P L D 1999 Supreme Court 990

Present: Saiduzzaman Siddiqui, Sh. Ijaz Nisar

and Kamal Mansur Alam. JJ

UNITED BANK LIMITED through President---Appellant

versus

SHAHMIM AHMED KHAN and 41 others---Respondents

Civil Appeal Nos. 1487 to 1528 of 1998, decided on 25th May, 1999.

(On appeal from the judgment of Federal Service Tribunal (Karachi), dated 28-7-1998 passed in
Appeals Nos.139-K, 165-K to 174-K, 180-K to 186-K, 196-K, 197-K, 204-K, 216-K, 217-K, 221-
K, 224-K, 225-K, 230-K. 231-K, 559-K to 569-K, 788, 789 and 940-K all of 1998 respectively).

(a) United Bank Limited (Staff) Service Rules, 1981---

----S. 15(1)---Constitution of Pakistan (1973), Arts.212(3) & 25---Service Tribunals Act (LXX of
1973), S.2-A---Bank employees---Compulsory Retrenchment Scheme---Payment of benefits for
retrenched employees---Orders of reinstatement of such employees by Service Tribunal---
Validity---Leave to appeal was granted by Supreme Court to employer Bank to examine question
of law as to whether, in spite of the fact, that the employees were deemed to be civil servants for
the purpose of the Civil Servants Act, 1973, they remained employee of a Corporation and,
therefore, in the absence of any statutory rules, the relationship between the Bank and the
employees was that of master and servant; that. Bank was entitled to downsize the number of the
staff in view, of he economic stress; that the Bank was entitled to reorganize its business in order
to run it more efficiently and if, in the process, some members of the staff had become redundant,
Bank was entitled to terminate their services, that Service Tribunal had enunciated various points
of law in its judgment contrary to the s laws enunciated by the Supreme Court; that Service
Tribunal had erred in ordering the reinstatement of retrenched employees and also the
continuation of respondents that even if there was some error on the part of Service Tribunal in
enunciating the legal position on various points, but the conclusion, namely, that the Retrenchment
Scheme was illegally applied to the employees, was correct and Scheme was, inter alia, violative
of Art. 25 of the Constitution and also was in breach of principle of natural justice.

Raziuddin v. Chairman, Pakistan International Airlines Corporation and 2 others PLD 1992 SC
531; United Bank Limited v. Ahsan Akhtar and others 1998 SCMR 68; K. Rajendran and another
v. State of Tamil Nadu and others AIR 1982 SC 1107; Zeal Pak Cement Factory Ltd., Hyderabad
v. The Chairman, West Pakistan Industrial Court, Lahore and others PLD 1965 SC 420 and
Pakistan Petroleum Workers Federation v. Burmah-Shell Oil Storage and Distributing Co. of
Pakistan Ltd. PLD 1961 SC 497 ref.

(b) Service Tribunals Act (LXX of 1973)---

----S. 2-A [as inserted by Service Tribunals (Amendment) Act (XVI of 1997)]---Interpretation,
scope and object of S.2-A, Service Tribunals Act, 1973---Bank employees---Effect of S.2-A,
Service Tribunals Act, 1973 on such employees---Provisions of S.2-A, Service Tribunals Act,
1973 had not changed the status of the employees of the Bank into civil servant for any other
purpose---Employee of the Bank notwithstanding the fact that they were deemed to be in the
Service of Pakistan and a civil servant for the purposes of Service Tribunals Act, 1973 to avail the
remedy by way of appeal before the Service Tribunal in respect of their terms and conditions of
service, continued to be governed by their existing terms and conditions of employment with the
Bank---Change in the forum of remedy could not alter their terms and conditions of service---
Only effect of insertion of S.2-A, in the Service Tribunals Act, 1973 was that instead of ordinary
remedy available to an aggrieved employee of the Bank in respect of his terms and conditions of
service, he became entitled to take his grievance before the Service Tribunal established under Art.
212 of the Constitution which alone could determine such dispute now.

Section 2-A, Service Tribunals Act, 1973 which has been introduced in the Act through
amendment, declares the service of any authority, corporation, body or organisation established by
or under a Federal law and which is owned or controlled by the Federal Government or in which
Federal Government has any share or interest, as the Service of Pakistan and every person holding
a post under such authority, corporation, body or organisation, shall be deemed to be a civil
servant for the purpose of the Act.

The intention of the Legislature is quite manifest. The Legislature by introducing section 2-A, in
the Act, only wanted to provide a right of appeal before the Service Tribunals to an aggrieved
employee of a corporation, authority, body or organisation established under a Federal Law or
which is owned or controlled by the Federal Government or in which the Federal Government has
a controlling share or interest. It is significant that while section 2-A, has been introduced in the
Act which deals with the rights of appeal of civil servants, no corresponding amendment has been
made in the Civil Servants Act, which determines the terms and conditions of service of civil
servants. If the Legislature intended to confer on the employees of Corporation controlled by the
Federal Government, the status of a civil servant, they could have provided so by introducing
appropriate amendments in the relevant service laws governing the Federal Government
employees. In the absence of such amendments, the laws applicable to Federal Government
employees could not automatically extend to the employees of the Bank. The contention that if the
intention of Legislature was only to provide a remedy to an aggrieved employee of the Bank
before the Service Tribunal, it was not necessary to declare the service of the Bank as the Service
of Pakistan as this purpose could be achieved by simply declaring such employees as civil
servants for the. purpose of the Act, is misconceived.

??????????? The Service Tribunals established under Article 212 of Constitution of Pakistan
(1973), through Act, of appropriate Legislature, has exclusive jurisdiction to take cognizance of
matters relating to terms and conditions of persons who are or have been in the Service of
Pakistan including disciplinary matters. Therefore, in order to oust the jurisdiction of ordinary
Courts and to confer exclusive jurisdiction on the Service Tribunal in respect of matters relating to
terms and conditions of service of bank employees, it was necessary that the employment under
the bank be first declared to be the Service of Pakistan. The declaration in section 2--A, of the Act
to the effect that the service under an authority, corporation, body or organisation established by or
under a Federal Law or which is owned and controlled by the Federal Government or in which
Federal Government has a controlling share or interest, shall be deemed to be in Service of
Pakistan and the persons holding any post in such authority, corporation or. body were deemed to
be civil servants for the purpose of the Act, was meant only for the limited purpose of conferring a
right on the aggrieved employee of such organisation/corporation to avail the remedy of appeal
before the Service Tribunal. Therefore, insertion of section 2-A, in the Act did not change the
status of the employee of the bank into civil servant for any other purpose. The employees of the
bank notwithstanding the fact that they were deemed to be in the service of Pakistan and a civil
servant for the purpose of the Act to avail the remedy by way of appeal before the Tribunal in
respect of their terms and conditions of service, continued to be governed by their existing terms
and conditions of employment with the bank. The change in the forum of remedy could not alter
their terms and conditions of service. In spite of above declaration by the Legislature under
section 2-A of the Act that the employee will be deemed to be civil servant for the purpose of the
Act, the corporate status of the bank was not affected or changed. Before the introduction of
section 2-A, in the Act, the service of the bank employees were governed under Rules, which were
framed by the Board of Directors of the Bank. The rules governing employment of the employees
with the bank had no statutory backing.

The introduction of section 2-A, in the Act, did not change the status of the employees of the Bank
into civil servants in so far their terms and conditions of service were concerned. In spite of
introduction of section 2-A, in the Act, they continue to be governed by the same terms and
conditions of service which applied to them before introduction of section 2-A, in the Act. The
only effect of introduction of section 2-A, in the Act was that instead of ordinary remedy
available. to an aggrieved employee of the bank, in respect of his terms and conditions of service,
he became entitled to take his grievance before the Service Tribunal established under Article 212
of the Constitution which alone could determine it now.

Mst. Zaiba Mumtaz v. First Women Bank Ltd. Civil Petition No.62-K of 1999, decided on 6-4-
1999 and Zeal Pak Cement Factory v. Chairman, West Pakistan Industrial Court PLD 1965 SC
420 ref.

(c) Constitution of Pakistan (1973)---

----Art. 25---Equality of citizens---Determination of terms and conditions of service of employees

of all the financial institution in Pakistan---Reasonable classification---No reasonable basis can be
laid down, for classifying the employees of all the financial institutions of the country into one
category to determine their terms and conditions of service which may be based on divergent
considerations.

(d) United Bank Limited (Staff) Service Rules, 1981---

----R. 15(1)---Constitution of Pakistan (1973), Art. 212---Bank'employees--Compulsory

Retrenchment Scheme---Validity---Exercise of retrenchment of employees was undertaken by the
Bank after study made with the help of an Expert Group and in the light of the findings and
recommendations of the Study Group and Board of Directors of the Bank---Bank gave effect to
the Retrenchment Scheme on the basis of "last come first go"---Bank being a commercial
organisation had to be run on commercial consideration---Bank having suffered continuous losses
for the last several years, it was open to the management to reorganise its working to improve its
commercial viability which included the right to dispense with the services of the staff which was
found in excess of necessity---No exception could be taken to the retrenchment of the employees
if such an action of Bank was motivated by commercial considerations and for reasons to run the
Bank on profitable lines---Such an action could only be brought under challenge by aggrieved
employees if it could be shown, that the action was not based on commercial considerations on
which the Bank was being run, but was motivated by some extraneous consideration--Nothing
was available on record to conclude that action taken, by the Bank was based on any mala fide
consideration---So long the action .of retrenchment of employees by the Bank was not opposed to
any statutory provisions or it came in conflict with any settled rule of law or it was mala fide, it
could not be objected to on the ground that the retrenchment could be avoided by some other
alternative method by the Bank.

Zeal Pak Cement Factory v. Chairman West Pakistan Industrial Court PLD 1965 SC 420 and Parry
& Co. v. Judge Second I. T., Calcutta AIR 1970 SC 1334 ref.

(e) United Bank Limited (Staff) Service Rules, 1981---

----R. 15(1)---Bank employees---Compulsory Retrenchment Scheme---Principle of "last in first
go"---Applicability---Service Rules applicable to employee had not provided that a person
promoted to a higher post/grade continued, to hold lien on the lower post and that he also had the
right to revert to the lower post in event of retrenchment---Effect---Contention that while
retrenching the employees, the Bank should have kept in view the right of reversion of employees
who were recently promoted to the higher grade from the lower grade; was not tenable in
circumstances.

Utility Stores Corporation v. Punjab Labour Appellate Tribunal PLD 1987 SC 447 ref.

(f) United Bank Limited (Staff) Service Rules, 1981---

----R. 15---Retrenchment---Termination of the service of an employee is one of the modes of

retrenchment---Application of provisions of R.15, United Bank Limited (Staff) Service Rules,
1981, cannot be restricted only to the case of termination of service of an individual employee---
No specific rule having been provided in United Bank' Limited (Staff) Service Rules, 1981
dealing with retrenchment, general provision of termination of service contained in R. 15 of the
said Rules, was applicable---Mere fact that as a result of retrenchment, services of large number of
employees were to be-terminated, would not make R.15 of the Rules, inapplicable in such cases.

(g) United Bank Limited (Staff) Service Rules, 1981---

----R. 15(1)---Service Tribunals Act (LXX of 1973),-S. 2-A---Bank employees--Compulsory

Retrenchment Scheme---Notice to employees---Not necessary--Employees terminated under the
Retrenchment Scheme did not carry any stigma and were eligible for future employment as and
when such contingency arose therefore, in terms of R.15, United Bank Limited (Staff) Service
Rules, 1981, they were not entitled to any notice of hearing before termination of their
employment---Reasons of termination of service had been set out in detail in the Retrenchment
Scheme which was circulated to all the employees of the Bank in advance, therefore, employees
could not urge that they were not informed of the reasons for termination of their services---
United Bank Limited (Staff), Rules, 1981, which was non-statutory in nature and not in conflict
with fundamental rights of Constitution, continued to govern the service of the employees,
notwithstanding the fact that under S. 2-A, of the Service Tribunals Act, 1973, their services were
declared to be one in the Service of Pakistan and they were deemed to be civil servant of Pakistan
and they were deemed to be civil servant, for the purposes of Service Tribunals Act, 1973.

Board of Trustees, Port of Bombay v. Dilipkumar AIR 1983 SC 109 distinguished.

(h) Service Tribunals Act (LXX of 1973)---

----Preamble---Non-statutory rules could be enforced through Service Tribunal.

Mrs. M.N. Arshad's case PLD 1990 SC 612 ref.

Delhi Transport Corporation v. D.T.C. Mazdoor Congress AIR 1991 SC 101 distinguished.

(i) United Bank Limited (Staff) Service Rules, 1981---

----R. 15---Bank employee---Compulsory Retrenchment Scheme---Concept of Adal-o-Ahsan in

Islam---Application---Rule 15, United Bank Limited (Staff) Service Rules, 1981, though vested
the Bank with the power to dispense with the service of an employee of the Bank by serving him
three months' notice or pay in lieu thereof but the Bank in Compulsory Retrenchment Scheme
allowed substantial benefit to the retrenched employees, therefore, it could not be contended that
the exercise of power by the- Bank was opposed to the Islamic principles of Adal-o-Ahsan.

Federation of Pakistan v. Public-at-Large PLD 1988 SC 202 ref.

Bacharya Dr. Durga Das Basu; Yick Wo v. Hopkns 188 US 356 and Slaughter House's case 83 US
36 distinguished.

Raja Muhammad Akram, Senior Advocate Supreme Court and Ch. Akhtar Ali, Advocate-on-
Record for Appellant (in all Cases).

A. Mujeeb Pirzada, Advocate Supreme Court and K. Wahab, Advocate-on-Record for Respondent
(in C. As. Nos. 1487 to 1505 of 1998).

Abid Hassan Minto, Advocate Supreme Court for Respondents (in C.A. No.1506 to 1516 of
1998).

Muhammad Akram Sh. Senior Advocate Supreme Court for Respondent n C. As Nos. 1517 to
1528 of 1998).

Dates of hearing: 28th, 29th, 30th April and 3rd May, 1999.

JUDGMENT

SAIDUZZAMAN SIDDIQUI, J.---We intend to dispose of abovementioned 42 civil appeals filed

with the leave of this Court by a common judgment as the questions of law and facts raised in
these appeals are identical and they also arise from the one and the same leave granting order,
dated 6-10-1998.

2. The respondents in the above appeals were the employees of United Bank Limited (hereinafter
to be referred to as 'the Bank'). On 9-10-1997 the bank enforced a compulsory retrenchment
scheme to reduce the strength of staff which reads as follows:-

"As you are aware, U.B.L. is passing through the most critical period in its history. In order to turn
around the Bank and eventually restore it to its former glory the management has decided to go
through with the right sizing of its operations.

The Bank is overstaffed and without reducing the number of employees, long term health and
survival of the bank cannot be attempted, muchless ensured. The management has, therefore,
decided to reduce the number of officers and executives by following a uniform,
nondiscriminatory. criterion i.e. the junior most in each category are being asked to go.

The Bank has, therefore, reluctantly taken the painful decision, in exercise of its right under Rule
15(1) of the United Bank Limited (Staff) Service Rules, 1981, to retrench from service of the
Bank all officers/executives (except those in the Computer Division) who came into their present
grade on or after October 1, 1991. As a gesture of goodwill, and in lieu of notice period, in
exercise of powers conferred by Rules 15, it has been decided to pay the retrenched employees,
upon termination, the following benefits:

(1)??????? An amount equal to three months Basic Pay for each completed year of service or one
and a half months Basic Pay for each remaining month of service, whichever. is less, subject,
however, to a maximum of 90 months' Basic Pay.
(2)??????? An amount equal to ten years normal post retirement medical Annual Monetary limit
presently available to retiring officers and executives, in lump sum, as final settlement in respect
of medical facilities.

(3)??????? An amount equal to the Benevolent Fund Grant for ten years, in lump sum, in advance
at the time of settlement of dues, as final payment.

(4)??????? Leave Enacashment facility equivalent to 50% of leave balance, subject to a maximum
of 180 days.

(5)??????? (a) For officers and executives under the Old Retirement Benefits Option:--

The employee's balance and the Bank's contribution towards his/her Provident Fund and profit
thereon, plus Gratuity @ one month's Basic Pay for each completed year of service.

(b-l) For officers and executives under the New Retirement Benefits Option and who have
competed 25 years of service.

Employees General Provident Fund contribution balance including profit thereon and 50%
commutation of Gross Pension with monthly payment of remaining pension under the rules.

(b-2) For officers and executives under the New Retirement Benefits Option and who have not
completed 25 years of service;

Employee's General Provident Fund contribution balance including profit thereon and, as a special
case and without creating a precedent payment of 50% Commutation of Gross Pension as a full
and final settlement.

Option for those qualifying retirement:

Staff members whose services have been terminated under this action and who have completed 25
years of service in the Bank, may at their discretion, opt for conversion of their retrenchment into
early retirement under clause (18) of the Bank's Service Rules. Such staff members should
forward their request, indicating that they waive their right to receive the above benefits and
instead would like to avail of the normal retirement benefits of the Bank.

Conditions of eligibility:

The executives/officers who have obtained unauthorized overdrafts or who are absent without
leave for a period exceeding 90 days or against whom disciplinary action in respect of any act of
misconduct involving theft, fraud, forgery, misappropriation, dishonesty, causing wilful loss to the
bank, or embezzlement, is pending or is likely to be initiated within the next 30 days, shall not be
entitled to the benefits under this Scheme. They shall be entitled only to the substantive pay for
the period of notice as per Rules. They may, however, appeal to the President of the Bank within
40 days of the date of this Circular, submitting their explanation in respect of circumstances
alleged against them. The competent Authority may, after taking into consideration. the charges,
the explanation and such other documentary record as he may deem relevant, absolve the
employee of the charges and. consequently allow him/her the benefits of this Scheme.

Residential Facilities

Residential Facilities for six months after retrenchment, if provided, and sale of furniture already
provided, shall also be allowed as a special case to all those executives, who are retrenched.
Income-tax Deduction

As per C.B.R. Circular No.l of 1965, termination benefit amount: shall be taxed as separate block
or item of income at the average rate 0', tax applicable to each recipient during the three preceding
years. If the salary of an employee was not taxable during the last three years, no tax would
become payable by him/her on the said compensation. As pet rules on the subject, income-tax will
be deducted at source. It is, however, clarified that tax liability is responsibility of the employee.

Other terms and conditions:

(1) This scheme is applicable to all officers and executives including those on leave.

(2) While computing the length of service, the period exceeding six months will be treated as full
year.

(3) The period of extraordinary leave without pay will not be counted for purpose of calculation of
any benefit under this Scheme.

(4) For Home based officers and executives posted in overseas branches/offices benefits under this
Scheme will be calculated. on the basis of their Basic Pay, as admissible to them in Pakistan in
Pak Rupees.

Payment of Benefits after adjustment of Employee Liabilities:

All loans and other liabilities outstanding against the staff member would be liable to be adjusted
prior to any disbursement under the above Scheme. These are being worked out and would be
advised individually to the affected employees. In the meantime, all such officers and executives
are advised to return the bank's assets in their possession, such as cars, equipment, etc. (excluding
furniture and fixture items allowed at residence) to expedite their individual settlement. Because
of embargo placed on the Bank by the Ministry of Finance on purchase of new cars, departing
officers/executives are required to return all Bank cars with immediate effect. Excluded from the
withdrawal are executives of the rank of Senior Vice-President and above who elect to take the
retirement option and, thus, may exercise their option to purchase the car from the Bank as per
existing rules.

Help Line for further information:

Help Lines have been set up at Head Office to answer questions regarding this matter, and to
provide information and clarifications. Where questions cannot be answered immediately, for
instance, when data has to be gathered from others sources, every attempt will be made to provide
a response as soon as possible when calling the Help Line, please provide your full name,
employee number, and designation and location of last assignment in the Bank. Employees may
use the following channels of communication to reach the Help Line:-

By telephone:??? 111-999-444

By fax:? - ????????? 111-329-825

By post: ?????????? GPO Box No.4613, Karachi.

The decision to retrench valuable staff resources has been taken after detailed analyses of the
present situation in the Bank. In the interest of its survival and future viability, the bank was left
with no other option but to take this action. The Bank is conscious and appreciative of the services
that retrenched employees have put in and would like to wish them success in their future
endeavours.

(Sd.) (ABDUL GHAFOOR),

??????????? Executive Vice-President.

(Sd.) (KHALID A. SHERVANI),

??????????? Senior Executive Vice-President.

As a result of the above retrenchment scheme, services of 5416 employees of the Bank were
terminated which included Senior Executive Vice-Presidents, Executive Vice-Presidents, Senior
Vice-Presidents, Vice-Presidents, Assistant Vice-Presidents and Officers of the Bank serving in
Grade-I to Grade-111. Out of the total 5416 retrenched employees, 42 are respondents, in the
above appeals before us, and we have been informed by the learned counsel for the respondents
that about 1000 appeals filed by the retrenched employees are presently pending before various
Benches of Service Tribunals throughout Pakistan. In order to understand the controversy arising
in the above appeals in its true perspective, it is necessary to refer here briefly the background of
these cases.

3. United Bank Limited was established in the year 1968 as a corporate entity. It was nationalised
on 1-1-1974. For the last several years, the Bank suffered continuous losses as would appear from
the balance-sheets issued by the Bank. In the year 1995, the Bank suffered pre-tax losses of 510
millions, which were increased to 1523 millions in the year 1996. Among others, one of the
reasons discovered for the above losses was overstaffing of the Bank. Accordingly, in July, 1996
the Bank appointed Nexus Group an independent management consultants to carry out the study
for reorganisation of the Bank. As a result of the study carried out by the Nexus Group, about 8
thousand employees in the Bank were found in excess. However, in order to reduce and minimise
the effect of retrenchment, the management decided to reduce the work strength of the staff in the
Bank by 5416 employees only. The bank, accordingly, decided to retrench only those employees
who joined the Bank service in each cadre on 1-10-1991 on the principle of 'last come first go'. To
give effect to this decision of the Bank, the Retrenchment Scheme reproduced above, was
circulated amongst all the employees of the Bank.

The respondents, whose services were terminated as a result of the above Retrenchment Scheme,
challenged their termination from service before the Service Tribunal in appeals. The learned
Service Tribunal, through a detailed judgment, declared the termination of the service of
respondents as without lawful authority and directed their reinstatement in service. Leave was
granted in the above appeals to examine the following questions of law arising in these cases:--

"In support of the above petitions Raja Muhammad Akram, learned counsel for the petitioner
bank, has inter alia contended as under:-

(i)???????? That in spite of the fact that the respondents were deemed to be civil servants for the
purpose of the Act, they remained employees of a corporation and, therefore, in the absence of any
statutory rules the relationship between the petitioner and the respondents was that of the master
and servant. In this respect reliance has been placed on he cases of Raizuddin v. Chairman,
Pakistan International Airlines Corporation and 2 others (PLD 1992 SC-531) and United Bank
Limited v. Ahsan Akhtar and others (1998 SCMR 68).

(ii)??????? That the `petitioner bank was entitled to downsize the number of the staff in view of
the economic stress. Reliance was placed on the case of K. Rajendran and others v. State of Tamil
Nadu and others (AIR 1982 SC 1107, para. 35 at page 1120).
(iii)?????? That the petitioner bank was entitled to re-organize its-business in order to run it more
efficiently and if in the above process some members of the staff have become redundant, it was
entitled to terminate their services. Reliance was placed on the case of Zeal Pak Cement Factory
Ltd., Hyderabad v. The Chairman, West Pakistan Industrial Court, Lahore and others (PLD 1965
SC 420).

(iv)?????? That the learned Tribunal has enunciated various points of law in, the impugned
judgment contrary to the law enunciated by the superior Courts. ,

(v)??????? That the Tribunal erred in ordering the reinstatement of the respondents in the above
terms.

On the other hand Messrs Akram Sheikh, Abid Hassan Minto and Abdul Majeeb Pirzada counsel
for the respondents have vehemently

urged that though there may be some error on the Part of the Tribunal in enunciating the legal
position on the various points, but the conclusion, namely, that the Scheme was illegally
applied to the respondents, was correct. According to them, the Scheme was inter alia
violative of Article 25 of the Constitution and also was in breach of the principle of natural
justice.

We are inclined to grant leave to consider as to whether the impugned ,judgment is in

consonance with the law enunciated by this Court."

We have heard the learned counsel for the appellant as well as respondents at length.

4. The Hon'ble Service Tribunal set aside the termination of respondents from service on the?
following grounds:--

(i) That the termination of service of respondents was in violation of the principle of audi???
alteram partem as they were not issued any show-cause notice before termination of their
service;

?(ii)?? That while terminating the service of respondents, the principle of "last come first go"
was not followed in strict manner inasmuch as the persons who were promoted to the higher
cadre a few days before the enforcement of Retrenchment Scheme, were not allowed to
continue or given option of reversion to the lower cadre from which they were promoted
while applying the above principle of retrenchment;

(iii)????????? that as a result of introduction of section 2-A, in the Service Tribunals Act,
1973 (hereinafter to be referred as 'the Act') the employees of the Bank were to be considered
as persons in the service of Federation who will be governed by the provisions of Civil
Servants Act and other service laws applicable to such employees instead of application of
the principle of Master and Servant;

(iv)????????? That the losses suffered by the Bank were not on account of overstaffing but
were mainly attributable to non-recovery of the loans and that the employment of consultants
by the Bank, after the termination of services of 5416 employees, on inflated salaries goes to
show that the action of the Bank was not in good spirit.

5.? The learned counsel for the appellant in support of the above appeals has contended that
in view of the continuous losses suffered by the Bank and the fact that in order to save the
Bank from a total collapse, Federal Government had' to inject a huge amount, the
Retrenchment Scheme introduced by the Bank was fully justified.' It is contended that the
Bank being a commercial Organisation and a corporate entity had the right to run it on
commercial consideration and to give effect to it, it was entitled to reorganise its working
including retrenchment of the overstaffed employees. It is also contended that as the
termination of service of respondents did not carry any stigma, no show-cause notice was
necessary to terminate their services. In the alternative, it is contended that under the Service
Rules of the Bank, the management had the right to terminate the services of employees by
giving them either 3 months' notice or pay in lieu of that period and as such the question of
giving any notice to the respondents before termination of their employment or hold an
enquiry, was totally irrelevant. It is lastly contended by the learned counsel that by virtue of
introduction - of section 2-A in the Act only a right of appeal became available to an
aggrieved employee before the Service Tribunal. This, however, did not mean that the terms
and conditions of service of the employees of the Bank ceased to be operative and provision
contained in the Civil Servants Act and other Service Rules applicable to State employees
generally extended to them automatically. It is contended by the learned counsel that in spite
of the fact that the employees of the Bank were declared civil servants by virtue of insertion
of section 2-A in the Act, they continued to be governed by the terms and conditions of their
service framed by the Board of Directors of the Bank and, therefore, the relationship of
Master and Servant continued to be applicable to them.

6. Mr. Abid Hassan Minto the learned counsel for respondents in Civil Appeals Nos.1506 to
1516 of 1998 has raised following contentions while supporting the impugned judgment of
Service Tribunal: --

(i)?????????? That although section 2-A has been introduced-in the Act, it has two distinct
and separate parts. First part of section 2-A relates to the declaration of service of employees
of the Bank as Service of Pakistan while the second part relates to the conferment of right of
appeal on the employees of the Bank before the Service Tribunal;

(ii)?????????? that the retrenchment of employees under the scheme framed by the appellant
has no nexus with Rule 15 of United Bank Limited (Staff) Service Rules, 1981 (hereinafter to
be referred as 'the Rules') which deals with individual termination of an employee. It is,
accordingly, contended that rule 15 (ibid), had no application to the present cases;

(iii)????????? that the retrenchment carried out by the appellant Bank in not covered by-any
statutory or other provision and, therefore, it could only be considered as having been done
under the policy decision of the Government which was circulated on 12-8-1997;

(iv)????????? that the retrenchment of the employees by the Bank being fully covered by the
policy decision of the Government, dated 12-8-1997 it could only be on voluntary basis as
laid down in the circular of the Government and, therefore, its compulsory application by the
appellant was contrary to the policy laid down by the Government.

In addition to the above contention, Mr. Abid Hasan Minto, the learned counsel for the
respondents, very vehemently contended that the case-law relied by the learned counsel for
the appellants in support of his contention that by virtue of section 2-A (ibid), the respondents
were to be treated in service of Pakistan only for the limited purpose of availing of the
remedy of appeal before the Service Tribunal is not to be taken into consideration as in the
cited cases, the contentions now raised by the appellant were not considered. It is also
contended by the learned counsel that in view of the fact that the Bank employees were
deemed to be in the service of Federation, by virtue of the provisions of section 2-A of the
Act, the principle of Master and Servant would not be applicable in these cases. It is
contended by Mr. Minto that if the intention of Legislature was only to confer right of appeal
before the Service Tribunal, it could simply provide that the Bank employees will be deemed
to be civil servants for the purposes of the Act instead of declaring them in the Service of
Pakistan. The Federal Government having declared the service of respondents with the
appellant as Service of Pakistan, the intention of Legislature was not limited only to treat
them in the Service of Federation for the limited purpose of availing remedy of appeal before
the Service Appeal.

Mr. Abdul Mujeeb Pirzada, the learned counsel for respondents in Civil Appeals Nos. 1487 to
1505 of 1998 while supporting the above contentions of Mr. Abid Hussan Minto, contended
that the respondents were treated in a discriminatory manner by appellant inasmuch as while
in the other Financial Institutions namely, Habib Bank Limited, National Bank of Pakistan,
Investment Corporation of Pakistan and State Bank of Pakistan the employees were offered
Golden Hand Shake Scheme on voluntary basis, the respondents were given no such option
under the Scheme of Retrenchment enforced by the appellants. It is contended by Mr. Mujeeb
Pirzada that the termination of services of respondents was in total disregard of principle of
natural justice as no opportunity was given to the respondents to explain their position before
terminating their services under the Retrenchment Scheme. It is also contended by Mr.
Pirzada that. while enforcing Retrenchment Scheme, the principle of Last in First go was not
followed inasmuch, the date of appointment of respondents in the service was not kept in
view while terminating their services. The learned counsel contended that the principle of
retrenchment could not be made applicable in the cases as no posts were abolished by the
appellant while the respondents were thrown out of service. It is contended by the learned
counsel that the whole exercise of retrenchment of appellant was mala fide as only those
employees were targeted who were employed by the previous Government.

Mr. Muhammad Akram Shaikh, the learned counsel for other appellants while adopting the
contentions of the counsel who preceded him, contended that the relationship of Master and
Servant was no more applicable after the introduction of section 2-A in the Act. It is
contended by Mr. Shaikh that in view of the scope of sections 4 and 5 of the Act, the Service
Tribunal was fully competent to order reinstatement of terminated employees into service and
therefore, principle of Master and Servant could not be made applicable to the proceedings
before the learned Tribunal. Mr. Shaikh contended that the right to employment in a public
sector undertaking is a fundamental right guaranteed under Article 9 of the Constitution and,
therefore, while depriving a person employed in such an undertaking a very high standard of
fairness and equity coupled with the-principle of natural justice should have been followed.
The learned counsel contended that the Service Tribunal recorded a finding that the
employees of the Bank have been discriminated and this being the finding of fact, is not open
to be gone into or scrutinised by this Court while hearing an appeal under Article 212 of the
Constitution. The following cases were cited at the bar during the course of hearing of these
appeals:-

(1) Pakistan Petroleum Workers' Federation v. Burma-Shell Oil Storage &

Distributing Co. of Pakistan Ltd. (PLD 1961 SC 479;

(2) N. Ramanatha v. State of Kerala (AIR 1973 SC 2641);

(3) K. Rajendran v. State of Tamil Nadu (AIR 1982 SC 1107);

(4) J. K. Iron and Steel Co. v. Mazdoor Union (AIR 1956 SC 231);

(5) Muir Mills Co. v. Suti Mills Mazdoor Union (AIR 1955 SC 170);
(6) House Building Finance Corporation v. Inayat Ullah Shaikh (1999 SCMR 311);

(7) United Bank Ltd. and others v. Ahsan Akhtar 1998 SCMR 68;

(8) Muhammad Mahibullah v. Chaman Lal (1994 SCMR 222);

(9) Pakistan and others v. Public-at-Large (PLD 1987 SC 304); ,

(10) Raziuddin v. Chairman, P.I.A. Corporation (PLD 1992 SC 531);

(11) Establishment Secretary v. S.A.M. Wahidi (1998 SC14R 1985);

(12) Abdur Rahman v. Ghulam Rasul Tanvir (PLD 1987 SC 45);

(13) WAPDA v. Muhammad Arshad Qureshi (1986 SCMR 18);

(14) Syed Aftab Ahmed v. K.E.S.C. (1999 SCMR 197);

(15) Pakistan v. General Public (PLD 1989 SC 6);

(16) I. A. Sherwani v. Government of Pakistan (1991 SCMR 1041);

(17) Inamur Rehman v. Federation of Pakistan (1992 SCMR 563);

(18) Delhi Transport Corporation v. D.T.C. Mazdoor Congress (AIR 1991

SC 101).

(19) Mrs. M.N. Arshad v. Miss Naeema Khan (PLD 1990 SC 612);

(20) Walayat Ali Mir v. Pakistan International Airlines Corporation (1995 SCMR 650);

(21) Board of Trustees. Port of Bombay v. Dilipkumar (AIR 1983 SC 109);

(22), Olga Tellis v. Bombay Municipal Corporation (AIR 1986 SC 180);

(23) Federation of Pakistan v. Public-at-Large (PLD 1988 SC 202);

(24) Yick Wo v. Hopkins (1885) 118 US 356:

(25) Slaughter-House Cases (83 US 36);

(26) R.v. Civil Service Appeal Board, ex parte Bruce (1988) 3 AELR 686;

(27) Gunton v. London Barough of Richmond upon Thames (1980) 3 AELR 577;

(28) N.B.P. v. Punjab Labour Appellate Tribunal (1993 SCMR 105);

(29) State v. Qaim Ali Shah (1992 SCMR 2192);

(30) Government of Baluchistan v. Aziz Ullah Memon (PLD 1993 SC 341);

(31) Federation of.Pakistan v. Muhammad Nazir (1998 SCMR 1081);

(32) Mian Muhammad Nawaz Sharif v. President of Pakistan (PLD 1993 SC 473);

(33) Zeal Pak Cement Factory Ltd. v. Chairman, West Pakistan Industrial
Court (PLD 1965 SC 420);

(34) Vcajlal M. & Co. v. State of M.P. (AIR 1970 SC 129) and

(35) Anisa Rehman v. P.I.A.C. (1994 SCMR 2232).

We will refer some of these cases during the course of our discussion at appropriate stage.
which are relevant to the discussion.

7.. The main controversy in the above appeals revolves around the interpretation of section 2-
A, which has been introduced through an amendment in the Act. Section 2-A has . been
introduced through Service Tribunals (Amendment) Act XVII: of 1997, dated 10-6-1997 and
it reads as follows:-

"(2-A)_ Service under certain corporations etc., to be service of Pakistan.--Service under any
authority, corporation, body or organization established by or under a Federal Law or which
is owned or controlled by the Federal Government or in which the Federal Government has a
controlling share or interest is hereby declared to be service of Pakistan and every person
holding a post under such authority, corporation, body or organization shall be deemed to be
a, civil servant for the purposes of this Act. "

A careful reading of the above section will show that this section, which has been introduced
in the Act through amendment, declares the service of any authority. corporation, body or
organisation established by or under a Federal law and which is owned or controlled by the
Federal Government or in which Federal Government has any share or interest, as the service
of Pakistan and every person holding a post under such authority, corporation, body or
organisation, shall be deemed to be a civil servant for the purpose of the Act. The contention
of the learned counsel for respondents in the above appeals jointly, is that the respondents
shall be deemed to be in the service of Pakistan as defined in Article 260 of the Constitution.
Further contention of learned counsel for the respondents is that the respondents having been
declared to be in the service of Pakistan, their terms and conditions of service could only be
regulated in accordance with Article 240 of the Constitution under an Act of Mailis-eShoora
or through an Act of Provincial Assembly of a Province. It is the contention of respondents
jointly in the cases, that as no law has been formulated either by Majlis-e-Shoora or
Provincial Assembly to regulate the terms and conditions of service of respondents, therefore,
in the absence of any such law provisions contained in the Civil Servants Act, 1973, relating
to the civil servants would govern the employment of respondents. It is accordingly,
contended that till such time the appropriate Legislature provides the terms and conditions of
employment of the employees of the Bank, the provisions contained in Civil Servants Act,
1973 and all other service laws and rules applicable to the employees of the Federal
Government would apply to the employees of the Bank. We are unable to accept the above
contention.

From reading of section 2-A. reproduced above. which has been introduced in the Act, the
intention of the Legislature is quite manifest The f Legislature by introducing section 2-A, in
the Act, only wanted to provide a; right of appeal before the Service Tribunal to an aggrieved
employee of a corporation, authority. body or organisation established tinder a Federal Law
or;, which is owned or controlled by the Federal Government or in which the Federal
Government has a controlling share or interest. It is significant that while section 2-A, has
been introduced in the Act which deals with the right of appeal of civil servants, no
corresponding amendment has been made in the Civil Servants Act, which determines the
terms and conditions of service of civil servants. If the Legislature intended to confer on the
employees of Corporation, controlled by the Federal Government, the status of a civil
servant, they could have provided so by introducing appropriate amendments to the relevant
service laws governing the Federal Government employees. In the absence of such'
amendments, the laws applicable to Federal Government employees could not automatically
extend to the employees of the Bank. The contention of the learned counsel for the
respondent that if the intention of Legislature was only to provide a remedy to an aggrieved
employee of the bank before the Service Tribunal, it was not necessary to declare the service
of the bank as the service of Pakistan as this purpose could be achieved by simply declaring
such employees as civil servants for the purposes of the Act, in our view is misconceived.
The establishment of Service Tribunals is contemplated under Article 212 of the Constitution
which reads as follows:-

"(212).--(1) Notwithstanding anything hereinabove contained, the appropriate Legislature

may by Act provide for the establishment' of one or more Administrative Courts or Tribunals
to exercise exclusive jurisdiction in respect of-

(a) matters relating to the terms and conditions of persons who are or have
been in the service of Pakistan, including disciplinary matters;

(b) -matters relating to claims arising from tortious acts of Government, or any person in the
service of Pakistan, or of any local or other authority, empowered by law to levy any tax or
cess and any servant of such authority acting in the discharge of his duties as such servant; or

(c) matters relating to the acquisition, administration and disposal of any

property which is deemed to be enemy property under any law.

(2) ????? Notwithstanding anything hereinabove contained, where any Administrative Court
or Tribunal is established under clause (1), no other Court shall grant an injunction, make any
order or entertain any proceedings, in respect of any matter to which the jurisdiction of such
Administrative Court or Tribunal extends and all proceedings in respect of any such matter
which may be pending before such other Court immediately before the establishment of the
Administrative Court or Tribunal other than an appeal pending before the Supreme Court,
shall abate on such establishment:

Provided that the provisions of this clause shall not apply to an Administrative Court or
Tribunal established under an Act of a Provincial Assembly unless, at the request of that
Assembly made in the form of a resolution, Majlis-e-Shoora (Parliament)] by law extends the
provisions to such a Court or Tribunal.

(3) An appeal to the Supreme Court from a judgment, decree, order or sentence of an
Administrative Court of Tribunal shall lie only if the Supreme Court, being satisfied that the
case involves a substantial question of law of public importance, grants leave to appeal."

The Service Tribunal established under Article 212 (ibid), through Act, of appropriate
Legislature, has exclusive jurisdiction to take cognizance of matters relating to terms and
conditions of persons who are or have been in the service of Pakistan including disciplinary
matters. Therefore, in order to oust the jurisdiction of ordinary Court and to confer exclusive
jurisdiction on the Service Tribunal in respect of matters relating to terms and conditions of
service of Bank employees, it was necessary that the employment under the 'Bank be first
declared to be the service of Pakistan. We are, therefore, of the view that the declaration in
section 2-A, of the Act, to the effect that the service under an authority, corporation, body or
organisation established by or under a Federal law or which is owned and controlled by the
Federal Government or in which Federal Government has a controlling share or interest, shall
be deemed to be the service of Pakistan and the persons holding any post in such authority,
corporation or body were deemed to be civil servant for the purposes of the Act, was meant
only for the limited purpose of conferring a right on the aggrieved employee of such
organisation/Corporation to avail the remedy of appeal before the Service Tribunal.
Therefore, in our view insertion of section 2-A, in the Act did not change the status of the
employees of the Bank into civil servant for any other purpose. The employees of the Bank
notwithstanding the fact that they were deemed to be in the service of Pakistan and a civil
servant for the purposes of the Act, to avail the remedy by way of appeal before the Tribunal
in respect of their terms and conditions of service, continued to be governed by their existing
terms and conditions of employment with the Bank. The change in the forum of remedy
could not alter their terms and conditions of service. It may be mentioned here that in spite of
above declaration by the Legislature under section 2-A of the Act that the employees will be
deemed to be civil servant for the purpose of the Act, the corporate status of the bank was not
affected or changed. It is not disputed before us that before the introduction of section 2-A, in
the Act, the services of the respondents were governed under Rules, which were framed by
the Board of Directors of the Bank under. Articles 121 and 122(22) of Memorandum and
Articles of Association of the Bank. It is, therefore, quite clear that the rules governing
employment of the respondents with the bank had no statutory backing. In the case of Mst.
Zaiba Mumtaz v. First Women Bank Ltd. (Civil Petition No.62-K of 1999) decided by a
Bench of this Court consisting of Hon'ble Chief Justice, Nasir Aslam Zahid and Mamoon
Kazi, JJ.) on 6-4.-1999, the learned Judges of the Bench examined the question of
applicability of the Rules, of the Bank after introduction of section 2-A, in the Service
Tribunals Act. In that case the services of the petitioner, who was serving as Executive Vice-
President, were terminated by giving her 3 months' salary in lieu of notice period. The
petitioner after seeking review of the order of termination before the Bank Authority,
approached the Federal Service Tribunal but his appeal was dismissed. In the petition for
leave to appeal before this Court, it was contended that the services of the petitioner could
not be terminated without notice but the contention was repelled as follows:-

"The respondent Bank has its own service rules but admittedly the same are not statutory
rules and, in the circumstances, the Tribunal, accepting the plea on behalf of the respondent
Bank took the view that the relationship between the respondent Bank and the petitioner was
of master and servant. The Tribunal also referred to rule 11 of the Service Rules of the
respondent Bank which is as follows:-

. ' 11. Termination of service. ---Services of an employee in Category I may be terminated by

the competent Authority on 3 months' notice or on? payment of a sum equal to her
substantive pay for three months in lieu thereof:

Provided that the competent Authority may allow, at its sole discretion, all or any of the
benefits ordinarily admissible on retirement from service to an employee in Category I whose
services have been terminated under this sub-rule.'

The Tribunal was of the view that a plain reading of the letter of termination shows that it
was a termination simpliciter. The appeal of the petitioner was dismissed by the Tribunal
observing as follows:-

'In view of the above, it is held that the appeal, filed by the appellant before this Tribunal,
seeking reinstatement as Executive Vice-President m the respondent-Bank, is incompetent
under the law as this Tribunal being a creation of statute cannot go beyond the codified law,
meaning thereby that in the absence of statutory rules, the law declared does not permit
reinstatement of the appellant and under the statutory law this Tribunal cannot award any
damages. The other two objections. discussed above, also support the plea of the respondent
bank that the appeal has. no merit and 'is not competent under the law. The appeal is
accordingly dismissed. Parties to bear their own costs who be informed.'

(3) The Staff Service Rules of the respondent Bank not being statutory rules and there being
no other statutory instrument shown to us according to which respondent Bank could not
terminate the services in accordance with its own staff service rules; and order termination
having been passed in accordance with the applicable rule of the Staff Service Rules of the
respondent Bank, the Federal Service Tribunal came to the right conclusion in dismissing the
appeal of the petitioner. It may be observed here that this Court has consistently held that in
the absence of any statutory rules, relationship between the employer and an employee of a
corporation, where protection cannot be sought under the Labour Laws or any statutory
instrument, is that of master and servant. In this regard, in the case of Anisa Rehman v.
P.I.A.C. (1994 SCMR 2232) reference was made to the following judgments:-

(i) Shahid Khalil v. P.I.A.C. (1971 SCMR 568);

(ii) A. George v. P.I.A.C. (PLD 1971 Lah. 784);

(iii) Muhammad Yousuf Shah v. P. I. A. C. *(PLD 1981 SC 224);

(iv) Raziuddin v. Chairman, P.I.A.C. (PLD 1992 SC 531);

(v) Lt.-Col. Shujauddin Ahmed v. Oil and Gas Development Corporation (1971 SCMR 566);

?(vi) Chairman of East Pakistan Development Corporation v. Rustam Ali (PLD 1996 SC
848);

(vii) Lahore Central Cooperative Bank Ltd. v. Pir Saifullah Shah (PLD 1959 SC 210);

(viii) Zainul Abedin v. Multan Central Cooperative Bank Ltd. (PLD 1966 SC 445);

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

`(x) Evacuee Trust Property Board v. Muhammad Nawaz (1983 SCMR 1275);

(xi) Anwar Hussain v. Agricultural Development Bank of Pakistan (PLD 1984 SC 170);

(xii) Principal, Cadet College, Kohat v. Muhammad Shoab Quershi (PLD 1984 SC 170);

(xiii) Nisar Ahmed v. The Director, Chiltan Ghee Mi1.,(1987 SCMR 1836);

(xiv) National Bank of Pakistan v. Manzoorul Hasan (1989 SCMR 832);

(xv) Sindh Road Transport Corporation v. Muhammad Ali G. Khokhar (1990 SCMR 1404);

(xvi) K. D. A, v. Wali Ahmed Khan (1991 SCMR 2431);

(xvii) Anwar Hussain v. Agricultural Bank (1992 SCMR 1112) and

(xviii) Agricultural. Development Bank v. Muhammad Sharif (1988 SCMR .597).

(4) Learned counsel for the petitioner could not controvert the above legal position but
referred to the following judgments in support of the proposition that petitioner could claim
reinstatement on the ground that the order of termination was mala fide:-

(a) WAPDA v. Muhammad Arshad Qureshi (1986 SCMR 18);

(b) Karachi Development Authority v. Wali Ahmed Khan (1991 SCMR 2434);

(c) Chairman, Pakistan Broadcasting Corporation v. Nasir Ahmad (1995 SCMR 1593);'

(d) Aftab Ahmed v. K.E.S.C. (1999 SCMR 197);

We have gone through the aforesaid judgments and we find that all of them are clearly
distinguishable and do not advance the case of the petitioner that she could claim
reinstatement in service.

Learned counsel also referred to a decision of the Full Bench of the Federal Shariat Court,
dated 18-11-1993 in Shariat Petition No.2-K of 1990 (Muhammad Sharif v. Federal
Government and Pakistan National Shipping Corporation). We find that the said judgment is
not relevant to the point in issue in this case.

(5) Respondent Bank may have had certain grievances against the petitioner but then a
decision was taken to terminate the services of the petitioner under the said rule 11, of the
Staff Service -Rules of the Bank and three months' pay was also received by the petitioner
from the respondent Bank in lieu of three months' notice under the said rule. The finding of
the Tribunal that, in the circumstances, the order terminating the services of the petitioner
was a termination simpliciter does not call for interference." .

In another case decided by the same Bench (Civil Petition No.604-K of 998), on 5-4-1999
while considering the scope of section 2-A, introduced in he Act, the following were the
observations made in that case:

(2) It has been noticed by us that the learned Tribunal while dismissing the appeal of the
petitioner has proceeded on an assumption that section 4 of the Sindh Service Tribunals Act
is applicable in the case of the petitioner. Although, it appears that the procedure, as provided
by section 4, was not followed in this case by the petitioner as appeal before the Tribunal was
not filed within the period of limitation as provided by the said section, but section 4 is
applicable only to civil servants and not to persons who invoke jurisdiction of the Tribunal by
virtue of a deeming clause inserted in Service Tribunals Act or similar Provincial enactments.
The Tribunal appears to have failed to notice that such amendments whereby employees of a
Corporation are to be deemed to be civil servants, have been made only in the Service
Tribunals Act, both Federal as well as Provincial, but corresponding amendments have not
been made .in the Civil Servants Act. Therefore, the Legislature appears only to have
intended to provide a remedy for redress of grievances to persons serving in Corporations
owned or controlled by the Federal or a Provincial Government, but the other terms and
conditions applicable to civil servants were not intended to be made applicable to such
persons. Consequently, the period of limitation, as provided in section 4, which is applicable
only to civil servants, cannot be made applicable to persons who have been declared as such
by the said deeming provisions in the Service Tribunals Act as right of a departmental appeal
may not be available to them as provided for in case of a civil servant. Reference in this
regard may also be made to the case of Lt.-Col. (Recd) Muhammad Siddique v. Allama Iqbal
Open University, Islamabad, Civil Petitions Nos.483 of 1998 and 685 of 1998, decided by
this Court on 2-11-1998 wherein under similar circumstances the case was remanded to the
Service Tribunal for a fresh decision on the question of limitation. "

The preceding discussion leaves us in no doubt that the introduction of section 2-A, in the
Act, did not change the status of the employees of the Bank into civil servants in so far their
terms and conditions of service were concerned. In spite of introduction of section 2-A, in the
Act, they continue to be governed by the same terms and conditions of service which applied
to them before introduction of section 2-A, in the Act. The only effect of introduction of
'section 2-A, in the Act was that instead of ordinary remedy available to an aggrieved
employee of the bank, . in respect of his terms and conditions of service, he became entitled
to take his grievance before the Service Tribunal established under Article 212 of the
Constitution which alone could determine it now.

8. Having determined the scope of section 2-A; of the Act, we now proceed to examine
whether the termination of services of respondents was justified and could not be interfered
with by the learned Service Tribunal. The learned counsel for the respondents jointly
contended before us that the Retrenchment Scheme introduced by the Bank was
discriminatory, violative of the policy decision of Federal Government and contravened the
principles of natural justice. The learned counsel for the respondents jointly contended that
similar schemes of Golden Hand Shake were introduced in Habib Bank Limited, National
Bank of Pakistan, Investment Corporation of Pakistan and State Bank of Pakistan wherein
employees were given an option to seek retirement on voluntary basis whereas under the
Retrenchment Scheme introduced by the Bank no option was available to the employees
which amounted to discrimination amongst the same class of employees, namely, the
employees of Financial Institutions. It is also contended that Compulsory Retrenchment
Scheme of the Bank was violative of the directions of Federal Government and as such it was
not legally enforceable. It is lastly contended in this behalf that the termination of the service
of respondents without affording them an opportunity of hearing. was opposed to the
principle of natural justice. We do not find force in any of the above contentions of the
learned counsel for the respondents.
??????????
There is nothing on record before us to show that the Habib Bank Limited, National Bank
Limited. Investment Corporation of Pakistan or State Bank of Pakistan had also suffered
losses in the same way as suffered by the Bank. We also neither have before us the terms and
conditions of service of the employees of other financial institutions with which the
respondents are drawing comparison nor the employees of those institutions are parties
before us. In the absence of these particulars, the question of discriminatory treatment ?to
respondents cannot be determined. Apart from it, there is no reasonable basis for classifying
the employees of all the financial institutions of the country into one category to determine
their terms and conditions of service which may be based on divergent considerations. It is
not disputed before us by the learned counsel for the respondents that the Bank from 1995
onward suffered continuous losses. In fact even in the impugned judgment this fact is not
disputed that the Bank had suffered continuous losses but it was held that the losses suffered
by the bank were not so much attributable to the overstaffing than to the non-recovery of the
stuck up loans. It was contended before the Hon'ble Tribunal and also before us by the
appellant Bank that before undertaking the exercise of retrenchment of the employees of the
Bank, a study was made with the help of Nexus Group and in the light of the findings and
recommendations of the study group, Board of Directors of the Bank decided to retrench
5416 employees of the Bank. It is contended by the Bank that to give effect to the scheme of .
retrenchment, the principle of Last Come First Go was strictly followed. These facts were
sufficiently brought on record before the Hon'ble Tribunal and were not seriously to dispute.
The Bank being a commercial Organisation has to be run on commercial considerations. In
view of the continuous losses suffered by the Bank for the last several years, it was open to
its management to reorganise its working to improve its commercial viability which included
the right to dispense with the services of the staff which was found in excess of necessity. In
our view so long the action of retrenchment of employees by the Bank was not opposed to
any statutory provisions or it came in conflict with any settled rule of law or it was held to be
mala fide, it could not be objected to on the ground that the retrenchment could be avoided
by some other alternative method by the Bank. In the case of Zeal Pak Cement Factory v.
Chairman, West Pakistan Industrial ('curt (PLD 1965 SC 420), scope of right of
reorganisation of a commercial Organisation in relation to retrenchment of its staff, was
examined by this Court as follows:-

"The question of the exercise of such power as against the general power of an enterprise to
reorganize its operations for better management and, in a. case like the present. to increase
productivity, hag been considered earlier by this Court, in several cases of which one,
namely, the case of Pakistan Petroleum Workers' Federatibn v. Burmah-Shell Oil Storage and
Distributing Co. of Pakistan Ltd. PLD 1961 SC 479 may be mentioned. There, the provisions
of section 33 of the Industrial Disputes Act, 1947, which in material respects are not different
from those of section 30, of the Ordinance of 1959 were considered. At page 512 of the
report will be found discussion of a case where the office transport service of three
Companies had been reorganised so as to render a number of motor car drivers surplus to
requirements, who were accordingly discharged by notice. Three of them who were
permanent drivers raised the contention. that their dismissal was illegal as it had been made
without the prier permission of the Tribunal during the pendency of the adjudication, and that
the discharge was by way of victimisation- The Tribunal had opined against them on this
ground, holding that the discharge was made in consequence of a bona fide reorganization
inside the three Companies by which the redundancy was brought about. But the Tribunal
had interfered in favour of two of the senior drivers, who had challenged the re-employment
after the retrenchment of two of their juniors, and had directed that they should be employed
instead, and this was the question for decision. The following observations made in the case
are, however, relevant to the question before us:-

'The redundancy was brought about by re-organization of a permanent nature, which is said
to be still in existence. The Tribunal had found that the reorganization was not designed to
affect any employee in particular, but was carried out bona fide. Yet, he found that the
preferential re-engagement of Ghulam Nabi and Habib Bux constituted a breach by the
Company of the provision in section 33 of the Industrial'. Disputes Act that no employer shall
during the pendency of an addiction, discharge, dismiss or otherwise punish any workman
except for misconduct not connected with the dispute':-

The order of the Tribunal requiring that Ghulam Nabi and Habib Bux, should be replaced by
Rafi Ahmad and Masoodul Hassan was set aside, but enough was said by the Court to
indicate its approval of the Tribunal's finding that a bona fide re-Organisation by which
pendency results, and consequent notices of discharge were issues by the employer, was not a
matter falling within section 33 of the Act of 1947.

In the present case, there is no manner of doubt that there was a reorganization carried out for
a bona fide purpose of the industry , and the notices of- discharge were given exclusively in
relation to the redundancy which thus resulted and without any taint of vitimisation. There
was nothing in the nature of punishment of- vindictiveness involved. We consider that the
action of the Factory iii respect of the employees retrenched in this case as surplus to
requirements being bona fide, it did not attract the control of the Industrial Court under
section 30 of the Ordinance. and we accordingly allow this appeal and set aside the order of
Chairman directing the reinstatement of these 19 workers. We make no order as to costs". "
In the case of Parry & Co. v. Judge Second I.T., Calcutta (AIR 1970 SC 1334) the Indian
Supreme Court considered the right of an employer to reorganise and arrange his business in
these words:-

14. It is well established that it is within the managerial discretion of an employer to organize
and arrange his business in the manner he considers best. So long as that is done bona fide it
is not competent of a Tribunal to question its propriety. If a scheme for such reorganization
results in surplusage of employees no employer is expected to carry the burden of such
economic dead-weight and retrenchment has to be accepted as inevitable, however,
unfortunate it is. The Legislature realised this position and, therefore, provided by section 25-
F compensation to soften the blow of hardship resulting from an employee being thrown out
of employment through no fault of his. It is not the function of the Tribunal, therefore, to go
into the question whether such a scheme is profitable or not and whether it should have been
adopted by the employer. In the instant. case the Tribunal examined the propriety of
reorganization and held that the company had not proved to its satisfaction that it was
profitable. The Tribunal then held (a) that the scheme was not reasonable inasmuch as the
number of agencies given up in Madras was less than that in Calcutta, (b) that though
development of manufacturing activity was taken up in Madras no such activity was
undertaken in Kidderpore, and (c) that the company should have developed its manufacturing
activity in Kidderpore simultaneously with the surrender of the agencies. It is obvious that
while reorganising its business it is not incumbent on the company to develop its
manufacturing side at the very place where it has surrendered its agencies, namely, Calcutta,
nor to do so at the very same time. These considerations which the Tribunal took into account
were totally extraneous to the issue before it and the Tribunal ought not to have allowed its
mind to be influenced by such considerations and thereby disabling itself from viewing the
issue from proper perspective. It was also beyond its competence to go into the question of
propriety of the company's decisions to reorganize its business. Having come to the
conclusion that the said policy was not actuated by any motive of victimization or unfair
labour practice and therefore, was bona fide any_ consideration as to its reasonableness or
propriety was clearly extraneous. Therefore, its finding that the company had failed to
establish that it was profitable was incompetent.-It is for the employer to decide whether a
particular policy in running his business will be profitable., economic or convenient and we
know of no provision in the industrial law which confers any power on the Tribunal to
inquire into such a decision so long as it is not actuated by any consideration for
victimisation or any such unfair labour practice."

(The underlining is by us to supply emphasis).

9. In view of the above-stated legal position, we are of the view that no exception could be
taken to the retrenchment of the employees of the appellant Bank if such an action of the
Bank was motivated by commercial considerations and for reasons to run the Bank on
profitable lines. In our view such an action could only be brought under challenge by
aggrieved employees if it could be f shown that the action was not based on commercial
consideration on which the Bank was being run, but was motivated by some extraneous
consideration. There is nothing on record before us to conclude that the action taken by the
appellant Bank was based on any mala fide consideration. Mr. Abdul Mujeeb Pirzada, the
learned counsel for respondents, has contended before u$ that the management deliberately
decided to terminate the services of all these employees under the Retrenchment Scheme
who were recruited after 1-10-1991 in the Bank as the management wanted to oust only those
employees who were employed during the tenure of previous Government. Besides the fact
that this contention was not accepted by the learned Tribunal it is based on some
misconception. The previous Government which came into power as a result of general
elections held in November, 1988, remained in power up to 6-8-1990. when it was dismissed
by the then President. Thereafter, the present Government came into power as a result of
general elections of 1990 and remained in power up to 18-4-1993. The previous Government
once again came as a result of general election held in October, 1993 but was again dismissed
on 6-11-1996. Since February, 1997 the present Government is now in power. It is, therefore,
quite clear that for the major period, after 1-10-1991, up to the, announcement of
Retrenchment Scheme by the Bank, the present Government remained in power. The
contention of Mr. Mujeeb Pirzada that the decision of the management of the Bank to
terminate the services of only those employees who were appointed after 1-10-1991, was a
deliberate attempt to oust the employees appointed during the tenure of previous Government
is without any basis and merit. It is also contended by the learned counsel for the.
respondents jointly that the principle Last in First Go was not strictly followed while
terminating services of the employees of the Bank inasmuch the employees who were
promoted a few days ago before enforcement of the scheme for retrenchment, were
terminated from service without providing them an opportunity to exercise option of
reversion to the lower grade from where they were promoted to the higher grade. Except for
this argument, the learned counsel for the respondents are unable to point out that the
appellant while giving effect to Retrenchment Scheme did not follow the principle of Last in
First Go. There is nothing in the Service Rules, of the Bank to show that a person promoted
to a higher post/grade continued to hold lien on the lower post and that he also had the right
to revert to the lower post in event of retrenchment. In the absence of such a provision in the
Service Rules, the argument that while retrenching the employees the appellant should have
kept in view the right of reversion of employees who were recently promoted to the higher
grade from the lower grade, was of no avail. A similar question was considered by this Court
in the case of Utility Stores Corporation v. Punjab Labour Appellate Tribunal (PLD 1987 SC
447) but was repelled as follows:-

"The basis on which the Tribunals below have granted relief to the respondents was that if
they were surplus as supervisors then they had a right to be reverted to their original posts.
The High Court took basis to be 'just and proper' in the facts and circumstances of the case.
Now the question as to whether they had the right to be reverted to the posts of Salesmen
from which posts they were promoted to the posts of Supervisor depended on as to whether
they retained their lien on the posts of Salesmen on being promoted as Supervisors.

Ordinarily the word 'lien' means the right of an officer to resume, on return to duty, a
substantive or acting appointment from which he is relieved. Fundamental Rule 13
(Government of Pakistan 'Compilation of the Fundamental Rules and Supplementary Rules',
Volume 1) lays down that a Government servant holding substantively a permanent post
retains all lien on that post while performing the duties of, that post or while on foreign
service, or holding a temporary post, or officiating in another post. Such right is neither
secured nor guaranteed to the respondents by or under any law. The learned counsel also was
unable to point out to us any provision by which he could press the rule of lien to the rescue
of the respondents. In that event, the respondents cannot have a grievance over their
retrenchment which was on the principle 'last in first out' as contained in Standing Order No.
13 of the West Pakistan Industrial and Commercial Employment (Standing Orders)
Ordinance, 1968.

It was feebly urged that the appellants could have been re-employed under section 14 of the
(Standing Orders) Ordinance, 1968, but for that no proper basis was laid to determine
whether the employer proposed to take into his employment any person within a period of
one year from the date of such retrenchment in the category of supervisors. And if any
situation had fallen vacant for a Salesman even then this provision was not applicable as it
only covered the category from which the workman was retrenched.
The High Court without attending to the existence of a right of the respondents to be reverted
to the posts of Salesmen on being retrenched held that order to be 'just and proper'. The
words 'just' and 'proper' mean 'right or fair' and 'suitable' respectively. The word 'just' in
subsection (5) of section 25-A of the Ordinance has been used as an adjective to mean
'according to law' and the word 'proper' to mean 'accurate'. (See Legal Thesaurus, Regular
Edition, by William C. Burton at pages 304 and 415). Therefore, the order to be 'just and
proper' conveys the eminent sense of the order being in accordance with law and to be
proper. It involves all processual and procedural application of law and includes adequate
application of substantive provisions thereof. Commonly stated it all takes in matters of
legality, property and correctness of the order.

There is no dispute as to the ambit of the adjudicator process. The, objection, however, was
that the Tribunal which was cognizant of the grievance could not adjudicate upon it as there
was not issue to be tried in regard to any violation of a right guaranteed or secured by or
under any law. This obviously reflects to the absence of this jurisdiction of the Tribunal
which the High Court failed to take note of and branded the order as 'just and proper' which,
could not in the absence of a legal right having been violated."

It is next contended by the learned counsel for the respondents that after the nationalization
of the Bank under Banks (Nationalization) Act, 1974, the management of the Bank could not
take a decision contrary to the policy directive issued by the Government in view of section
11 of the Banks (Nationalization) Act, 1974. The contention of the learned counsel for the
respondents does not appear to be correct. Firstly, there was no policy decision of the
Government that the Bank could not introduce a retrenchment scheme otherwise warranted
by the circumstances in which the Bank was placed. Secondly, section 11 (ibid), relied by the
learned counsel for the respondents has been substantially changed in its scope and effect
after it was introduced in the amended form in the Banks (Nationalization) Act, 1974, Act
XV of 1991. Section 11 of the Banks (Nationalization) Act, 1974 reads as follows:-

"11. General provisions pertaining to management of banks:--(1) A bank shall have a Board
of Directors consisting of the President and six other members to be nominated by the
Federal Government.

(2) The general direction and superintendence of the affairs and business of a bank, and
overall policy making in respect of its operations, shall vest in its Board which may exercise
all such powers and do all such acts, deeds and things as the bank was competent,
immediately before the commencing day, to exercise or do in a meeting of the Board of
Directors.

(3) A bank shall have an Executive Committee consisting of the President and four other
members being executive of the bank to be nominated by the Board; and the Executive
Committee shall conduct the day-to-day affairs and business of the bank under the guidance
and supervision of the Board.

(4) A bank shall have an Evaluation Committee consisting of the President and such member
as may be appointed by the Board from amongst such of its members as are not executives of
the bank; and the Evaluation Committee shall--

(a) recommend to the Board the criteria that should be laid down for different categories of
employee for carrying out a fair assessment of the merit of the executives and other
employees; and
(b) monitor and assess the performance of the employees of the bank, other than the
President, and report its findings to the Board.

(5) The President shall be the Chief Executive of a bank and shall preside at the meetings of
the Board, the Executive Committee and the Evaluation Committee and direct, manage and
control the affairs of the bank.

(6) The Chairman and members of the Council, and the President and members of the Board
shall be appointed by the Federal Government and shall hold office during the pleasure of the
Federal Government on such terms and conditions as may be approved by it.

(7) No person shall be eligible for appointments as the Chairman or a member of the Council,
or the President or a member of the Board or the Executive Committee, if--

(i) he is or has at' any time been adjudged an insolvent or has suspended payment or has
compounded with his creditors; or

(ii) he is a minor or is found lunatic or of unsound mind; or

(iii) he is not a citizen of Pakistan; or

(iv) he was at any time in the service of the Federal Government or a Corporation or Board
owned or controlled by any such Government or in the service of a Bank and was dismissed;
or

(v) he is a person against whom any action has been taken or any proceedings are - pending
under section 412, of the Companies Ordinance, 1984 , (XLVII of 1984), or section 83 of the
Banking Companies Ordinance, 1962 (LVII of 1962); or

(vi) he is or has been convicted of any offence of tax evasion under any, law for the time
being in force:

Provided that the Federal Government shall, before appointing any person, satisfy itself that
the person will have no such financial or other interest as is likely to affect prejudicially the
performance by him of the functions of the office to which he is being appointed.

(8) The Chairman and a member of a Council and the President and member of the Board
and the Executive Committee shall be liable to such disciplinary action and penalties, to be
awarded in such manner and by such authorities, as may be prescribed.

?(9) In the discharge of their functions, the President and members of the Board and the
members of the Executive Committee shall act on sound business principles and be guided
by such directives in matter of policy involving the public interest as may be given to the
bank by the Federal Government, which shall be sole Judge as to whether or not any matter is
a matter of policy involving the public interest.

(10)?????? ?????????? In -the exercise of their powers, the Board of Directors, the Executive
Committee and the President of a bank incorporated by or under any special law shall not be
subject to any restrictions which do not apply to the Board of Directors, the Executive
Committee or the President of a Bank registered under the Companies Ordinance, 1984
(XLVII of 1984).
(11) The banks shall furnish to the council such information, returns or? reports as may be
required of them.

???? (12) Except as provided in subsection (3), of section 12, the Federal Government, the
Council, the President, the Board or the Executive committee, shall not issue any directive or
take any decision in contravention of the provisions of the State Bank of Pakistan Act, 1956
?(XXXIII of 1956), or the Banking Companies Ordinance, 1962.

(13) The Federal Government may constitute such consultative bodies at the Provincial and
other levels as may, in its opinion, be necessary for gathering information from the public to
identify areas of improvement in service and facilities to customers and the public, including
measures for meeting regional credit requirements."

????? By virtue of clause (2) of section 11 (ibid), the general direction and superintendence
of the affairs and business of the Bank and overall policy making in respect of its operations,
now vest completely in its Board of Directors It is not disputed before us that the compulsory
retrenchment scheme which was introduced by the Bank. was approved by its Board of
Directors, There is nothing on record before us to hold that the Board of Directors, while J
approving the above scheme for retrenchment acted on any extraneous consideration other
than commercial consideration. It is neither open to allege nor-possible to prove that the
Board of Directors had .any malice or maid fides consideration against the retrenched
employees and specially the respondents, while approving the scheme for retrenchment of
the Bank employees. The learned counsel for the, respondents have very vehemently relied
on the decision of the Federal Government to contend that the downsizing policy circulated
by the Cabinet Secretariat, Establishment Division, vide letter, dated 12-8-1997, provided
downsizing in all public corporations owned and run by the Federal Government on purely
voluntarily basis but this policy decision of the Government was totally violated by the Bank
while framing compulsory scheme for retrenchment of its employees. The policy decision of
the Federal Government for downsizing in the Federal Ministries and Corporations circulated
through its letter, dated 12-8-1997 reads as follows:-

"Mr.Muhammad?????????? Afzal??? ????????? Kahut,??????????????? CABINET??????

SECRETARIAT,
Establishment??????????????? Secretary,???????? Tel:??????
ESTABLISHMENT???????????????? DIVISION,
9212118????????????????????????????????????????????????????????? GOVERNMENT
OF?????????????? PAKISTAN,
??????????????????????????????????? ????????????????????????????????????????
ISLAMABAD.??????

No.35/2/1997---RW.III?????????????????????????????????? 12th August, 1997.

Subject:?? ???????? DOWNSIZING OF THE FEDERAL MINISTRIES/DIVISIONS,

ATTACHED???? DEPARTMENT/OFFICERS, PUBLIC SECTOR CORPORATIONS AND
AUTONOMOUS BODIES,

My dear Secretary,

??????????? The Government is seriously concerned about considerable overstaffing in the

Federal Government Ministries, Division, Departments, Corporations and Autonomous
Bodies. This overstaffing has beer. magnified particularly during the last three years, when a
large? proportion of appointments were made without following the rules /regulations and the
prescribed? procedures. Most of Public Sector Corporations are on verge of Financial
collapse because of operational inefficiencies and heavy overstaffing.

(2) ? The Government continues to face severe resource constraints Large portion of revenue
expenditure and entire development expenditure is being financed through borrowings at
high cost. This situation, you would appreciate. cannot be sustained.

(3) ? The Government has accordingly decided to introduce a Golden Hand Shake/Early
Retirement Benefits Schemes for the Government servants and also for the employees of
Public Sector Corporations/Autonomous/Semi-Autonomous Bodies on voluntary basis, as
under:-

(i) ? Golden Hand Shake may be offered to the employees with service up to ' 9 years
equivalent to 3 months' basic salary for each completed year of service as per schedule given
at Annexure I.

(ii) Early Retirement Benefits:

(a) Early retirement benefits may be offered to the employees with more than 10 years and up
to 20 years of service equivalent to the pensionary benefits as admissible to employees with
25 years of service including the commutation benefits as per schedule given at Annexure II.

(b) ' More than 20 years and up to 25 years of service:

The employees with more than 20 years and up to 25 years of service may be offered early
pensionary benefits as admissible to the employees with 30 years of service including
commutation benefits as per schedule given at Annexure III.

(c) More than 25 years of service:

The employees with more than 25 years of service may be offered maximum pensionary
benefits including the commutation benefits as per schedule given at Annexure IV,

(d) Transport and Housing.

The entitled officers may be allowed to purchase official cars at the depreciated value. The
officials/officers seeking golden hand shake or early retirement benefits may be allowed to
retain Government housing in their occupation for a period of one year.

?????? (4) You are requested kindly to circulate the terms and conditions of the Golden Hand
Shake/Early Retirements Benefits Scheme to each of the Government servants in the Federal
Ministries. Division, Departments and offices under your control and to elicit their response
on the enclosed pro forma (Annexure VII) within a period of two months of receipt of this
letter and forward the same to the Establishment Division for further action. It is also
requested that a package for each of the Corporations/Autonomous Bodies/Semi-
Autonomous Bodies under your control may be worked out on the above lines subject to the
prevailing .pension rules of these organizations and a response elicited from the
Corporations/Autonomous Bodies/Semi-Autonomous Bodies employees based on the
respective package.

??????????????????????????????????????????????????????????? With regards.

? Encl: Annexures I to VII '

??????????????????????????????????
????????????????????????????????????????????????????????????????????????Your
sincerely, (Sd.)

??????????????????????????????????????????????????????????????????????????????????????????
(MUHAMMAD AFZAL KAHUT)."

A careful reading of the above policy decision of the Government will show that the above
downsizing scheme was circulated for the purpose of the guidance of the departments of
Federal Government and in so far the Corporation, authority or organization run and
controlled by the Federal Government were concerned, a package on the basis indicated in
the letter was to be worked out subject to the prevailing rules of pension in the corporations.
The above policy decision, in our view, did not place any restriction on the Corporation or
Autonomous Bodies to frame any other similar scheme keeping in view the prevailing
circumstances. Therefore, if the circumstances prevailing in a corporation/autonomous body
justified for compulsory retrenchment of the staff in order to run it on commercial lines on
profitable basis, such an action would not come in conflict with the directive of the Federal
Government, dated 12-8-1997. A reference to the Compulsory Retrenchment Scheme
introduced by the Bank would show that while terminating the services of employees, the
Bank offered an amount equal to 3 months' basic salary for each completed year of service
and 1-1/2 months basic pay for each remaining month of service whichever is less subject to
a maximum of 90 months' basic pay. In addition to it, it also offered an amount equal to 10
years' normal post retirement medical annual monetary limit presently available to a retiring
officer and executive in lump sum as final settlement in respect of medical facilities. An
amount equal to Benevolent Fund Grant for 10 years in lump sum in advance at the time of
settlement of dues was also offered. Leave encashment facility equivalent to 50% of leave
balance subject to a maximum of 180 days was also offered to the retrenched employees. It is
contended by the learned counsel for the appellant that in spite of the fact that under Rule 15
of the Bank Service Rules. the Bank Management was entitled to terminate the services of a
bank employee after giving him 3 months' notice but instead of following that procedure it
opted to extend the benefits to retrenched employees which were far in excess of the amount
of notice pay provided under Rule 15 of the Rules. The learned counsel for the respondents
on the other hand contended that the provisions of Rule 15 were not applicable in the present
cases as it did not apply to retrenchment of workers. We are unable to accept the contention
of learned counsel for the respondents. The termination of the service of an employee is one
of the modes of retrenchment. There is no justification to read Rule 15 (ibid), in a way so as
to restrict its application only to the case of termination of service of an individual employee.
There being no specific rule in the United Bank Limited L (Staff) Service Rules, 1981,
dealing with the retrenchment, general provision for termination of service contained in Rule
15 was applicable. Mere fact that as a result of retrenchment, services of large number of
employees were to be terminated, would not make rule 15 (ibid) inapplicable in such cases.

It has been very vehemently contended by the learned counsel for the respondents jointly that
termination of services of respondents from the Bank was in utter disregard of the principles
of natural justice as the respondents were not afforded any opportunity of hearing or to place
their cases before the authority before they were terminated from the service. The contention
of the learned counsel for the respondents has not impressed us at all. The termination of the
services of respondents as a result of retrenchment carries no stigma In fact, an employee
terminated under the Retrenchment Scheme is eligible for future employment as and when
such contingency arises. As the termination of respondents from service did not carry any
stigma, in our view, in terms of rule 15 of the Rules, they were not entitled to arty notice of
hearing before termination of their employment. Apart front it, the reasons for termination of
their services were set out in detail in the retrenchment scheme which was circulated to all
the employees of the Bank in advance and, therefore, the respondents could not plead that
they were not informed of the reasons for termination of their services. We have already
pointed out earlier that as there were no statutory rules applicable to the respondents, the
terms and conditions contained in U.P.L. (Staff) Service Rules, 1981 were applicable to them.
These rules continued to govern the service of the respondents notwithstanding the fact that
under section 2-A (ibid), their services were declared to be one in the service of Pakistan and
they were deemed to be civil servants for the purposes of Service Tribunals Act, 1973.

10. Mr. Akram Shaikh, the learned counsel for the respondent-, has relied on the case of Mrs.
M.N. Arshad v. Miss Naeema Khan (PLD 1990 SC 612) to contend that even non-statutory
rules could be enforced through the Service Tribunal. The learned counsel relying on the
above observations argued that the Service Tribunal having ordered reinstatement of
respondents in service under the Rules, the order could not be interfered with by this Court.
In advancing the above submission, the learned counsel totally overlooked the ratio laid
down in Mr- M.N. Arshad's case. This case related to a dispute between the teachers of the
Islamabad Model College. regarding promotion. This Court held that Board of Governors of
the College which was created through a resolution of Ministry of Education, was neither a
corporate body nor a jurisdictic person. The teachers of? the. Model College were,
accordingly, held to be 'civil servant'. It was also observed in this case that in so far
employees of corporation were concerned, their relationship with the corporation was
governed on the principle of 'Master and Servant'. The learned Service Tribunal in the case
having found that the rules of promotion framed by the Board of Governors of the school
were violated, set aside the promotion and directed reconsideration of the case of promotion
in accordance with the rules. It was in this context that the contentions raised before this
Court that the rules of promotion not being statutory, could not be enforced, that this Court
observed that even non-statutory rules could he enforced through Service Tribunal. The
learned counsel for the respondents have not been able to point out as to which of the Bank
rule was violated by the management while terminating the services of the respondents.

Mr. Akram Shaikh, the learned counsel for some of the respondents has also relied on the
case of Delhi Transport Corporation v. D.T.C. Mazdoor Congress (AIR 1991 SC 101) to
contend that an .employee of the Corporation which is controlled by the, Government is not
governed by the principle of Master and Servant. The learned counsel has specifically relied
on the following passage in the judgment of Sharma, J. in the above case:-

' "The employment under the public undertaking is a public employment and a public
property. It is not only the undertaking but also the society which has a stake in their proper
and efficient working. Both discipline and devotion are necessary for efficiency. To ensure
both, the service conditions of those who work for them must be encouraging, certain and
secured, and not vague and whimsical. With capricious service conditions, both discipline
and devotion are endangered and efficiency is impaired.

The right to life includes right to livelihood. The right to livelihood, therefore, cannot hang
on to the fancies of individuals in authority. The employment is not a bounty from them nor
its survival be at their mercy. Income is the foundation of many fundamental rights and when
work is the sole source of income, the right to work becomes as much f , fundamental.
Fundamental rights can ill-afford to be consigned to the limbo of undefined premises and
uncertain applications. That will be a mockery of them. "

From the report of the case, it appears that the service regulations in that case were statutory
in nature having been framed in pursuance of a statutory provision. The Indian Supreme
Court found these service regulations opposed to the provisions of Article 14 of the Indian
Constitution. In the case before us, the U.B.L. (Staff) Service Rules, 1981, are not statutory
in nature and it has not been shown as to how these rules come in conflict with the
fundamental rights guaranteed under the Constitution. The case of Board of Trustees, Port of
Bombay v. Dilipkumar (AIR 1983 SC 109) referred by Mr. Akram Shaikh in support of his
contention that a notice was necessary before termination of services of the respondents, has
no application in the facts and? circumstances of the present cases as neither any proceedings
were taken against the respondents before their termination from service nor any stigma was
attached to the termination of the services of the respondents. Mr. Shaikh also referred to the
observations in the case Federation of Pakistan v. Public-at-Large (PLD 1988 SC 202) to
contend that an arbitrary or unbridled power is opposed to the Islamic concept of Adal-o-
Ahsan. There can be no cavil with the proposition that unbridled power is against the Islamic
concept of Adl-o-Ahsan but we are unable to understand as to how these principles are
applicable in the present cases. Although rule 15 of the Rules vested the appellant with the
power to dispense with the service of an employee of the Bank by serving hint three months'
notice or pay in lieu thereof, but the management did not resort to this rule while terminating
the services of respondents. The management?s in the Retrenchment Scheme allowed
substantial benefit to the retrenched employees and, therefore, it cannot be said that the
exercise. of power by the management of Bank was opposed to the Islamic principles of
Adal-o-Ahsan. Mr. Akram Shaikh has also, invited our attention to the commentaries of
Bachaya Dr. Durga Das Basu on Article 21 of the Indian Constitution but these commentaries
in our view do not advance the case of respondents any further The 2 American cases cited
by the learned counsel reported as Yick Wo,v. Hopkins (118 US 3561 and Slaughter : House
Cases (83 US 36) similarly have no application in the circumstances of? the present cases.

11. As a result of the above discussion, we are of the view that the judgment of the Service
Tribunal holding the termination of respondents from service as illegal and directing their
reinstatement in service is not legally sustainable. We, accordingly, allow the above appeals,
set aside order of the learned Tribunal but there will be no order as to costs in the
circumstances of the cases.

M.B.A./U-15/S???????????????????????
??????????????????????????????????????????????????????????????????????? Appeal
allowed.
;