Koperasi Serbausaha Makmur Berhad (Kosma) v Jamil Bin Ninggal (W-01(A)-154-04/2016)

1 DALAM MAHKAMAH RAYUAN MALAYSIA (BIDANGKUASA RAYUAN) RAYUAN SIVIL NO. W-01(A)-154-04/2016 Dalam Perkara Aturan 53, Kaedah-Kaedah Mahkamah 2012; Dan Dalam Perkara Seksyen 82 dan 83 Akta Koperasi 1993; Dan Dalam Perkara Akta Suruhanjaya Koperasi Malaysia 2007; Dan Dalam Perkara Seksyen 20 Akta Perhubungan Perindustrian 1967; Dan Dalam Perkara mengenai Jadual 1 Akta Mahkamah Kehakiman 1964; Dan Dalam Perkara Mahkamah Perindustrian No: 13/4-918/11 dan 12/4-535/12 ANTARA KOPERASI SERBAUSAHA MAKMUR BERHAD (KOSMA) … PEMOHON DAN

1. JAMIL BIN NINGGAL

2. MOHD SHAIDI BIN MOHD SALLEH

3. SURUHANJAYA KOPERASI MALAYSIA … RESPONDEN-RESPONDEN 2 Dalam Mahkamah Tinggi di Kuala Lumpur (Bahagian Rayuan Dan Kuasa-Kuasa Khas) Permohonan Untuk Semakan Kehakiman No. 25-134-07/2014 Dalam Perkara Aturan 53, Kaedah-Kaedah Mahkamah 2012; Dan Dalam Perkara Seksyen 82 dan 83 Akta Koperasi 1993; Dan Dalam Perkara Akta Suruhanjaya Koperasi Malaysia 2007; Dan Dalam Perkara Seksyen 20 Akta Perhubungan Perindustrian 1967; Dan Dalam Perkara mengenai Jadual 1 Akta Mahkamah Kehakiman 1964; Dan Dalam Perkara Mahkamah Perindustrian No: 13/4-918/11 dan 12/4-535/12 Antara Koperasi Serbausaha Makmur Berhad (KOSMA) … Pemohon Dan

1. Jamil Bin Ninggal

2. Mohd Shaidi Bin Mohd Salleh

3. Suruhanjaya Koperasi Malaysia … Responden-Responden 3 CORUM: ALIZATUL KHAIR OSMAN KHAIRUDDIN, JCA NALLINI PATHMANATHAN, JCA ZABARIAH MOHD. YUSOF, JCA GROUNDS OF JUDGMENT Introduction [1] This appeal arises from the decision of the High Court dated 16 June 2016 dismissing the appellant’s application for judicial review. In their application, the appellant, a co-operative society named Koperasi Serbausaha Makmur Berhad (‘Kosma’), had sought orders of certiorari as well as declaratory relief pertaining to the decision of the Suruhanjaya Koperasi, the third respondent (‘the Commission’) to refer the complaints of the respondents (‘the respondents’) of wrongful dismissal and defamation, to a tribunal (‘tribunal’) to be adjudicated upon. The certiorari order and declaratory relief sought is much in the same vein, namely that the respondents’ complaints to the tribunal relating to wrongful dismissal, be set aside or declared illegal and void. [2] The singular points of significance in this appeal relate to the following issues:

(ii) This turns on the construction to be accorded to section 82(1) of the Act, more particularly the phrase “a dispute touching on the management or business” of the co-operative society, Kosma. The precise issue requiring determination is whether the phrase “a dispute touching on the management or business” includes the settlement or adjudication of disputes relating to the wrongful termination of employment of co-operative society employees, as in the case with the respondents here.

(iii) The High Court, relying on the Supreme Court decision of M. Arulanandan v Malaysian Co-operative Insurance Society Ltd [1987] 1 MLJ 485 (‘Arulanandan’), held that the ‘dispute’, namely the complaints of wrongful termination by the respondents, fell within the ambit of the phrase “a dispute touching on the management or business”. The effect of the High Court’s decision was to find that the 3rd Respondent is clothed with jurisdiction to determine or adjudicate upon claims of wrongful termination of employment by officers and/or employees of Kosma. Accordingly Kosma’s judicial review application, which was premised on the contention that the Commission had no such jurisdiction or power, failed. The dispute was to be determined by a tribunal set up pursuant to a 5 recommendation by the Commission to the Minister under section 83 of the Act;

(iv) We determined and held otherwise, namely that the complaints of wrongful termination or unfair dismissal of employment of the respondents do not fall within the purview of the phrase “dispute touching on the management or business” of the co-operative society. The net result of our decision was to hold that the Commission did not possess jurisdiction over disputes of this nature. It was not therefore empowered to either deal with the dispute itself, or to refer the dispute to the tribunal established under 5.83(1) of the Act to resolve or adjudicate upon the dispute.

(vi) We were further persuaded by the fact that Arulanandan was decided (particularly in relation to the interpretation to be accorded to the phrase “dispute 6 touching on the management or business”) by reliance on the Madras High Court decision of Madhava Rao v Surya Rao AIR 1954 Mad 103 (‘Madhava Rao’). In that case, the Indian equivalent provision of our section 82(1)(c), (in pari materia with our provision) was accorded a wide or broad construction. Adopting the same approach, the Supreme Court led by Wan Suleiman SCJ, determined by a majority, that the phrase was to be broadly construed. George Seah SCJ dissented.

(vii) It was held that the dispute relating to whether the disciplinary procedures implemented by the Chief Executive amounted to a contravention of the relevant co-operative regulations, was a domestic dispute. It related to the internal administration of the co-operative society. The phrase “dispute touching the business of a registered society” was therefore wide enough to accommodate such a dispute, and it should be referred to the then Registrar General of Co-operative Societies under the then section 49(1) of the Co-operative Societies Act 1948.

(viii) It is clear that in Arulanandan, the dispute related to domestic or internal disciplinary proceedings. Arulanandan’s grievance was against the imposition of the proceedings and the punishment meted out. But Arulanandan did not leave the employ of the co-operative society. He remained an officer, even after the 7 disciplinary proceedings. To that extent it is clear that his grievance with regards to his employment remained an internal matter of the co-operative society. The adoption of a ‘broad’ approach in the construction of the words “touching … .the management or business” of a co-operative society to encompass a domestic disciplinary proceeding is, with great respect, entirely correct.

(ix) Another relevant point worth mention is that the Indian High Court case of Madhava Rao which prescribed that a broad construction be accorded to the phrase “touching the business of a registered society” had in fact been overruled by the Indian Courts in the case of Co-operative Central Bank Ltd & Ors v Additional Industrial Tribunal, Andhra Pradesh, Hyderabd [1970] AIR 245 (‘Co-operative Central Bank’). In Co-operative Central Bank, the learned judges relied in turn upon an Indian Supreme Court decision namely Deccan Merchants Co-operative Bank Ltd v M/s Dalichand Jugraj Jain and Ors [1969] AIR (‘Deccan Merchants’) where the Supreme Court of India determined that a narrow construction or definition was to be accorded to the phrase “touching on the business”.

(xi) In like manner we were of the view that in Malaysia the Industrial Relations Act 1967 provides specific legislation dealing with disputes pertaining to unfair dismissal. To that extent we were of the view, with the greatest of respect, that the phrase “touching on the business” and “dispute” in section 82(1)(c) ought to be accorded a narrow construction or definition, as it did not appear to be within the contemplation of the legislature to confer jurisdiction on the 3rd Respondent to adjudicate upon, and grant reliefs such as reinstatement or arrears of wages, in respect of grievances of unfair dismissal. This more properly fell within the regime of the Industrial Relations Act 1967.

(xii) We therefore allowed Kosma’s appeal, set aside the decision of the High Court and allowed the application for judicial review. The net consequence of our decision is that the Commission’s decision to refer the respondents’ dispute to such a tribunal is quashed. The Commission acted ultra vires or in excess of its jurisdiction in making such a reference because it was not, on our construction of section 82(1)(c), conferred by Parliament with the jurisdiction to refer a dispute relating to wrongful dismissal of officers of a co-operative society to a tribunal for adjudication. Such a 9 dispute is not a domestic or internal matter of the co-operative.

(xiii) When we delivered our decision we afforded the parties the thrust of our reasons for the decision we made. We now set out our full grounds. Essential Background Facts [3] The factual matrix leading up to this case relates to the termination of the employment of one Jamil Bin Ninggal and one Mohd Shaidi Bin Mohd Salleh (‘the respondents’) who were, at the material time in 2009, employees of Ladang Gajah Jinak, a palm oil plantation (“the plantation”). The appellant, Koperasi Serbausaha Makmur Berhad (‘KOSMA’) is the owner of the plantation. [4] The respondents claim that the termination of their employment was wrongful. Apart from wrongful termination, the respondents also made claims founded on defamation against Kosma. [5] Kosma, the appellant, is a co-operative society established under the Act. [6] The respondents were employees of Kosma until their termination in June 2009. They remain members of Kosma. [7] The 3rd Respondent is a governing body tasked under the Act to oversee and exercise powers of supervision over all co-operative 10 societies under the Act and the Co-operative Societies Commission Act 2007. [8] Kosma employed the respondents as senior supervisor and farm manager respectively, at the plantation. [9] On 12 January 2009 Kosma received a report from the managing agent for the plantation, one BUDI-JS Plantation Management Sdn Bhd (“the managing agent”), that there were irregularities in payments to contractors, breaches of procedure and mismanagement of the plantation. A visiting agent confirmed that there were irregularities and mismanagement. [10] Kosma then conducted an internal audit. A management audit team was tasked to investigate the contents of the report by the management agent and to review the operations of the plantation. The management audit report concluded that there was indeed misconduct in the management of the plantation. [11] Kosma then suspended the respondents. Show cause letters were issued to the respondents, to which they provided explanations. Kosma deemed their replies unsatisfactory and terminated their employment on 1 June 2009. [12] The respondents each lodged a complaint with the Minister of Human Resources. After conciliation failed, the complaints were referred to the Industrial Court in Kuala Lumpur. The two claims of dismissal without just cause or excuse were duly consolidated and the matter proceeded to trial on 27 August 2013. 11 [13] However, on 9 April 2014, when Kosma’s sixth witness was due to continue testifying before the Industrial Court, the respondents requested an adjournment because they wished to refer their claims to the Co-operative Tribunal. They contended that the Industrial Court had no jurisdiction to hear the matter. The Industrial Court adjourned the hearing. [14] Subsequently, the respondents informed the Industrial Court that the Co-operative Tribunal had accepted their case for adjudication. This meant that:

(2) …………………

(3) The Commission may, on receipt of a reference under subsection

(1) -

(4) ………………….

(5) The decision of the Commission shall be final and shall not be called in question in any civil court.

(6)………………

(7)………………

(8)……………..” (emphasis ours). Interpretation of section 82(1)(c) [30] It is clear from a reading of section 82 that its purpose is the resolution of disputes. The type of dispute that the Commission may resolve is described in section 82(1). It serves to define the limits of a dispute falling within the purview of the powers of the Commission. The specific words of both definition and limitation are:

(1) “touching the constitution, by-laws, election of officers, conduct of general meetings, management or business of a co-operative society”; 18

(2) “arises – (a) among members, past members,…….(b) between a member, past member…..(c) between the co-operative society or …… and any officer of the co-operative society” [31] Therefore the section envisages that firstly, the dispute must “touch” on or relate to the constitution or by-laws of the society, the election of officers, conduct of general meetings by the society, management of the society, or the business of the co-operative society. [32] If it falls within those specific areas then it is further honed down to encompass only disputes touching on the above matters between several categories of persons. On the facts of our case, it relates to a dispute between ex-employees or ex-officers of the co-operative society and the co-operative society. The question that falls for consideration is whether this dispute falls within the categories of disputes envisaged to be resolved by the Commission. [33] Construed as a whole, the Act relates to disputes concerning the internal or domestic affairs of the society and persons who are connected to the co-operative society. This is clear from a plain reading of the section. It does not purport to cover disputes which are outside of the scope of the workings and business of the society or persons who not members, past members or heirs or legal representatives of deceased members. In other words disputes which relate to members or officers/employees of the co-operative society only, fall within the purview of this section relating to the resolution of disputes. 19 [34] This is a plausible and tenable construction because the entire Act is centred on co-operative societies. Therefore disputes too must relate to, or be connected in some manner with the workings of a co-operative society. [35] It is arguable even from this plain reading that the dispute in the instant case, of unjust or wrongful termination of the officers of the co-operative society do not fall within the purview of section 82(1)(c) because:

(ii) They are no longer officers of the co-operative society. The section makes no provision, on the face of it, for an ex-officer to have a dispute relating to unfair or wrongful dismissal adjudicated upon by a tribunal established at the behest of the Commission under section 83;

(iii) Their complaint relates to a cessation of their relationship/employment as officers with the co-operative society as their employer. This does not appear to fall within the section as there is no reference to past officers or ex-officers;

(iv) The instant case is distinguishable from Arulanandan’s case where Arulanandan continued to remain in the employment of the co-operative society. The dispute could therefore be properly categorized as falling within 20 the two defining limbs. This is because it related to the management of the co-operative society, as the discipline of officers falls within ‘management’. Secondly as a subsisting officer who had a grievance, Arulanandan could properly bring such a grievance under section 82. [36] To that extent, in holding that a wider construction ought to be accorded to the words “touching the ………… management or business of a co-operative society” the decision of the Supreme Court does not in any manner alter the express definition and limitations imposed by the section. [37] Even according the word “management” a wide construction, it does not follow that an ex-officer can refer a dispute to the Commission for resolution because an ex-officer does not fall within the categories specified in section 82. Section 82(1)(c) does not make reference to an ex-officer of the co-operative society. [38] Secondly, the issue of the termination of employment does not amount to a “management” issue within a co-operative society, again because the cessation of service of an officer means that he is no longer employed by the society. Such an officer’s grievance does not then touch on any management issue within the purview of the co-operative society. Rather it relates to the grievance of an employee who contends that his contract of employment has been unlawfully or wrongfully terminated. That is a matter that falls outside the ambit of the “management” of a co-operative society, because it is no longer a domestic or internal matter. It is a matter 21 which gives rise to a cause of action in the law of dismissal, the remedy for which is provided by statute, namely the Industrial Relations Act 1967. (Alternatively, an action may be brought in court, although the remedies under contract and/or the common law are relatively limited). [39] In summary, whether a plain or purposive approach is utilized to construe section 82(1)(c), it is apparent that a dispute such as the present does not fall within the section. It is not only a matter of construction of the words “touching the ………. management …… of a co-operative society” but equally a question of falling within the specific categories set out in the section. [40] The section has to be read as a whole. When this is done it is evident that the purpose of this section is to resolve disputes relating to the affairs of a co-operative society within a limited category of persons. These categories do not include ex-officers of the society. It only covers subsisting officers. The fact that the respondents here remain members of the co-operative society does not resolve the issue because their dispute is not as members or qua members. Their dispute relates solely to their employment. [41] It would follow from such an interpretation that the Commission acted outside the scope of its powers as prescribed by the Act. In other words, it acted in excess of its jurisdiction in referring the matter to the Co-operatives Tribunal. 22 The relevant case-law on section 82(1)(c) [42] The thrust of the case as argued before us by both parties was that in view of the Federal Court decision in Arulanandan’s case, this court was bound to conclude that the dispute in the instant case fell within the boundaries of section 82(1)(c). [43] We have set out above the arguments that dispel this proposition. However much reliance was placed on Arulanandan’s case particularly that portion of the case that relied on Madhava Rao. [44] Madhava Rao is a case from the Madras High Court (India) and dates back to 1954. Arulanandan was heard and disposed of by the Supreme Court in 1987, some thirty years later. However, in the course of adjudication of Arulanandan, the cases of Co-operative Central Bank and Deccan Merchant were not made available to the Supreme Court. The effect of Deccan Merchant and Co-operative Central Bank was to effectively overrule Madhava Rao. [45] This issue is of relevance because of the respondents’ reliance on the construction adopted in Madhava Rao to substantiate their stance that the Commission is indeed empowered to refer the instant dispute for resolution to a tribunal under the Act. This was also a pillar of their argument to support the proposition that the tribunal had the jurisdiction to determine matters relating to unfair dismissal, including the remedies of reinstatement and the award of backwages. The net result would be that a body set up by 23 the Commission with the consent of the Minister would be accorded powers equivalent to that of the Industrial Relations Court. The latter is a creature of statute, namely the Industrial Relations Act 1967, and exercises its powers strictly within the ambit of the statute. It is misconceived to contend that the Commission, under section 82 of the Act, which deals primarily with the resolution of disputes of co-operative societies only, can arrogate to itself such extensive powers without express provision by way of legislation. [46] Put another way, the tribunal lacks the jurisdiction to resolve disputes of this nature, namely the adjudication of an unfair or wrongful dismissal claim relating to the termination of employment of an employee. Neither does it possess the jurisdiction to award reliefs such as reinstatement and arrears of wages. [47] What then do the cases of Arulanandan and the three Indian cases of Madhava Rao, Co-operative Central Bank and Deccan Merchant state? [48] As summarised briefly earlier, M. Arulanandan relates to a case, where an officer of the co-operative society sought a declaration that the disciplinary action taken against him was null and void and further sought that his increment that had been barred for a period of 1 year be restored. The Supreme Court held that the words “touching ……… on the business of a registered society” must be given its full import, bearing in mind the object of the legislation. Taking the dictionary meaning of the word “touching”, it indicates that the dispute need not directly arise out of the 24 business of the society, but that it is enough that it should have reference or relation to or concern the business of the society. [49] Again as we have pointed out above, the facts of the present appeal are distinguishable from Arulanandan, as in that case, Arulanandan remained an officer of the society and only sought relief against disciplinary action. It was not a claim for wrongful dismissal or termination, as is the case with the respondents here. [50] The case of Co-Operative Central Bank Ltd & Ors v Additional Industrial Tribunal, Andhra Pradesh, Hyderabad [1970] AIR 245 overruled Madhava Rao. In doing so, reliance was placed on another Indian Supreme Court decision, namely Deccan Merchants Co-Operative Bank Ltd. v. M/s Dalichand Jugray Jain & Ors. AIR [1969] Supreme Court 1320. In the latter case, the Supreme Court narrowed the definition to be accorded to the phrase “touching on the business”. It was pointed out that there was a limitation to the word “dispute” in that it only covers disputes which are capable of being resolved by the registrar or his nominee. [51] Deccan Merchant dealt with a dispute between a landlord society and tenant. The Indian Supreme Court held that it was doubtful that the word “dispute” in the relevant legislation would include such a dispute. There was specific legislation dealing with the dispute and the court therefore felt that it was not within the contemplation of the Bombay Co-operative Societies Act 1925 that such a dispute be referred to the registrar. 25 [52] In like manner in the present case, as we have pointed out earlier, we have specific legislation dealing with unfair dismissal, namely the Industrial Relations Act 1967. The operation of the Industrial Relations Act 1967 has not been expressly excluded by the Co-Operative Societies Act 1993. [53] Following Deccan Co-Operative, we are of the view that the claims and grievances of the respondents as set out in their statement of case do not fall within the scope of the phrase “touching ……. on the management or business’ or the word “dispute” in section 82 (1)(c) of our Co-Operative Societies Act

1993. This is because “touching ….. on the management or business” does not cover a dispute relating to an officer of a co-operative society who has been dismissed from service with the society for misconduct. In Arulanandan there was no question of dismissal. It was not, to our minds, within the contemplation of the legislature to confer such jurisdiction on the Co-operative Societies Commission. The jurisdiction to resolve disputes such as the present case which deals with a claim of unfair or wrongful dismissal from a co-operative society falls within the regime of the Industrial Relations Act 1967. [54] Finally, with respect to the respondents’ ancillary claim for defamation, this Court held in On bin Long & Ors v Romeli bin Dollah [2014] 7 CLJ 371 that defamation did not fall within the ambit of section 82 (1) of the Co-operative Society Act 1993, and we adhere to that decision, with respect. 26 [55] For the foregoing reasons we were unable to conclude as the learned High Court Judge did, that the decision of the Commission fell within the scope of its jurisdiction under the Act. On the contrary we concluded that it was made in excess of jurisdiction and to that extent was tainted by illegality and/or irrationality. [56] As such, curial intervention was merited and the appeal allowed with costs. The decision of the High Court was set aside and we allowed the application for judicial review. [57] We further ordered that the costs of RM 33,000-00 paid to the respondents in the High Court be paid to the appellant within 14 days of service of this order, subject to allocatur. The deposit was refunded to the appellant. Nallini Pathmanathan Judge Court of Appeal Malaysia Dated : 18th April 2018 For the Appellants : Harjinder Singh (Premjit Singh with him) Tetuan Sabarudin Othman & Ho Advocates & Solicitors C-8-2 Block C 8th Floor Megan Avenue II No. 12 Jalan Yap Kwan Seng 50450 Kuala Lumpur Signed 27 For the 1st & 2nd : Nazri Ibrahim Respondents Tetuan Haranay Hisham Anikah Advocates & Solicitors Tingkat 1 Bangunan Perkim Jalan Gambut 25000 Kuantan Pahang For the 3rd Respondent: Baizura Kamal Suruhanjaya Koperasi Malaysia Menara Suruhanjaya Koperasi Malaysia Changkat Semantan, Off Jalan Semantan Bukit Damansara 50490 Kuala Lumpur