Koperasi Serbausaha Makmur Bhd (KOSMA) v Jamil bin Ninggal & Ors [2019] 2 ILJ 2

Court of Appeal (Putrajaya)

Unfair Dismissal

1.     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, the employees of Ladang Gajah Jinak, a palm oil plantation (‘the plantation’).

2.     The Appellant, Koperasi Serbausaha Makmur Bhd (‘KOSMA’) is the owner of the plantation.

3.     The Respondents claimed that the termination of their employment was wrongful.  Apart from wrongful termination, the Respondents also made claims founded on defamation against KOSMA.

4.     KOSMA, the Appellant, is a co-operative society established under Co-operative Societies Act 1993 (Act 502). The Respondents were employees of KOSMA until their termination in June 2009. They remain members of KOSMA.

5.     The Third Respondent is a governing body tasked under the Act to oversee and exercise powers of supervision over all co-operative societies under Act 502 and the Malaysia Co-Operative Societies Commission Act 2007 (Act 665).

6.     KOSMA employed the Respondents as senior supervisor and farm manager respectively, at the plantation.

7.     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.

8.     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.

9.     The management audit report concluded that there was indeed misconduct in the management of the plantation.

10.  KOSMA then suspended the Respondents and issued show cause letters to which they provided explanations.

11.  However, 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.

13.  The two claims of dismissal without just cause or excuse were duly consolidated and the matter proceeded to trial on 27 August 2013.

14.  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.

15.  They contended that the industrial court had no jurisdiction to hear the matter. The industrial court adjourned the hearing.

16.  Subsequently, the Respondents informed the industrial court that the co-operative tribunal had accepted their case for adjudication.

17.  The Respondents then sought to withdraw their grievances being adjudicated in the industrial court. Despite objections from KOSMA, the complaints brought by the Respondents in the industrial court were withdrawn.

18.  This in turn meant that the ‘dispute’ would have to be adjudicated upon afresh by a co-operative tribunal to be set up by the Third Respondent (Malaysia Co-Operative Society Commission).

19.  KOSMA therefore commenced judicial review proceedings to quash the decision of the Third Respondent, in accepting for adjudication, the claim of wrongful termination made by the Respondents.

20.  The High Court heard KOSMA’s application for judicial review against the decision of the Third Respondent. It dismissed the application on 30 March 2016. Hence the present appeal.

1.     Whether the Third Respondent was conferred with the requisite jurisdiction under the statutory provisions of the Co-Operatives Societies Act 1993 to deal with disputes relating to wrongful termination of employment or unfair dismissal.

1.    Unfair Dismissal

(a)   Section 82 of the Co-Operative Societies Act 1993 highlighted the type of dispute that the Commission may resolve.

(b)   It serves to define the limits of a dispute falling within the purview of the powers of the Commission.

(c)   The specific words of both definition and limitation are ‘touching the constitution, by-laws, election of officers, conduct of general meetings, management or business of a co-operative society’; and ‘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’.

(d)   Therefore, such provision 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.

(e)   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.

(f)     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.

(g)   The question that falls for consideration is whether this dispute falls within the categories of disputes envisaged to be resolved by the Commission.

(h)   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.

(i)      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.

(j)      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.

(k)    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.

(l)      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) of Act 502 due to the several reasons.

(m)  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 provision.

(n)   Even according to the word ‘management’ in 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 of Act 502 as Section 82(1)(c) of Act 502 does not make reference to an ex-officer of the co-operative society.

(o)   In like manner in the present case, as the Court had pointed out earlier, Malaysia has specific legislation dealing with unfair dismissal, namely the Industrial Relations Act 1967 (Act 177)

(p)   The operation of Act 177 has not been expressly excluded by the Act 502.

(q)   Following Deccan Co-Operative, the Court was 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 Act 502.

(r)     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.

(s)     Therefore, according to the Court, it was not within the contemplation of the Legislature to confer such jurisdiction on the Co-Operative Societies Commission.

(t)     This is because, 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 Act 177.

1.     The Court of Appeal set aside the decision of the High Court and allowed the application of judicial review.

2.     Section 20(1) of Act 177 provides that-

“Where a workman, irrespective of whether he is a member of a trade union of workmen or otherwise, considers that he has been dismissed without just cause or excuse by his employer, he may make representations in writing to the Director-General to be reinstated in his former employment; the representations may be filed at the office of the Director-General nearest to the place of employment from which the workman was dismissed.”

3.     However, it must be noted that the representations must be filed with the Director-General within 60 days of the dismissal.