Gopal Sri Ram JCA:

This is an appeal against the decision of Abu Mansor J (now JCA.) whereby he quashed an award of the Industrial Court that upheld the appellant's act of terminating the respondent's employment.

The facts relevant to this appeal are as follows.

The appellant is a wholly owned subsidiary of the State Economic Development Corporation of Selangor. It owns and manages several businesses. Amongst these were an hotel known as the Holiday Inn City Centre and a recreational club called Kelab Darul Ehsan ("the club"). But it now no longer owns nor manages the club.

On 24 August 1985, the respondent commenced his employment with the appellant. He was initially employed as the resident manager of the Holiday Inn City Centre. By a letter dated 25 September 1986, he was, with effect from 1 October 1986, appointed as the assistant manager of the club. Later, on 1 April 1987, one Encik Bistaman Siru Abdul Rahman was appointed as the club's general manager, while the respondent was almost simultaneously appointed as its food and beverage director. Later, one Encik Azman Shah replaced Bistaman as the chief executive of the club.

On 13 November 1987, Azman Shah sent for the respondent. There was a meeting between them at which Azman Shah informed the respondent that he (Azman) had decided to abolish the post of food and beverage director. He was however prepared to appoint the respondent as the food and beverage manager with a 37% reduction in salary. The respondent was not minded to accept this offer and said so in his letter of 14 November 1987 which contained this penultimate paragraph:

Since you are going to abolish my present position as food & beverage director, it construed as a retrenchment.

If this is so, I would expect a retrenchment benefit before I leave.

This entirely proper observation by the respondent was, as will be later seen, to have adverse consequences for him in the proceedings before the Industrial Court.

That the appellant misunderstood the respondent's stand comes across from the following paragraphs of its reply to him dated 23 November 1987:

We refer to your letter dated 14 November 1987 with regard to your intention to be retrenched from Perangsang Recreation Berhad.

2. After due consideration and with much regret the board agreed to your request to leave the company with effect from 1 December 1987. (Emphasis added.)

Now, this was clearly wrong. It was not the respondent who was seeking retrenchment. On the other hand, it was the appellant who had, through Azman Shah, informed the respondent that the very post which the respondent held was being abolished.

Not unexpectedly therefore, the respondent refused to accept the position as described in the appellant's letter of 23 November 1987. His response came by his letter dated 30 November 1987, which, shorn of formalities, reads as follows:

Your letter dated 23 November 1987, refers. I have no reason to accept your letter and have no intention to being retrenched without any apparent reason.

I merely seeked clarifications whether I am being demoted, terminated or retrenched.

Since today is my last day with Kelab Darul Ehsan, I have instructed my Solicitor to take my case and he will be in touch with you shortly.

The appellant thereafter paid to the respondent a sum of RM15,296.32 as retrenchment benefit which sum the respondent, through his solicitors' letter dated 7 December 1987, expressly accepted without prejudice to his rights in industrial law.

The respondent subsequently made representations to the Director General of Industrial Relations pursuant to the provisions of s. 20(1) of the Industrial Relations Act ('the Act') . Director General, having failed to effect a conciliation, reported the matter to the Minister who referred the respondent's representations to the Industrial Court.

In his statement of case filed in the Industrial Court, the respondent claimed that he had been terminated from employment without just