1998 PLP 600 (CLC)

14.W.P. No.4756/97 22.W.P. No.4746/97

23. W.P. No.4758/97

2. All the petitioners who possess Post Graduate Degrees, were appointee as Management Trainees by the Sui Northern Gas Pipelines Limited (herein‑after referred as the company) under its Management Trainees Scheme. The appointment letters, although issued on different dates contained the same term and conditions and were accepted by the petitioners. They were appointed as Management Trainees for a fixed period of two years and at the fixed monthly stipend of Rs.6,000, However, before the expiry of the two years' period the employment (which is termed as "training Contract" by the company) was terminated in the month of February, 1997 on the allegation of petitioners unsatisfactory performance during the period of training, without show‑cause notice. This termination has been challenged in these writ petitions by the petitioners. These writ petitions were admitted to regular hearing after obtaining the report and parawise comments from the respondent‑Company.

3. In the parawise comments the following preliminary legal objection were raised on behalf of the company:‑‑‑ (1) That the company is neither the statutory body nor has the statutory rules of service, therefore, not amenable to the jurisdiction of this Court under Article, 199 of the Constitution of the Islamic Republic of Pakistan, 1973; (2) that the petitioners were appointed as management Trainees which did not create relationship of employee and employer; (3) that the Management Trainee Contract eras rescinded under clause (3) thereof, therefore, writ petition is nor competent.

4. On merits it is stated in the parawise comments that the performance of the petitioners was found unsatisfactory during the training period which. warranted termination of the trainee‑contract under clause (3) of tile contract (appointment letter).

5. Learned counsel for the petitioners submitted that the petitioners were appointed as the Management Trainees under the Management Trainee Scheme after going through all the legal and codal formalities, therefore, their employment could not be terminated before the expiry of the period of training. They also submitted that the allegation of unsatisfactory performance made it obligatory upon the Company to issue show‑cause notice to the petitioners and to give them opportunity to defend themselves otherwise it would carry stigma with them. It was also disputed that there was any adverse report/complaint against the petitioners and in any case they were not aware of the same.

6. With regard to the first objection that the respondent‑company having been incorporated under the Companies Act, 1913, is not amenable to the jurisdiction of this Court, it is pointed out that the respondent‑Company is a public limited company in which, according to its learned counsel, 36% shares holding is owned by the Government of Pakistan. It was admitted by Mr. Saleem Beg, Advocate, learned counsel for the respondent‑Company that the Company has 13 Directors including its Chairman and that the Chairman who is the Secretary to the Government of Pakistan is elected by the Board of Directors and that in the Board of Directors 6 officers of the Government of Pakistan are appointed as Directors for a period of 3 years. The Chairman has the casting vote. The Managing Director of the company is elected by the Board of Directors for a period of 3 years. It is, thus, obvious that the management and the affair of the company are controlled by the Government of Pakistan through the Chairman and its Directors who form the majority in the Board of Directors. According to the observation of a learned D.B. of this Court in Fateh Khan v. Sharaaf Khan and others PLD 1984 Lah. 106 the Government of Pakistan has the controlling shareholding in the company. The following passage of the judgment is usefully reproduced below:‑‑‑ "These Articles, therefore, conclusively show that the Pakistan Government by virtue of its 58.97 per cent, shareholding can requisition Extraordinary General Meetings and by demanding a poll in respect of any resolution, have the said resolution carried in its favour. Section 81 of the Companies Act, 1913, does not bar a poll being demanded by a member in which case the resolution would be carried on the strength of the votes, and not the members present, as provided Articles 86, 87 and 91 of the Company's Articles of Association. In short, therefore, it has the power and ability to establish control over its affairs and working. In the present case, it, therefore, cannot be denied that the Government of Pakistan has a controlling share or interest in the Sui Northern Gas Pipelines Limited,"

7. In the light of the observations of the Hon'ble Supreme Court in "Central Board of Revenue v. S.I.T.E." (PLD 1985 SC 97), on lifting the veil of incorporation it becomes clear that the business and affairs of the Company are being controlled by the Government of Pakistan and the company itself is dealing with the supply of the Gas, essential for the Industry, business and domestic consumption, therefore, performs functions m connection with the affairs of the federation and as such is amenable to the jurisdiction of this Court.

8. Learned counsel for the petitioners argued that as no show‑cause notice was issued to the petitioners, their termination is void being contrary to the principle of natural justice. It was alternatively argued that in any case clause (3) of the appointment letter which dispenses with the show‑cause notice be struck down being arbitrary and capricious and against the public policy. In this respect Mr. A.Karim Malik, Advocate, learned counsel for one of the petitioners, relied on the judgment of the Indian Supreme Court in "Central Inland Water Transport Corporation Ltd. and mother v. Brojo Nath Ganguly and another" (AIR 1986 SC 1571) and particularly referred to the following passage of this judgment:‑‑‑ "The principle deducible from the above discussions on this part of the case is in consonance with right and reason, intended to secure social and economic justice and conforms to the mandate of the great equality clause in Article

14. This principle is that the Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause m a contract, entered into between parties who are nor equal in bargaining, power. "

9. The principle of law for striking down an unfair and unreasonable clause in a contract as applied in the case of "Central Inland Water Transport Corporation Ltd. and another" (supra), is not attracted to the instant case, as clause (3) of the letter of appointment cannot be termed as unfair and unreasonable so long as it does not stigmatize the petitioners. On the contrary the dictum of the Hon'ble Supreme Court in "Muhammad Siddiq Javaid Chaudhry v. Government of West Pakistan" (PLD 1974 SC 393) on the question of termination of service on the ground of unsatisfactory work during probation and termination of employment on the ground of misconduct, is to be followed in the present case, with reference to the following observation:‑‑‑ "In the light of the above discussion, it appears to me that a probationer is a person who is taken in service subject to the condition that it will attain a sure footing only if during the period that he is on probation he shows that he is a fit person to be retained in service. I agree with the view expressed in Muhammad Afzal Khan v. The Superintendent of Police, Montgomery and Riaz Ali Khan v. Pakistan, that a person who is on probation is subject to all checks to which a permanent servant is subject. He cannot for example, refuse to obey orders, keep his own hours of duty, or indulge in any malpractice. In my opinion, if the service of a probationer is terminated on the ground of unsatisfactory work that will not amount to dismissal or removal from service, such termination will be in terms of the contract or the rules made by the Government but if the service of a probationer is terminated on the ground of misconduct that will amount to removal or dismissal. It will be a stigma in his favour. In the last mentioned case, the probationer will be protected by the provisions of Article 177 of the Constitution of 1962 and will be entitled to a show‑cause notice and a proper enquiry against him must be made. "

10. The learned Indian Supreme Court in "State of U.P. and another v. Prem Lata Misra (KM) and others" (1994) 4 Supreme Court Cases 189) while dealing with the question of termination of service of a probationer for unsatisfactory performance observed as follows:‑‑‑ "The Court can lift the veil of the innocuous order to find whether it is the foundation or motive to pass the offending order. If misconduct is the foundation to pass the order then an enquiry into misconduct should be conducted and an action according to law should follow. But if it is motive, it is not incumbent upon the competent officer to have the enquiry conducted and the service of a temporary employee could be terminated, in terms of the order of appointment or rules giving one month's notice or pay/salary in lieu thereof. Even if an enquiry was initiated, it could be dropped midway and action could be taken in terms of the rules or order of appointment."

11. The basic question to resolve is whether termination of the training period before its expiry and without show‑cause notice was lawful or otherwise. For this purpose reference is made to the first three clauses of the letter of appointment which are common and are reproduced below:‑‑‑ "(1) Under the Management Trainee Scheme, you shall undergo comprehensive training in our Organization. During the training period you shall receive a fixed stipend of Rs.6,000 (Rupees six thousand only) p.m. (2) Your training is for a fixed period of 2 years which is not extendable under any circumstances and does not entitle you for a regular job/service in the Company. (3) Your training may be terminated at any time without any notice or assigning any reason, should your performance during training period be considered unsatisfactory by the Company. "

12. Admittedly, the employment of the petitioners is not governed and regulated by any statutory Rules of service. During period of training as management trainees they are governed by their appointment letters (which is termed by the Company as contract of employment). Clause (2) of the appointment letter has fixed two years' period of training and provides that even after the completion of the satisfactory training it does not entitle the petitioners for a regular job/service. Clause (3) of the appointment letter provides that the training can be terminated at any time without any notice or assigning any reason if the performance of the trainee is considered unsatisfactory by the Company.

13. The stance of the Company is that the performance of the petitioners was not found satisfactory by the superior officers of the petitioners and for that reason the employment of the training was terminated by the Company under clause (3) of the appointment letter. Learned counsel for the Company submitted that the conditions of appointment were voluntarily accepted by the petitioners and were bound by the same. He further submitted that under clause (3) of the appointment letter the Company had the powers to terminate the employment of the trainees on, finding their performance unsatisfactory and while doing so the Company was not under legal obligation either to issue show‑cause notice or to communicate the reason to tile petitioners. He placed on record the judgment of the learned Peshawar High Court, Peshawar delivered in the case of "Ali Gohar v, Managing Director, Sui Northern Gas Pipelines Limited" Writ Petition No.330 of 1997) wherein dealing with a similar case the learned D,13, observed as follows: ‑‑ , "We have already noticed that there has been no charge of misconduct against the petitioner. The only reason for his removal was the unsatisfactory performance. Such performance is nut it stigma on the career of all employee and there is it plenty of case‑law where the issuance of notice was considered not necessary (1991 SCMR 1998), A probationer is taken into service subject to the ultimate satisfaction of the employer for which a period is fixed to keep his performance under observation. No show‑cause notice is, therefore, necessary before termination of the service of probationer unless it is on the charge of misconduct or on the basis of some serious allegations for which the employee must be given an opportunity of being heard. In the instant case on such situation is involved. "

14. In the present case, the petitioners are not charged for any misconduct and the termination of their employment is on account of their unsatisfactory performance during training and is warranted under the terms of employment as contained in clause (3) of the letters of appointment. Such termination of employment does not attack stigma to the career of the petitioners as held by the Hon'ble Supreme Court in Muhammad Siddiq Javaid Chaudhry (supra), and no show‑cause notice was necessary.

15. Accordingly, all these writ petitions fail and are dismissed without any order as to cost. A.A./M‑491/L Petition dismisses.