INAYATULLAH NAREJO Versus UNITED BANK LTD. OF PAKISTAN

MOHAMMAD MAZHAR ALI, J.‑ ‑The petitioner Inayatullah Narejo has moved this Constitutional Petition for the following reliefs:‑

"XVII. That the Petitioner therefore prays for relief as under:‑

(a) To quash the proceedings and to declare that the impugned dismissal order dated 10‑8‑1982 (Annexure 'I') passed by respondent No.6 and all prior and subsequent orders and proceedings as illegal and without lawful authority and are of no legal effect and that the petitioner continues to be in service as Officer Grade I, uninterruptedly;

(b) To direct the respondents to re‑instate the petitioner immediately with back benefits; and

(c) To grant costs to the petitioner as against the respondents and further to grant any other relief as deemed fit and proper in the circumstances of the case."

2. The facts of the case, briefly stated, are that on 22nd January, 1982 when the petitioner was posted as Manager (Grade I) of the Sarafa Bazar Branch, Jacobabad, of the respondent Bank, he was served with a charge‑sheet by respondent No.l for having fraudulently and illegally in collusion with certain other officers of the said Bank, criminally misappropriated Bank's money amounting to Rs.7.5 lacs. He was also simultaneously placed under suspension. Later on, two more charge‑sheets, dated 22nd February, 1982 and 12th May, 1982 for lack of supervision resulting in the embezzlement of further sum of bank's money amounting to Rs.4 lacs and Rs.3 lacs respectively were served upon him by the respondent No.6. Similar action was taken against 13 other officers/ officials of the respondent bank. Pursuant to the said charge‑sheets the respondent No.6 appointed the respondent No.8 as the Enquiry Officer to enquire into the allegations made against the petitioner as well as the other officers/ officials who had been charge‑sheeted, as stated above, and submit his report. The respondent No.8 held the enquiry and submitted his joint report dated 1‑6‑1982 thereby holding that the charges against the petitioner had been established and he accordingly held him guilty thereof. Pursuant to the said report of the enquiry officer the respondent No.6 vide order dated 10‑8‑1982 dismissed the petitioner.

3. Aggrieved by the order of his dismissal the petitioner preferred an appeal before the respondent No.2 as well as respondent No.3. Neither of the said respondents, despite several reminders issued by the petitioner, decided the petitioner's appeal. Simultaneously, according to the petitioner, the respondent bank lodged two F.I.Rs. with FIA Police, Crime Branch, Karachi, being F.I.R. No. 7/1982 and F.I.R.No. 9/1982 respectively which led to the submission of two challans against Ejaz Ahmad, Head Cashier and Hub Ali, Cashier, under section 409, P.P.C. read with section 5(2) of Act II of 1947. The petitioner was, however, not sent up for trial. The said two accused persons were ultimately tried by the Special Court of Sind (Banks) Karachi, who vide its judgment dated 30‑9‑1985 passed in Case No.89/1984 acquitted both the said accused by giving them benefit of doubt.

4. Having failed to get a decision on his appeal from either of the respondents No.2 and 3, the petitioner filed this petition on 28‑7‑1986 assailing the order of his dismissal from service on numerous grounds as enumerated in the petition and praying for the reliefs as stated above.

5. A counter‑affidavit of Mr. Nizamuddin Shaikh, an authorised Officer by the respondent‑bank, has been filed on behalf of the respondents wherein, inter alla, the maintainability of the petition has been challenged as under:‑

"3. That I am advised by the learned (counsel) that the staff rules are not statutory rules, and the petitioner is governed by the law applicable to "MASTER AND SERVANT". The petition is therefore, not maintainable."

6. Mr. Nasim Farooqi, learned counsel for the petitioner contended that the petitioner is governed by ,the United Bank Limited (Staff) Service Rules, 1981 which have been made by the Executive Board under Articles 121 and 122(22) of the Memorandum and Articles of Association of United Bank Limited, read with section 11(4) of the Banks (Nationalisation) Act, 1974 (hereinafter called "the Act"). These rules, according to him, having been framed in exercise of the rule making power conferred on the Executive Board of the Bank have the force of the statutory rules and hence their violation is assailable through Constitutional Petition. The learned counsel, in support of his contention, invited our attention to the following decision.

(1) Cashier, United Bank Ltd. v. The State 1987 PLC (C.S.) 122.

In this case the petitioner who was an officer Grade‑III in the United Bank Limited was charge‑sheeted for certain severe type of negligence in the discharge of his duties. The Enquiry Officer found the charges levelled against him having been established. The Vice President of the Bank, the Zonal Chief, while concurring with the findings of the enquiry officer, recommended that a punishment of stoppage of increment for one year and a letter of warning be issued to him to be careful in future to avoid such sort of irregularities as he was of the view that the petitioner had not gained any monetary benefit and the negligence was due to lack of proper knowledge of foreign exchange transactions. The competent authority, however, decided to terminate the services of the petitioner. Hence he filed a Constitutional Petition challenging his termination of services. An objection was raised on behalf of the respondent against the maintainability of the writ petition on the ground that there were no statutory rules and the relationship between the petitioner and the bank was that of master and servant. A learned single Judge of the Lahore High Court relying upon an unreported decision of this Court in Constitutional Petition D‑123/1983 dated 13‑4‑1983, dismissed the petition by upholding the above‑noted objection of the respondent. This case obviously does not support the contention of Mr. Nasim Farooqi. While quoting this decision he seems to have been misled by the following Head Note:‑ "Re‑Maintainability‑‑Banks (Staff) Service Rules, 1981‑‑Rules being statutory, writ competent where rules violated. "

7. The next contention of the learned counsel for the petitioner was that in view of the provisions of section 13 of the Act the nationalised bank is to be treated as a department of the Government and, consequently, the employees of all such banks are to be treated as Government employees. In the submission of the learned counsel section 13 provides guarantee to the service rules and hence the United Bank Limited (Staff) Service Rules, 1981 are to be treated as statutory rules more particularly in appreciation of the fact that the Executive Board has framed them in exercise of the power vested in it under section 11(4) of the Act.

8. Mr. Mohammad Sadiq, learned counsel for the respondent‑bank, on the other hand, contended that the status of all the nationalised banks as bodies corporate has been kept intact by virtue of section 5(5) of the Act and hence the petition is not competent inasmuch as there had been violation of no statutory rules. Inviting our attention to sections 9, 11 and 20 of the Act, the counsel contended that the bank staff has been entirely left at the disposal of the Banks Board. He, therefore, urged that the general law of master and servant is applicable. to the petitioner's case.

During the hearing of the petition the following authorities were also cited, besides the one already referred to in para. 6 above, a reference to some of them will be made later in due course.

(i)R.T.H. Janjua v. National Shipping Corporation PLD 1974 SC 146. .

(ii)The Principal, Cadet College, Kohat and another v. Mohammad Shoaib Qureshi PLD 1984 SC 170.

(iii)Saleh Mohammad v. Traffic Manager, Port Trust PLD 1961 (W.P.) Kar. 349.

(iv)Mohammad Haroon v. District Food Controller and others 1982 SCMR 551.

(v)National Bank of Pakistan and others v. Mohammad Ahdullah Khan 1985 SCMR 1392.

(vi)National Bank of Pakistan v. Manzoorul Hasan NLR 1985 Service 37.

(vii) Shahid Khalil v. P.I.A. 1971 SCMR 568.

(viii)Province of East Pakistan and another v. Noor Ahmad and another PLD 1964 SC 451.

(ix)Punjab Small Industries Corporation v. Shamim Ahmad Khan and another 1980 CLC 381.

(x)Anwar Hussain v. Agricultural Development Bank of Pakistan PLD 1984 SC 194.

(xi)Mohammad Razman Ansari v. Govt. 1983 PLC (C.S.) 52.

9. Before proceeding further, we think, it would be appropriate if we reproduce hereunder the provisions of sections 5(5), 9, 11(4), 13 and 20 of the Act:‑

"5. Transfer and vesting ownership, etc. of banks.

(5) The provisions of this Act and the vesting of the shares of the banks in the Federal Government thereunder shall not in any way affect the status of the banks as bodies corporate under the Companies Act, 1913 (VII of 1913).

9. Pakistan Banking Council.‑‑ (1) This section and section 11 shall apply to the banks mentioned in the Schedule and any new bank which may be constituted after the commencing day, whether by merger or reorganisation of the said banks or under the Companies Act, 1913 (VII of 1913).

(2)The Federal Government shall, by notification in the official Gazette, constitute a Council to be called the Pakistan Banking Council and consisting of‑‑

(i) a Chairman;

(ii) ( )

(iii)an official of the Ministry of. Finance. Government of Pakistan ;and

(iv)not more than five and not less than three members:‑

Provided that not loss than three members shall be full‑time members one of whom shall be appointed by the Federal Government to be the Secretary of the Council.

(3) The Council shall be a body corporate having perpetual succession and a common seal, with power to acquire and hold property, and shall by the name given to it by subsection (2) sue and be sued.

(4)The functions of the Council shall be‑‑

(i) formulating operational policy guidelines for the banks;

(ii)laying down performance criteria for banks, and taking steps for ensuring their observance;

(iii)evaluating the performance of the bank in the context of operational policy guidelines issued to the banks;

(iv)determining the areas of co‑ordination of the banks;

(v) co‑ordinating the planning of the operations of, the banks and exercising general over‑all check on the cost of their operations;

(vi)formulating schemes under section 15,

(vii)making recommendations to the Federal Government for the appointment of the

President acid members of an Executive Board;

(viii)analysing and appraising financial statements, including Balance‑Sheets and Profit and Loss Accounts, of the banks and apportioning of auditors of the banks and replacement of such of them as are not performing their functions satisfactorily;

(ix)conducting such surveys, inquiries and appraisals as may be necessary for the purpose of this Act;

(x)overseeing foreign operations of the banks to ensure that these are being conducted in the best interest of the banks;

(xi)establishing a Research Department to conduct banking research and, in particular, study overseas banking operations and problems of agricultural financing;

(xii)establishing a Central Training Institute for imparting pre service and in‑service training to the personnel of the banks;

(xiii) acting as arbiter in the settlement of inter‑bank disputes;

(xiv)appointing lead banks and apportioning share of advance among the five banks in respect of consortium loans only, in accordance with the resource availability of each bank;

(xv) watching the progress of implementation of the rulings made in State Bank's Annual Inspection Reports and the remedial and corrective measures taken by the banks with a view to removing imbalances both in respect of commodities and regions; and

(xvi)exercising and performing such powers and functions of the Federal Government under this Act, and such other functions, as the Federal Government may assign to it.

(5) For the proper exercise of its functions, the Council may require information, returns or periodical and special reports from banks.

(6) The Council may appoint such officers, employees, experts and consultants as it may deem fit.

11. General provisions pertaining to management of banks.

(4) In the exercise of their powers the Executive Board and the President of a bank incorporated by or under any special law shall not be subject to restrictions which do not apply to the Executive Board or the President of a bank registered under the Companies Act, 1913 (VII of 1913).

13. Provisions Regarding Staff.‑‑ (1) Save as otherwise provided in this Act, a officers and other employees of a bank shall continue in their respective offices and employments on the same terms and conditions, remuneration and rights as to pension and gratuity, as were applicable to them immediately before the commencing day.

(2) Notwithstanding any law or any provision contained in a contract, agreement, letter of appointment, rules or regulations of a bank, every officer and employee of a bank shall be liable to transfer to any of its branches in or outside Pakistan or to any other bank: Provided that his status and emoluments shall not be adversely affected.

20. Powers to make Rules.‑‑ The Federal Government may, by notification in the official Gazette, make Rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Act."

10. We have given our earnest consideration to the contentions raised by the learned counsel for the parties and have also carefully perused the relevant provisions of law. A bare perusal of section 5(51 of the Act makes it absolutely clear that notwithstanding the vesting of the shares of the banks in the Federal Government the status o all the nationalised banks as bodies corporate under the Companies Act, 1913 remains unaffected. The nationalised banks thus did not. become an organ and parcel of the Federal Government. Moreover, by virtue of section 16 of the Act it is further specifically provided that all assets, rights, powers, authorities and privileges in all properties, movable and immovable, cash balances etc. shall continue to vest in the concerned bank and likewise all borrowings, liabilities and obligations of all kinds subsisting before the commencing day shall continue to be the borrowings, liabilities and obligations of the bank. Similarly all contracts, deeds agreements subsisting on the commencing day and so also the pending legal proceedings shall continue without in any way being prejudicially affected by the provisions of the Act. It is further pertinent to note that even the general direction, superintendence of the affairs and business of the bank, according to section 11 of the Act, has been made to vest in A the Executive Board with powers to do all such acts, deeds and things and exercise' of all such powers, as the bank was competent, immediately before the commencing day to exercise or do. It is further enacted that the banks shall operate within the Operation Policy 'guidelines laid down by the Pakistan Banking Council constituted under section 9 of the Act and make every effort for observance of the performance criteria laid down for them. Hence the legislature has made specific provisions for the operation of the banks outside the purview of Article 173 of the 1973 Constitution.

11. From the above discussion it is, in our opinion, manifestly clear that the banks notwithstanding the nationalisation continue to enjoy their status as legal entities and independent of the Federal Government. We do not, therefore, find it possible to accede to the contention of Mr. Nasim Farooqi that in view of the provisions of section 13 of the Act the nationalised banks are to be treated as a department of the Federal Government.

12. The first contention of the learned counsel for the petitioner having been repelled, it now remains to be examined if the rules made by the Executive Board of the respondent No.l‑bank, have the status of statutory rules so as to confer a right on the petitioner to maintain constitutional petition under Article 199 of the Constitution for the redress of the wrong complained of done to him. It is by now a settled principle of law laid down by the Hon'ble Supreme Court that "a writ petition would not be competent unless the violation B of any provision of the Statute or of a statutory rule is shown". reference in this connection may be made to the following reported decisions" ‑

(1)Mohammad Yousaf Shah v. Pakistan International Airlines Corporation PLD 1981 SC 224.

In this case the appellant Mohammad Yousaf Shah, who was a Security Guard in P.I:A. was dismissed from service for misconduct. His services were found to be governed by a Service Code published by P.I . A . and not by any statutory rule or regulation. It was further observed that the provisions of Service Code were nothing more than instructions of a directory nature issued by the P.I.A. for the guidance of its officers. The Hon'ble Supreme Court held:‑

"4. Learned counsel for the appellant referred to Mst. Manni v. Karachi Cantonment Board PLD 1969 Kar. 304 for the proposition that an employee of a corporate body can always file a civil suit for a declaration that his services were wrongly terminated. The aforesaid precedent has no relevancy, inasmuch as, the services of the employees therein were governed by formal statutory Rules and Regulations whereas here the learned counsel has not been able to show us any such statutory Rules or Regulations which may be applicable to his case. At this juncture, the learned counsel wanted to refer to a publication known as the "Service Code" published by the P.I . A . but the status and position of that Code was analytically gone into in A. Ceorge v. Pakistan International Airlines Corporation PLD 1971 Lah. 748 (Muhammad Akram and Muhammad Afzal Cheema, JJ), and it was concluded that its provisions were not immutable and they were in the nature of mere instructions issued by the P. I. A. for the guidance of its officers for their internal use and were altogether directory. Learned counsel was unable to point out any fallacy in the aforesaid view and in that state of law, in the absence of any statutory rules, the Courts below were justified in holding that this was a case which was governed by the simple theory of Master and Servant and a suit of the present kind in the aforesaid context was not naintainable."

(2)The Evacuee Property Board and another v. Mohammad Nawaz 1983 SCMR 1274.

In this case Mohammad Nawaz, an employee of the District Evacuee Trust Committee, Multan, had assailed his termination of Services on the charge of misconduct by filing a suit for declaration that his removal from service was illegal. The case ultimately came up before the Supreme Court at the instance of the Evacuee Trust Property Board on whose behalf it was on the strength of Janjua's case (Supra) contended that the relationship between the petitioner and its employees being that if Master and Servant, the suit was incompetent. The Supreme Court found no merit in this contention by observing that in Janjua's case "the powers of the masters to deal with the service matters of his employees were not regulated by statutory rules, whereas in the instant case the subject was covered and controlled by required rules on the subject in the form of Efficiency and Disciplinary Rules which were adopted by the Evacuee Trust Property Board, as its own rules by means of a proper resolution in their meeting of May 1969" . Their Lordships then referred to an earlier decision of the Supreme Court passed in C.P.S.L.A. 645 of 1974 and C.P.S.L.A. 646/1974 wherein it was held that dismissal in violation of those rules was illegal. Their Lordships of the Supreme Court then remarked:‑

"5. Learned counsel has not been able to distinguish the present case from the precedent abovenoted. Even otherwise it is well settled that where statutory rules govern the service conditions of an employee, then the pleasure of the Master stands surrendered to the extent the matter is covered by the relevant rules".

(3)Principal, Cadet College, Kohat, v. Mohammad Shoaib Qureshi PLD 1984 SC 170.

By this judgment, the Hon'ble Supreme Court disposed of two appeals filed by leave before it at the instance of Principal, Cadet College, Kohat, challenging the judgments of the Peshawar High Court allowing the writ petition filed by Mohammad Shoaib Qureshi, Head Clerk, and Kabut Khan, a Senior Master in the Cadet College, Kohat, assailing the termination order of their services passed by the Principal and the Board of Governors, respectively, of the Cadet College, Kohat, and declaring the impugned orders to be a nullity in the eye of law. The Peshawar High Court repelled the preliminary objection raised on behalf of the Principal, Cadet College, against the maintainability of the writ petitions in view of the judgment of the Supreme Court in R.T.H. Janjua's case, by holding that" the Cadet College, Kohat, cannot be said to be an institution carryine out its functions for commercial purposes. The function of this College and all other educational institutions run by the State would be alike and thus the petitioner would be deemed as if he was holding public office. In this view of the matter, there is, therefore, no force in the preliminary objection raised by the learned Advocate‑General and we rule it out".

The Hon'ble Supreme Court after quoting its earlier observations in Janjua's case to the effect that "it is well‑settled that where statutory rules govern the service conditions of an employee, then the pleasure of the master stands surrendered to the extent that the matter is covered by the relevant rules" held as under:‑

It is, therefore, evident that where the conditions of service of an employee of a statutory body are governed by statutory rules, any action prejudicial taken against him in derogation or in violation of the said rules can be set. aside by a writ petition. However, where his terms and conditions are not governed by statutory rules but only by regulations, instructions or directions, which the institution or body, in which he is employed, has issued for its internal use, any violation thereof will not, normally, be enforced through a writ petition".

Lastly, we think, we may also refer to the judgment of the Hon'ble Supreme Court in Janjua's case PLD 1974 SC 146. The petitioner (R.T.H. Janjua) in this case was employed as Regional Officer at Lahore by the National Shipping Corporation. He was charge‑sheeted, an Enquiry Committee was constituted to enquire into the charges. The Committee found the charges to have been duly proved. The case ultimately came up before the Managing Director of the Corporation who, on the basis of the record including the enquiry report and the statements of the petitioner, removed him from service with immediate effect by an order dated 2‑9‑1972. His appeal to the Chairman, Board of Directors failed and hence he filed writ petition which was also dismissed in limine by a learned Single Judge of the Lahore High Court, "on the ground that the case did not disclose any violation of statutory protection to the petitioner and that at any rate, the arguments addressed on behalf of the petitioner involved controversial questions of facts which require a detailed enquiry which could not be taken in writ jurisdiction". The petitioner thereupon preferred Civil Petition for Special Leave to Appeal before the Hon'ble Supreme Court. After referring to their several reported judgments, their Lordships of Supreme Court held as under:‑

"The broad proposition laid down in all the cases was, that the Constitutional safeguards available to the generality of the Civil Servants against arbitrary dismissal for removal from service are not available to the servants of a registered Company, or a statutory Corporation. The precedent cases, with the exception of the case of Pir Saifullah Shah which was the case of a Commercial Manager of a Cooperative Bank, related to the removal from service or a statutory Corporation like, PIAC, WAPDA and East Pakistan I.D.C., each of which was established by a statute, over which the Government exercised control in varying degrees In all these cases, grievance related to alleged arbitrary dismissal from service of an employee by a registered Company or statutory Corporation in which the general law of master and servant was held applicable cable and it was laid down that the only remedy available to the aggrieved servant in such cases is to sue for damages for wrongful dismissal and not of writ of mandamus or certiorari".

13. Now we proceed to consider the next contention of Mr. Nasim Farooqi that the United Bank Limited (Staff) Service Rules, 1971, have the status of statutory rules inasmuch as they have been made by the Executive Board in exercise of the powers conferred upon it by section 11(4) of the Act. Here also we do not feel hesitant to repel the contention of the learned counsel for the petitioner as being without substance for the obvious reason that from a plain reading of section 11 of the Act it is absolutely clear that the Executive. Board has nowhere been authorised to frame service rules for the staff of the Banks. It is also pertinent to note that neither as preamble nor from Rule 1 to Rule 97 of the said Rules it is mentioned that the Board has framed them in exercise of the powers vested in it under section 11(4) of the Act. There is, however, no doubt a Note is appended to the Rules published by respondent No.l to the effect that they have been made by the Executive Board under Articles; 121 and 122(22) of the Memorandum of Articles of Association of the United Bank Limited read with section 11(4) of the Bank. Nationalisation) Act, 1974. But this Note, we find, is not the par and parcel of the text of the Rules as such. At any rate, as already stated, the legislature has nowhere provided that the Executive Boar of each nationalised bank may make statutory rules for their respective staff and officers of the bank. Had it been the intention of the legislature to do so it should have so specifically provided as it has, vide section 20, specifically conferred the power to make rules on the Central Government to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act. Having provided for and laid down in section 5(5) of the Act that the status of the banks as bodies corporate under the Companies Act shall nct be affected, the legislature deemed it expedient to declare vide section 13(1) of the Act that "Save as otherwise provided in this Act, all officers and other employees of a bank shall continue in their respective offices and employments on the same terms and conditions, remuneration and right as to pension and gratuity, as were applicat‑le to them immediately before the commencing day". thereby making it clear that there will be no. change in the status of the employees of the nationalised banks as well. The absence of any provision conferring a right on any authority to frame rules, regulations or bye‑laws for the recruitment of officers and staff of the Banks including the terms and conditions of their service etc. is a clear point that no statutory rules were contemplated to be made by any authority in respect of the staff of the nationalised banks. The legislature, in any case if intended to adopt the existing service rules of each nationalised bank as statutory rules then too it should have so specifically enacted. In the absence of any such provisions of law in the Act there is no escape from the conclusion that neither the staff service rules existing on the commencing day nor any rules if any made thereafter by the Executive Board of such Banks in exercise of the powers vested in it under the respective Memorandum of Articles and Association of the Bank shall have the status of statutory rules.

14. In this view of the matter, we are clearly of the opinion that the United Bank Limited (Staff) Service Rules, 1971 are not Statutory Rules and hence the Constitutional Petition for the redress of the violation of the said Rules is not competent. It is dismissed accordingly, leaving the parties to bear their own costs.

A. A./I‑43/K Petition dismissed.