P L D 1959 Supreme Court (Pak (PLP)

CORNELIUS J.‑--This certificated appeal by the Lahore Central Co‑operative Bank Limited is brought before the Court to challenge the order of a Division Bench of the High Court of West Pakistan setting aside an order of the appellant‑Bank terminating the services of the respondent, Pir Saif Ullah Shah, who was employed by the Bank as its Commercial Manager. The facts are simple. Pir Saif Ullah Shah commenced his service as Commercial Manager under the Bank on the 4th June 1949 and on the 13th October 1950, a service agreement was executed by the parties to take effect from the earlier date, by which he was appointed Commercial Manager for a period of ten years, on a specified salary, and was to "have the sole care and charge of the Bank on the commercial side", certain of the subsidiary duties involved being specified with qualifications. Clauses 8 and 9 of the service agreement related to premature termination of the appointment. Clause 8 referred to incapacity through illness or other cause to perform the duties of the post. By clause 9 the Bank was given power to "determine this period of employment at any time in case the Commercial Manager is found guilty of misconduct, incompetence, fraud, embezzlement and misbehaviour". The necessary condition for such a deter mination, was that a finding should be given by a majority of the Board i.e., the Managing Committee of the Bank and "after hearing the Commercial Manager on such charge". In the year 1954, there was a general inspection of the Bank conducted by an Assistant Registrar of Co‑operative Societies. His enquiry showed a. great many irregularities in regard to loans made on the com mercial side, and in a lengthy report, he detailed these matters and concluded with the observation that the Bank was "facing a calamity which no amount of care can avert". The huge suns of about Rs. 28 lakhs had been advanced to 11 listed parties, against securities valued at less than Rs. 7 lakhs. On the 6th October, 1954, a charge‑sheet was drawn up and presented to Pir Saif Ullah Shah in which very serious charges of a general nature as well as certain specific charges were enumerated. It was said that he did not make proper enquiries regarding the financial status of borrowers, but proceeded on exaggerated and optimistic reports made by the Commercial Inspector without verifying them himself; that Bank references were not taken in all cases, as was necessary; and, in a number of cases, the loan limits of different parties were increased within very short periods. No uniform policy or procedure was adopted in regard to the pledge of goods against loans. Among a large number of specific cases, two need special mention viz., those in paragraphs 21 and 22 of the charge- sheet, involving advances by way of loan to one Saeed Ahmad, who was son‑in‑law of Pir Saif Ullah Shah. Item 21 was to the effect that Rs. 16,000 were advanced to Saeed Ahmad on the ostensible pledge of a Ramp Recorder without any bill or invoice being produced in support of the price, and when investigation was made it was found that the article actually pledged was a Tape Recorder valued at about Rs.

700. Item No. 22 relates to a further advance to the same person of the sum of Rs. 34,575 against the pledge of a camera alleged to be of the value of Rs. 46,

100. This valuation was supported by an invoice dated in the year 1951 from a firm named Messrs. Fazal Bhai of Lahore, which invoice, it was said must be bogus, since Messrs. Fazal Bhai had wound up their business at Lahore long before 1948. Pir Saif Ullah Shah had been placed under suspension on the 7th May, 1954. By the charge‑sheet, he was allowed until the 21st October 1954, to make a reply, but he failed to keep this date, and after certain intermediate events, a final notice was sent to him to appear on the 9th December, 1954. On this day he did appear and filed a detailed reply to the charges. He traversed all the allegations regarding general negligence and claimed to have acted with due care and caution in all the instance cited. Detailed replies were given to each charge, but it is not necessary to recount them all. For the purposes of this judgment, it will be sufficient to say that the replies given to the charges of irregularly making, advances to his son‑in‑law out of the Bank's monies, were wholly unconvincing. As regards the Ramp Recorder it was said that the original invoice had "been detached somehow" but nothing was said about the substitution of a Tape Recorder for the Ramp Recorder. As regards the camera, it was said that this had been released in 1952 and other goods of equal value were substituted as a pledge. No answer was furnished to the charge that the invoice from Messrs Fazal Bhai which had been accepted was a bogus document. On the same day, the Managing Committee heard Pir Saif Ullah Shah in reply to the charges. It seems he protested that he had not had sufficient opportunity to meet the charges by full examination of the records etc. However, there seems no doubt that a full hearing was given to him. It was stated at the Bar, and was not controverter, that the hearing lasted for some three to four hours. On the same day, the Managing Committee passed a unanimous resolution to the effect that the Committee had considered the charges together with the answers furnished by Pir Saif Ullah Shah and after deliber ation, the members "unanimously arrived at the conclusion that all the charges entered in the charge‑sheet are proved against him, and that during the term of his service he has been guilty of cor ruption, inefficiency, cheating the Bank and embezzlement of the Bank property etc. etc., in consequence whereof the Bank has suffered a heavy loss". It was also mentioned that in delaying the submission of his reply to the charges for so long, by evasive methods, Pir Saif Ullah Shah was guilty of conduct which was "improper and bad". Accordingly, the Managing Committee made an order removing him from the Bank service with immediate effect. It was not until the 23rd October 1956 that Pir Saif Ullah Shah moved his petition in the High Court for a writ or order to gain the following reliefs, viz., firstly, that the order removing him from service should be treated by the Bank as illegal and invalid; secondly, that the Bank should reinstate him as Commercial Manager; thirdly, that the Bank should desist from removing him from service till the criminal cases pending against him had been finally decided, and, fourthly, to set aside the order of suspension passed on him. Each of the orders asked for was clearly an order in the nature of a mandamus. The learned Judges of the High Court granted the petitioner only the first of these reliefs. The reason given for not directing his reinstatement was that the petitioner did not explain why he delayed the filing of his petition so long and that he was presently under trial for eleven alleged offences in some of which charges had been framed against him. They went on to say that "it would be idle to keep in employment a person who is under trial for embezzlement" and they therefore directed that Pir Saif Ullah Shah could only take advantage of the High Court judgment setting aside his order of removal, "if he is acquitted of the criminal charges against him". After hearing arguments, we consider that the order made by the High Court cannot be sustained. Indeed the catalogue of reasons why no writ of any kind could have issued in this case is a formidable one. There is firstly the question of the delay in bringing the petition before the Court. It was filed some 22 months after the order of dismissal had been passed, which itself was made more than seven months after the suspension of Pir Saif Ullah Shah. It is well recognised that mandamus will not be granted unless it is applied for within a reasonable time after the right of prayer has accrued. In this case, the delay is not accounted for on any reasonable basis. The writ jurisdiction of the High Court was restored in October 1955, and there is no explanation for the f last twelve months of the delay. Secondly, mandamus is a dis cretionary writ. It is not an order granted as of right and it is not issued as a matter of course, so that the Court may refuse the order not only upon the merits, but also by reason of the special circumstances of the case. The position occupied by Pir Saif Ullah Shah in the organisation of the Bank was a fiduciary position of trust in an active department of the Bank's business, namely, that relating to commercial loans. When he had been separated from this post for a period of more than two years and five months, it was surely a strong reason for refusing the writ that there had been a long absence from this important office. Again, since the highest degree of trust was involved, a factor of the greatest importance in regard to the exercise of the discretion was that grave charges of diversion and misapplication of the Bank's funds had been brought against Pir Saif Ullah Shah, and that some of those matters had been made the subject of criminal prosecutions, in some of which charges had actually been framed. As has been seen, the learned Judges regarded this as a good ground for declining to restore Pir Saif Ullah Shah to his office. It was no less valid as a ground for refusing a writ to challenge the validity of the order removing him from that position of trust. The documents on the record were amply sufficient to establish that Pir Saif Ullah Shah had been guilty of grave mis conduct in the discharge of fiduciary functions. The two cases in which he had made loans to his son‑in‑law in circumstances calculated to excite suspicion, which suspicion had not been removed by his answers, were quite sufficient for holding that in the relevant sense, he had been guilty of misconduct and had proved himself unworthy to continue to occupy so important a position of trust. By the ordinary law of master and servant, when a servant is guilty of misconduct, the master is entitled as of right to terminate his services without notice. In this case, the notice given was of some two months' duration, following upon a period of five months of suspension during which enquiries were being held. There can be no doubt that under the general law of master and servant, the action taken by the Committee was a perfectly proper one, and it could have been taken in an even more peremptory manner. What the Managing Committee actually did was to comply with the provision in clause 9 of the Service Agreement which has been reproduced above. They gave Pir Saif Ullah Shah notice and a hearing and then by a resolution, of which the meaning is perfectly clear, they decided that he was guilty of all the charges and therefore that he should be removed from his office. For the purposes of the writ petition' and this appeal, it was sufficient that in at least two of the charges involving diversion of the Bank's funds for the benefit of his own son‑in‑law, the unanimous finding of the Managing Committee was com pletely correct. These were grounds which the learned Judges of the High Court may well have borne in mind, in considering whether in the exercise of their discretion, they should grant to Pir Saif Ullah Shah the kind of writ he wanted. The learned Judges, however, proceeded on the basis that Pir Saif Ullah Shah was entitled to a proper enquiry, that is to say an opportunity to present evidence in reply to evidence led by the Bank on the various charges etc., as is admissible to Govern ment servants under the Civil Services Rules. Their ground for so thinking appears to be a resolution passed by the Managing Committee in the year 1945 to the effect that the Civil Services Rules would apply in relation to the Bank's employees. This resolution was passed under a bye‑law enabling the Managing Committee to frame rules on matters concerning the establishment. On reference to the Act, however, we find that by section 43 (2) (g) provision relating to the "appointment, suspension and removal of the members of the committee and other officers" is to be made by the Provincial Government, in the form of rules, which must be published in order that they should be valid. Thus, if the Commercial Manager of the Bank be thought to be an officer, then the law requires that provision for his removal should be made by rules under section

43. Now, an officer of the Bank by definition includes "a chairman, secretary, treasurer, member of the committee, or other person empowered under the rules or the bye‑laws to give directions in regard to the business of the society". The Commercial Manager is not enumerated by name in this definition, and the office does not seem to be one which is recognised by the Co‑operative Societies Act, 1912. Yet, having regard to the wording of a number of the charges, presented to Pir Saif Ullah Shah, it seems clear that he was not one of those employees whose duty was merely to obey or carry out orders and directions received by him. In a number of places, it is charged against him that he sanctioned loans and that he followed certain procedure which did not provide sufficient safeguards for the interests of the Bank. In other words, as Commercial Manager, Pir Saif Ullah Shah was empowered to give directions in regard to the business of the Society. Yet, it does not seem that this was done in accordance with any rule or bye‑law of the Bank, and therefore, it would appear that provision in regard to the removal of the Commercial Manager did not require to be made by rules under section

43. Regarded as an employee in the relevant respect, the respondent would seem to fall under bye‑law 23 (18), which gives the Committee power "to appoint, dismiss, suspend or otherwise punish salaried or unsalaried employees of the bank and to frame rules on matters concerning the establishment". The resolution of the 3rd February 1945 to which reference has been made earlier was not passed in the form of a rule, and it is therefore very doubtful whether it pan be thought that thereby compliance was made with bye‑law No. 23 (18), Consequently, we consider that it is a point of considerable doubt whether the Ltd. respondent could claim the application to himself of the Civil Service Rules. In any case, these Rules were not applicable to him of their own force, but merely by reference Where these Rules embody safeguards provided for public servants under the then Constitution i.e., the Government of India Act. 1935, as then in force, they cannot be availed of by such a person as Pir Saif Ullah Shah, as a matter of legal right. That is another strong reason why in the present case, a writ of the kind in question here should not have been issued favour of Pir Saif Ullah Shah. It has been observed by this Court in the recent case of Pakistan v. Merajuddin (P L D 1958 S C (Pak.) 147) (Civil Appeal No. 36 of 1958, decided on the 20th January, 1959) that:‑ "in the absence of proof that any statutory duty was involve or that any legal right was being enforced or that the performance of a public duty was being claimed, it is clear that a mandamus or an order of mandamus could not have sued consistently with the relevant practice and precedent". That was said in regard to cases where certain Railway employees had obtained declaratory decrees to the effect that their removal from service was void in law, and writs had been issued by the High Court by way of enforcement of those decrees. In arriving at that conclusion, the Court considered statements of the relevant law appearing in authoritative text‑books of which two were mentioned, namely, a monograph by Ferris on "Extraordinary Legal Remedies", and the monograph in Volume 11 of Halsbury Laws of England on "Crown Proceedings": Syed Muhammad Zafar appearing on behalf of the respondent has referred us to a state ment in Ferris' book on page 328, in support of his plea that, although the office in question was an office in a private corpora tion, yet a mandamus could issue for the purpose of restoration to such office. The words on which he relied are as follows:‑ "Mandamus is the proper remedy to prevent further illegal exclusion from office in a private corporation when the right thereto is clear, although under such circumstances there be an incumbent. The same principles applicable to public officers in such cases are generally applicable here". A number of authorities of the State Courts in the United States are cited in support of this dicta. None of these cases is available here for examination, but we find on reference to the treatment of the writ of quo warranto in the same book, at page 174, material which shows plainly that in this respect, the American Courts have drawn the scope of mandamus in the relevant respect for beyond the limits set by the English jurisdiction to which the writ originally belongs. The following passages in Paragraph 154 will make this perfectly clear: "The English rule is, that to justify quo warranto to try title to an office, it is essential that the office be such as the law deems of a public nature, and quo warranto will not lie, although the charter is derived from the sovereign, if the sovereign neither aids nor reserves any control over it. All American Courts, with one exception, Massachusetts, agree and that an action of quo warranto, or in the nature thereof, is the proper remedy to test tile right of office in a private corporation, on the theory that any corporation chartered or organized under the laws of a state is public in character, and any abuse or usurpation thereof is an abuse or usurpation of the State's privilege. Offices in private corporations are created so that the design of the grant may be effectuated and the existence of the corpora tion perpetuated by the due and regular election of officers in accordance with the rules and laws of their governance. And there is no difference in principle between an office created by special act, as director of a bank, and one created by general provisions of law, as a director in a manufacturing corporation. The public character of a corporation and of its offices, when the question arises in quo warranto proceedings, and as dis tinguished from corporations and offices that are public in a political sense, is not to be determined by the nature or purpose of' its business, but by the character of its origin and the policy of the law. Corporations for private gain differ in no essential that affects the public character of the grant, from corporations created for purely public purposes. Their corporate powers spring alike from the same source, their organization is directed by the same hand, their regulations and restraints are controlled by the same authority, and they are answerable alike to the same sovereign". The reference to a "sovereign" needs some explanation, and this may perhaps be found by reference to paragraph 145 on page 166 of the same book in the following observations:‑ "A public office is the right, authority and duty created and conferred by law, by which an individual is vested with some portion of the sovereign functions of the government to be exercised by him for the benefit of the public, for the term and by the tenure prescribed by law. It implies a delegation of a portion of the sovereign power. It is a trust conferred by public authority for a public purpose, embracing the ideas of tenure, duration, emolument and duties". Apparently, by the expression "sovereign" in relation to private corporations, is meant the sphere within which, under law, such corporations have freedom to act, in the discharge of their functions. In this case, it seems that the power of sanctioning loans had been delegated to the Commercial Manager and to that extent he might be thought to have been exercising the "sovereign." functions of the Bank, but the office which he held was not a statutory office i.e., an office which is by law prescribed in regard to its existence, its tenure or duties. On this point it is relevant to note that by the constitution of the appellant‑Bank it is within the powers of the Secretary, and of the Manager under the control of the Secretary "to grant loans to individuals '. . . to the extent permitted by any order of the (local) government . , . and to procure the due execution of the bonds". Therefore, to claim that Pir Saif Ullah Shah occupied the position of an officer of a private corporation in the sense appearing from the above extracts quoted from Ferris would be an exaggerated and unsupportable inference. Moreover, the law on the subject in this country has hitherto followed in all, essential respects the practice of the English Courts and as to that, an authoritative statement will be found in Halsbury paragraph 162 in the monograph on "Crown Proceedings". It reads as follows:‑ "An order of mandamus will lie to compel the restoration of a person to an office or franchise, whether spiritual or temporal, of which he has been wrongfully dispossessed. provided the office or franchise is of a public nature; as for example to the office of mayor, alderman, recorder, town clerk, burgess or other municipal position, to academicals degrees, to a fellowship of a college where there is no visitor, or to the offices of parish clerk and sexton". The superior Courts in England have not found it possible to extend the scope of mandamus to restoration to office in private, corporations. All the offices mentioned in the list contained in; the quotation above appear to be of a public nature, and to have a quality which is entirely foreign to that belonging to the post of Commercial Manager in a Co‑operative Bank. That post was clearly of a contractual nature, falling within the category of employment, and having nothing of the true character of a statutory or corporate office. A further ground advanced against the issue of a writ was that by agreement between the parties, any dispute between them relating to the conditions of the employment was to be referred to arbitration under Rule 18 of certain Rules notified in June 1917. By expression, this term was to apply even if Pir Saif Ullah Shah were not holding his office in the Bank when the dispute should arise. The High Court overruled this objection on the ground that the Registrar having already been prejudiced by the report of the Assistant Registrar referred to above, "it would be inequit able to refer the dispute to him, in the face of certain knowledge that he is satisfied in his mind as to the guilt of the petitioner". But under Rule 18, the Registrar is empowered to refer the dispute to arbitration by some other person, and the objection is therefore unsustainable. A point raised on behalf of the petitioner was that his dismissal had not been approved by the Registrar, as required by the Rules relating to Co‑operative Societies. It seems that when the dismissal order was placed before the Registrar, he noted on it "Mulahiza shud" which is equivalent to saying "seen". No if such remark could have been made if the dismissal had been dis approved, and nothing appears to show that disapproval was expressed at any time later. The view of the learned Judges that the Registrar "might have disapproved the resolution if he had been aware that he could do so" is inconsistent with their previously expressed view that he was to be presumed to be satisfied regarding the guilt of Pir Saif Ullah Shah. In any case, the approval of the Registrar could be obtained by the Bank at any time. No reason whatsoever appears on which the writ or direction issued by the High Court in this case can be sustained in law or discretion. We accordingly allow this appeal and set aside the direction issued by the High Court. There will be no order as to Costs. A. H. Appeal allowed.