DECISION ' The appellant, who was employed as a Junior Clerk in the Accident Section of the Pakistan Insurance Corporation, the respondents herein, was dismissed from service, with effect from 19th May, 1980, on the charges of committing breach of discipline, misconduct and insubordination. The appellant challen8ed the orders of his dismissal from service before the learned Fifth Labour Court, which has dismissed his grievance petition on the ground that it was not maintainable as the Standing Orders are not applicable to the respondent establishment or its employees. Aggrieved by this decision the appellant has come up in appeal to this Tribunal.
2. I have heard Messrs. A. T. Mahmood and Mr. Muhammad Ahmad Khan, Advocates, for the appellant, and Mr. Samiullah Khan for the respondent establishment.
3. The sole issue which has been canvassed before me is whether the Standing Orders are applicable to the respondent establishment. It was strongly urged by Mr. Samiullah Khan that as the respondent establishment is being run under the authority of the Federal Government and further it has statutory rules of service, conduct and discipline for its employees, namely, the Pakistan Insurance Corporation (Staff) Service Regulation, 1959, which have been framed in exercise of the powers conferred by clause (m) of section 46 of the Pakistan Insurance Corporation Act, 1952, the respondent establishment and its employee fall within the first proviso to subsection
(4) of section 1 of the Sind Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, to which I will refer as the "Ordinance", and hence the application of the Ordinance to the employees of the respondent establishment is completely excluded. On the other hand, it was submitted by Messrs A.T. Mahmood and Muhammad Ahmed Khan that the respondent establishment was a corporate body, managing its own affairs and the mere fact that some of its Directors were appointed by the Government and the Government can issue to the Corporation directions of policy did not mean that the Corporation was being carried on under the authority of the Federal Government.
4. The first proviso to subsection (4) of section 1 of the Ordinance excludes the application of the Ordinance to establishments carried on by or under the authority of the Federal or any Provincial Government in which statutory rules of service, conduct or discipline are applicable to the workmen employed therein. It is not disputed that statutory rules of service are applicable to the workmen employed in the respondent-Corporation, which has been established under the Pakistan Insurance Corporation Act, 1952. Clause (in) of subsection (2) of section 46 of the Act empowers the Board of the Corporation, with the previous sanction of the Federal Government, to make regulations governing the terms and conditions of service and duties and conduct of officers, servants and agents of the Corporation. In exercise of this power, the Board of Directors of the Corporation with the previous approval of the Federal Government, has framed the Pakistan Insurance-Corporation (Staff) Service Regulations, 1959, which were published in the Gazette of Pakistan, dated 27th November, 1959. It is common ground that these regulations are applicable to the appellant.
5. It is next to be considered whether the respondent establishment fulfils the second requirement for exclusion of the application of the Ordinance to its employees. It is common ground that the respondent establishment is not being carried on by the Federal Government, which expression would mean an establishment run directly by the Federal Government through its own officers. It, therefore, remains to be considered whether the respondent establishment is being carried op met the authority of the Federal Government. In support of his contention that the respondent establishment is being carried on under the authority of the Federal Government Mr. Samiullah Khan invited my attention to sections5, 6(3), 6(4), 9, 10, 18 and 20-A. Section 5 of the Act provides that the shares of the Corporation shall be guaranteed by the Federal Government as to the re- payment of the principal. Subsection (3) of section 6 lays down that in the discharge of its functions the Board of Directors of the Corporation shall be guided on questions of policy by such instructions as may be given by the Federal Government. Subsection (4) of the said section further provides that if the Board fails to carry out any instructions given by the Federal Government the Federal Government may remove the Directors, including the Chairman, and appoint persons in their place to be Directors temporarily until a fresh Board is constituted. Section 9 enacts that the Chairman shall be appointed by the Federal Government for such period and on such salary and terms and conditions as the Federal Government may determine and that he shall hold office at the pleasure of the Federal Government. Section 10 of the Act lays down that there shall be five Directors of the Board, including the Chairman, out of which two Directors and the Chairman shall be appointed by the Federal Government while the remaining two Directors shall be elected by the share-holders. According to section 18, the Head Office of the Corporation shall be at Karachi and it shall have another officer at Lahore, but it may, with the previous sanction of the Federal Government, establish Offices, Branches and Agencies at other places, inside or outside Pakistan.
The Corporation is empowered by section 20 to open, with the prior approval of the Federal Government, a deposit account with any Bank. It has also been empowered by section 20-A to borrow or raise funds, by arranging over-drafts or by issue of bonds or debentures, with the previous approval of the Federal Government.
6. It was strongly urged by Mr. Samiullah Khan that the combined effect of the above provisions was to establish firm and effective control of the Federal Government over the respondent establishment and, therefore, it should be deemed to be carried on by the authority of the Federal Government. In support of his contention Mr. Samiullah Khan relied upon the decisions of this Tribunal in the cases of Director, Building Research Station Council for Works v. Sarfraz Khan (1), Imam Bux Qazi v. The Trustees of the Port of Karachi (2) and State Bank of Pokistan v. A bdullah, decided on 6th October, 1980. The decisions in the aforesaid cases, however, were based on different sets of facts and would not appear to be strictly applicable to the instant case. In the case of the Building Research Station Council the decision that the council was being carried on under the authority of the Federal Government turned largely on the fact that it was not only being controlled by the Federal Government but that it was being wholly financed by the Federal Government. In the case of the Trustees of the Port of Karachi, it was conceded by the learned counsel for the other side that the KPT was being carried on by or under the authority of the Federal Government and hence there was no dispute or discussion on this issue. In the case of State Bank of Pakistan, the decision that it was being carried on under the authority of the Federal Government was mainly influenced by the fact that not only the Bank had been nationalised but that further the Issue Department of the Bank, which was incharge of and dealt with the currency of the country, was {{FOOT NOTE}}
(1) 1980 PLC 274 (2) 1980 PLC 495 {{FOOT NOTE}} ' a vital Governmental function which could not be entrusted to a non-Governmental organization.
7. Messrs A. T. Mahmood and Mohammad Ahmed Khan, on the other hand, while arguing that the Standing Orders are applicable to the respondent establishment and its workmen, submitted that the Corporation was a corporate body having the characteristics of a Joint Stock Company, as it has shares which could be bought and sold by the public, and the mere fact that out of 20,000 subscribed shares the Federal Government had subscribed for 10,200 shares or that the shares of the Corporation were guaranteed by the Federal Government as to the repayment of the principal, together with the other provisions relied upon by Mr. Samiullah Khan, did not establish that the Corporation was carried on under the authority of the Federal Government. In support of their contention they relied upon the case of the National Shipping Corporation v. Sind Labour Appellate Tribunal (1). In that case it was contended before a Division Bench of the Karachi High Court that as the National Shipping Corporation of Pakistan was a statutory Corporation and that further as its authorised capital was fixed by statute and the Central Government has reserved for itself certain powers i,e, permitting increase in authorised capital, nominating Directors, or restricting the Corporation from borrowing, and issuing instructions to the Board of the Corporation on questions of policy involving national interest, the Corporation should be deemed to be carried on under the authority of the Federal Government and hence the Standing Orders should be deemed not to be applicable to it or its workmen. Repelling this argument it was observed by the Division Bench as follows:- "I now come to the alternate argument of the learned counsel that the Standing Orders Ordinance was not applicable to the petitioner-Corporation as it is an establishment "carried on by or under the authority of the Central Government." That the establishment of the petitioner-Corporation is not carried on by the Central Government is not denied by the learned counsel, for what has been urged is that its establishment is being carried on under authority of the Central Government. The words employed by the Legislature, it may be noted, are not an establishment established by the Central Government or under its authority but one carried on by or under the authority of the Central Government. The learned counsel relied on the facts that the Corporation was established by the Central Government under section 3 of its Ordinance; that its majority Directors including the Chairman, the Managing Director and the Finance Director are to be appointed by the Central Government ; that in discharging its functions the Board under section 8 was to be guided by such instructions on questions of policy involving national interest as may be given to it from time to time by the Central Government that the Corporation's borrowing powers were subject to previous sanction of the Central Government under section 23 and under section 30 the Corporation could be wound up only by an order of the Central Government and in such a manner as the Central Government may direct. It may, at once be noted that under subsection (1) !Of section 8 the affairs {{FOOT NOTE}}
(1) 1975 PLC 1 {{FOOT NOTE}} ' and the business of the Corporation is. Vested in its Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Corporation and the nominee Managing Director of the Central Government under subsection (2) of section 14, was to exercise only such powers and perform such functions as may be prescribed or delegated to him by the Board. These provisions would show that the Management of the petitioner-Corporation was vested in its Board, which was to carry on its business as a body and the fact, therefore, that the majority of its directors are nominated by the Central Government is no legal consequence for these persons, namely, the nominated directors have no individual authority or power to exercise any functions. It is also significant to note that under subsection (3) of section 8 the Board is only to be guided by instructions from the Central Government and that too only on question of policy involving national interest. From these provisions it is obvious that the establishment of the petitioner-Corporation is not being carried on under the authority of the Central Government but on its own authority notwithstanding the restrictions on its borrowing powers or the power vested in the Central Government under section 30 of the Ordinance for winding up. The least that the learned counsel had to show to us was that the petitioner-Corporation would have ceased to carry on its business in the absence of the exercise of any authority by the Central Government. No doubt the Central Government have reserved for itself certain powers in the functioning of the Corporation but nonetheless the petitioner-Corporation will continue to function under its own authority without the exercise of authority by the Central Government. I am, therefore, unable to agree with the learned Appellate Tribunal that the petitioner-Corporation is an establishment carried on under the authority of the Central Government."
8. The case of the National Shipping Corporation was relied upon by a learned Single Judge of the Karachi High Court in the case of I. C. P. Employees' Front, Karachi v. Presiding Officer, Pith Sind Labour Court (1) for holding that that the Standing Orders were applicable to the I.C.P.
Establishment and its employees.
9. Support was also sought by Mr. Muhammad Ahmed Khan from the case of Tomlin v. Hannaford
(2) for his contention' that the respondent establishment was not being carried on under the authority of the Federal Government. The issue involved in the English Decision, however, was totally different as also the facts on which that case was decided. The question that fell to be considered in that case was whether the British Transport Corporation Commission would be said. To be a servant or agent of the Crown by reason of the control over it by the Ministry of Transport and by the further fact that the Railways had been nationalised.
10. Respectfully following the rule laid down by the High Court in the case of National Shipping Corporation, I am of the view that notwithstanding the fact that under the Pakistan Insurance Corporation Act, 1952, considerable powers and control over the affairs of the Corporation vest {{FOOT NOTE}}
(1) 1977 PLC 154 (2) (1950) 1 K B 18 {{FOOT NOTE}} ' in the Federal Government, the respondent establishment is not being carried on by or under the authority of the Federal Government but by its own Board of Directors, some of whom at least are elected by shareholders.
11. The upshot of the above discussion is that I would accept the appeal, set aside the impugned decision and remand the case to the learned Labour Court for deciding the grievance petition of the appellant on merits.