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[2] The background facts and correspondences exchanged between the

Applicant and the 1st Respondent leading to the claim of constructive

dismissal are found in the Award. Briefly the 1st Respondent was the holding

company of the companies within the Eden Group. The 1st Respondent’s core

business was in food and beverage which were operated through its

subsidiaries. The Applicant commenced employment with the 1st Respondent

sometime in the year 1974. On 2.6.1994 he was appointed to the position of

Director and Executive Director/Senior General Manager of the 1st

Respondent as well as aIl the 1st Respondent’s 13 subsidiaries.

[3] The evidence before the Industrial Court shows that the 1st

Respondent had been suffering huge losses between 1999 and September

2002. The audited financial statements showed that the 1st Respondent and

the Eden Group suffered from negative shareholder funds meaning that it

could not meet its debt obligations and it faced legal action from various

banks. In October 2002 the 1st Respondent and its 13 subsidiaries were

bought over by the Zil Group of Companies (“Zil”) which was involved in the

business of infrastructure/power, general manufacturing and property. Zil

concluded a reverse takeover of the 1st Respondent through the injection of

assets into the 1st Respondent in exchange for shares. The evidence showed

that the 1st Respondent’s Board of Directors sanctioned the takeover. At the

time of takeover the Applicant was a director of the 1st Respondent.

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[4] The Industrial Court found that one of the conditions for the takeover

was that the directors named in the agreements between Zil and Multi Destar

(M) Sdn Bhd, which brokered the takeover, would sign letters of resignation

from all their executive and salaried positions in the Eden Group without any

claim whatsoever for compensation for loss of office. The Applicant agreed

under cross examination that following the takeover of the 1st Respondent by

Zil, it was agreed that all directors of Eden Group were to resign from the

Board of Directors. The Applicant was one of the persons who resigned but

he states that he resigned as a director of the 1st Respondent but did not

resign as Executive Director. He agreed that the title of Executive Director

was after he was appointed to the Board. The Applicant agreed that he was

not removed but he resigned on his own and that by 18.10 2002 he ceased to

be a director of the 1st Respondent and its subsidiaries. The Applicant agreed

that after October 2002 he was no longer entitled to director’s fee or

allowance. Apart from the Applicant, Dato’ Robert Chuan the Executive

Chairman, Terry Wong Soo Teong, Chuan Hooi Huat who were directors of

the 1st Respondent also resigned on the same terms as the Applicant’s letter

of resignation. After the takeover the Applicant was the only one amongst the

directors who stayed on to work for the 1st Respondent.

[5] Pursuant to the takeover of the operations of the Eden Group, the

Chief Operating Officer one Zahar Zaman by letter dated 1.1.2003 informed

all management staff including the Applicant of the organization and reporting

structure of the 1st Respondent and the composition of the Board of Directors.

The group activities of the 1st Respondent was reorganized and Food and

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Beverage was divided into Restaurant and Non-Restaurant business and the

Applicant was designated as Senior General Manager, Restaurant reporting

to the Director of Operations, one Abdullah Rasul (exh. T-4).

[6] Upon completion of the general transition of the business pursuant to

the takeover, by a letter dated 26.3.2003 the Applicant was offered the

position of Senior General Manager, Operations reporting to the Director of

Operations effective 1.3.2003. The salary offered was RM10,000 per month.

The Applicant rejected the offer and contended that the 1st Respondent by its

conduct is repudiating its contract by demoting him to the post of Senior

General Manager at a reduced salary. The Applicant gave the 1st

Respondent time to withdraw the letter of offer failing which he would claim

constructive dismissal. The 1st Respondent replied denying any demotion or

reduced salary package. It is the 1st Respondent’s stand that the Applicant

had resigned from all directorships and that since October 2002 the Applicant

no longer functioned as Executive Director of any of the companies.

Therefore the 1st Respondent states that the issue of restoring the Applicant

to the position of Executive Director does not arise. According to the 1st

Respondent there is no basis to claim constructive dismissal from a position

which the Applicant no longer held. The 1st Respondent extended the offer till

9.4.2003. The Applicant did not reply but on 11.4.2003 the Applicant returned

the company car. The 1st Respondent deemed the Applicant’s action as a

rejection of the offer. On 21.5.2003 the Applicant wrote again demanding

reinstatement to his former position as Executive Director failing which he

would consider himself as constructively dismissed.

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[7] On the evidence adduced the Industrial Court made the following

findings of fact –

(a) since October 2002 the Applicant no longer functioned as Executive

Director of any of the 1st Respondent’s companies;

(b) in cross examination the Applicant admitted that following the takeover

of the 1st Respondent, by a memo dated 1.1.2003 he was

redesignated as Senior General Manager Restaurant reporting to the

Director of Operations;

(c) the Applicant had complied with the memo and reported to Abdullah

bin Rasul;

(d) if the Applicant was indeed the Executive Director he would not have

reported to Director of Operations who was not an Executive Director;

(e) the Applicant’s claim that he was demoted vide the letter of offer was

an afterthought;

(f) the Applicant ought to know that he was no more an Executive

Director when he resigned;

(g) the Applicant was asked to stay on a temporary basis during the

transition period;

(h) that there was such an arrangement;

(i) the facts that the Applicant had resigned shows that his position as

Senior General Manager was temporary;

(j) there were too many doubts regarding the tenure of the Applicant’s

employment after the takeover of the 1st Respondent by Zil Group;

(j) the only one certain thing was that the service of the Applicant was

retained by the 1st Respondent on a temporary basis after the take-

over;

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(k) the resignation by the Applicant included his resignation as Executive

Director;

(l) the offer of employment was a mere offer and had not been

implemented by the 1st Respondent;

(m) the Applicant’s claim of constructive dismissal was premature;

(n) the Applicant had resigned on his own accord as he did not accept the

new offer of employment.

Decision

[8] The letter dated 1.1.2003 issued by the Chief Operating Officer of

the 1st Respondent on the reorganization and reporting structure of the 1st

Respondent, and the chart marked Appendix III(a) and (b) of exhibit T-4

shows that the Applicant was the Senior General Manager, Restaurant

reporting directly to the Director of Operations.

[9] The 1st Respondent’s organizational structure shows only one post

of Executive Director. The composition of the 1st Respondent’s Board of

Directors shows that the Executive Director of the 1st Respondent was one

Datin Fadzillah Md Ariff. Thus the evidence shows that as of 1.1.2003 the

Applicant was in fact not an Executive Director of the 1st Respondent. If the

Applicant was the Executive Director as he contended, then he ought to have

raised the issue with the 1st Respondent upon having noticed that his name

was missing from the composition of the 1st Respondent’s Board of Directors.

I find that the Industrial Court has not erred in its finding that the Applicant’s

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claim of demotion which was made in March 2003 is an afterthought. The

evidence supports the finding of the Industrial Court that the Applicant had

resigned from his position as director and as Executive Director. I agree with

counsel for the 1st Respondent that the Industrial Court's findings of facts

were clearly supported by evidence.

[10] From the Award I find that the Industrial Court has applied the

correct test for constructive dismissal (Western Excavating (E.C.C.) Ltd v

Sharp [1978] 1 All ER 713; Wong Chee Hong v Cathay Organization [1988] 1

MLJ 92). I find that the Industrial Court has not erred in its finding that there

was no constructive dismissal. There is no error of law that merits curial

intervention. For the reasons stated I dismissed the application with costs of

RM5,000.00 to the 1st Respondent.

Dated 8th February 2011

AZIAH BINTI ALIJUDGE

HIGH COURT MALAYA

KUALA LUMPUR

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Counsel :

For the Applicant : VK Raj(Messrs P Kuppusamy & Co.)

For the 1st Respondent : K Sivakumar (Messrs Skrine)

Documents

After Tot