P L D 1967 Karachi 1 (PLP)

WAHIDUDDIN AHMAD, J.‑This is ‑ a Letters Patent Appeal from the. judgment of a learned Single Judge in Suit No. 956/ 1955, decided on 15th August 1961, on the original side of this Court. By this judgment the respondent's suit for damages was decreed in the sum of Rs. 20,000 with costs and interest at the rate of six per cent. per annum from the date of the decree until payment vas awarded to him.

2. Brief, the facts leading to this appeal are that the appellant engaged the respondent as an Engineer to set up a Re‑rolling Mill under an agreement dated 9th December 1950, at a salary of Rs. 825 per month plus a share of profits at pies 12 in a rupee with free accommodation. The material portions of the said agreement are reproduced below: "

4. That the said Engineer will be allowed to draw to the extent of 50 % of the accumulated income from one anna of the net profits apportioned to him after every financial year ending on 31st March.

5. That the said Engineer undertakes and agrees to serve the Principal for the period of five years and if within this period he leaves the service of his own accord he will not be entitled to claim any part of his accumulated income; viz. the salary due and remuneration earned under clause 2.

6. That if the said Engineer fails to manufacture Rolling Bars and Iron Hoops according to the usual standard the Principal will have the option to terminate his service by giving him one month's notice. But if the Engineer manufac tures the Bars and the Hoops to the usual standard and yet the Principal decide to terminate his services he shall be entitled to be paid in full the salary for the remaining period of the agreement.

9. That unless and until the Engineer commences the manufacture of Bailing Hoops in the factory be will only be entitled to receive twelve pies in a rupee out of the net profits and after the manufacture of the Bailing Hoops he will be entitled to get his income increased to fifteen pies in a rupee, if and when sanctioned." The appellant terminated the services of the respondent on 15th September 1952, by notice (Exh. 12) on the. following allega tions: "You have misconducted yourself and in gross violation of the confidence and trust reposed in you and the agreement of service, you have been unfaithful; your underhand dealings and activities have gravely prejudiced our interests and threaten our organisation and business. You have under the circum stances left us no option than to terminate your services with immediate effect and we do terminate your service hereby with effect from the receipt hereof." The respondent denied the allegations made in the notice in a letter dated 23rd September 1952. (Exh. 11) and alleged that he had made and prepared most of the machines at Karachi and set up a complete rolling plant by February 1952. He alleged that he got this work done in or about Rs. 1,50,000 whereas the rolling plant of the same type available in Germany would cost Rs. 5,00,000, and in this way had saved Rs. 3,50,000 for the appellant. He further alleged that he had advised the appellant to arrange for factory building, power, pinion gear and fly wheel to enable him to run the Mill and he had made ready roofing structure for the factory building and had been pressing to arrange for power and a suitable site of the factory, but ‑the same had not been done. He averred that his services had been terminated after taking the work of the completion of the machines and setting up of the rolling plant with the sole object that the appellant may not have to pay one anna per rupee in the net profit of the earning of the factory and salary of Rs. 825 p.m. He denied that he had misconducted himself in any way in the discharge of his duties and called upon the appellant either to reinstate him or to pay his full salary for the period from Ist September 1952 to 31st December 1955, amounting to Rs. 33,000.

3. In reply the appellant by notice dated 6th October 1952, (Exh. 10) informed the respondent that his services were terminated because he had not been proved to be useful and serviceable. They reiterated that the Dismissal was due to wrong ful conduct and harmful activities and denied the motive imputed for his dismissal. They alleged that on enquiry held it was found that the respondent was guilty of gross misconduct detrimental to the interest of the appellant concern. They further asserted that clause 3 of the agreement only fixed maximum period of service of respondent and not minimum and his service could be terminated without incurring any liability. On these grounds the appellant repudiated the claim of the respon dent. On 11th October 1952, the respondent by notice (Exh. 9), disputed the allegations of the appellant and called upon them to pay the salary in lieu of damages for wrongful dismissal.

4. As the appellant failed to comply with the above notice, the respondent filed Suit No. 956/1955, alleging that he was a skilled Engineer specialised in the manufacture of rolling bars and bailing hoops and other allied articles and bad performed his duties under the said contract faithfully and efficiently and completed the setting up of the mill in almost all respects for the appellant at Karachi. He further alleged that on baseless, false and unwarranted charges his service has been wrongfully terminated and that he was entitled to recover Rs. 32,175 as damages in lieu of salary for the unexpired portion of his term for wrongful dismissal.

5. The appellant resisted the suit. In defence they denied that the respondent was a skilled Engineer or that he was specialised in the manufacture of rolling bars and bailing hoops and other allied articles. 'They further denied that the respon dent had performed his duties honestly, faithfully and efficiently. They pleaded that the agreement dated 9th December 1950, was obtained by misrepresentation of the respondent that he had specialised in manufacture of rolling bars and that he was a ski]led and competent Engineer. It was, therefore, urged that the agreement was unenforcible by the respondent. 1t was also pleaded without prejudice to the appellant's other contentions that the respondent bad got employment with other parties and was not entitled to any damages for the period that he had been in service with other parties.

6. On the pleadings of the parties the following consent issues were struck:‑ "(1) Was the plaintiff engaged by the defendants for 5 years certain from 1‑12‑1950 to 30‑I1‑1955? (2) What was the share of profits of the plaintiffs in the defendants' business? (3) Whether the plaintiff is a skilled Engineer specialised is the manufacture of Rolling Bars and Bailing Hoops and in other allied articles? (4) Did the plaintiff perform his duties under the contract faithfully and efficiently? (5) Whether the factory was completed and had started to work and whether any profits were earned when the plaintiff's service was terminated? (6) Is the plaintiff's dismissal by the defendant wrongful and illegal? If so, did the defendants refuse to employ the plaintiff after 15‑9‑1952? (7) Did any cause of action accrue to the plaintiff against the defendants? If so when? (8) What damages, profits and reliefs the plaintiff is entitled to?" On 7th May 1959, the suit came up before our brother Qadeerud din Ahmed, J., for bearing. On the pleadings of the parties the issues were found to be unsatisfactory and counsel for plaintiff/appellant was required to furnish the details of the alleged misconduct of the respondent. In this connection the learned Judge observed:‑ "Mr. Aziz for the defendants, says that his clients had in their minds two instances of misconduct and unfaithfulness of the plaintiff. They are firstly, that the plaintiff had misappropriated moneys which, according to counsel, were entrusted to him. Counsel says that for proving misappro priation he would rely on the books of account only which have already been produced and are on Court record. Secondly according to counsel, the plaintiff' set up and carried on, under the name of National Steel Company, the business of manufacturing the same articles which the defendants were to manufacture when the factory went in production and which articles, according to counsel, the defendants were manufac turing on a small scale before the factory was set up and went in production. The articles which according to counsel, were manufactured and supplied by the plaintiff to the Posts & Telegraphs Department of Government of Pakistan were as follows :‑ (a) Copper Strips. (b) Stay Rods. (c) Straining screws. (d) Stalks telegraphs. (e) Ties and Brackets. The above allegations, counsel says, will be proved by the defendants by producing documents from Government record only." Accordingly, the learned Judge re‑cast the issues as under:‑ "(1) Was the plaintiff engaged by the defendants for five years from 1‑12‑1950 to 30‑11‑1955? (2) Whether the agreement of service dated the 9th of December 1950, made between the parties was made by the defendants on account of misrepresentation as alleged in para. 2 of the written statement? (3) Whether the plaintiff has misconducted himself by misappropriating moneys and setting up and carrying on a parallel and competitive business? If he has what is its effect ? (4) Is the plaintiff's dismissal by the defendants wrongful? (5) To what damages, and reliefs if any the plaintiff is entitled?

7. In support of their cast the parties produced both oral and documentary evidence. Respondent examined himself as B. W. 1 Fazal Muhammad (Exh. 13). The appellants examined as many as 12 witnesses namely D. W.

11. C. Aberneithe, D. W. 2 Abdur Rahim, D. W. 3 Abdul Hafiz, D. W. 4 R1uhammad Ismail, D. W. 5, Hafiz Muhammad Yakub, D. W. 6 Abdul Shakoori D. W. 7 Zamiruddin, D. .W. 8 Zikrur Rehman, D. W. 9 Muhammad Hasan, D. W. 10 Ahmed Hasan, D. W. 11 Abu Bakar and D. W. 12 Ahmed Abdullah. On the evidence adduced by the parties the learned Single Judge on issue No. 1 gave the finding that the respondent was engaged by the appel lant for five years from Ist December 1950 to 30th November 1955. On issue No. 2 the finding is that the agreement in question was not obtained by any misrepresentation. It was held that there was no misrepresentation and the plea had been raised on a hint taken from the pleading of the respondent. On issue No. 3 the finding is against the appellants. Issue No. 4 eras also decided in favour of the respondent. On issue No. 5 the learned Judge held that the respondent was entitled to a decree for Rs. 20,000 and passed a decree for this amount as damages with interest at the rate of six per cent. per annum from the date of the decree until payment. The appellants have challenged these findings in this appeal before us.

8. In support of the appeal Mr. Abdul Aziz, the learned counsel for the appellants has urged that the most important question involved in the matter is whether the appellants were Justified in dismissing the respondent from their service. The learned counsel contended that the dismissal of the respondent could be justified on two grounds, viz.‑.‑ (a) Incompetency of the respondent to carry out the work entrusted to him, and (b) Misconduct. In order to support his contention that the appellants were justified in terminating the respondent's service before time, the learned counsel took us through the entire evidence produced by the parties on the record. On the first ground that the respondent was incompetent to carry out the work entrusted to him, the learned counsel contended that the respondent had no theoretical knowledge of the subject which is ordinarily expected from a qualified Engineer. He further contended that the respon dent had represented himself to be a qualified Engineer but that was not a fact. It was due to this misrepresentation that the appel lants engaged him in that capacity. In order to prove that the respondent was not an Engineer the learned counsel referred us to the admission made by the respondent on this point. On going through the evidence adduced by the parties it cannot be doubted that the respondent is not a qualified Engineer. According to his own admission he bad no degree or diploma from any College or University and had only received training in the Railway Workshop of G. B. S. Railway, where engines, carriages and parts of machinery used to be manufactured, and the casting and forging of iron was also carried out and had not received training in the re‑rolling of bars. D. W. 12,' Ahmed Abdullah's statement that the respondent had told him that he was a qualified Engineer was disbelieved by the learned Single Judge. In fact on this point the only evidence is the respondent's statement on oath as against appellants' partner Ahmed Abdullah's statement on oath. In the circumstances of the present case we are satisfied that the finding of the learned Single Judge that the respondent had made no such misrepre sentation is based on proper appreciation of the evidence produced by the parties. In the first place, it will be noticed that no such allegation was made in the notice dated 15th September 1952, terminating the services of the respondent. Secondly, the appel lants have failed to produce the best evidence available on this point. It is admitted by D. W. 12 Ahmed Abdullah that the respondent was introduced by one Basharat, who admittedly is a partner of the appellants firm. Basharat would have been the best witness on the alleged . misrepresentation made by the respondent. Besides the statement of D. W. 12 Ahmed Abdullah is not very convincing. He admitted in his cross‑examination that he did not enquire from the respondent from which College he had taken degree or about his qualification or degrees. According to him he believed the respondent's statement that he was a qualified Engineer because Basharat described him to be so when he introduced him. He further admitted that he did not enquire from Basharat whether respondent had received any education in Engineering or held any diplomas or degrees. He frankly admitted that the real truth was that at the time the respondent was engaged he wanted to change over from trade to Industry. As his impression was that the cost of the Mill was not going to cost much, therefore, he was not much worried about it and wanted to go ahead with the establishment of the factory. He, therefore, did not make keen enquiries and started the work. This statement clearly shows that the plea taken by the appellants in this behalf is nothing short of an afterthought, No such allegation was made in the notice by which the respon dent's service was terminated nor was this fact mentioned in the correspondence that was carried on between the parties, before the suit was filed. In fact in Exh. 12, a reply of the appel lant dated 6th October 1952, the appellants themselves conceded that clause 6 of the agreement concerned the ability of the respondent as a technician and not about his conduct. It is, therefore, quite clear to us that the respondent was engaged as a skilled Engineer or technician and not as a qualified Engineer. The allegation that the respondent made any misrepresentation in this connection appears to us‑to be, unfounded and the plea of the appellant in this behalf was rightly rejected by the learned Single Judge.

9. It was next urged by Mr. Abdul Aziz, the learned counsel appearing for the appellants that there is ample evidence on the record to show that the respondent was incompetent to carry out the job entrusted to him. Mr. Syed Muhammad Sadiq the learned counsel for the respondent objected that the appellant was not entitled to raise this plea as the service of the respondent was not terminated on this ground. He contended that any such allegation made during the trial or at the hearing of the suit should be ignored. The objection of the respondent's counsel is not of much value because in law the employer has certain well recognised privileges. One of them is that an employer is entitled to rely on the incompetency or inefficiency of an employee even if it comes to his notice late on. In Vol. XXV of Halsbury's Laws of England the learned Author on the point under consideration in para. 936 has stated as under:‑ "

936. Incompetency.‑Where a skilled servant is engaged, there is on his part an implied warranty that he is reasonably competent for the work which he is employed to undertake, and if he proves to be incompetent the employer is not bound to continue him in his service for the term for which he was engaged. The learned author has further in para. 939 stated:‑ "

939. Grounds for dismissal discovered subsequently..‑It is not necessary that the master dismissing a servant for good cause, should state the ground of such dismissal and provided good ground existed in fact, it is immaterial whether or not it was known to the employer at the time of the dismissal. Justification of dismissal can accordingly be shown by proof of facts ascertained subsequently to the dismissal, or on grounds differing from those alleged at the time." In Malabar Forest & Rubber Co. v. D. H. Macleod (A I R 1926 Mad. 270), it was held as under:‑ "That the servant having been proved to be incompetent for the duties of the office which he undertook to discharge, the company could dispense with his services and that the servant was not entitled to recover damages for wrongful dismissal by the Company." This view was taken in spite of the fact that in the letter, of dismissal the employer stated that the Company was thankful to the servant for his service. In Bostan Deep Sea Fishing and Ice Company .v. Ansell ((1888) 39 Q B D 339), it was held that: "The receipt of a commission from the ship‑building company was good ground for dismissal, although it was not discovered till after the dismissal had taken place; and although it happened several months previously, and might have been an isolated act."

10. In English Courts this view was first laid down in Ridgway v. Hunger Ford Market Co. (111 E R 378) and was armed by the Court of Appeal in the above‑mentioned case. In Indian jurisdiction this rule was applied in Ali India Reporter Ltd. Bombay v. D. D. Datar (A I R 1951 Nag. 412). Mudholkar, J., observed that justification of dismissal can be shown by proof of facts ascertained subsequent to the date of dismissal or on grounds differing from those alleged at the time. In the light of the discussion it is abundantly clear that it was open to the appellants to justify the dismissal of the respondent on the ground of incompetency even if it was not taken as a ground in the notice of dismissal. Mr. Sadik contended that no such plea was raised in the written statement. This contention is not well founded because it arises on the allegation made in para. 2 of the written statement, in which the appellant denied that the respondent performed his duties honestly, faithfully and efficiently. The learned Single Judge has also discussed this question at length and after referring to the evidence adduced by the parties came to the conclusion that the appellants had failed to establish that the respondent was incompetent to carry out the work entrusted to him as a skilled Engineer.

11. The most important question, therefore, for considera tion in this appeal is whether the finding of the learned Single Judge on this point is based on proper appreciation of the evidence adduced by the parties. Before considering this aspect of the case it will be convenient to mention here that the respondent's case is that he had made and prepared most of the machineries at Karachi and set up a re‑rolling plant for the appellants by February 1952, at a cost of about 1,50,000, which if imported from Germany would have cost about Rs. 5,00,000 and in this way the appellants had saved Rs. 3,50,

000. He further alleged that he had advised the appellants to arrange for power, pinion, gear and 8y wheel to enable him to install the mill and for arranging a suitable site for factory building to put the plant in running condition, but no heed was paid to it. He alleged that his service was terminated because the appellant wanted to save the salary paid to him and also to avoid the payment of the profit which they had agreed to give to him under the terms of the agreement. On the evidence brought on the record the allegation of the respondent that he had almost completed the setting up of the machinery needed for the re rolling mill is satisfactorily substantiated. Even D. W. 12 Ahmed Abdullah, partner of the appellants firm admitted in evidence that‑ "In 1952, when the experts visited our factory, it was not ready to go in production. I cannot tell how much had remained to be done for this purpose. But I can say that much had not remained to be done. I, should, however, add that the defects in the workshop of the plaintiff had to be rectified." He further stated that at the time of employment the respon dent had given there to understand that the setting up of the Mill would take up about a year and would cost one lac to one and a half lac of rupees. He admitted that up to the time the respondent left them in September 1952, expenditure had amounted to about two lacs to two and a half lacs of rupees. On these clear admissions it can be easily gathered that the respondent has not wasted his energies. He cannot be said to be negligent in his duties and had completed the best part of the setting up of the proposed Mill.

12. However, the grievance of the appellants is that the work carried out by the respondent was found to be defective. Unfortunately the appellants gave no particulars of the alleged defects in the pleadings. For the first time, this was brought out by respondent counsel in the cross‑examination of D. W. 12 Ahmed Abdullah. His statement on this point is as under:‑ "I was informed of the defects by the experts of D. G. S. & D. and members of a German Mission. The expert of the D. G. S. & D. visited our mill in July or August 1952. One of them was Dr. Asad Ali and the other was Mr. Crawford. They were invited by us to give us information about the factory. They gave their opinions orally. The German Mission also came about the same time. That Mission had come to study the industry of this country and we had invited them. They also gave their opinion orally. We had not noted down the defects pointed out by the D. G. S. & D. and the Members of the German Mission. Dr. Asad Ali is still in the employ ment of the D. G. S. & D. The other expert is no longer in the D. G..S. & D. I do not know what he is doing now. The plaintiff was present when the above‑mentioned experts and members of the German Mission pointed out the defects; I told the plaintiff to remove the defects. He disagreed with the views of the experts and the members of the German Mission and insisted that his workmanship was correct " This statement is not corroborated by any other reliable evidence. Dr. Asad Ali, who is stated to be one of the persons present on that occasion is still in the employment of the D. G. S. & D. but no effort was made to produce him as a witness in the case. It is strange that although the work done by respondent was found in July and August; 1952, to be defective, yet it was not mentioned in the notice terminating the service of the respon dent given in September 1952. In these circumstances the learned Single Judge was fully justified in not placing any reliance on these allegations to hold that the respondent was incompe tent or the work done by him was defective.

13. In support of their case the appellants had further relied on the evidence of D. W. 1 J. C. Aberneithe, an expert, whom they called to survey the work done at the factory and who, it is alleged, on 6th December 1952, submitted a report. Admittedly, the expert on whose advise the appellants have relied is also not a qualified Engineer. He also holds no diploma or degree. He claimed to have a life long experience in the re rolling mill, mostly on the basis that he had been in the steel industry for the past 33 years. He further claimed that he worked as apprentice with Tattas for five years and was employed with them for about 17 years and in this way acquired knowledge regarding everything connected with re‑rolling industry. However, he produced no certificate in proof of the alleged appren ticeship or employment. He admitted to a question put to him that he was paid Rs. 750 for surveying the Mill in 1952, as he had been out of employment at that time. On his own admis sion he was employed by Pakistan Industries Ltd. and five times left their employment because of differences with the Manage ment. From 1958, he was employed as an Inspector with the P. I. D. C. and drawing only Rs. 400 per month as pay. In view of this the witness cannot be considered as an expert. Besides he cannot be considered as a reliable witness. In his cross -examination he stated that no drawing was shown to him of the proposed mill in spite of the fact that in the report (Exh. 24) he stated as under:‑ "The drawings you have are of no help as they won't, convey any sense, the only thing that can be done is to .get a draftsman to take each piece separately and take their size and make out new, drawings first for each piece and then a drawing showing the complete unit assembled, but before doing this it is better to do the desired alterations which is most necessary for the efficient working of the mill."

14. In his evidence D. W. 12 Ahmed Abdullah gave the following as the details of the defects found in the workmanship of the respondent:‑ (1) He had not prepared any specifications and blue prints for the machinery. (2) The Housings were not perfect and not in centre. (3) The chucks which he had prepared were also not perfect and were not in centre. (4) Adjustment was not made for the movement of bottom rolls. (5) The plaintiff bad made covers of Bearings which did not work at all and new ones had to be made in their place. (6) We imported some rolls at the instance of the plaintiff from Belgium. They proved to be wrong in size. (7) The plaintiff had bought the main shaft which was found hollow from inside and, therefore, it had to be discarded.

15. The appellants' counsel has confined himself only to four defects alleged to have been found in the workmanshop of the respondent. According to him the respondent's work in respect of (1) Roller stands (2) Bearings (3) Main shaft, and (4) Housings were such that it clearly demonstrated that he was not compe tent to complete the job entrusted to him. In support of his case learned counsel relied on the evidence of D. W. I. J. C. Aberneithe. 'The witness stated that: "My finding was that the Mill was planned with little or no understanding. This finding of mine was based on my conclu sion that the Mill was simply unworkable at that stage. My practical sense told me that those things were‑ not workable. The major defect in the planning was that it was called a 12' mill but the fittings which were used in it were of an 11' mill. The Bearings were defective even for an 11' mill because they were so constructed as to cause a break on the driving motor." He further stated: "The roll necks were not so designed as to give long life to the rolls. The bottom wedge was not proper. It did not have the right taper to give it the required up and down play. The guides were not of the correct proportion. There were no guards and they could be made only, after growing of the rolls. They could be put on afterwards. New spindles and boxes had to be made because of the difference between the wabblers and the 14' rolls. The wabblers were meant for 12' rolls." The witness also alleged that the main driving shaft was hollow and could not be successfully worked in the factory. It was expected that the appellant would specifically, put the above defects to the respondent to his evidence. We have noticed that the respondent was not questioned on the alleged defect found in respect of the Housing of the machinery. We have further noticed that except the alleged hollowness of the main shaft, bearings and over size of the rollers, no other defect was specifically put to the respondent in his examination in Court. His reply about these defects was that the main shaft which was procured was not hollow. The Bearings were capable of bearing the pressure. His explanation about rollers was that these were purchased from D. W. Shakoor at the time when he was not in the employment of the appellant. The respondent however admitted that roller stands were made according to his specifications, but asserted that they did not suffer from any defect and it was possible to use rollers of 14' in the mill as its size was 10` to 14'. In view of the explanation of the respondent, therefore, it was incumbent on the respondent to produce some reliable disinterested evidence in proof of the alleged defects. No such attempt was made. The appellant even failed to get the defective articles surveyed by any independent expert. It is noteworthy that, according to the so- called expert produced by the appellants, the defects found in the workmanship of the respondent could be rectified within a sum of Rs. 10

000. The learned Single Judge on this point observed as under: "The defects pointed out by the witness thus relates to nuts and bolts and size of the‑mill. All of them could be removed, according to him, at a cost of Rs. 10,

000. This must be an exaggerated amount because the witness appeared to take delight in using exaggerated expressions, and in view of the lack of attention which he appears to have paid in surveying the mill, by the following statement: "I cannot tell what the mill in suit was meant to produce. I only know its deficiencies which were to be rectified. I am not in a position to tell what amount the mill in dispute would have cost in 1951, because I was not setting it up. I cannot tell how much a re‑rolling mill will cost unless I set it up or unless it is complete and I survey it." Ahmed Abdullah (D. W. 12) has stated: "The defects have been removed but we have not maintained a separate account containing the expenditure incurred on alte rations." Supposing that the cost of rectification was Rs. 5,000 it should be noted that, according to Ahmed Abdullah (D. W. 12) 2 or 21 lacs of rupees had been invested upto the time the plaintiff was in service of the defendants and that the mill has on the whole cost 8 or 81J lacs of rupees. In a project of this size an error costing replacements of 5 or 10 thousand rupees does not necessarily prove inefficiency of the engineer particu larly in view of the fact that most of the material was procured locally."

16. In the circumstances of the present case the conclusions reached by the learned Judge are fully borne out from the record. Mr. Abdul Aziz, learned counsel appearing for the appellant, was unable to satisfy us that the above conclusions are not based on proper appreciation of the evidence adduced by the parties. There is no manner of doubt that the evidence on the alleged defects found in the workmanship of the respondent is most unsatisfactory. It is not possible to place any reliance on the evidence of a witness who, besides contradicting himself on important pieces of evidence, was not even in a position to state the purpose for which the re‑rolling mill was installed. The respondent's counsel has referred us to drawings Exh. 41 and the photo Exh. 36 which clearly show that the respondent had done a good job and the alleged defects were put forward with a view only to justify his dismissal. In the light of the above discussion, we are satisfied that the finding of the learned Judge on this aspect of the case is not open to exception. In our view too the appellants have failed to establish that the respondent's workman ship was so defective that he was wholly incompetent to carry out the job entrusted to him.

17. The appellants counsel next referred us to the evidence of the respondent himself to satisfy us that he was not compe tent to carry out the job for which he eras engaged. Learned counsel stranuously argued that the respondent had demonstrated in his evidence that he had no theoretical knowledge about the engineering work. In our opinion the learned Single Judge rightly did not attach any importance to this circumstance because the respondent at no time claimed to have any theoretical know ledge of the subject involved in the setting up of the re‑rolling mill. According to our earlier finding he was only a skilled engineer and, therefore, was not expected to have any theoretical knowledge about the subject. 18. besides, the appellants had not been able to establish on the record that they had suffered any substantial loss on account of the alleged defective workmanship of the respondent. In support of their case they did not even produce the account books, Except the bare statement of D. W. 12 Ahmed Abdullah that the appellants had suffered loss on that account, there is nothing on the record to establish this allegation. The appellants even failed to bring evidence on the record to prove the actual amount they spent on the setting up of the mill up to the time that the respondent left their service. They even failed to produce their account books to further establish as to how much amount they had to spend to rectify the defects found in the workman ship of the respondent. It was, therefore, not possible for the learned Single Judge to place any reliance on bare allegations.

19. There is, however, ample evidence on the record to show that by the time the respondent left the service of the appellants they had not even acquired any building site for setting up the mill. It is also in evidence that it took them three years to set up are‑rolling mill. It cannot, therefore, be ruled out that this delay was caused because the appellants later on changed their idea to set up a mill of a bigger size. It will be noticed that the work entrusted to the respondent was to set up a locally made cheap roller mill. In setting up such a mill high quality of workmanship and good theoretical knowledge could not be expected. In these circumstances, the only impression which the evidence led by the appellants gives is that the respondent's service was not dispensed with for any cogent reason. There is a good deal of truth in the allegation of the respondent that his services were terminated because he had finished major portion of the work entrusted to him. We are, therefore, satisfied that the learned Judge below was fully justified in coming to the conclu sion that the appellant had failed to establish that the respondent was an incompetent person or inefficient and incapable to perform the work entrusted to him under the agreement entered into between the parties.

20. The other ground on which the respondent's services were terminated is his alleged misconduct. The appellant's case is that the respondent (1) misappropriated the monies belonging to them, (2) took secret commission from the parties from whom machinery and other material were purchased or procured for setting up the mill, and (3) set. up a rival business in competition to the appellant firm. At the hearing the appellant's counsel did not press his contention about the alleged misappropriation, but he added two more items (1) pilferage and (2) divided atten tion. In connection with the alleged charging of commission and making of secret profits, learned counsel contended that the respondent clandestinely obtained the contract of manufacturing the Trusses and Pillars of the Mill in the name of one of his sons Muhammad Salim through one Jan Muhammad. He further contended that in respect of the rollers that were purchased from one Abdul Shakoor he had made an illegal gain of Rs.

600. It was also contended that the work for casting Housing was entrusted to D. W. 2 Abdul Rahim at the rate of Rs. 30 per cwt., but he was made to submit false bills at a higher rate. In this way learned counsel contended that the respondent had taken undue advantage of his position and made considerable profit out of the work entrusted to him to the detriment of his employer. In support of this allegation the appellants made an attempt to prove that all the purchases for the setting up of the mill were made through the respondent. In this connection they placed reliance on Exh. 14 to Exh. 22 which are in the handwriting of the respondent. These documents are bills forwarded by the respondent for payment to the appellant firm. None of these documents, however, show that the respondent received payment of any of these bills. On the contrary, an examination of these documents would show that the bills submitted by the respondent were thoroughly checked and contained endorsements of the other employees of the appellant firm. Through these employees an attempt was made to prove that, the amount mentioned in these endorsements were paid to the respondent directly. But in this attempt the appellant had miserably failed. D. W. 3 Abdul Hafeez, D. W. 4 Muhammad Ismail, D. W. 8 Zikrur Rehman and D. W. 11 Abu Bakar, employees of the appellant firm, were produced to depose that the respondent was blindly trusted with huge amount for procuring the materials for the setting up of the mill. The evidence of these witnesses is self‑contradictory in many respects. The version of the last witness has contra dicted the statement of the other witnesses in respect of the procedure followed for paying money towards the purchases made for the setting up of the mill. According to this witness Ahmed Seth used to issue orders to pay these amounts on account of Yousuf Zai Brothers to a person sent by the said firm for this purpose. This witness further stated that some. times the plaintiff used to take the money but on such occasion he used to obtain receipts from him. According to him if the money was paid to Ismail then subsequently he used to send the receipts from the respondent. But the witness had to admit that there is not a‑single payment entered in the account books showing that it was made to the respondent directly or through some other employee of the appellant firm. The witness did not produce the alleged receipt obtained from the defendants on the explanation that those were destroyed after the chits contain ing the expenditure made by him was received in his firm. The learned Single Judge has disbelieved this evidence on the following observations:‑‑ "The impression which this evidence creates is erroneous, because there is evidence to prove that the plaintiff was neither trusted blindly, nor is it correct that there was nobody else to make purchases. Exhibits 14, 16, 18, 19 and 20 show how thoroughly the supplies were checked. Abdul Hafiz (D. W. 3) has stated regarding the entries in Exh. 14 that they were "checked once with red pencil and once or twice with lead pencil." This is what could be expected where there were accountants, cashiers, a manager (Basharat, vide Abdul Hafiz's statement), and a number of "Seths" themselves. The appoint ment letter, Exh. 28, proves that a "Purchasing Officer and Store Incharge" was employed at a salary of Rs. 225 p.m. on the 21st of April 1951, more than a year before the services of the plaintiff Were terminated." In the light of the above discussions, we are in full. agreement with the. observations of the learned Judge that the alleged practice of paying money to the respondent was not established and the evidence on this allegation is most unsatisfactory and cannot be accepted without any reliable independent corroborative evidence.

21. The allegation about the preparation of manufacturing of the. Trusses and Pillars is that its contract was obtained 'La the name of Muhammad Salim, a bogus person through one Jan Muhammad. In this connection reliance was placed on the state ment of D. W. 5 Hafiz Muhammad Yakoob. He stated that he was employed for making Trusses, but later on had to admit that he was only engaged to provide labour for manufacturing these articles. He stated that the respondent agreed to pay him Rs. 5 per cwt., but he was in fact paid only at the rate of Rs. 4‑12‑0 per cwt. and for the balance was kept on hopes. The witness, however, admitted that Jan Muhammad was present at the time when he was engaged to supply labour. He further stated that he had complained to Seth Ahmed's cashier about this' malpractice twice before the service of the respondent was dispensed with. The evidence of this witness is silent about the alleged bogus contract obtained in the name of Salim through Jan Muhammad. The learned Single Judge has discarded the evidence of this witness for the simple reason that had. there been any truth in the allegation the witness would not have left the matter only to the stage of complaints. Ordinarily it was expected .that he would have taken some further steps to recover his dues. D. W. 8 Zikrur Rehman however stated in his evidence that the respondent fictitiously obtained contract in the name of his son Salim. His evidence also is unbelievable. In the first place, no such case was set up by the appellant. Secondly, the witness admitted that Jan Muhammad was also given the contract. Besides, his story that he used to obtain bogus receipts for the benefit of the respondent and those have been spoilt appears to be nothing else but tissue of lies. In our opinion, the learned Single Judge rightly rejected the evidence of this witness.

22. As regards the allegation that the respondent had made secret profit in the sum of Rs. 600 in respect of the purchase of rollers reliance was placed on the evidence of D. W. 6 Abdul Shakoor besides D. W. 2 Abdul Rahim. In his examination‑in -chief he admitted that the agreement to purchase the rollers was entered before the employment of the respondent: However, to a question put to him he made a bold statement that the respon dent had taken 50 % of the amount paid to him for this purpose. The dramatic manner in which this witness took out from his pocket a sheet of paper alleged to be a copy of his diary clearly proves that he is not a reliable witness. It will be noticed that m his examination‑in‑chief the witness stated that the rollers were purchased from Pakistan Industries and he was only a broker in the transaction. In cross‑examination he admitted that the tran saction was made in October or November 1950, much before the time the respondent was engaged. But it appears that during his cross‑examination at the suggestion of the appellant counsel the learned Judge put some questions. In reply the witness suddenly took out a sheet (Exh. 31) from his pocket alleged to be a copy of the entries made in his diary. No reliance can be placed on the evidence of such a witness. The learned Judge very rightly rejected the evidence of such a pliable witness. The appellant's counsel was unable to persuade us to take a different view of the appreciation of the evidence‑of this witness.

23. Similarly, the allegation that the respondent had charged secret commission from Abdur Rahim in respect of the preparation of Housing is also not borne out by any reliable evidence. D. W. 2 Abdur Rabim deposed that the respondent had entered into an agreement with him at the rate of Rs. 30 per cwt. on the temptation of giving him false receipts at the rate of Rs. 40 per cwt. He has further alleged that the respondent only paid him Rs. 1,400, as advance but obtained from him a receipt for Rs. 2,000 for casting Houses. The learned Single Judge disbelieved the evidence of this witness on the ground that the witness had a motive to depose against the respondent. In cross‑examination the witness admitted that D. W. 12 Ahmed Abdullah had promised him to pay the balance after he bad given a satisfactory account of the misdeeds of the respondent in Court. In this connection the witness admitted in cross‑examination as under: "Ahmed Abdullah told me that I should appear as a witness for the defendant and after it he would consider paying such amount to me as was found due." Besides, the witness admitted that the contract for the above mentioned work was taken on behalf of a business carried on in the name of Dawn Foundary which used to maintain regular account books. But none of the books was produced on the record. The explanation of the witness was that the above busi ness was carried on in partnership with his brother‑in‑law with whom he had fallen out and some of the account books remained with him. It is in evidence that this witness was involved in some criminal case and had also absconded. It is further in evidence that the account books were examined by the Income‑tax Depart ment. In our opinion the allegation of this witness did not deserve any consideration in the absence of any reliable corrobo rative evidence in the nature of account books and other documents. It is difficult for us to believe that the business concern carrying on business on a large scale paying income‑tax would stoop down to such low tactics. It is inconceivable that such a business concern would agree to charge less amount for the work entrusted to them on the temptation of issuing bogus receipts. Admittedly, the witness was passing bard times at the time when he was examined as a. witness to support the allegation on the temptation thrown to him by the appellant. The learned Single Judge, therefore, has rightly disbelieved the evidence of this witness on the above‑mentioned allegation,

24. In the light of the above discussion it is perfectly clear to us that the allegation of secret commission and profits, charging commission or brokerage against the respondent has not been satisfactorily proved on the record. It is to be noticed that the appellant failed to give the particulars of the above‑mentioned instances at the earlier stage. For the first time, these allegations were brought on the record at the Rage of recording evidence. It is interesting to note that on 7th March 1953, the appellant sent a letter Exh. 40 and none of these allegations are mentioned in it. The respondent in his evidence has totally denied these allegations. None of the allegations are corroborated by any independent evidence. Even the appel lant's `account books are silent on this point. In our opinion, the type of witnesses who have supported the allegation are most untrustworthy. Having regard to these circumstances, we are satisfied that the learned Judge finding, that the appellant's allegation that the respondent had misconducted himself in the discharge of his duties has not been proved, is based on proper appreciation of the evidence adduced by the parties. There is nothing on the record to persuade us to take a different view on this question.

25. It was lastly contended by Mr. Abdul Aziz, learned counsel for the appellant, that the respondent had mis-conducted himself by carrying on parallel and competitive business with the appellant firm. Learned counsel contended that the appellant was not whole‑heartedly attending to his work and. was paying divided attention to the work of the appellant. In our opinion, this contention also has no force. It is quite correct that the respondent admitted in his evidence that he had set up a small machinery for supplying copper articles, namely, copper wire and strips to the Posts and Telegraphs Department. That work., how ever, has nothing to do with the business of the appellant's firm. The appellant firm too had supplied to this Department small articles of iron and steel, but they are quite different from those which the respondent supplied. It was admitted by the appellant's witness D. W. Ahmed Abdullah that they supplied the goods to the Posts and Telegraphs Department in response to a public advertisement, and he was unable to state as to what advantage the respondent had taker in connection of the supplies made to the Postal Department. The witness admitted that the respondent was not incharge of any business dealings of the appellant firm. 'In these circumstances, it is difficult for us to accept the conten tion of the appellant's counsel that the respondent was carrying on any parallel or competitive business with the appellant firm. There is no evidence on the record to show that the work carried out by the respondent on the small machinery set up by him for supplying copper articles had in any way interfered with the duties entrusted to him for setting up a re‑rolling mill by the appellant. In the absence of any such proof the contention of the appellant that the respondent was paying divided attention to the work entrusted to him has no substance: The learned Single lodge was, therefore, fully justified in rejecting this plea.

26. The plea of the appellant that respondent committed pilferage of the goods belonging to them is also based on very shaky evidence. The evidence of D. W. 7 Zamiruddin that copper and brass which came to the appellant factory were taken away by the respondent for use in his small workshop supported by D. W. Zikrur Rehman was rejected by the learned Judge on the ground that it was given to curry favour with the appel lants. We have gone through the evidence of Zamiruddin and it does not in the least inspire confidence. We have already disbelieved the evidence of D. W. 8 Zikrur Rehman on other points. In these circumstances we are not inclined to take a different view or their evidence.

27. Before parting with this part of the case we Gay observe that in law if a sarvant indulges in competitive business, an fails to pay full attention to his employer's work or indulges in pilferage, these are good grounds on which his services can be prematurely terminated. Pearse v. Foster and others (54 L T R 664) and Boston Deep Sea Fishing & Ice Co. v. Ansell ((1888) 39 Chancery Div. 339) are some of the cases in which in somewhat similar circumstances the dismissal of a servant was justified. According to the view of the Privy Council in Gujrat Manufacturing Co. v. Govind Nair (A I R 1940 PC 101), summary dismissal is a drastic step and if it is to be excused, the acts or neglects of the servant of which complaint is made must be of a serious nature and such as to show that he is not carrying out his part of the bargain in a matter going to the root of the contract. In the present case we are satisfied that the appellant was unable to prove by reliable evidence any act of dishonesty or such misconduct as could justify the respondent's dismissal. In law all that was expected from the respondent was to bring reasonable skill and diligence to bear on his work as technician and there is nothing to show that he failed to fulfil it. In these circumstances the learned Single Judge's finding that the appellant has failed to prove incompetence on the part of the respondent is not open to any exception.

28. Thus it is quite clear that the appellants were at fault and committed the breach of the contract by prematurely termi nating the service of the respondent. On this finding it cannot be disputed that the respondent is entitled to reasonable compensa tion by way of damages. The learned Single Judge has awarded Rs. 20,000 (twenty thousand) as damages to him for wrongful dismissal. The appellant counsel's main objection on the amount awarded is that as the respondent was latex on employed with Century Iron & Steel Products, another business concern, on the 11th August 1953, and the appellant was discharged from paying any damages from that date. The evidence produced on the record proves that the respondent was dismissed from service on 6th October 1952. On 11th August 1953, he was employed with the above firm at a salary of Rs. 950 p.m. including house allow ance and continued in their service up to 20th December 1954. In this state of evidence the learned Single Judge had rejected the respondent's claim for this period. After rejecting this claim he came to the conclusion that the respondent was entitled to have damages in the sum of Rs. 16,

699. Instead of giving a decree in this amount he has granted a decree in the sum of Rs. 20,000.

29. The appellant counsel's contention that appellant was completely discharged of their liability after his employment in 1953, is based on the ground that an employer's liability continues only upto the time an employee remains out of service. In support of his contention Mr. Aziz relied on the commentary in the book shown as "Mayne on Damages" (11th Edition). In this book the learned author has summed up the law on the point at page 293 as under:‑ "From the above consideration it follows that the loss measured may be less than the wages for the unexpired period of service, where other employment may be easily obtained and that it will vanish .where the plaintiff has immediately passed into another employment on equally good terms." The learned counsel further relied on the following observa tion of Fry L. J. in Reid v. Explosives ((1887) 19 O B D 264). "If nothing further had happened 'he would have been entitled to bring his action, but under the circumstances, as he was employed in an equally advantageous manner for the whole of the period for which he was entitled to notice, he cannot claim damages."

30. On the other hand, Mr. Sadik referred to para. 995 of Halsbury's Laws of England, (Vol. 25), dealing with the "Measure of damages" which is to the following effect:‑ "The servant cannot wait until the termination of the period for which he was engaged and sue for the whole amount of his wages, but where it is an express term of the, contract that a servant who is dismissed without notice is to be paid his wages for a certain period in lieu of notice, or where there is a usage to that effect, the measures of damages for the breach is the amount of such wages; which is to be regarded as liquidated damages. The same principle applies where the contract specifies a particular sum to be payable as and for liquidated damages in the event of a breach. In any other case the damages are to be measured by the amount of wages which the servant has been prevented from earning by reason of his wrongful dismissal including the value of any other benefit to which he is entitled by virtue of his contract and of which he is deprived in consequence of its breach after taking into consideration the probabilities of his obtaining employment elsewhere. If, therefore, he obtains other employment imme diately after his dismissal, the amount which would otherwise be payable as compensation must be reduced by the amount of remuneration which he receives in respect of such employ ment, and if he is paid the same or higher wages, his loss is merely nominal. 'Moreover it is his duty to minimise his loss, and he must therefore use due diligence in. endeavouring to obtain employment. If, but for his own default or neglect, he could, immediately after his dismissal, have obtained suitable employment at similar wages, he cannot recover more than nominal damages against the master. He is not, however, bound to accept employment of a different kind, or even a lower position in the same kind of employment, and, in such case, it is immaterial that the rate of wages offered is the same. In assessing the damages the jury is entitled to take into consideration all that has happened, or is likely to happen, to increase or mitigate the servant's loss down to the day of trial."

31. Mr. Sadik contended that according to the learned author "the same principle applies where the contract specifies a particular sum to be payable as and for liquidated damages in the event of breach." It is only in those cases in which no sum is specified that the damages are to be determined after taking into consideration the probabilities of employee obtaining employment elsewhere. It will be noticed that under the English Common Law where a contract of service provides that a sum shall be payable in the event of breach; such sum is recover able if in fact it constitutes liquidated damages and not a penalty on the principle that the sum named is the result of honest and genuine pre‑estimate of damages. In this connection Lord Parker in Dunlop Pneumatic Tyre. Co. v. Yew Garage (1), at page 97 observed as under:‑ "Where the damages which may arise out of a breach of contract are in their nature uncertain, the law permits the parties to agree before hand the amount to be paid on such breach. Whether the parties have so agreed or whether the sum agreed to be paid on the breach is really a penalty must depend on the circumstances of each particular case. There are, however, certain general considerations which have to be borne in mind in determining the question. If, for example, the sum agreed to be paid is in excess of any actual damage which can possibly, or even probably arise from the breach, the possibility of the parties having trade a bona fide pre‑estimate of damage has always been held to be excluded, and it is the same if they have stipulated for the payment of a larger sum in the event of breach of an agreement for the payment of a smaller sum."

32. In Pakistan the law on this point is governed by sections 73 and 74 of the Contract Act. In cases where the parties have not contemplated before hand a fixed amount as damages, its estimate is to be made in accordance with section

73. But if the parties have pre‑estimated the damages, it will be assessed in accordance with the principles laid down in section 74 of the Contract Act which is in the following terms:‑ "

74. When a contract has been broken if a sum is named in the contract as the amount to be paid in case of such breach, ;or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for."

33. In Bhai Panna Singh and others v. Bhai Anjun Singh and others (A I R 1929 P C 179), in interpreting the above provision of law the Privy Council observed as under:‑ "The effect of section 74 of the Contract Act of 1872 is to disentitle the plaintiff to recover simpliciter in the sum of Rs. 10,000 whether as penalty or liquidated damages. The plaintiff must prove the damages they have suffered."

34. Thus if the plaintiff fails to prove the actual damages suffered by, him he will not be entitled to recover simpliciter damages on the basis of the liquidated damages provided in the contract. It is his duty to prove damages to a given case. Each case would depend on its own facts. In assessing damages under this provisions of law there is a duty cast on the Court to award reasonable compensation to an aggrieved party that should not exceed the amount so named in the contract. In determining reasonable compensation a Court of law shall have to take into consideration the means available to a party to mitigate the damages. But the fact that a party failed to utilise such opportunity would not necessarily absolve the party at fault from his liability under the contract. It would be for consideration in each case whether any such opportunity was not accepted for good and reasonable grounds.

35. Thus in disputes arising between Master and servant ordinarily, the measure of damages would be determined accord ing to the covenants in the contract but the party at fault would be entitled to claim the exclusion of any earning made by the servant during the period for which damages are claimed as discussed earlier on the possible chance of obtaining a suitable appointment elsewhere. Considering the present case in this light it is perfectly clear to us that the learned Single Judge has not in the least departed from these principles. Taking all the circumstances of the case he has awarded damages in the sum of Rs. 20,000 which by no means can be considered to be unrea sonable compensation.

36. In these circumstances, we find no force in this appeal which is dismissed with costs. K. M. A. Appeal dismissed.