P L D 1984 Supreme Court 194 (PLP)

M. S. -M QURAISHI, J. -This petition raised the question whether the petitioner, an employee of the Agricultural Development Bank of Pakistanastatutory corporation, was not entitled to a decree for declaration and injunction. The petitioner had, in fact, been, granted such decree by the Civil Court and the decree had been upheld in appeal by the District Judge, Larkana, but it was set aside by a learned Single Judge of the Sind High Court by the impugned order, dated 26-4-1981 passed in revision. The view taken was that a suit for declaration and injunction was not competent and that the petitioner's remedy lay in a suit for damages.

2. Petitioner Anwar Hussain joined service in the Bank in terms of letter of offer, dated 15-5-1974. According to the letter, he. was to undergo training whereafter he was to serve .for a minimum period of 5 years during which period he would not be allowed to resign and in case he did resign, he would be required to give one month's notice or surrender one month's pay in lieu thereof in addition to compensation and reimbursing the Bank for the moneys spent on his training for which he was to furnish a personal surety of Rs. 2,

000. The petitioner accepted the offer, furnished the security and executed an agreement on 3-6-1974. In October, 1976, the petitioner on failing to secure his transfer from Kandhkot where he bad been posted, sent a letter of resignation on 6-10-1976 stating that as he. had been compelled to resign on account of the circumstances mentioned in the letter, he would not be liable to pay Rs. 2,000 as per agreement and requesting that if his plea were . accepted,, he be allowed to resign with effect from 7-11-1976. On 1-11-1976 he, however, sent a telegram withdrawing his resignation. It appears that his- letter of resignation had meanwhile been accepted by the authority on 30-10-1976. He was informed of this fact telegraphically on 3-11-1976. He was also asked to deposit the sum of Rs. 2,000 as the cost of training. The petitioner protested, but he was relieved with effect from 7-11-1976 and was told by letter, dated 19-I1-1976 that the amount of Rs. 2,000 would be recovered from him oti account of training expenses. In this background, the petitioner brought the suit on 1-12-1976 for a declaration that the orders passed accepting his resignation and relieving him from service and making him liable to pay the expenses of training, were void and that he still continued to be in service, and was entitled to emoluments ancillary to such service. He also sought an injunction in regard to his posting. The suit was contested by the Bank who challenged the maintainability of the suit. The objection was overruled and a decree was passed as prayed. The High Court after discussing the case-law and particularly relying on Muhammad Afzal v. H. B. F. C. (P L D 1976 Kar. 1121) held that the matter was governed by the principle of master and servant and that as the question arising, relates to the terms and conditions of service as incorporated in the contract of service, the suit for declaration under section 42 of the Specific Relief Act was not competent.

3. According to Halsbury's Laws of England, Vol. XXV, p. 446, para. 872: "The relationship of master and servant is expressed by a contract of service, express or implied, between the master and servant. A contract of service is one in which a person undertakes to serve another and to 'obey his reasonable orders within the scope of the duty undertaken. Whether oir not a particular contract is a contract of service, is a question of fact depending upon the terms of the engagement, the method of remuneration, and the power of controlling and dismissing the worker although none of these factors is by itself conclusive." On the same question it has been commented in American Jurisprudence (Vol. 35 at pages 445 and 446) as follows : "In law, the term "master and servant" indicates the relationship which exists when one . person who employs another to do certain work exercises the right of control over the performance of the work to the extent of prescribing the manner in which it is to be executed" . . . . "While it is said that at common law there are four elements which are considered upon the question whether the relationship of master and servant exists, namely, the selection and engagement of the servant, the payment of wages, the power of dismissal, and the power of the control of the servant's conduct, the really essential element of the relationship in the right of control-the right of one person, the master to order and control another, the servant, in the performance of work by the latter, and the right to direct the manner in which the work shall be done. It is, moreover, essential that the master shall have control and direction not only of the employment to which the contract relates, but also of all of its details, and if these elements of control and direction are lacking, no relationship of master and servant exists. The test of the employer/ employee relation in the right of the employer to exercise control of the details and method of performing the work." It follows that if the relationship is the result of a contract freely entered into by the contracting parties then the principle of master and servant will apply. The principle, however, will not apply if some law or statutory rule intervenes and places fetters upon the freedom of the parties in the matter of the terms of the contract. It is on this principle that a civil servant for whom there are constitutional safeguards, is not governed by the principle of master and servant, for he is possessed of a legal character for the enforcement of which he can bring an action. Even where the employee is not a civil servant but there are statutory safeguards governing his relationship with the employer and placing restrictions on the freedom of the parties to act, the general law of master and servant will not apply. In such cases the employer would be bound to follow the procedure provided for in the statute or the statutory rules before terminating the service of the employee and in the absence of conformity to such procedure, the termination of service would not be clothed with validity and the employee will be entitled to an action for his re-instatement.

4. Dealing with the principle, in Akbar Ali Bokhari v. State Bank of Pakistan etc. (P L D 1977 Lab. 234) it had been explained : "For relationship of master and servant as I understand it; there should be a freedom of contract both for master as well as the servant so as to act freely unfettered by any legal disability, but if for instance the servant is not free to leave service due to certain intervening, or conversely if master's pleasure to terminate service of his employee is similarly curtailed, then the case is no longer of a contract of service or of simple master and servant concept." Where a corporation is set up b a statute but the Government does not reserve to itself the power to regular the conditions of service of the employees under the corporation and the statute itself also does not prescribe any condition but leaves the matte entirely in the discretion of the corporation who is given the power to frame rules and regulations in that regard so that the employee is left with no protection under the statute itself, then the corporation must be held to be the sole arbiter in the matter of prescribing the _ terms and conditions of its employees and competent to deal with them in accordance with the terms and conditions so prescribed by it. In such situation the employee cannot claim to be a person possessed of any legal character within the meaning of section 42 of the Specific Relief Act and in case of his wrongful dismissal from or termination of service, the principle of master and servant will fully apply and he can only claim damages but not reinstatement to his post:

5. Our attention was drawn to-the observation of Mushtaq Hussain, 3. (as be then was) in Abdur Razzaq Malik v. WAPDA through its Chairman (P L D 1973 Lab. 188) and Muhammad Ashraf Parvaiz v. Agricultural Development Bank of Pakistan (P L D 1973 Lab. 425). Both concerned the question of the maintainability of writ petition by an employee of the respective statutory body. In the case of Abdul Razzaq it bad been held that "where the conditions of service of a servant of a statutory public corporation are so governed, relief under Article 98(2);6) of the abrogated Constitution of Article 201(2)(a) (if) of the Interim Constitution shall be available to,such servant, if the other conditions for its grant are present and that the employees of WAPDA, whose terms-and conditions of service are governed by the statute or by. the rules made thereunder are persons to whom such relief is available." In the second cited case, which was by an employee of the Agricultural Development Bank of Pakistan itself, it had been observed that "He is serving a statutory corporation which is performing functions in connection with the affairs of the Centre and the Province, his terms and conditions ' of service are governed by regulations framed under a statute and if the other conditions are-present, be can certainly ask for a declaration to the effect that the order of termination of his service is without lawful authority and of no legal effect if it has not been passed in accordance with the regulation." There may . have been some conflict of views in the High Court in regard to the applicability of the principle of .master and servant to the statutory corporations but the conflict, if any, must be held to have been brought to rent by this Court's judgment in R. T. H. Janjua v. Nationa Shipping Corporation (P L D 1974 S C 146) in which, after examining a number of earlier pronouncements of this Court, it had been held that: "The broad population laid. down in all these cases was; that the constitutional safeguard; available to the generality of Civil Servants against arbitrary dismissal or removal from service are not available to the servants of a registered Company, or a statutory corporation." On the basis of this view it had been held in Ch. Abdul Rashid v. Capital. Development Authority, Islamabad (P L D 1979 Lah 803) that an employee of that Authority "being not the holder of statutory, public or elective office, and his case not involving the infraction of a statutory provision or rule, cannot in terms of decision of the Supreme Court in Janjua's case, or of this Court in Abdur Razzaq's case, maintain this Constitutional petition" for challenging his order of removal from service. A similar view had been taken by the Sind High Court in the aforecited case of Muhammad Afzal (PLD 1976 Kar 1121) and a civil suit for a declaration against the termination of service by the House Building Finance Corporation had been dismissed.

6. Learned counsel for the petitioner referred to a number of cases but on examination we found that they relate to conditions of employment regulated either by statute or, by statutory rules. Some of these are Mst. Manni v. Karachi Cantonment Board (P L D 1969 Kar 304), Muhammad Salimullah v. Trustees of the Port of Karachi (P LD 1975 Kar 756) and Evacuee Trust Property Board, Lahore v. Muhammad Nawaz (PLD 1919 Lah 903).

7. The Agricultural Development Bank of Pakistan Ordinance (IV of 1961) whereby the respondent Bank was created has left the question of appointment and terms of its employees to the Bank itself: The relevant provisions are contained in section 30 and section 39 thereof which read as follows Section 30 : Appointment of officers and advisers.-The Bank may appoint or employ such persons including advisors as it considers necessary for the dfficient performance of its operations on such terms and conditions as may be prescribed by regulations. Section 39 : Regulations.-(1) The Board may make regulations not inconsistent with this Ordinance or the rules to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of this Ordinance and the efficient . conduct of the affairs of the Bank. (2) Without prejudice to the generality of the provision of subsection (1) the regulations may provide for (a) to (d), ......... (e) The recruitment of the employees of the Bank, the terms and conditions of their service, the constitutions and management of Provident Funds for the employees of the Bank and all other matters connected with any of these things ; (f) The duties and conduct of employees and agents ; (g) and (h) ............ It is clear from the above that the Bank has complete control over its employees, their appointment and dismissal and their terms and conditions C of service and that this control is not fettered by any statutory provision, The rule of Master and Servant will, therefore, apply to the case .of the servants of the Bank.

8. Moreover, the petitioner had accepted the employment under the Bank in terms of a contract duly executed by him on 3-6-1974 in which the terms contained in the letter of offer of appointment, dated 15-5-1974 bad merged. According to para. 7 of this letter of offer, the petitioner was to be "governed by the Rules, Regulations and Orders of A. D. B. P. in force and as amended from time to time in all matters in respect - of your service not specially mentioned in this memorandum." It was further stipulated that' "the rules, regulations and orders of the Bank .shall prevail if there is any conflict between the conditions laid down in this office memorandum, and the rules or regulations". The rules of the Bank bad thus merged in and formed part of the contract. - The petitioner's employment was, therefore, purely contractual and as such be was governed. by the principle of master and servant.

9. In this view of the matter, no exception can be taken to the impugned judgment of the High Court. , The petition is therefore, dismissed. ?Petition dismissed.