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Petitioner: Syed Sardar Alam Zaidi VS Respondent: Pakistan Gum and Chemicals limited
Court Name: Sindh High Court Judge(s): Yousuf Ali Sayeed Title: Syed Sardar Alam Zaidi vs Pakistan Gum and Chemicals limited Case No.: Suit No. 1215 of 1999 Date of Judgment:2017-01-30 Reported As: 2017 SHC 121 Result: N/A
JUDGMENT
JUDGMENT YOUSUF ALI SAYEED, J. Through this Suit the Plaintiff has sought judgment and decree against his former employer, the Defendant, for sums said to be due on account of arrears of salary, increment, differential in gratuity, and pension, as well as further compensation for innovation of a manufacturing process to the benefit of the Defendant. 1. The preceding facts, as stated, are that the Plaintiff was in the employ of the Defendant from 01.01.1974 until the expiry of his service contract on 30.06.1998, when he opted against further renewal. Whilst the Plaintiff was admittedly paid a certain amount towards settlement at that time, it is contended that he was additionally entitled to receive further amounts as claimed, the purported basis and computation of which is as follows: (a) Due to the modification/variation of the Contract of Employment dated 30.6.1997 (for the period (01.07.1997 to 30.06.1998), as recorded in terms of letters dated 01.01.1998 and 02.01.1998, the Plaintiff had received a reduced salary of Rs.27,379.13 per month from 1.10.1997 to 31.3.1998, as against the earlier contracted salary of Rs.54,758.26 per month, and it is contended that as per the varied terms of contract the Plaintiff was entitled to demand and receive the differential for this six month period along with an increment of at least 10% over the salary for 1996, which is said to work out to Rs.164,274/- on account of the differential and Rs.80,758/- on account of the 10% increase; (b) An amount of Rs.81,466/- on account of short payment in gratuity due to the failure on the part of the Defendant to factor in the 10% increment whilst determining the Plaintif f?s entitlement; (c) An amount of Rs.561,820/- on account of pension; and (d) An amount of US$ 80,000/- on account of development of a new and unique manufacturing process, which was said to have been utilized by the Defendant during its operations for commercial benefit. 2. It is submitted that the Plaintiff addressed the Defendant in respect of these claims vide a letter dated 24.03.1999 as well as in terms of a legal notice dated 06.05.1998, but no response was forthcoming. Hence the instant suit had to be filed, wherein the Plaintiff has prayed, inter alia, for judgment and decree against the Defendant in the sum of
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Rs.883,318/- as well as US$80,000/- or its equivalent in Pak rupee at the rate of exchange applicable on the date of actual payment. 3. The Defendant filed its written statement and whilst proceeding to assail the maintainability of the Suit on a point of jurisdiction, essentially contended that the claims had no basis in law and that no case was made out on merit, hence the Suit merits dismissal. 4. From the issues proposed by the respective parties the following were adopted and settled by the Court on 21.02.2000: (i) Whether the Suit is not maintainable? (ii) Whether this Honourable Court has no jurisdiction to proceed with the instant case which exclusively falls within the jurisdiction of Federal Service Tribunal in view of enactment of Section 2A of Service Tribunal Act, 1973? (iii) Whether the claim of the plaintif f is outside of scope of service contract agreement? (iv) Whether the plaintif f has already received payment as being full and final settlement on his account in terms of his Service Contract under reference? (v) Whether the plaintif f is not entitled to recover Rs.8,88,318/- and US $ 80,000/- in equivalent Pak rupees from the defendants? (vi) What should the decree be? 5. Since Issues Nos. 1 and 2 concerned the maintainability of the Suit, the same were taken up as preliminary issues, and after hearing the respective counsels for the parties, were answered in the negative in terms of an Order made on 16.10.2001, which was not assailed by the Defendant. 6. Thereafter , the matter proceeded to evidence, and the Plaintif f filed his affidavit-in-evidence (Exhibit PW-1/1) and was examined in Court, whereas two witnesses, namely Abdul Rehman, son of Ghulam Mehmood, and Sharif Khan, son of Waheed Khan, filed their respective affidavits-in evidence (Exhibits D/6/1 and DW-2) and were examined in Court as witnesses from the Defendant's side. 7. On the case coming up before me, it was pointed out by learned counsels on the date of hearing that their respective written arguments had already been placed on record. It was submitted that they reaffirmed the same and desired the decision of the case on that basis. Judgment was reserved accordingly. 8. In the written arguments of Plaintiff's counsel it has been submitted that the signatory of the written statement, namely one Mirza Mehmood Agha, did not file his affidavit in-evidence nor was examined in Court. It was submitted that hence the written statement had not been proved through its signatory, due to which the case of the Plaintiff had gone unchallenged and unrebutted, hence proven. With reference to the appointment of the two persons who did appear as witnesses of the Defendant, it was submitted that the letter of authority (Exhibit D/6/1/1 and Exhibit DW 2/1) produced by them in that regard purports to have been signed by one Meer Asad Waseem, who is stated to be the Chief Executive Officer of the Defendant. It is contended that this letter does not refer to any Board resolution conferring power / authority on the executant to act on behalf of the Defendant. Furthermore, it was pointed out that under cross-examination, the Defendants' witness, Abdul Rehman, had admitted that no such Resolution has been passed. It has been argued that there is therefore no representation or rebuttal from the Defendants to the Plaintiff's claim and in these circumstances the Court may be pleased to pass Judgment and decree in favour of the Plaintiff. Reliance has been placed in this regard on the judgments reported at 1986 CLC 288, PLD 1972 SC 25, 1996 CLJ 474 and PLD 2010 Supreme Court 604. As these objections pertain to an evidentiary matter, I intend to first consider the same as well as the case-law cited before embarking on any discussion on merit. 9. In the case of Mst. Sakina and Another v Hussain and 5 Others, reported at 1986 CLC 288, it was observed by a learned single judge of this Court that the pleadings of the parties are not to be treated as substantive evidence, and that averments made in such pleadings carry no weight until the author personally turns up to support them, and more importantly, offers himself for cross examination. Reliance was placed on the principle evolved in the case of Khair-ul- Nisa v. Malik Muhammad Ishaque, reported at PLD 1972 SC 25. 10. It is pertinent to mention that the underlying facts of Khairunnisa's case were that a suit for specific performance had been filed against the vendor as well as a third party who was a subsequent purchaser to the plaintiff, wherein enforcement was sought of the earlier contract of sale in favour of the plaintiff. The defense raised by the subsequent
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purchaser in his written statement was that he was a "transferee for value who has paid his money in good faith and without notice of the original contract" and as such was covered by the exception to Section 27 of the Specific Relief Act, and the rule of specific performance of the earlier contract could not be enforced against him. However, during the pendency of the suit this purchaser died prior to recording his evidence in support of his contentions in the written statement, which was therefore ignored and rejected from consideration. The contentions raised by the advocate for the said defendant as to the effect of the written statement were disposed of by the Court as follows: "Raja Muhammad Anwar, learned counsel for the appellants, has contended that the deceased had denied the factum of the notice in the written statement and this should be considered as evidence in the case under section 32 of the Evidence Act. The contention of the learned counsel is not well-founded. Written statements cannot be the exhibits in the case without the person who filed the same being examined in the Court. The statement made in the written statement are not on oath. They are only verified and, therefore, they cannot be treated as evidence in the case". It was observed that support for this view was to be found in the cases reported at AIR 1917 Cal. 269(2) and PLD 1962 Dacca 643, and in view thereof the denial by the deceased subsequent purchaser in his written statement was of no avail and could not be of any assistance in the discharge of the onus which lay on the appellants to prove that the deceased was a transferee for valuable consideration in good faith and without notice. 11. Applying this principle, it was held by the learned single Judge in Sakina's case that the written statement filed by one of the defendants could not be utilized by the respondent/plaintiff as he had failed to examine the author of the written statement. It appears that this approach was adopted by his Lordship, as he then was, as the contents of the written statement were sought to be used by the Plaintiff against and to the detriment of a defendant other than the one who had filed such written statement, which would then have constituted a different circumstance altogether. 12. Similarly , in the case of Haji Adam Ali Agaria v Asif Hussain etc, reported at 1996 CLJ 474, it was held with reliance on the principle laid down in Khairunnissa's case, that the averments made in the written statement could not be taken into consideration as a valid piece of evidence after the death of the defendant without the same being exhibited and proven through the Defendant's witness. 13. Likewise, in the case of Federation of Pakistan through Secretary Ministry of Defence and Another v Jaffar Khan and Others, reported at PLD 2010 Supreme Court 604, it was held by the Apex Court that a docu ment which has not been brought on record through witnesses and has not duly exhibited, cannot be taken into consideration by the Court, and it was observed that a written statement cannot be exhibited in the case without the filer being examined in the Court and cannot be treated as substantive evidence except where such statement amounts to admission of plaintif f's plea. 14. In response, learned counsel for the Defendant has submitted that these contentions are hyper-technical, and stated that a person who is familiar with the facts, can appear as a witness and give evidence particularly where there is no objection to his appearance and there is no requirement under law and none has been quoted by the plaintiff to suggest that a witness requires a resolution by the Board of Directors to tender evidence. He further states that the admitted position in this case is that the Chief Executive of the company had instructed the witness to appear and tender evidence and the name of the witness was contained in the list of witnesses. Without prejudice to the above it is submitted that the plaintiff did not seek that an issue be made on this point and none was made. It is further submitted that technicalities should be avoided. 15. As far as this evidentiary objection raised by the Plaintiff is concerned, it appears from the record that a resolution had been passed through circulation by the Board of Directors of the Defendant (Exhibit D/6/1/24), whereby the signatory to the written statement had been authorized generally to represent the Defendant for the purposes of the Suit, including engage advocates. In such capacity, he had signed a Vakalatnama for the purpose of appointing legal counsel on behalf of the Defendant in the matter, who in turn had prepared and filed a list of witnesses which had been submitted in Court under his signature. The two persons named in this list were the very witnesses who then appeared in Court and tendered evidence on behalf of the Defendant. 16. At the time of appearance, these witnesses produced the letter of authority purportedly issued by the Managing Director, authorizing them in that regard, and in the absence of any objection at that juncture this letter was exhibited accordingly. Thereafter, the examination in chief of both these witnesses was conducted in full and the entire corpus of
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documentary evidence produced by them was allowed to be exhibited without any serious objection being raised at the relevant time as to their capacity to appear and/or bring such documents on record. It was only during the course of cross-examination that questions were put to them as to whether they had been authorized pursuant to any resolution of the Board of Directors. Furthermore, as per the record, the witnesses named in the list filed on behalf of the Defendants by the validly appointed counsel were produced by him in Court on behalf of the Defendant and examined accordingly. Suffice it to say that the Defendant never disavowed either of these witnesses or the evidence tendered by them. 17. The point presently arising for consideration is different from that of authorization for institution of proceedings, where it is imperative that specific authority sanctioning institution be present at the outset. In the instant case the reasonable satisfaction of the Court as to the credentials of the witness appears sufficient. Furthermore, the matter at hand is not a case where the written statement is sought to be exhibited or relied upon in evidence without the defendant being deposed. Even otherwise, the present Defendant is a juristic entity and two witnesses have deposed in evidence on its behalf and been subjected to cross examination accordingly. 18. Under these circumstances, I am of the opinion that the cases cited by learned counsel for the Plaintif f are distinguishable and the evidence that has been presented before the Court by the Defendant?s witnesses cannot be set at naught on the basis thereof. However , to what extent the evidence prese nted may be considered for the purpose of determination of the case on merits is a further matter to be considered in light of the pleadings, as dealt with herein below . 19. Issues Nos. 1 and 2 have already been answered in the negative, as mention ed herein above, and no further finding on these issues is required. 20. Issues Nos. 3, 4 and 5 appear intertwined as a determination thereof necessitates that the employment terms prevailing at the relevant point in time firstly be ascertained, and then interpreted. As such, these issues may conveniently/properly be considered together. Having examined the respective contentions of the parties in light of the evidence produced, my finding on these issues is as follows hereinafter. 21. In advancement of the claims set up in the plaint, as regards the factual backdrop, it has been submitted that the relationship inter se the Plaintiff and the Defendant at the relevant time was such that the service contract was subject to renewal from year to year. Around the period 1996-1997, the business of the Defendant began to decline, with the result that the Defendant sought to curb/reduce its costs and in a gesture of support certain employees opted to voluntarily forego their increments due on 01.07.1997, and subsequently to work on the basis of a reduced salary. 22. It is submitted that the Contract of Employment dated 30.6.1997 (Exhibit PW-1/21, which was also produced on behalf of the Defendant as Exhibit D/6/1/15), pertaining to the period 01.07.1997 to 30.06.1998, was subsequently modified on the terms recorded in two letters dated 01.01.1998 and 02.01.1998 respectively (Exhibits PW-1/4 and PW- 1/5, which were also produced on behalf of the Defendant as Exhibits D/6/1/16 and D/6/1/17). It is submitted that vide the letter of 02.01.1998, further terms over and above what had been proposed as per the Defendants letter dated 01.01.1998 were added for the benefit/protection of employees. This letter of 02.01.1998 thus forms the basis of the Plaintiff?s claim on account of salary arrears, increment and short payment on gratuity, as alleged. 23. The underlying document which undisputedly forms the substratum of the service contract in this case is the letter of 30.07.1997, captioned "RENEW AL OF CONTRACT PERIOD OF COVERAGE JULY 01 1997 TO JUNE 30 1998 ", addressed to the Plaintif f by the then Managing Director of the Defendant, the relevant paragraph of which states as follows: "As you are aware, due to non-availability of raw material, the company is going to face a tremend ous loss this year, which has already been reflected in the results for the first 6 months. I greatly appreciate the gesture by the PakChem Management Team of which you are a member , to voluntarily forego your increments due on July 01 1997, as your contribution to controlling the company?s Fixed Costs. In view of this decision the terms of your employment remain unchanged-until further notice-from those detailed in my letter of June 30, 1996." [Underlining added] 24. Subsequently, this contract was modified in terms of a letter dated 01.01.1998, also addressed by the Managing Director, which was captioned "MODIFICATION TO RENEWAL OF CONTRACT PERIOD OF COVERAGE JULY 01 1997 TO JUNE 30 1998", and wherein it was stated inter alia that due to the unavailability of an essential raw material
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the business forecast for the year 1998 was even worse than that of the preceding year and that action would be taken to retrench many workers on a permanent basis. It was further stated as follows: "You form part of the Management staff. Other activities not related to production, have to continue and unfortunately these have not reduced in any way as a result of an idle plant. We really do not know where the company is heading under these conditions, but we know that we have to reduce our fixed costs. You have been given every opportunity to voice your opinions on how to run this business, during the weekly Management meetings. I do not think anybody can come up with any other solution. We should take solace in the fact that this financial crisis is in no way whatsoev er, due to any action which the Management of this company has taken. Nor is it any reflection on your person al performance which has been exemplary . I regretfully see no alternative, however, but to propose to you that at least for the first 6 months of 1998, you continue to work on 50% salary, as you have been doing for the last three months of 1997. Naturally I would not like to force this decision upon any of our valued managers. If anybody does not agree, I would very reluctantly have to accept their resignation. To those who do agree, let us hope that this tremendous sacrifice on your part will lead us into a future where we will once again be able to lift our heads high and be proud of the organization of which we are part. As you know , we have a plan to get away from the cyclical weather changes in the not-too-distant future." [Underlining added] 25. Whilst this letter was signed in acceptance of the terms stated, it is contended that the matter had nonetheless been kept alive by the Plaintiff as well as other employees to whom such an arrangement of continuing in employment on varied terms had been proposed, in as much as they jointly addressed a letter dated 02.01.1998 to the Managing Director, bearing the same caption as the Managing Director?s letter of the previous day, wherein it was mentioned as follows: "This has reference to the letter dated January 01 1998 addressed by you to Grade IV and V Officers of PakChem. We informed you that before signing the same, we wished to discuss the contents amongst ourselves. We have now had a meeting, and, understanding the difficult conditions under which the company is laboring at present, would agree to sign the letter under reference, on the following conditions: 1) The reduction in salary will not af fect our retirement benefits in any way . 2) If at any time during the tenure of the current contract, we feel that it is not possible-for any reason, for us to continue working on half salary , we may demand that our full salary-along with arrears and at least a 10% increment over the salary for 1996 be restored to us, and the company will do so forthwith, without question. We hope that you can agree to the foregoing, so that the letter in question may be signed by us. We join you in looking forward to better times for this company which we have loyally served for so many years." [Underlining added] 26. The authenticity of the letter of 02.01.1998 has not been disputed by the Defendant, in as much as it stands admitted that the same was presented by the Plaintiff and other personnel before the Managing Director, and was signed by him in acceptance of these terms. However, it has been submitted that this was done without seeking any approval or direction from the Board of Directors, and when the matter was placed before the Board, the implementation of this arrangement was held not to be mandatory and it was directed that no such claim be entertained. Instead, in the meeting of 21.04.1998 (the minutes of which have been placed in evidence as Exhibit D/6/1/18), the Board of Directors decided that full salary be paid to the Plaintiff and others effective 01.04.1998 onwards, which was paid and accepted. It has thus been contended that the arrangement of 02.01.1998 was not binding on the Defendant. 27. Having considered the matter , I find myself unable to accept this contention, in as much as the past practice apparent on the face of the record shows that the Managing Director had previously executed past renewals of the employment contract and there was no reason for the parties to have doubted his capacity to represent and contractually bind the Defendant on this occasion. 28. Even otherwise, under the principle of indoor management evolved from the judgment in the case of Royal British Bank v. Turquand, and based on the maxim omnia presumenter rite esse acta, it may be assumed that a functionary in a position of ostensible authority has been properly authorized and that all official acts in that regard have been properly done.
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29. Furthermore, in Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd, [1964] 2 QB 480, where the authorities on this question were reviewed by the Court of Appeal, it was held by Diplock L.J, that four conditions must be satisfied to entitle a third-party to enforce a contract entered into on behalf of a company by an agent without actual authority. 30. For the purposes of this four pronged test, it must be shown (1) that a representation was made to the third party that the agent had authority on behalf of the company to enter into a contract of the kind sought to be enforced; (2) that such representation was made by a person or persons who had actual authority to manage the business of the company either generally or in respect of those matters to which the contract relates, (3) that he (the third-party) was induced by such representation to enter into the contract, that is, that he in fact relied on it: and (4) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent. In the matter at hand, when the conduct and past practice is examined, all of these conditions appears to be met, as previously discussed. 31. Accordingly , I am fortified in my assessment that the terms of the letter of 02.01.1998 form part of the overall contract of service, which is thus comprised of the letter of 30.07.1997, as modified in terms of the subsequent letters dated 01.01.1998 and 02.01.1998 referred to and partly reproduced herein above, and the cumulative understanding encapsulated in these three documents constitutes the pith and substance of the service contract. The claims of the Plaintif f under the vario us heads have to thus be viewed in juxtaposition with reference to this framework in order to determine whether they are outside/beyond the scope thereof and what the Plaintif f?s entitlements are, if any . Salary Arrears, Increment & Gratuity 32. As the claims on account of salary arrears, increment and short payment on account of gratuity all revolve specifically around the interpretation of the terms encapsulated in the letter of 02.01.1998, I propose to consider these first. 33. In advancement of these claims it has been argued by learned counsel for the Plaintiff that as per the modified service contract, the Plaintiff received a reduced salary of Rs.27,379.13 per month from 1.10.1997 to 31.3.1998, as against the earlier contracted salary of Rs.54,758.26…
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