of the Court of Appeal in Quah Swee Khoon v Sime Darby Bhd [2001] 1 CLJ 9 CA. The Court of Appeal held that: If a judge to whom application is made for certiorari inquiries into and disturbs findings of fact based on the credibility of witnesses, he does indeed exercise appellate functions. It is important to remember that in judicial review proceedings the High Court must accept as gospel findings of fact made by the Industrial Court based on credibility of witnesses. [34] It has not been shown to me that the factual finding of the learned Chairman of the Industrial Court is illegal or plainly irrational for this Court, as a reviewing Court to intervene; see Ng Chang Seng v Technip Geoproduction (M) Sdn Bhd & Anor [2021] 1 MLJ 447 CA. [35] Applying the law to the instant case, it is not shown to this Court that the finding of fact of the Industrial Court was unsupported by evidence. On the contrary, the learned Chairman had examined the evidence in detail – both oral and documentary – before concluding that the 1st respondent’s employment was terminated without just cause or excuse. [36] Since there was no such evidence led before the Industrial Court, the 1st respondent could not be said to be validly retrenched or his services terminated on that ground within the meaning of the ratio in Woo Vain Chan. Findings [37] For the aforesaid reasons, there was no serious error made by the Industrial Court in the form of Wednesbury unreasonableness or procedural impropriety that would make the Award amenable to judicial review. [38] The Industrial Court was correct in issuing the Award. [39] This application for judicial review is therefore dismissed with costs of RM3,000 subject to allocatur. Tarikh: 25 November 2024 (WAN AHMAD FARID BIN WAN SALLEH) Hakim Mahkamah Tinggi Kuala Lumpur. Pihak-pihak: Bagi Pihak Pemohon : Chandra Segaran a/l Rajandran Tetuan Law Chambers of Vijay Ruben Kannan Bagi Pihak Responden : Ananthan a/l Vijayakumar Tetuan Hakem Arabi & Associates