MUHAMMAD ASHRAF PARVAIS Versus AGRICULTURAL DEVELOPMENT BANK OF PAKISTAN

1. This judgment will dispose of Writ Petitions Nos. 385/S, 750/S and 939/S of 1968.

2. Muhammad Ashraf Pervaiz was appointed as a Junior Clark in the Agricultural Development Bank on 3rd March 1964. He was confirmed in his appointment on 4th March 1965. He was posted at Gujranwala Bank on 11th December 1967. Letter No. PP/11227 was issued on 11th December 1967, by the Chief Regional Manager terminating his services with immediate effect "without assigning any reason under S. S. R. 13(1) by paying him three months' pay in lieu of notice." The petitioner felt aggrieved and moved this Court under Article 98 of the abrogated Constitu tion praying that the order terminating his service was of no legal effect and the petitioner be treated as continuing in service and entitled to receive all the arrears of salary for the period during which the illegal order remains in force.

3. The Agricultural Development flank has vehemently contested the petition. It has, however, been admitted that the petitioner was a confirmed employee of the Bank. It was submitted that‑‑

(1) The Agricultural Development Bank of Pakistan is a body corporate and the relationship between it and the petitioner is governed by the law of 'master and servant' and no protection is afforded by Article 177;

(2) Regulation 13(1) confers sufficient powers upon the Bank to terminate the services of an employee without assigning any reason. Section 39 of the Ordinance has been pressed into service in support of it. It has been contended that no show cause notice was called for ;

(3) The petitioner's services were not dispensed with because of malice ;

(4) The rules and regulations of the Bank are binding upon the petitioner because he accepted the service on the condition that it was offered ; and

(5) The petitioner had remedy by way of review which he has not availed of.

4. Mr. Mahmood Ali Kasuri, Advocate, who appeared for the Bank, raised the following three preliminary questions ;‑

(1) Is service of the Bank "Service of Pakistan?"

(2) Is the Agricultural Development Bank a person perform ing functions in the Province in connection with the affairs of the Centre, the Province or a Local Authority ; and

(3) Can a writ be issued despite the law of 'Master and Servant'.

5. The Agricultural Development Bank of Pakistan was created under the Agricultural Development Bank Ordinance (No. IV) of 1961. By section 3, it was declared that the Bank shall be a body corporate having perpetual succession and a common seal with power to hold and dispose of property. There is, therefore, no doubt that the Bank is a statutory corporation and its servants are not in the "Service of Pakistan", and, therefore, not entitled to the safeguards provided for such servants in Article 177 and other Articles of the Constitution.

6. The capital of the Bank is dealt with in section 4 of the Ordinance. It has been initially fixed as 20 crore of rupees divid ed into 20 lacs fully paid up shares of the nominal value of hundred rupees each. Not less than 51 % of the shares issued at any time shall be subscribed by the Central Government and the remaining shares shall be offered to the Provincial Government, the Cc‑operative Societies and the members of the public for subscription in such proportion and on such terms and conditions as the Central Government may determine at the time of each issue. It has been stated at the Bar by Mr. Fazal Hussain Advocate, who appeared at the later stages of the case for the Bank, that the entire funds of the Bank have been supplied by the Government and that none was offered for subscription by the public.

7. Under section 7, the Head Office of the Bank shall be at Karachi and may be shifted at such other place as the Central Government may direct. Similarly, the regional offices ate to be established at places specified in section 7 and such other places with the approval of the Central Government as may be deemed necessary. Under section 8, the direction and superintendence of the affairs and the business of the Bank is entrusted to a Board of Directors which has to be constituted in accordance with section 9. According to section 9, the Central Government will appoint‑

(i) the Chairman ;

(ii) two officers serving under the Central Government . . . .

(iii) one officer serving under the Government of East Pakistan . . .

(iv) one officer serving under the Government of West Pakistan . . .

(v) two non‑officials, one from East Pakistan and one from West Pakistan to be nominated by the Central Govern ment in consultation with the Provincial Government concerned ; and

(vi) such other person or persons, if any, as the Central Government may consider necessary to give due represen tation to the Co‑operative Societies and the members of the public holding shares of the Bank.

8. Under section 10, the term of the office of the Chairman shall not be more than five years and his salary and terms and conditions shall be determined by the Central Government. He is to be the Chief Executive and shall on behalf of the Board direct and control the whole affairs of the Bank subject to such rules as the Central Government may make.

9. Section 12 provides that an Executive Committee which con sists of the Chairman and three Directors shall have power, subject to rules, to deal with any matter within the competence of the Board. Even all sums due to the Bank are recoverable as arrears of land revenue under section 25. Under section 38, it is the Central‑ Government which has the power to make rules for carrying out the purposes of the Ordinance and such rules, and the regulations made by the Board are required to be published in the official Gazette under section 40. It is thus clear that the Bank functions under the complete control of the Government and also is financed by it.

10. I have already held in Abdar Razzaq Malik v. WAPDA W. P. No. 673/S of 1969 that‑‑

11. "It can hardly be denied that the West Pakistan WAPDA is a statutory public corporation performing functions in connection with the affairs of the province as well as the Centre. It has been created by the West Pakistan WAPDA Act, 1958, (b) all its functions are related to the provisions of a. public utility service, (c) the members of the Authority are appointed and removed exclusively by the Government, and (d) the capital employed by the Authority is provided either from Government funds or from Aid received through the Government of Pakistan from foreign countries. It can, therefore, not be urged with any amount of success that it is a private corporation or that it is not performing functions of the Government."

12. In the present case, the preamble of the Ordinance shows that the reason for establishment of this Bank was to make better provision for offering credit facilities to agriculturists and persons engaged In cottage Industries in the rural areas and for, matters connected therewith." Pakistan has admittedly an agricultural economy and the functions assigned to this Bank are eminently the functions of Government which had even before the establishment of the Bank been providing taqavi loans from time to time for the same purpose to the agriculturists. The Bank is, therefore, a public statutory corporation engaged in the performance of functions in connection with the affairs pri marily of the Province but also of the Centre.

13. Faced with this position, Mr. Fazal Hussain the learned counsel appearing for the Bank, conceded that the Bank is a person and in relation to some of its activities it does perform functions in relation to the Central Government.

14. It has already been pointed out above that the Bank is em powered to make regulations under the Ordinance. In the exercise of the power conferred by section 39, the Board of Directors of the respondent made regulations known as the Agricultural Development Bank General Regulations, 1961. They also made the Agricultural Development Bank (Staff) Service Regulations, 1961, and it is these latter regulations with which we are concern ed in this case.

15. Regulation 8 classifies the posts in the Bank into I, II, III and IV. Regulation 9 lays down that appointments shall be made both by direct recruitment and by promotion from lower posts as laid down in Appendix XIX. It is further provided that all appointments to class I, and class 11 posts shall be made by the Board or by the Chairman as provided for in the rules on the re commendation of the Selection Board. Provisions are made in respect of class III and class IV employees also. The conditions of appointment are laid down in Regulation 11 which prescribes the minimum educational qualifications. Regulation 12 provides that all persons entering the service of the Bank shall be on pro bation for one year excluding the time spent on training and the service can be terminated during the period of probation without assigning any reason on one month's notice. On satisfactory com pletion of the probationary period the employees are confirmed in service.

16. Regulation 13, which forms the bed rock of the case of the Bank empowers the Bank to dispense with the service, of an employee other than an employee on probation or a temporary employee by giving three months' previous notice in writing of three months' substantive pay in lieu thereof. The power has to be exercised by competent authority and the assigning of reason is not necessary. Under paragraph 2 of the same regulation the Bank also reserves the right of dismissing an employee without any "notice" if he is found guilty of misconduct, breach of trust or neglect of duty.

17. Regulation 95 contains provisions for discipline and efficiency of officers and employees of the Bank. It lays down the various penalties which can be imposed and also the procedure which has to be followed prior to the infliction of a penalty. The procedure does provide for a proper inquiry being held. Even the procedure which on Inquiry Officer has to follow is laid down.

18. It is, therefore, clear that while in the care of termination of service no Inquiry Is called for and only a three months' notice has to be given where an employee Is sought to be dismissed no such notice as provided in clause (1) of Regulation 13 is necessary, but it has to be done Is aocord3ncs with the provisions laid down in Regulation 95.

19. It has already been seen above that action under Regulation 95 requires holding of proper Inquiry and show‑cause notice. It is also clear from Regulation 13(2) that he has to be found guilty of misconduct, breach of trust or neglect of duty.

20. In the present case, at page 135 of the file can be found letter No. PF/ENQ/908 dated 21st August 1965, addressed by the Chief Regional Manager of the Bank to the Manager at Mianwali. It calls upon him to serve a charge‑cheat on Muhammad Ashraf which runs as follows :‑----

21. "(1) You Mr. Muhammad Ashraf sent two letters Nos. 958 and 992 dated 28‑4‑65 and 28‑5‑65 respectively direct to the Chairman, A.D.B.P.

(2) You stated wrong and got up facts and allegations in these letters.

(3) You misbehaved with one Mr. Adam Khan of Zills Shimali and others.

(4) You received Re. 40 as Illegal gratification from Mr. Sultan Muqurrab Khan son of Ghulam Hassan of village Dikawala (Ballo Khail), Tehsil and District Mianwali on 9‑4‑65 in connection with the payment to him of the second instalment.

(5) You have thus been guilty of misconduct.

22. You are called upon to submit your reply to the above charges within ten days of the receipt of this charge‑sheet to Mr. Qazi Sanaullah, Officer in charge, Pay Officer, Jauharabad who is appointed Inquiry Officer. You may also state in your reply whether you wish to be heard in person and lead evidence in defence"

23. The petitioner was, therefore, being dealt with for mis conduct. This was done under orders of the Chairman passed on page 20 of the noting part of the file on 1st February 1965. A perusal of the note at page 32 of file No. Admn. II‑9(21) I would show the following note dated 4‑12‑1967 :‑

24. "Two complaints regarding bribery against Mr. Muhammad Ashraf Pervaiz, J/C, Lahore (on leave) are under con sideration. The first complaint was sent to C. R. M., Lahore for his comments. The comments were received from him on 24.4‑67 and when these were being examined another complaint against the same clerk was received and this was also sent to Mr. M. S. Qadri, C. R. M., Lahore to make an enquiry into the allegations and to furnish a report. The C.R.M., Lahore has furnished his report which is self‑ex planatory. The report shows that Mr. Muhammad Ashraf Parvaiz is an undesirable element. C.R.M., Lahore has recom mended his dismissal from service. He also suspects that Mr. Ashraf is the person who ifs behind the propaganda and false allegations against him (C.R.M., Lahore), He has given other instances which prove that Mr. Ashraf is really a mis chievous person. However, so far as the dismissal is concerned as proposed by C. R. M. is not possible without conducting formal departmental enquiry which will take a long time. It is not advisable to keep a person like Mr. Muhammad Ashraf Pervaiz in Bank's service even for a short duration. It is, therefore, proposed that we may terminate the services of Mr. Ashraf under SCR‑13(1) by giving him 3 months' pay in lieu of notice. He has opted for three months' pay in lieu of notice. If it is agreed to Rive Mr. Ashraf 3 months' pay in lieu of notice C. R. M., Lahore will be requested to issue orders of termina tion of service of Mr. Pervaiz by paying him 3 months' pay in lieu of notice."

25. This makes It amply clear that although the dismissal of the petitioner from service was recommended by the Chief Regional Manager, Lahore, for reasons given in the note above, since the Bank was of the view that a formal departmental inquiry will take a long time they decided to terminate hit; services. There cannot be a better example of fraud upon regulations. If this procedure were to be held to be correct or valid under the law the regulation with regard to holding of Inquiry would become completely ineffective and security of service which is the reason behind Regulation 95 would evaporate with it into thin air.

26. It is a salutary principle of law that if an authority cannot do anything directly it cannot do it indirectly either. In the Present case, they could not have dismissed him from service without an inquiry and show‑cause notice which was the only thing that could' be lawfully done as he was being accused of being guilty of mis conduct. His service could equally not be terminated under Regulation 13 because the same is not applicable to the facts of this case. There are charges against him and he is under Regulation 95 to be served with a charge‑sheet, to be given an oppor tunity of hearing and to have a regular Inquiry held against him before any action can be taken. The provisions of Regulation 95 and the security granted by It cannot be allowed to be set all naught by circumventing it and proceeding under Regulation 13.

27. Since the terms and conditions are contained in regulations which have been made under a statute the dictum of the WAPDA's case quoted above which runs as follows Is fully applicable;‑

(1) ... ... ...

(2) an employee of a statutory public corporation is not pert se subject to general law of master and servant ;

(3) In case there are conditions contained in statute or statu tory rules with regard to the engagement, terms of employment, removal from service or control of such employee, the general law of master and servant shall give way to these conditions and the service of the persons concerned shall be governed by the latter and not by the former

(4) where the conditions of service of a servant of a statutory public corporation are so governed, relief under Article 98(2)(a) of the abrogated Constitution or Article 201(2)(a)(h) of the Interim Constitution shall be available to such a servant if the other conditions for its grant are present."

28. The issuance of a writ is, therefore, in accordance with law and there is no bar to it simply on the ground that the petitioner is not in the Service of Pakistan. He is serving a statutory cor poration which is performing functions fn connection with the affairs of the Centre and the Province ; his terms and conditions of service are governed by regulations framed under a statute and If the other conditions are present he can certainly ask for a declaration to the effect that the order of termination of his service is without lawful authority and of no legal effect if it has not been passed in accordance with the regulation.

29. W. P. No. 750/S of 1968

30. Chaudhary Akbar Ali Cheema, petitioner in W. P. No. 750/S of 1968, was appointed and confirmed as Manager on 3‑8‑1964. He was served with a charge‑sheet on the 6th August 1966, under letter No. Admn‑I/5(43) Part II/521 listing seven charges against him, if proved, the charges would amount to misconduct. The petitioner sent a reply to the charge‑sheet and an Inquiry Officer was duly appointed. While the inquiry was in progress his services were terminated under the aforesaid Regulation 13(1) without assigning any reason on payment of three months' salary in lieu of notice on 27th January 1968. The Inquiry Officer held charges, 1, 2, 3, 5 and 7 conclusively proved but he dropped charge No. 4 and in charge No. 6, Mr. Cheema was found partially responsible. The Inquiry Officer in his report recommended stoppage of in crement with cumulative effect but no action was taken thereon.

31. Certain other matters came to light against the petitioner in 1967 which could have amounted to misconduct and instead of holding a proper Inquiry under Regulation 95 the Chairman passed an order on 22nd January 1968 directing that his services should be terminated.

32. The facts of this case would show that they are on all fours with the facts of the case of Ashraf Pervaiz. The order of his termination of service is, therefore, held to without lawful authori ty and of no legal effect.

33. W. P. No. 939/S of 1968

34. Muhammad Ibrahim a confirmed Investigator in the employ of the respondent‑Bank was arrested by the Anti‑Corruption Departm6nt in pursuance of F. I. R. No. 9 dated the 2nd April 1966. The case was investigated by the Special Police Establishment and the Home Affairs Division after examining the report decided that departmental action should be taken against him. One Mr. M. S. Qadri was consequently appointed an Inquiry officer and charge‑sheet was served upon the petitioner. The Inquiry Officer after examining the evidence produced by the Special Police Establishment came to the conclusion that the charges had not been proved against the petitioner.

35. In a note dated 26th January 1968, Mr. K. S. Salam, Chair man of the Bank found that the witnesses examined by the prosecution had not supported its case against the petitioner and had, in fact, given support to the defence version. He, however, pointed out that the story put forward by the petitioner was "quite unnatural and a pure concoction" and he thought that the guilt was clear and his services should have been terminated. He was, however, advised that he could not do so as it was a case for dismissal. Notice to show cause was, therefore, issued to him. He submitted a reply. It was again pointed out on the file by the Legal Adviser that‑----

36. "If the authority finds that the report of the Inquiry Officer is incomplete as it is in the present case, the Inquiry Officer should be asked to complete the inquiry.

37. It was improper to issue show‑cause notice because the report did not find Mr. Ibrahim guilty of any misconduct."

38. The Chairman then asked the C. A. O. to speak to him where after an order was passed by the latter‑

39. "Chairman kindly discussed. Show‑cause notice may be cancelled and Mr. Muhammad Ibrahim, Investigator, re‑instated and posted elsewhere. N/F may also be informed of the action taken in continuation of any previous letter. Please re‑submit the case after this action on 10‑5‑1968."

40. As directed the case was duly submitted on that date that the C. A. O. asked for its re‑submission on 30th May 1968.

41. On the 24th May 1968, the C. A. O. wrote a note to the Chairman which runs as follows :‑

42. "It is proposed to terminate the services of Mr. Muhammad Ibrahim, Investigator, Fort Abbas (Bahawalnagar Branch, Multan, Chief Region). Under S. S. R. 13(1) on payment of pay in lieu of notice without assigning any reason Chairman may kindly approve payment of pay in lieu of notice. The condition whether pay for one month or three months is to be given can be verified from the service book which is available with C. R. M., Multan who will be asked to make necessary payment to Mr. Muhammad Ibrahim after verifying the fact from service book and after adjusting dues, if any"

43. The Chairman signed it as a mark of approval on 25th May 1968. His services were consequently terminated. Muhammad Ibrahim made a review application and the following order was passed by Mr. K. S. Salam on 27th July 1968 :‑

44. "Reviewed. The order of termination of services stands."

45. It is thus clear that the petitioner was found not guilty of the charges that were levelled against him and since he could not be dismissed from service, recourse was had to S. S. R. 13(1). We have already seen above that such a procedure is not permissible. Once as a result of full-fledged inquiry under Regulation 95 he was found to be not guilty, his services could not be terminated by having recourse to the regulation governing termination.

46. The result is that all these three writ petitions are accepted and the declarations prayed for are granted.

47. The petitioners shall be entitled to have their costs from that respondent‑Bank.

48. K. B. A. Petition accepted