IN THE INDUSTRIAL COURT OF MALAYSIA

CASE NO.: 22/4-378/20

BETWEEN

SAHARUDIN BIN AKASAH

AND

PROTON TANJUNG MALIM SDN. BHD.

AWARD NO. 2208 OF 2023

BEFORE : Y.A. TUAN PARAMALINGAM A/L J. DORAISAMY

- Chairman (Sitting Alone)

VENUE : Industrial Court of Malaysia, Kuala Lumpur
DATE OF REFERENCE : 05.01.2020
DATES OF MENTION : 27.07.2020; 11.03.2021; 15.04.2021; 06.05.2021;
08.10.2021; 15.12.2021; 14.03.2022; 16.06.2022;
24.06.2022; 17.11.2022 & 16.01.2023
DATES OF HEARING : 18.03.2022; 11.10.2022; 01.03.2023 & 16.03.2023
REPRESENTATION : Mr. Ravindra Murugavell
Messrs. Murugavell Arumugam & Co
Counsel for the Claimant

Mr. Raymond Low Teik Chye

together with Mr. Wong Kian Jun
Messrs. Shearn Delamore & Co.
Counsel for the Company

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REFERENCE :

This is a reference made under Section 20 (3) of the Industrial Relations Act 1967 (Act

177), arising out of the dismissal of Saharudin Bin Akasah (hereinafter referred to as

“the Claimant”) by Proton Tanjung Malim Sdn. Bhd. on 6 September 2019.

AWARD

[1] The Ministerial reference in this case required the Court to hear and determine

the Claimants’ complaint of dismissal by the Company on 6 September 2019.

I. Procedural History

[2] The Court received the letter pertaining to the Ministerial reference under

Section 20(3) of the Industrial Relations Act 1967 on 13 February 2022.

[3] The matter was fixed for mention on 27 July 2020, 11 March 2021, 15 April

2021, 6 May 2021, 8 October 2021, 15 December 2021, 14 March 2022, 16 June

2022, 24 June 2022, 17 November 2022 and 16 January 2023.

[4] The trial proceeded on 18 March 2022, 11 October 2022, 1 March 2023 and

concluded on 16 March 2023.

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II. Factual Background

[5] The Claimant commenced employment with the Company on 22 September

2008 as an Executive in the Engine & Transmission (“ETM”) department. He was

subsequently promoted to the position of Head of ETM on 1 January 2012.

[6] Sometime in February 2018, the management of Proton Holdings Berhad

requested the Group Internal Audit Division (“GIAD”) to conduct an investigation on

the purchase of cutting tools and touch parts at the Tooling Section of Engine,

Transmission & Machining Shop (Tool Shop) of the Company. The request was made

due to the high number of purchases made for the cutting tools and touch parts despite

slow-down in production.

[7] Pursuant to the investigations, the Company issued a Show Cause letter dated

15 January 2019, wherein the Claimant was instructed to provide his written

explanation to the following allegation:-

“1. That you, were found to be negligent in discharging your duty and

responsibility as Head of ETM, Proton Tanjung Malim Sdn Bhd by

approving excessive purchase of cutting tools without proper

checking and clarification from your staff, En Ahmad Azizi Bin

Nawawi which resulting loss to the company amounting to

RM3.02 million”.

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[8] The Claimant replied to the Show Cause letter vide his letter of explanation

dated 22 January 2019, which the Company, after having reviewed it, found the

Claimant’s explanation to be unsatisfactory. The Company thereafter gave the

Claimant a further opportunity to put forward his version of events and decided to

convene a domestic inquiry on 19 February 2019 to answer the following charges of

misconduct:-

“1. That you, in between January 2015 to December 2017, were

found to be negligent in discharging your duty and responsibility

as Head of ETM, Proton Tanjung Malim Sdn Bhd in which you are

required to ensure resources, equipment, facilities and tooling are

operated and maintained efficiently. It was found that there were

excessive purchase of cutting tools in your department despite

reduction in ETM Production Output as follows:

Actual ETM Total Purchase Cost per Excessive GR (Excessive

Production Order Issued Production Purchase of Cutting

Year Output (Unit) (RM) Output (RM) Tools Against the Tools

Required (RM)

2015 201,451 2,861,900 14.21 3,118,477.13

2016 117,853 2,723,722 23.11

2017 78,734 1,792,958 22.88

As a result of your negligent act, the Company has suffered loss

approximately amounting to RM3.1 Million.

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 2. That you in between January 2015 until December 2017, as Head

of ETM Proton Tanjung Malim has failed to carry out your duty

diligently by establishing appropriate procedures as reference for

your staff to keep record of cutting tools operation management.

It is fiduciary that you have to exercise prudent and diligence in

managing your duty and responsibility in accordance with the

implied and/or expressed terms and conditions of your

employment”.

[9] The Domestic Inquiry proceedings was conducted on 19 February 2019

wherein the Inquiry Panel thereafter unanimously found the Claimant guilty of both

Charges No. 1 and 2. The management accepted the findings of the Inquiry Panel and

proceeded to terminate the Claimant’s employment effective from 6 September 2019.

III. The Function of the Industrial Court & The Burden Of Proof

[10] It is established law that the function of the Industrial Court in a Section 20(3)

Industrial Relations Act 1967 reference is two-fold, i.e. to determine:-

(i) whether the misconduct of the employee alleged by the employer has

been established; and

(ii) whether the proven misconduct constitute just cause or excuse for the

dismissal.

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[11] In the case of Wong Yuen Hock v. Syarikat Hong Leong Assurance Sdn

Bhd & Anor Appeal [1995] CLJ 344 the Federal Court had held:-

“On the authorities, we were of the view that the main and only function

of the Industrial Court in dealing with a reference under section 20 of the

Act (unless otherwise lawfully provided by the terms of the reference), is

to determine whether the misconduct or irregularities complained of by

the Management as the grounds of dismissal were in fact committed by

the workman, and if so, whether such grounds constitute just cause or

excuse for the dismissal.”

[12] And in the case of Goon Kwee Phoy v. J & P Coats (M) Bhd [1981] 2 MLJ

129 the Federal Court (vide the judgment of Raja Azlan Shah CJ) held:-

“Where representations are made and are referred to the Industrial Court

for enquiry, it is the duty of that court to determine whether the

termination or dismissal is with or without just cause or excuse. If the

employer chooses to give a reason for the action taken by him, the duty

of the Industrial Court will be to enquire whether that excuse or reason

has or has not been made out. If it finds as a fact that it has not been

proved, then the inevitable conclusion must be that the termination or

dismissal was without just cause or excuse. The proper enquiry of the

court is the reason advanced by it and that court or the High Court cannot

go into another reason not relied on by the employer or find one for it”.

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[13] The burden of proof in an unfair dismissal claim lies on the employer to prove

on a balance of probabilities that the employee had committed the misconduct

complained of (Stamford Executive Centre v. Dharsini Ganeson [1986] ILR 101).

IV. Issues To Be Decided

[14] The issues to be determined in this case are:-

(i) whether the Claimant was guilty of the allegations of misconduct

levelled against him by the Company; and

(ii) whether the allegations of misconduct constitute just cause or excuse

for the Claimant’s dismissal.

V. The Court’s Findings And Reasons

(i) Whether the Claimant is guilty of the allegations of misconduct

(a) Charge No. 1 – Negligent in discharging duty and responsibility as

Head of ETM, Proton Tanjung Malim Sdn Bhd in ensuring resources,

equipment, facilities and tooling are operated and maintained

eficiently

[15] Charge No. 1 contained in the Notice of Domestic Inquiry and Suspension

Letter dated 12 February 2019 (at p. 13-14 of COB-1) reads as follows:-

“That you, in between January 2015 to December 2017, were found to

be negligent in discharging your duty and responsibility as Head of ETM,

Proton Tanjung Malim Sdn Bhd in which you are required to ensure

resources, equipment, facilities and tooling are operated and maintained

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 efficiently. It was found that there were excessive purchase of cutting

tools in your department despite reduction in ETM Production Output as

follows:

Actual ETM Total Purchase Cost per Excessive GR (Excessive

Production Order Issued Production Purchase of Cutting

Year Output (Unit) (RM) Output (RM) Tools Against the Tools

Required (RM)

2015 201,451 2,861,900 14.21 3,118,477.13

2016 117,853 2,723,722 23.11

2017 78,734 1,792,958 22.88

As a result of your negligent act, the Company has suffered loss

approximately amounting to RM3.1 Million”.

[16] This charge pertains to the Claimant’s negligence in discharging his duty and

responsibility as the Head of ETM in the Company wherein there had been excessive

purchase of cutting tools in his department despite reduction in production output,

which led to the Company suffering loss of approximately RM3.1 million.

[17] It is the Company’s contention that:-

i. between January 2015 to December 2017, there had been

excessive purchase of cutting tools despite the fact that the ETM

production had been decreasing;

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 ii. during this period of January 2015 to December 2017, the

Claimant was the Head of ETM;

iii. as a result of the excessive purchase of cutting tools, it had also

resulted in the cost per production output to increase from

RM14.21 in 2015 to RM22.88 in 2017;

iv. the excessive purchase amounted to approximately RM3.1

million.

The Company’s contention is based on the findings of its GIAD vide the Special Audit

On The Excessive Purchase of Cutting Tools And Touch Parts dated 13 November

2018 (at pp. 23-104 of COB-1) and the Supplementary Report On The Excessive

Purchase Of Cutting Tools And Touch Parts dated 9 May 2019 (at pp. 105-114 of

COB-1).

[18] Against Charge No.1, the Claimant did not deny that there had indeed been

excessive purchase of cutting tools as against the actual production volume, but

instead had submitted that it was necessary as the lifespan of the cutting tools had

been greatly reduced due to Group Technical Procurement having purchased the

cutting tools from a different vendor, unbeknownst to the Claimant and his staff En.

Ahmad Azizi Bin Nawawi, which was of a lower quality from the original approved OEM

in which the trial process of the quality of their cutting tools had originally been

approved. The Claimant contends that due to this, the purchase of the inferior quality

cutting tools had resulted in a lower lifespan and thus the volume of purchase of cutting

tools had gone up.

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[19] The Claimant however failed to produce any evidence to show that the cutting

tools that were ordered by Group Technical Procurement were of a lower quality than

the approved OEM or that he had even raised the said issue to the Group Technical

Procurement or to the higher management. In such instance, the Claimant’s

contention herein could be nothing more than a mere afterthought.

[20] The Claimant further contended that the excessive purchase of the cutting tools

would be a non-issue as they were not perishable goods, in that “the materials were

hardy and made of metal” and thus may only lead to cash flow issues but not losses.

The excessive purchase was necessary as they needed to have a buffer of stock to

cater for production requirements.

[21] The Company however counters the Claimant’s contention by submitting that

whether the goods were made of sturdy materials is immaterial as the purchase of the

cutting tools should be commensurate with the production requirements, which was

not the case at the material point in time. The GIAD findings also showed that the

cutting tools were purchased on the pretext of being rejection replacements, but there

were however no report of any rejections of cutting tools by the Production

Department. In fact, no evidence was produced to show that the cutting tools

purchased were even delivered to the Production Department.

[22] The Claimant further contended that his superior had instructed him to move

from the SAP system to a manual purchase system in order to reduce the volume of

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purchases. But yet again, this was unsubstantiated by any evidence apart from the

Claimant’s own oral assertion during the trial.

[23] The Claimant also attempted to lay the blame on the Company by alleging that

it was the Company that had committed to purchase materials from a company known

as Consecutive Systems Sdn. Bhd. (“CSSB”) and that this had resulted in a high

rejection of the cutting tools triggering the need for the eventual excessive purchase

of cutting tools amounting to RM3.1 million. But yet again, the Claimant failed to show

any documentary proof of the said committed purchase and the resultant high rejection

of the cutting tools.

[24] What is glaring is that during the trial, the Claimant failed to dispute the fact that

there had indeed been an excessive purchase of cutting tools which was not

commensurate to the production volume at the material point in time, which resulted

in a loss amounting to RM3.1 million to the Company. The reasons given by the

Claimant for the said excessive purchase of the cutting tools were unsupported by any

documentary evidence, apart from his own assertion and/or testimony.

[25] The Court finds that the Company has succeeded to prove, on a balance of

probabilities, that the Claimant is guilty of Charge No. 1. The explanations given by

the Claimant were nothing more than bare assertions and afterthoughts. The

incontrovertible evidence is that there had been an excessive purchase of cutting tools

which were not commensurate to the production volume in the Company at the

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material point in time and this had caused the Company to suffer a loss amounting to

RM3.1 million.

(b) Charge No. 2 – Failed To Carry Out Duty Diligently By Establishing

Appropriate Procedures

[26] Charge No. 2 contained in the Notice of Domestic Inquiry and Suspension

Letter dated 12 February 2019 (at p. 13-14 of COB-1) reads as follows:-

“That you in between January 2015 until December 2017, as Head of

ETM Proton Tanjung Malim has failed to carry out your duty diligently by

establishing appropriate procedures as reference for your staff to keep

record of cutting tools operation management. It is fiduciary that you

have to exercise prudent and diligence in managing your duty and

responsibility in accordance with the implied and/or expressed terms and

conditions of your employment

[27] This charge pertains to the failure of the Claimant as the Head of ETM to

establish appropriate procedures to keep record of cutting tool operations.

[28] The Claimant in his testimony before the Court had admitted that there had

been no Standard Operating Procedures (SOP) to monitor the purchase of cutting

tools.

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[29] The GIAD found in its audit that the cutting tools that were purchased were not

even sent to the Production Department and that there was no record to show the

delivery having been done (at p. 43 of COB-1):-

“xi. Based on system record all the RM3.02 million worth of cutting

tools and touch parts claimed for rejection replacement had been

delivered to the production Section.

xii. We further perused through the Tool Shop’s record for the

supporting documents on the utilisation and noted that the

delivery of the cutting tools and touch parts to Production Section

was not supported with records such as cutting tools issuance

slip, log book and cutting tools acknowledge received slip for our

review. However, in the SAP system it had been captured that the

cutting tools and touch parts have been delivered and received

by production via Goods Issued (GI) by En Mohamad Redzuan

Bin Abdul Halim (En Redzuan), the storekeeper of the Tool Shop.

xiii. Our interview with En Redzuan noted that the Tool Shop did not

practice to have a material requisition form from production as a

proof production had ordered the tools as there is no SOP to

govern the process. He further stated that the tools request from

Production Section were made verbally”.

[30] It is evident that the absence of a proper procedure and/or SOP in the ETM

department to monitor the purchase and delivery of the cutting tools and touch parts

had resulted in the purchases and deliveries not being properly accounted for and

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ultimately led to the excessive purchase of the cutting tools. The Claimant was unable

to show to this Court that there was an SOP in place but instead produced sample

forms (exhibits “CL-2” and “CL-3”).

[31] The Claimant’s contention that he was merely a checker and not the approver

of the purchase requisition forms for the cutting tools does not hold water. Merely

signing of the said forms as a checker does not absolve him from the duty to ensure

that the data and/or details provided were accurate, as the approver will have to rely

on the verifications done by the checker before approving the said forms. The

Claimant cannot shift the blame onto others when in fact it was his responsibility to

make sure the data and/or details provided in the forms were accurate in the first place.

[32] In the case of Halimah Binti Ariffin v. Jambatan Kedua Sdn Bhd [2022] 2

LNS 0469 it was held:-

"The Court opined that the Claimant had clearly been lackadaisical in her work

attitude and failed to perform the very duty that she was supposed to perform

in her position as the Finance Manager.

The Claimant places reliance on the word "verify" to support her contention that

she never approved the payment, claiming that verification does not amount to

an approval of the transaction. However, she admitted in cross-examination

that without her verification, the payment transaction would not have gone

through and that the documentation would have reverted back to the Accounts

Assistant, COW-1, to prepare a fresh M2E advice.

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The Claimant even attempted to put the blame on Pn. Nurhafiza (the former

General Manager and Head of Finance) and Dato' Ir. Mohd. Ashari bin Alias

(the former Managing Director) for having approved the payments.

The Court is of the view that the Claimant failed to appreciate the fact that both

Pn. Nurhafizah and Dato' Ir. Mohd Ashari actually relied on the representation

made by the Claimant and the verification that was completed by her, En.

Muhammad Fikri and COW-1. Both Pn Nurhafizah and Dato' Ir. Mohd Ashari

merely clicked on the approval button on the M2E system based on the

verification that was done and completed by the Claimant.

The Court also finds it rather strange for the Claimant to say that she is not

liable as it was Pn. Nurhafizah and Dato' Ir. Mohd. Ashari who had approved

the payment and that they ought to have been more vigilant before giving their

approval to the payment.

If one were to accept the Claimant's contention, then there would be no

necessity for the Claimant's job function and position to exist in the first

place.

The Court is in agreement with the Company's contention that the

Claimant's role would indeed be rendered redundant should Pn.

Nurhafizah and Dato' Ir. Mohd. Ashari were required to review and verify

every single detail of the documents before they gave their approval.

There is simply no basis to assign the task to the Claimant if the Claimant

could negate her responsibilities by claiming that her superiors ought to

have been vigilant of her negligence and mistakes'.

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[33] In light of the evidence produced before the Court, it is incontrovertible that

there was no appropriate procedures and/or SOPs in place in the ETM department for

the purchase of materials, in particular the cutting tools and touch parts. As such, the

Court finds that the Company has succeeded in proving, on a balance of probabilities,

that the Claimant is guilty of Charge No. 2.

(ii) Whether the allegations of misconduct constitute just cause or excuse

for the Claimant’s dismissal.

[34] As can be seen from the findings above, the Company has succeeded to prove

on a balance of probabilities that the Claimant is guilty of both Charges No. 1 and 2

levelled against him.

[35] The gravity of misconduct complained of against the Claimant was sufficient to

warrant a dismissal. The Claimant had exposed the Company to monetary losses

through his negligent conduct and failure to perform his tasks and responsibilities. His

conduct fell short of the high standard of care and skill expected of him and destroyed

the trust and confidence placed upon him by the Company. Being in senior

management in the Company, i.e. Head of ETM, the Claimant had added

responsibilities and a fiduciary duty to always act in the best interests of the Company.

By exposing the Company to financial losses, the Claimant was not acting in the

Company’s best interests to say the least. Under the circumstances, the punishment

of dismissal meted out by the Company to the Claimant is proportionate to the act of

misconduct complained of.

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[36] In the oft-quoted case of PEARCE v. FOSTER [1886] QBD 536 it was held by

Lord Esher MR:-

“The rule of law is, that where a person has entered into the position of

servant, if he does anything compatible with the due or faithful discharge

of his duty to his master, the latter has a right to dismiss him. The relation

of master and servant implies necessarily that the servant shall be in a

position to perform his duty duly and faithfully, and if by his own act he

prevents himself from doing so, the master may dismiss him. It is not that

the servant warrants that he will duly and faithfully perform his duty;

because, if that were so, upon breach of his duty his master might bring

an action against him on the warranty. But the question is, whether the

breach of duty is a good ground of dismissal”.

[37] And in the case of I-BHD v. CHEE POK KOW [2004] 1 ILR 16 the Industrial

Court held:-

“…it is settled principle in industrial law that those employed in the senior

management level, by the very nature of their jobs, should be fully aware

of what is required of them and they are fully capable of judging for

themselves whether they are achieving that requirement. In such

circumstances, the need for warning and opportunity for improvement

are less apparent (see United Oriental Assurance Sdn Bhd v. Kamala

Rangithan Selladuray [1992] 2 ILR 280). When serious omissions are

identified, it is the duty of management to inquire and take appropriate

action on those accountable for them”.

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[38] Upon analysing the evidence and facts of the case in its entirety, the Court is

satisfied and do hereby find that the Claimant’s dismissal by the Company was done

with just cause and excuse.

VI. Conclusion

[39] The Company’s action in terminating the Claimant’s services was done with just

cause and excuse.

[40] The Claimant’s case is hereby dismissed.

HANDED DOWN AND DATED THIS 6TH DAY OF NOVEMBER 2023.

-signed-

(PARAMALINGAM A/L J. DORAISAMY)

CHAIRMAN
INDUSTRIAL COURT, MALAYSIA
KUALA LUMPUR

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