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Petitioner: Dr. TAHIR MASUD VS Respondent: AMJAD ALI KHAN and 4 others
Court Name: Lahore High Court Judge(s): Amin-Ud-Din Khan, Shakil-ur-Rehman Khan Title: Dr. TAHIR MASUD vs AMJAD ALI KHAN and 4 others Case No.: I.C.A. No. 225091 of 2018, in W.P. No.65400 of 2017 Date of Judgment:2019-05-28 Reported As: 2019 PLC (C.S.) 1167 Result: Intra court appeal allowed
Judgment ORDER Through the Instant order , we intend to decide the captioned intra court appeal along with I.C.A. No. 226487 of 2018 and I.C.A. No.231 179 of 2018 through which the impugned judgment announced on 28.6.2018 allowing the W.P. No. 65400 of 2017 filed by respondent No.1, has been challenged. 2. The brief facts leading to the filing of the instant Intra court appeals are that respondent No.1 had challenged the order dated 10.4.2017 whereby he was retired on attaining the age of superannuation w.e.f. 09.4.2017, through W.P. No.65400 of 2017, wherein his basic stance was that he had been reappointed for three years by the Board of NESP AK Private Limited for a period of three years commencing from 16.8.2016 to 15.8.2019, therefore, he could not have been retired through the order dated 10.4.2017, which had been issued by an incompetent authority and in violation of the governing law . 3. At the outset learned counsel for the appellants stated that since the matter relates to the maintainability of the writ petition itself, out of which these intra court appeals have arisen, therefore, the legal issue relating to the jurisdiction be decided at the first instance. 4. In this view of the matter , we have heard learned counsel for the parties on the question of maintainability of the writ petition. Messrs Hafiz Tariq Nasim led the arguments in this regard and pointed out that National Engineering Services Pakistan (Pvt.) Limited ("NESP AK") is a private limited company registered under the Companies Act, 1913 and the matter relates to the terms and conditions of appointment / re-appointment of respondent No. 1 as Managing Director of the aforesaid private limited company . He added that the matter in hand further relates to the non-statutory rules of the said company , that is, NESP AK Chief Executive Service Rules, 1977. 5. Learned counsel for the appellant stated that respondent No.1 attained the age of superannuation, accordingly , he was retired through order dated 10.4.2017 w.e.f. 09.4.2017. He applied for gratuity and other emoluments and benefits under the above noted non-statu tory rules of 1977 and in this way, accepted his retirement. However , he
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filed W.P. No. 65400 of 2017 on 05.9.2017 challenging the order dated 10.4.2017 on the ground that he was granted another extension for three years as M.D./CEO before his superannuation, therefore, he could not have been retired through the order dated 10.4.2017. 6. He further explained that since the post of M.D./CEO NESP AK had become vacant, so a transparent procedure for filling the post was initiated through advertisement dated 01.10.2017, in terms of the decision of the Board of Directors of NESP AK. The appellant applied for the said post and under the provisions of The Companies Act, 2017, the Government of Pakistan approved his name for appointment on 29.5.2018. He further stated that respondent No. 1 obtained an order dated 06.6.2018 whereby the appointment of new M.D. till the next date of hearing was restrained and only for this reason the notification of the appointment of the appellant was withheld. He further stated that the entire exercise of the new appointment was within the knowledge of respondent No.1, but he did not implead the appellant in the writ petition, only to take the benefit at the back of the appellant. He further stated that the appellant is an aggrieved person for the reason that the writ petitio n filed by respondent No. 1 has been allowed. 7. He further argued that the impugned judgment failed to decide the question of jurisdiction/maintainability at the first instance and therefore, is liable to be interfered with by this Court. In this regard, he referred to judgments reported as D.G.Customs Evaluation, Karachi and another v. Messrs Trade International Lahore and others (2014 SCMR 15), Syed Muhammad Hussain Shah v. Abdul Qayyum and others (2011 SCMR 743), Hafiz Muhammad Siddique Anwar v. Faisalabad Development Authority and others (2007 SCMR 1126), Executive District Officer Schools and Literacy District Dir Lower and others v. Qamar Dost Khan and others (2006 SCMR 1630 ), Mansub Ali v. Amir and 3 others (PLD 1971 SC 124) and Amanullah and others v.The State and others (PLD 2004 Quetta 105). 8. He next contended that since the matter revolves around the fact that terms and conditions of service of the respondent No.1, were regulated by non-statutory rules, therefore, the writ petition itself was not competent. In this regard he relied upon the judgment reported as Muhammad Zaman and others v. Government of Pakistan through Secretary , Finance Division (Regulation Wing), Islamabad and others (2017 SCMR 571), Syed Nazir Gillani v. Pakistan Red Crescent Society and another (2014 SCMR 982 also reported as 2014 PLC (C. S.) 961) and Abdul Wahab and others v . HBL and others (2013 SCMR 1383 also reported as 2014 PLC (C. S.) 393). 9. He argued that the matter was clearly barred by the principle of laches, particularly in view of the conduct of respondent No.l. He added that the said respondent No.1 had accepted his retirement and in view of the same he had approached NESP AK for his dues. He further explained that the dates involved in the matter were of crucial importance, but were ignored by the learned Single Bench while passing the impugned judgment. In this regard he pointed out that respondent No.1 stood retired, through Office Order dated 10.4.2017. He approached the NESP AK through letter dated 14.4.2017 for paymen t of his provident fund and gratuity etc. Then he approached the office of NESP AK vide letter dated 17.4.2017 for purchasing the two official vehicles under his use and this letter was replied to by NESP AK vide letter dated 09.6.2017. He again approached NESP AK vide letter date 05.5.2017 for purchasing the household articles etc. at book value. He further contended that in the meanwhile the Companies Act, 2017 had been promulgated on 30.5.2017, empowering the Government to nominate the Chief Executive of the Company . On 21.8.2017, a new Board of Directors was appointed by the Government and its first meeting took place on 09.9.2017. The respondent No.1 filed writ petition on 05.9.2017 with the following prayer:- `In view of the above submissions it is most respectfully prayed that this petition may graciously be accepted, the order dated 10.4.2017 purporting to retire the petitioner from the office of MD/CEO NESP AK be declared as illegal and without lawful authority and the petitioner may be declared to have been appointed/re-appointed in accordance with the relevant provisions of Law and Rules as MD/CEO, NESP AK until 14.8.2019 and the Respondents may kindly be ordered to refrain from convening the so-called meeting of the BOD on 9.9.2017 vide notification dated 23.8.2017 or any other meeting till the final decision of the present petition. It is further respectfully prayed that respondents may kindly be ordered to refrain from creating any hurdles in the smooth functioning functions of the petitioner as MD/CEO NESP AK and also from withholding his salary and/or any facility/amenity to which he is entitled as MD, NESP AK during the pendency of the petition."
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10. He reiterated that the advertisement for the position of MD/CEO NESP AK was published on 01.10.2017, however , vide order dated 06.6.2018 learned Single Bench restrained from making any appointment against the post of M.D., till the next date of hearing. He then explained that writ petition filed by respondent No.1 was allowed through impugned judgment announced on 28.6.2018, which has been challenged through the instant intra court appeal along with two other ICAs filed by the NESP AK as well as by the government. 11. He then pointed out that this Court vide order dated 12.7.2018 suspended the operation of the impugned judgment. However , when the impugned judgment was announced, the responden t No. 1 approached NESP AK for release of his salaries vide letter dated 28.6.2018 and by exerting undue pressure got the payment released for more than Rs.14 million in his favour without even working for a single day. On the other hand, as the impugned judgment had been suspended, the appe llant was notified as Managing Director of NESP AK and he accordingly joined the of fice, subject to the final order to be passed by this Court, in the instant intra court appeals. 12. He added that on 30.7.2018, respondent No.1 filed a Civil Miscellaneous Application before this Court for restraining NESP AK from entering into a contract with the appellant, thereafter , the respondent No. 1 filed CPLA No. 1870-L of 2018 against the appellant and others, while challenging the order dated 12.7.2018 passed by this Court in the instant intra court appeal i.e. I.C.A. No. 225091 of 2018. The said CPLA was withdrawn and accordingly dismissed by the Hon'ble Supreme Court of Pakistan vide order dated 20.8.2018. The learned counsel then drew the attention of this Court to C.M. No. 7 of 2018 filed by him in the instant intra court appeal through which relevant documents were placed on the record. He read out paragraph 2 of the said application wherein it had been stated that after hearing the learned counsel for respondent No. 1 (Mr. Amjad Ali Khan) the Hon'ble Supreme Court of Pakistan observed in clear terms that writ petition filed by Mr. Amjad Ali Khan was not maintainable, so how could he approach this Court. It was further mentioned in the said application that after realizing the weaknesses of his case learned counsel for respondent No.1 withdrew his CPLA, which is confirmed from the annexed certified copy of order passed by the Hon'ble Supreme Court of Pakistan on 20.8.2018. In such circumstances, he further point ed out that respondent No. 1 has not even filed a reply to the said application, which was in any case, also supported by an af fidavit of the appellant. 13. Learned counsel for the appellant pointed out that the stance of respondent No.1 before the learned Single Bench has been noted in paragraph 5 of the impugned judgment, to the effect that the terms and conditions of service of MD/CEO., NESP AK are gover ned under the NESP AK Chief Executive Service Rules, 1977. He further pointed out that the stance of respondent No. 1 before learned Single Bench was again noted in the said paragraph wherein the said Service Rules of 1977 were relied upon regarding his right to purchase the household items/furnishings, on the basis of their book value. 14. He then pointed out that through the impugned judgment announced on 28.6.2018, learned Single Bench had clearly noted in paragraph 7 of the said impugned judgment to the effect that "admittedly the terms and conditions of service of the petitioner were governed under the NESP AK Chief Executive Service Rules, 1977. .." therefore, the writ petition 'itself was not maintainable. He further stated that once the learned Single Bench had reached this conclusion, it should have decided the question a maintainability of the writ petition before proceeding any further . He also pointed out that learned Single Bench had further relied upon these rules and pointed to paragraph 11 of the impugned judgment wherein Rule 6 of the said Rules was noted regarding the option to purchase the furnishings at book value. 15. He further pointed out to letter dated 14.4.2017 by the said respondent No. 1 to the Chief Financial Officer/Company Secretary of NESP AK wherein he had stated as follows:- "Please pay me provident fund, gratuity and leave encashment of my un-availed leave as per company rules according to my entitlement. However , a sum equal to 25% of the total amounts payable to me on account of above matter may be retained by the company till the final settlement of my dues." Learned counsel further refereed to letter dated 17.4.2017 through which it had been stated by the said respondent No.1, as follows:- "Vehicle No.LEJ-1 145 Toyota Fortuner Mode-2013 and Vehicle No.LEJ-35, Honda Civic Model-2017 are in my use as per my entitlement as a Chief Executive/Managing Director of NESP AK.
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As per company Rule/Policy I am entitled to purchase these two vehicles. However , these vehicles will remain in my use till a decision in this respect is made by the Board of Directors..." He then referred to letter dated 9-6-2017 written by NESP AK to respondent No.1 addressing him as former Managing Director , which is reproduced below:-- "We are pleased to inform you that as per proviso to Rule 6 of the Chief Executive Rules, you are entitled to opt for purchase of only one car at depreciated value on your retirement from company service. This option is subject to confirmation from NESP AK Board of Directors. Since you have been retired from company service on April 09, 2017 A.N. and following two company vehicles have been retained by you. LEJ-1 145 TOYOT A FOR TUNER Model-2013 LEJ-35 HONDA CIVIC Model-2017 In the light of the above rule we request you to retain one vehicle and return the other vehicle at the earliest. The case for the purchase of vehicle retained by you will be put up to the Board of Directors for approval." He also referred to letter dated 5.5.2017 by the respondent No.1 to NESP AK, which is reproduced below:- "As you would be aware that the due to serious Audit objections on the purchas e of house by NESP AK for the residence of the Managing Director , I opted not to stay there on assuming the charge of MD in August, 2013. Thereafter the BOD decided to dispose off this house, the process of which is still underway . Certain items (As per list attached and shifted in the presence of Mr. Asif Imran, Office Assistant M&QC Division and Mr. Khalid Mushtaq, Staff Officer to MD) which were under the use of previo us MD also remained under my use as MD at my residence. I intend to purchase these on the book value, the amount of which may be deducted from my dues with NESP AK after concurring with me the book valued amount(s) to be charged and items to be purchased. However , I believe the purchase of prices of these items would be market compatible viz-a-viz years of purchase so as to arrive at the realistic book values." It needs to be noted that this letter was addressed by the respondent No.1 to the then Additional Secretary who was at that point in time, serving as the Managing Director , NESP AK. The letter dated 09.6.2017 was written to respondent No.1 addressing him as the former Managing Director . In view of the above, he further stated that despite the above noted conduct of the respondent No. 1, he filed the W.P. No. 65400 of 2017 before the learned Single Bench on 06.9.2017. Learned counsel for the appellant stated that he highlighted the above letters simply to point out that respondent No. 1 hims elf had acted upon the Rules of 1977 and had approached NESP AK under the said Rules for the purchase of vehicles as well as other items and had also claimed his retirement benefits under the said Rules and that while relying upon the said Rules, he could not have filed the writ petition after almo st five months, in which the impugned judgment has been passed while ignoring the non-statutory nature of said rules. 16. Messrs Aurangzeb Mirza and Saad Rasool, Advocates for NESP AK/appellate in I.C.A. No.226487 of 2018, also adopted the arguments of Messrs Hafiz Tariq Nasim and pointed out that in such circumstances the only remedy available to respondent No.1 was to file a suit for damages, if so advised. They further added that the process of appointment of the new Managing Director/CEO, from open market, on merits had been initiated by NESP AK and respondent No. 5/appellant in I.C.A. No.225091 of 2018 had been selected and appointed. They further pointed out that the learned Single Bench had clearly noted through the impugned judgment that the employment of respondent No. 1 with NESP AK was contractual in nature; therefore, writ petition was not maintainable, in view of the above noted conduct of respondent No. 1. They further highlighted that Companies Ordinance, 1984 has been repealed and Companies Act, 2017 has been promulgated with effect from 30.5. 2017, therefore, the matter had automatically come to an end and in such circumstances the impugned judgment, without considering the aspect of the non-statutory rules could not have been passed. 17. Learned Additional Attorney General for the Federation of Pakistan/appellant in I.C.A. No.231 179 of 2018, while adopting the arguments of Messrs Hafiz Tariq Nasim stated that the writ petition suffered from laches as it was filed after about five months and that the learned Single Bench had wrongly noted that the superior courts have held
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that in such cases the period for filing a constitutional petition is six months. He added that it is ninety days. Moreover , the question of laches had to be decided first, while keeping in view the conduct of the respondent No.1. 18. On the other hand, Messrs Waqar A. Sheikh and Nadeem Ahmad Sheikh, led the arguments on behalf of the respondent No. 1 and stated that he was appointed as Managing Director/Chief Executive Officer of NESP AK vide order dated 15.8.2013 for the period starting from 15.8.2013 to 14.8.2016; and that the case of the respondent No.1 was that vide notification dated 28.6.2016, he was appointed for another term of three years starting from 16.8.2016 to 15.8.2019. However , through order dated 10.4.2017, issued with the approval of the then Chairman/Board of Directors of NESP AK retired him on attaining the age of superannuation w.e.f. 09.4.2017. They added that the service of the respondent No. 1 was regulated by the Companies Ordinance, 1984. He could have been removed from his office under the provisions of Section 202 of the said Ordinance. The office order dated 10.4.2017 regarding his retirement was stated to be passed by the Chairman of the Board of Directors and accordingly was challenged before the learned Single Bench. They argued that the NESP AK Employees Service Rules, 1973 were not applicable to the Managing Director . Further that the NESP AK Chief Executive Service Rules, 1977 were also not applicable for the reason that the said Rules provide d for the age of the Managing Director as 50 years and the tenure of the said office has been stated therein, as five years. They argued that the Rules could not have precedence over the statutory provisions of Sections 199 and 202 of the Companies Ordinance, 1984. It was further stated that, the Federal Government had no authority in the matter of removing the respondent No. 1 from the position of Managing Director , NESP AK through the impugned order dated 10.4.2017. They added that the said office order was issued by a Section Officer of the Ministry of Water and Power , Government of Pakistan, statedly upon the approval of the Chairman, Board of Directors, NESP AK and the Company Secretary was directed to get the said decision ratified by the Board in its next meeting. They then referred to the Articles of Association of NESP AK, Article 45 which is reproduced below:- "45. Chief Executive The Directors shall appoint a Chief Executive in accordance with the provisions of Sections 198 and 199. The terms and conditions of the Chief Executive shall be determined by the Board. The general conduct, administration and management of the business propert y and affairs of the company shall, subject to the control and supervision and such business requisition, directing and delegation of powers as may be given by the Board of Directors from time to time, be vested in the Chief Executive." 19. They then referred to the order dated 21.5.2013 passed by the Hon'ble Supreme Court of Pakistan in C.M.A. No. 2386 of 2013 in C.M.A. No. 1564 of 2013 in Constitution Petition No. 23 of 2012 (regarding appointments made between 01.3.2013 to 16.3.2013 in the government owned companies, autonomo us bodies, regulatory agencies, etc.) and highlighted that through this order , in terms of Article 45 of the Articles of Association of NESP AK, it was held that it was the job of the Directors to appoint the Chief Executive of the NESP AK. They next contended that the Board of Directors in its 141st meeting held on 27.6.2016 approved the re-appointment of the respondent No. 1 as the Managing Director/Chief Executive of NESP AK for another term of three years w .e. f. 16.8 .2016. 20. While referring to the NESP AK (Pvt.) Limited Chief Executive Service Rules, 1977 they referred to Rule 4, which provides as follows:- "4. Appointment: The appointment to the post of Chief Executive will be made with the approval of the Board, both by director recruitment and promotion. The maximum age for direct appointment as Chief Executive would be 50 years unless relaxation is allowed by the Board in an individual case." 21. They next contended that Public Sector Companies (Corporate Governance) Rules, 2013, as well as, Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015 are relevant to the facts and circumstances of the case and the Chief Executive has to be appointed in accordance with the said Rules/Guidelines. Accordingly , they stated that the writ petition was maintainable and that the learned Single Bench had rightly allowed the same and that the question of laches is of no consequence in view of the order passed by the Board of Directors of NESP AK whereby the respondent No.1 had been granted extension for three years.
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22. Learned counsel for the respondent No. 1 in order to substantiate their arguments placed reliance on the judgments reported as Asad I.A. Khan v. Federation of Pakistan and others (2014 SCMR 320), Muhammad Idrish v. East Pakistan Timber Merchants Grou p and another (PLD 1968 SC 412), Syed Azhar Abbas Jafri v. HBFC Workmen Union of Pakistan and others (2017 PLC (C. S.) 1393), Engr. Ghazanfar Ali Khan and another v. F.O.P. and others (PLD 2014 Lahore 375) and Polyster Employees Union (C.B.A.) Registered v. Trustees Union and 2 others (2013 CLD 108 ). 23. Heard. Record perused. 24. At the outset, it is noted that the learned counsel representing the parties in the instant appeals have confined their arguments to the maintainability of the writ petition and the question of laches. 25. Accordingly , the question of jurisdiction relating to the maintainability .of the writ petition is being taken up first. It is settled law that when the question of jurisdiction goes to the very root of the case and renders the entire proceedings corum-non-judice thereby A vitiating the same and making the judgment illegal and void as well as the settled proposition of law that when the question of jurisdiction is of fundamental nature in the judicial proceedings, then the same should be decided on priority basis. These principles of law are settled in view of the cases reported as D. G. Customs Evaluation, Karachi and another v. Messrs Trade International Lahore and others (2014 SCMR 15), Syed Muhammad Hussain Shah v. Abdul Qayyum and others (2011 SCMR 743), Hafiz Muhammad Siddique Anwar v. Faisalabad Development Autho rity and others (2007 SCMR 1126), Executive District Officer Schools and Literacy , District Dir Lower and others v. Qamar Dost Khan and others (2006 SCMR 1630 ), Maulvi Aziz-ur -Rehman v. Ahmad Khan and others (2004 SCMR 1622 ), Ali Muhammad and others v. Muhammad Sham and others (PLD 1996 SC 292), Shagufta Begum v. The Income Tax Officer , Circle-X1, Zone-B, Lahore (PLD 1989 SC 360), Mansab Ali v. Amir and 3 others (PLD 1971 SC 124), Haji Abdullah Khan and others v. Nisar Muhammad Khan and others (PLD 1965 SC 690) and Amanullah and others v. The State and others (PLD 2004 Quetta 105). The ratio of these judgments being that the question of jurisdiction can be raised at any stage; question of jurisdiction being of fundamental nature in judicial proceedings should be decided first on priority basis; that consent or acquiescence of the parties has never been considered as a factor conferring jurisdiction; that if mandatory condition for exercise of jurisdiction by Court, Tribunal or Authority is not fulfilled then all proceedings which followed become illegal and without jurisd iction and that the jurisdiction is conferred either by the Constitution or the law. 26. While applying these principles to the facts and circumstances of the instant case, we find that the post of Managing Director/Chief Executive of NESP AK (Private) Limited was held by the learned Single Bench as contractual and governed by the NESP AK Chief Executive Service Rules, 1977. Accordingly , once the learned Single Bench had found that…
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