Al Wakeelo
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Your Digital Lawyer, Always on Duty
Initializing Secure Chambers
Petitioner: GHULAM MUHAMMAD SAGARWALA VS Respondent: NATIONAL BANK OF PAKISTAN AND
Court Name: Sindh High Court Judge(s): Saleem Akhter Title:GHULAM MUHAMMAD SAGARWALA vs NATIONAL BANK OF PAKISTAN AND
JUDGMENT
Reported As: 1982 PLC (C. S.) 61 Result: Order accordingly Judgment JUDGMENT ' The plaintiff has filed suit for compensation for wrongful dismissal from service. The suit Was originally filed against Bank of Bahawalpur and the defendant No, 2. During the pendency of the suit the Bank was nationalized and merged with National Bank of Pakistan and therefore, on 10th April, 1979 National Bank of Pakistan was joined as defendant No, 1 instead of the Bank of Bahawalpur. ' The plaintiff was employed by Bank of Bahawalpur as Principal Officer on 1st June, 1964 and he entered into an agreement to serve for 5 years and the Bank agreed not to terminate his service during that period except for misconduct. The plaintiff completed his tenure of 5 years and continued in service. He was entitled to continue till he attained the age of 55 years on 16th April, 1971. In September, 1970 Managing Director of the defendant No, I extended the employment of the plaintiff by one year i,e, up to 16th April, 1971 on existing terms and conditions. On 19th November, 1970, the plaintiff received a letter from the Bank stating at the Board of Directors have abolished the Post of Chief Accountant with effect from 1st January, 1971 and the extension in service by one year was withdrawn. The defendant was allowed to proceed on leave from 1st January, 1971 to 16th April, 1971, On 3rd November, 1970 the plaintiff received another letter from the defendant No, 2 dismissing him from service. The plaintiff protested and termed the dismissal as malicious and illegal. The plaintiff, therefore, filed a suit for compensation for Rs, 1,49,402. Rs, 99,402 have been claimed from defendant No, I towards compensation for wrongful dismissal whereas Rs, 50,000 have been claimed from defendant No, 2 for defamation.
---
## Page 2
' The defendant No, 1 has admitted that the plaintiff was appointed as officer on the Post of Chief Accountant and after the expiry of the period of 5 years from 1st June, 1969 the employment of the plaintiff was governed by the Staff Bye-Laws of the defendants and in terms thereof defendant No, I was entitled to terminate the service by paying one month's basic pay in lieu of notice or by serving one month's notice. It has been denied that the service of the plaintiff as from 1st June, 1969 was governed by service agreement. It has been stated that the plaintiff had procured the extension up to 16th April, 1972 illegally and the order was made by the then Chairman and Managing Director without any authority which was withdrawn by the Board. Alternatively it has been pleaded that even if extension was valid the Board was authorised to terminate the service in accordance with Bye-Law 19. As the defendant No, 2 enjoyed the administrative powers delegated to him in Board's meeting dated 14th November, 1970, the order of termination was proper, legal and is not hit by bias or mala fides as alleged by the plaintiff. The defendants have further stated that as the plaintiff had threatened to take the bank in liquidation the defendant No, 2 lawfully dismissed him from service. On these pleadings the following issues were framed :- (1) What was the status and terms and conditions of service of the plaintiff with Defendant Bank ? (2) Whether withdrawal in November, 1970 of extension of service was in breach of agreement with plaintiff and mala fide ? (3) Whether termination of service of the plaintiff in November, 1970 by Defendant No, 2 was in breach of terms and conditions of service without authority and mala fide ? (4) Whether Defendant No, 2 slandered and defamed the plaintiff? (5) To what amount is the plaintiff entitled to on account of remuneration, leave remuneration compensation and or damages? (6) What should the decree be 7 ' On 28th October, 1978 the following additional 'Issue was framed by the Court :- "Whether the Chairman and the Managing Director of the defendant No, I was authorised to extend the service of the plaintiff without approval of the Board of Directors of the defendant No, 1," ' My findings on the above issues are as under : Issue No, I : ' It is an admitted position that the bank made an offer to the plaintiff for appointment as Principal Officer in terms of its letter dated 1st June, 1964, whereby the plaintiff was required to execute an agreement to the effect that he would not leave or discontinue the service of the bank within a period of 5 years from the date of his reporting for duty. The agreement was executed on 1st June, 1964 in which the bank agreed that it will not terminate the plaintiff's service during the period of 5 years except on the ground of misconduct. In case of misconduct the bank was entitled to terminate the service without enquiry by giving one month's notice or one month's basic pay in lieu of notice or to dismiss the employee from service after he was found guilty of serious charges upon enquiry as laid down in Banks Staff Bye-Law No, 61. The plaintiff performed the duties of the Chief Accountant and after completing the period of 5 years he continued on the same position. After this period of 5 years i,e, after 1st June, 1969 the agreement ceased to exist and the plaintiff was to be governed by the Staff Bye-Laws. According to the Staff Bye-Law No, 2, the bye-laws applied to all officers except otherwise provided in the regulation or to such extent as may be prescribed by the Board of Directors to specialists recruited on special contracts or senior officers of the Bank whose salary or allowances are separately determined by the Board. In the present case there is no evidence to establish that the plaintiff was employed as a specialist. Merely because the plaintiff had a vast experience of banking service does not lead to the conclusion that he was a specialist in any of the branches of the banking business. The plaintiff was recruited as a Principal Officer to work as Chief Accountant. He was recruited as a senior officer whose salary and allowances were separately determined by the Board. There is sufficient evidence on record to show how the salary and allowances were determined from time to time and therefore the plaintiff
---
## Page 3
was Principal Officer working as a Chief Accountant on terms and conditions mentioned in the letter of appointment and in the agreement which was valid for a period of 5 years where after except the emoluments and allowances all other terms and conditions were to be governed by the Staff-Bye-Laws of the Bank. Additional Issue :- ' The main point for consideration under this Issue is whether the Chairman and Managing Director could extend the service of plaintiff without approval of the Board of Directors of the Bank ? It is an admitted position that on 7th September, 1970 the plaintiff applied for extension of his service for a period of one year up to 16th April, 1972. This extension was sought from the Chairman and Managing Director of the then Bank of Bahawalpur. The extension was necessitated because the plaintiff was to attain the age of 55 years on 16th April, 1971 and would have then retired from service. He, therefore, thought it fit to seek extension for one year, which was granted by the chairman and Director of the Defendant No, 1. The defendant No, 1 has challenged the authority of the Chairman and Managing Director on the ground that this extension should have been approved by the Board of Directors. Under the Staff Bye-Laws of the Bank the Managing Director and Chairman was the competent authority. Under Bye-Law 20 every employee was to retire at the age of 55 years provided the "Competent Authority" may in its discretion extend the period of service of any such employee in the interest of the Bank. Bye-Law 5 further provides that the powers and duties to be exercised in respect of the application of these Bye-Laws have been delegated to the "Competent Authority" of the Bank, and accordingly vested in him. Bye-Law 11 also contemplates that the appointment made to category 'A' by the Managing Director shall be laid before the Board. The plaintiff fell within category A as classified by the Staff-Bye-Law No, 9. It, therefore, follows that appointments made by the Managing Director in respect of the employees falling in category A were to be laid before the Board but Bye-Law 20 does not provide that the extension granted by the competent authority i,e, the Managing Director should be laid before the Board. It only provides that it can be extended by 'Competent Authority' in its discretion in the interest of the Bank. Furthermore it can be seen that the extension granted to an employee cannot be termed as a fresh appointment to attract Bye-Law 11. Mr. Mansoorul Arfin the learned counsel for the defendant has contended that the fact that the plaintiff was friendly with the then Managing Director, applied for extension at least six months before the expiry of the term, and that the Managing Director granted it on the eye of his retirement proves that the extension was illegally procured. These facts are hardly relevant to the issue under consideration which deals with the authority of the Managing Director to extend the period of employment. These facts by themselves do not constitute mala fides or collusion on the part of the plaintiff. Even the Board of Directors while considering the abolition of post did not object to the extension granted to the plaintiff on the grounds contended before me. In these circumstances I hold that the Chairman and the Managing Director was, authorised to grant extension of service of the plaintiff and it was not necessary to lay it before the Board or to seek its approval. Issues Nos. 2 and 3. ' I will take up both these Issues together as they are interconnected. The plaintiff has challenged that the withdrawal of extension of service was in breach of agreement with the plaintiff and mala fide. According to the defendants the extension was illegally procured and that in order to economies the work of the bank the Board had taken certain steps which inter alia included the abolition of the post of the Chief Accountant and consequently the extension granted by the Board was withdrawn, The defendants have relied upon the resolution of the Board to substantiate that the extension was not withdrawn for victimizing the plaintiff or for any mala fide reasons but it was merely to economies the affairs of the Bank. The plaintiff has contended that although the post of the Chief Accountant was abolished, the work continued and was looked after by a junior officer. It
---
## Page 4
has been further contended that the plaintiff was appointed as a Principal Officer and other Principal Officers who were junior to him were continuing with the defendant No, 1. In these circumstances it is argued that abolition of post awl withdrawal of extension was maid, foe and illegal. The defendant has produced the minutes book Exh. 29/7. At item No, 29 the Board seems to have discussed the proposed steps taken by the Bank to minimize its expenditure. Suggestions relating to use of official cars, their maintenance, conveyance allowance, telephone, taxes and charges for the houses of the officers were considered and decided. The question of retirement of bank employees also came for consideration. It was stated that all employees who were to attain the age of 55 years were to retire with the exception of the plaintiff whom extension of one year had been granted. Although the Board considered the extension granted to the plaintiff it does not seem to have disapproved it. It only decided that to effect economy the post of Chief Accountant should be abolished with effect from 1st January, 1971 and a senior accountant be placed as in charge of this work and since the post of the Chief Accountant would stand abolished the extension gran ted to the plaintiff would stand withdrawn. Upon the abolition of the post the plaintiff was allowed leave-preparatory to retirement. From the minutes of the meeting in which this decision was taken it seems clear that the extension granted to the plaintiff was not disapproved. It was not withdrawn for the reason that the extension was granted illegally or unauthorized or that it was not in the interest of the bank. The extension was withdrawn only because the post of the Chief Accountant had been abolished. It seems that in a drive to economies the expenditure the defendant No, 1 had been taking such steps which may be beneficial to the bank. One such step was to abolish the post of the Chief Accountant and his work was to be looked after by a Senior Accountant instead of a highly paid principal officer, who was to retire after few months. Another decision in this regard seems to be that all the employees attaining the age of 55 years were to retire. There is nothing to suggest on record that the extension granted to the plaintiff was withdrawn mala fide. The extension was granted at least 5 months before the plaintiff was to retire. It was withdrawn by the Board before its commencement. The Board is authorized to make decision with regard to the employment and could also withdraw such decisions unless prohibited by any other Bye-Law. No such provision has been shown that the authority of the Board is restricted and extension cannot be withdrawn, The plaintiff has not been able to show any ground that the action taken by the Board was mala fide or in breach of the agreement. ' The matter did not end here. By a letter dated 23rd November, 1970 reproduced hereunder the bank dismissed the plaintiff- "We are aggrieved to know that because of the Board's decision dated 14th November, 1970, - conveyed to you vide our letter dated 19th November, 1970, you have threatened to take Bank into liquidation on the allegations that it is unable to pay its debts. Your intentions are harmful for the institution and as such it is not conducive that your service should continue any longer in the institution which you have threatened to take to liquidation. Your services, are hereby terminated with immediate effect and you are directed to collect your dues immediately from the Bank." ' Your's faithfully, (S. BASHIR AHMED), General Manager, ' A plain reading of this letter makes it clear that the service of the plaintiff was terminated as the plaintiff had threatened to take the bank into liquidation and therefore it was not conducive in the interest of the bank to allow him to continue in service. The service was terminated with immediate effect and the plaintiff was directed to collect his dues from the bank but the particulars of dues which the bank was prepared to pay have not been given nor there is any correspondence where the bank has indicated the amount payable to the plaintiff. The plaintiff challenged this order of
---
## Page 5
termination as illegal, wrongful, void and mala fide. The plaintiff has also challenged that the allegation made against him in this letter is also incorrect. ' According to the learned counsel for the plaintiff the order is without authority as under the bye- laws the Managing Director was the competent authority to terminate the plaintiff's service but it was terminated by the Manager. In this regard reference has been made to a resolution passed on 14th November, 1970 whereby the bye-laws were amended and it was provided that wherever the word "Chairman" and "Managing Director" appeared in the bye-laws the word "General Manager" shall also be added. There is no dispute about this resolution but the learned counsel for the plaintiff has contended that according to Bye-Law No, 3 a resolution or any amendment in the staff bye-laws will be operative only from the day as it is circularised. According to him the amendment was not circularised. The learned counsel for the defendant has pointed out to Exh. 32/1 where the resolution making the amendment in the bye-laws was circulated. This objection has therefore no force. ' The plaintiffs' counsel then contended that the bye-laws are contracts between the parties and cannot be amended to the detriment of the other party. This argument loses sight of the fact that bye-law itself provides that the rules can be amended by Board of Directors. Therefore even if it is accepted that bye-laws become terms and conditions of the contract between the parties it provides for an amendment by the Board of Directors. In these circumstances amendments validly made cannot be challenged on this ground. ' The learned counsel for the plaintiff has contended that after the termination order was passed it was placed before the Board and it was decided that it should be withdrawn but. Later the defendant No, 2 obtained the approval by misrepresentation. The defendants have produced the minutes of the meeting of the Board of Directors held on 30th December, 1971 in which it was decided that in view of the legal advice the termination order should not be withdrawn. It seems that earlier the Board wanted to settle the dispute with the plaintiff amicably and had decided that the termination order will be withdrawn provided there is an overall settlement and the Bank is not dragged in litigation. From the minutes of the meeting and the legal advice it is clear that no settlement was reached and therefore, the Board decided not to withdraw the order of termination. These facts do not establish that the decision of the Board was obtained by misrepresentation. ' In order to establish that the termination was wrongful the learned counsel for the plaintiff has relied upon bye-laws 18 and 19 of the Staff Bye-laws. The defendants have also relied upon Bye- Law 19. It is convenient to reproduce them as follows :- 18. No employee shall leave or discontinue his service in the if he is an employee under categories 'A' and 'B' without first giving three months notice and if he is an employee under categories other than 'A' without first giving one month's notice in writing to competent authority of his intention to do so. In case of breach of this Bye-laws he shall be liable to pay to the Bank as compensation a sum equal to his substantive pay for the notice period ; provided that the competent authority may in its discretion waive wholly or partly the payment of such compensation payable by such employee. 19. Notwithstanding anything contained in these Bye-laws the Bank shall have the right to terminate the services of any employee in any category without assigning any reason on giving one month's notice or pay in lieu thereof. Such powers of termination of service will be exercised by the competent authority. ' Under Bye-Law 18 an employee in category 'A' cannot leave or discontinue from his service without first giving notice of three months. It further provides that in case of breach of this bye-law the employee shall be liable to pay to the bank as compensation a sum equal to his substantive pay for the notice period. Bye-law 19 provides, that the bank shall be entitled to terminate the service of
---
## Page 6
any employee of any category without assigning any reason on giving one month's notice or pay in lieu thereof. In this regard Bye-Law 61 will also the relevant which is reproduced hereunder :- "Any employee of the Bank, including any officer who commits < a breach of any of the bye-laws (Staff) or any other instructions issued hereunder or by the General Manager or who displays negligence, inefficiency or indolence or who knowingly and intentionally does nothing detrimental to the interest or reputation of the Bank or in any manner in conflict with the instructions issued by it or who commits a breach of discipline or is guilty of any other act of misconduct, or who is convicted of a criminal offence by a competent Court of law shall be liable to the following penalties :- (1) Reprimand. (ii) Delay or stoppage of increment or promotion or both. (iii) Degradation to a lower post in his permanent class or Category. (iv) Recovery from pay of the whole or part of any pecuniary loss caused to the Bank. (v) Dismissal. ' Bye-Law 61 authorises the bank to impose the penalty of dismissal in case of misconduct. However it regulates the procedure in which such a penalty can be imposed. The preconditions are that before dismissal a notice shall be served in writing giving an opportunity to the employee to defend himself and the charge shall be investigated by the competent authority or enquiry officer appointed by the competent authority. Bye-Laws 65 and 66 provide an appeal by the employee against the order of dismissal passed under Bye-Law 61. The learned counsel for the plaintiff has contended that as procedure provided under Bye-Laws 61 and 62 was not followed the dismissal was wrongful. Mr. Arfin the learned counsel for the defendant has contended that the case is governed by Bye-Law 19 under which the bank was authorised to terminate the service without assigning any reason on giving one month's notice or pay in lieu thereof, and therefore the termination was valid and proper. A close scrutiny of Bye-Laws 19, 61 and 62 makes it clear that Bye-Law 19, will apply where the service is terminated without assigning any reason on giving one month's notice or pay in lieu thereof. It contemplates a termination simpliciter without assigning any reason. But once any charge is levelled against the employee which is the basis for order of termination resort should be had to bye-laws 61 and 62. In the event it will not be necessary to give one month's notice or pay in lieu thereof but it will be incumbent upon the bank to hold an enquiry according to the procedure provided in Bye-Law 62 and then pass an order imposing any of the penalties mentioned in Bye-Law 61. If the employee's service is terminated by assigning any reason which is adverse to the employee then Bye-Law 19 will not come into operation. The bank could have terminated the service by issuing a letter of termination simpliciter without assigning any reason. In that event either one month's notice should have been given or one month's salary in lieu of notice should have been paid. In the present case nothing was done. In fact a serious allegation was made against the plaintiff that he threatened to take the bank into liquidation and therefore in order to save the interest of the bank the service was terminated. The charge was of a very serious nature particularly in respect of an employee who had served up to the age of superannuation. It is an admitted position that the plaintiff was not charge-sheeted nor opportunity was given to him to defend himself. In the circumstances the termination was wrongful. Reference has been made to the case of J. J. Miranda v. Fishermans Co-operative Society Ltd. (1), where after the review of host of authorities my brother Ajmal Mian, J. Held that any breach of rule shall entitle an aggrieved employee to maintain an action for damages. Termination of service in breach of rule wil 1 amount to a wrongful termination. The defendants stand that it was terminated under Bye-Law 19 is without any force. The defendants seem to be laboring under a misapprehension that since under Bye-Law 19 they have the power to terminate the service) without/assigning any reason on giving one month's notice, they are entitled to terminate the
---
## Page 7
service for any reason whatsoever. It is not correct. The termination of service without notice or one month's notice is permissible only where it is a termination simpliciter and neither any charge has not been levelled on the employee nor any penalty has been imposed upon him. My finding to issue No, 3 is that the termination of service of the plaintiff was wrongful and in breach of the term and condition of service and bye-laws. ' It now brings to the crucial issue of compensation. The plaintiff has claimed damages in the following manner (1) A sum of Rs, 80,038.00 being the salary from December 1970 up to April, 16, 1972 at the rate of 4,841 P.M. Which he was drawing at the time of termination of service (2) Rs, 19,364 being the leave pay for 4 months, (3) General damages of Rs, 50,000 from defendant No, 2 as both petitioners for loss and/or damage caused to be plaintiff by acting maliciously or without authority and by defaming the plaintiff. {{FOOT NOTE}} PLD 1978 Kar. 990 {{FOOT NOTE}} ' The plaintiff has contended that since his service has been extended up to 16th April, 1972, but for the wrongful termination he would have continued in service till that period. The plaintiff has therefore, claimed salary for that period. The plaintiff has given a breakdown of Rs, 4,841 in Annexure 'X' to the plaint. It is stated that the basic salary was Rs, 2,000, personal pay Rs, 400. Dearness allowance Rs, 300 Servant Allowance Rs, 70, Furnishing Allowance Rs, 70. All these items are covered by the bye-laws and letters of the bank…
Read the unabridged text and precedent citation network on Al Wakeelo Legal Research Platform.