1995 PLP 644 (PLC)

3. Learned counsel for the petitioner has contended that on the admitted facts no misconduct on the part of the petitioner stood established and his removal from service was totally unjustified. In the submission of the learned counsel, even if the petitioner transferred the mortgaged property as no loss whatsoever was caused to the respondent bank, the petitioner cannot be said to be guilty of any misconduct. In this respect, learned counsel relied upon the judgment of Karachi High Court in Zonal Chief Muslim Commercial Bank v. Ubedullah and others (1987 PLC (Lab.) 462). The other contention of the learned counsel was that violation of service rules does not amount to misconduct. It was also maintained that at the most the petitioner could have been reprimanded or fine imposed upon him as envisaged by the West Pakistan Standing Orders Ordinance, 1968.

4. On behalf of respondents Nos. 3 to 5, Mr. Sarfraz Ahmad, Advocate, has contended that the petitioner had played fraud upon the respondent Bank by transferring the property mortgaged with it as security for repayment of‑ the loan without knowledge or consent of the Bank. According to the learned counsel, both under the service regulations as also terms of the mortgage, the petitioner was not entitled to alienate or transfer the property without permission of the Bank and by doing so, he violated the conditions of service as laid down in A.D.B.P. Clerical and Non‑Clerical Staff Service (Efficiency and Discipline) Regulations, 1975. He argued that the provisions of West Pakistan Standing Orders Ordinance, 1968 are not applicable by virtue of proviso to section 1‑C as the employment under respondent Bank was governed by statutory rules of service.

6. There is considerable merit in the contention raised by the learned counsel for the petitioner that the allegations against the petitioner, even if correct, did not constitute misconduct and as such the petitioner could not have been removed from service. Admittedly, the loan for repayment of which petitioner had mortgaged his property has since been repaid. It is not the case of the respondents that even at the time of transfer of property the petitioner had defaulted in payment of any instalment or that his intention was to cheat the Bank. Furthermore, as the property stood mortgaged with the respondent bank, its transfer in law is of no effect so far as the rights of the respondent Bank were concerned. It is also been pointed out by the learned counsel for the petitioner that sufficient amount in the provident fund of the petitioner was, in any case, lying with the respondent bank and as per the terms of the mortgage themselves, in the event of non‑payment of loan it could be deducted out of those dues. Mere transfer of security could not as such amount to misconduct.

7. The regulation under which the action purports to have been taken namely regulation No. 2 of Clerical and Non‑Clerical Staff Service (Efficiency and Discipline) Regulations, 1975 reads as under:‑‑ "Ground for penalty.‑‑‑Where an employee who commits breach of the regulations of Bank or of discipline or contravenes instructions/orders issued to him in connection with his official work or who displays negligence, inefficiency, or indolence or who knowingly does anything detrimental to the interest of the Bank or is guilty of any other act of misconduct or insubordination the competent Authority may impose on him one or more of the following penalties; (a) reprimand; (b) postponement or stoppage of increment or promotion; (c) degradation to a lower stage of pay in his grade or to a lower grade; (d) recovery from pay of the whole or part of any pecuniary loss caused to the Bank by the employee; (e) compulsory retirement from service; (f) removal from service which does not disqualify for further employment or calls upon an employee‑to resign from service; and (g) dismissal which will involve permanent disqualification for further employment in the Bank.

8. As is apparent from a reading of this a provision, penalty can be imposed where, the employee has either committed (i) breach of the regulations of the Bank or(ii) of discipline or (iii) contravenes instructions/orders issued to him in connection with his official work or (iv) he has been negligent, inefficient, indolent and (v) lastly he has done anything knowingly detrimental to the interest of the Bank or is guilty of other act or of insubordination. There is no allegation against the petitioner that he had committed any of the acts mentioned above in performance of his official duties. There is nothing in the regulations which prohibits an. employee from transferring the property mortgaged with the Bank to any other person. At the most, what can be said is that the petitioner had committed a breach of the terms and conditions of the contract of mortgage. However, such a breach was not a ground on which penalty could be imposed upon the petitioner. It is unfortunate that the case has not been examined in its proper perspective by the authorities below who instead have proceeded under the presumption that any breach of the conditions of mortgage would constitute misconduct on cursory view of the matter. It needs no gainsaying that the transfer of mortgaged property is wholly ineffective against the rights of the mortgagee who can follow mortgaged property into the hands of the subsequent purchaser for the recovery of debt due. It is also to be seen that the Labour Court as also Labour Appellate Tribunal have failed to differentiate between the act or omission of the petitioner as an employee of the Bank in the course of his service and breach of the agreement committed by him 'as a ‑debtor. In these circumstances, the violation of any terms of mortgage‑deed did not constitute any misconduct so as to entitle the respondent Bank to take the extreme step of removing the petitioner from service. In this view of the matter the impugned orders are not clearly sustainable.

9. The case of Zonal Chief Muslim Commercial Bank v. Ubedullah and others (1987 PLC 42) is instructive. In that case, there was allegation against the employee that he had failed to repay the house building loan. In that context, it was held that if any amount was due, it could be recovered under the lay by adopting normal procedure but it could not be a ground for taking disciplinary action against the employees. The authorities of the Supreme Court in National Bank of Pakistan through its General Attorney v. Punjab Labour Appellate Tribunal and others 1989 SCMR 861 and Pakistan International Airlines Corporation, Karachi v. Junior Labour Court No. IV, Karachi (PLD 1978 SC 239) also support the view taken for violation of service regulations of the employee in the absence of any other misconduct, he cannot be removed from service. Reference may also be made to the judgment of this Court in. Allied Bank of Pakistan Ltd. v. Raja M. Zaheer‑ul‑Hassan and 3 others (1990 PLC (Lab.) 238) wherein it was held that violation of a rule per see does not amount to misconduct so as to entail the major penalty of dismissal from service.

10. It is also to be seen that according to Standing Order 15(1)(ii)(a) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, disregard or disobedience of rules or orders is punishable with reprimand or fine but does not amount to misconduct entailing imposition of major penalty as mentioned in section 15(3) of the said Ordinance.

11. In support of his contention that since the employment under Agricultural Development Bank of Pakistan is governed by the statutory rules of service, the provisions of West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 have no applicability, the respondents' learned counsel has relied upon regulations which have been framed by the Board of Directors of the Bank itself under section 39 of the Agricultural Development Bank of Pakistan Ordinance, 1961 which do not have the status of statutory rules of service. Under section 38 of the ADBP Ordinance, 1961, rules are to be framed by the Federal Government while these regulations have been made by the Board and not by the Government under section 39 of the Ordinance. As the authority from which these regulations have emanated is not competent under the Ordinance to frame rules, the regulations cannot be given the status of statutory rules. Furthermore, under section 39 of the Ordinance as amended by Agricultural Development Bank of Pakistan Act. 1973. the regulations could only be framed with prior of the Federal Government which m the present case is not shown to exist. This Court in Lahore Development Authority and others v. Abdul Shafiq and others 1992 PLC (Lab.) 1214) has already ruled that in such circumstances, the regulations cannot be given the status of rules so as to make proviso to section 1(c) of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 applicable of the statute. For all these reasons, this petition is allowed; the impugned orders are declared to be without any lawful authority and of no legal effect. No order as to costs. A.A./M‑2144/L Petition accepted.