The defendant is a Company incorporated under the Companies Act, 1913 and the plaintiff was in its service from April 1957. Since 1960 he had been working as a Chemist. But, according to him, despite his competence, he was not being given the promotion due to him. Then, according to the plaint, on 4th September 1967, the defendant introduced a scheme known as the Revised Voluntary Resignation Scheme. I shall refer to this Scheme as the said Scheme and the employees of the defendant who resigned under it received substantial benefits. According to the plaintiff, the benefits of the said Scheme were available as of right to all the employees of the defendant.
Accordingly, he had submitted his resignation under it by his letter dated the 1st December 1967. In this letter he had called upon the defendant to accept his resignation with effect from 31-12-1967.
But, as the defendant did not care to answer his letter he had submitted a second letter of resignation under the said Scheme dated 19-12-1967. He received the defendant's reply dated the 22nd December 1967 on 4th January 1968 and in this reply the defendant refused to accept his resignation and wrongly contended that the said Scheme was available only to those of the defendant's employees, who were surplus. Thereafter, according to the plaint, on 23rd January 1968, the defendant gave the plaintiff an increment. But he continued to make his representations for the acceptance of his resignation under the said Scheme. Finally, he gave the defendant a notice dated the 29th April 1968 calling upon it to accept the resignation submitted by him on 1-12- 1967 under the said Scheme with effect from that date. By its reply dated the 1st May 1968, the defendant accepted his resignation but not under the said Scheme; therefore it did not give him any of the benefits contained in the said Scheme. According to the plaint, the benefits to which the plaintiff was thus entitled amounted to Rs, 27,900.00, and as this amount was not paid, on 1-10- 1968, on the basis of the above mentioned allegations, he filed this suit against the defendant for the recovery of the said amount of Rs, 27,900, with costs and interest at 9% per annum from the date of the suit till the realisation of his Scheme.
2. In its written statement the defendant has admitted that the plaintiff had been in its employment and that he was a competent employee. However, it has submitted that, as it had some surplus staff, after consultation with its Employees' Union, it had introduced a Voluntary Resignation Scheme, the object of which was to give an incentive to its surplus staff to resign. Thereafter, this Scheme was revised and, as contended in the plaint, the said Scheme was introduced in September 1967. But the sole object of this Scheme was to eliminate its surplus staff, and it did not amount, as contended by the plaintiff, to a general, invitation to its staff to resign on lucrative terms. It has further submitted that as the plaintiff was neither surplus nor unwanted, he was not covered by the said Scheme, and that his employment continued to be governed by the terms and conditions of his service therefore he was not entitled to the benefits of the said Scheme which were in the nature of ex gratia payments only. It has therefore further submitted that the acceptance of resignations under the said Scheme was in its sole discretion, and until it had finally and unreservedly accepted the resignation of an employee who wanted to resign, there was no contract between it and any of its employees who wanted to resign under the said Scheme. In the result, it has submitted that, as the plaintiff was not entitled to resign under the said Scheme, and as his resignation under that Scheme had not been accepted, it was not under any liability for the amount claimed or for any amount,
3. On these pleadings the Court framed the following issues : (1)Whether the plaintiff's resignation was submitted and accepted by the defendant under its "Voluntary Resignation Scheme"?
(2)If so, is the plaintiff entitled to receive Rs, 27,900 with interest thereon at 9% per annum and costs of the suit ?
The plaintiff has examined himself in support of his claim, whilst the defendant has examined two of its officers, Mr. A. U. Hyder and Mr. M. A. D'Souza, and I shall now consider the evidence produced by the parties.
4. Issue No, 1.--It is common ground between the parties that the said Scheme provided for the payment of liberal compensation to the defendant's employees and the contents of this Scheme are set out in Exh.
8. The plaintiff has said in his evidence that he had received a copy of this Scheme from his Departmental Head, Mr. Alvi, and had intimated his acceptance of it in September 1957. He has also produced copies of his letters dated the 1st December 1967 and 19th December 1967 to the defendant's General Manager (Exhs. 9 and 10 respectively) in which he has submitted his resignation under the said Scheme. He has then said that his resignation was not accepted under the said Scheme and intimation of the same was given to him by the defendant's letter dated 22nd December 1967 (Exh. 11) which had been received by him on 4th January 1968. He has also stated that he had continued to press for his resignation, vide his letter to the defendant's General Manager dated the 29th January 1968, of which Exh. 13 was a true copy, and that finally he had submitted Hs resignation by his letter of 29th April 1968 of which Exh. 14 is a true copy. He has further said in his evidence that the defendant accepted his resignation by its letter of 1st May 1968 (Exh. 15) to him, but that it did not accept it under the said Scheme. Both Mr. Hyder and Mr. D'Souza have admitted that the plaintiff had submitted his resignation under the said Scheme, but they both said that when his resignation was finally accepted by the defendant's letter of 1st May 1968, it was accepted unconditionally and not in pursuance of the said Scheme. There is thus really no difference between the parties as to what happened in the matter of the plaintiff's resignation and 1 cannot understand how this issue was framed. Be that as it may, I hold that the plaintiff had submitted his resignation under the said Scheme, but the defendant did not accept it under that Scheme.
5. Issue No 2.--The real question in this suit is whether the plaintiff is entitled to the emoluments specified in Exh, 8, and in order to establish his claim he has to prove that his acceptance of the said Scheme imposed a contractual obligation on the defendant to give him the benefits of that Scheme. Mr. Shaikh Hyder has therefore argued that the said Scheme constituted an offer which became a binding contract as soon as it was accepted by the plaintiff. On the other hand, Mr. Ibadat Yar Khan has submitted on behalf of the defendant that the said Scheme had never been communicated to the plaintiff, who had found out about it surreptitiously, that his resignation under that Scheme had not been accepted by the defendant, and alternatively that even if it had been so accepted it had been withdrawn on account of a fresh agreement between the parties.
Learned counsel also argued that the said Scheme was only an invitation for an offer, and that in any case its acceptance did not constitute a contract within the meaning of section 2 of the Contract Act, 1872.
6. I shall now consider learned counsel's arguments, and if the said Scheme was not communicated to the plaintiff by the defendant the question of his acceptance of that Scheme would not arise, therefore I shall first consider the evidence and arguments on this point.
7. The plaintiff has said in his evidence that although the said Scheme had not been placed on the defendant's Notice Board, it had been circulated amongst its staff. He has further said in his cross- examination that it had been shown to him by his Departmental Head, Mr. Alvi, and has then said "I distinctly remember that a copy of this Scheme with a general covering letter had come to me and I had marked on the Scheme "Seen" and I had also intimated my acceptance of it". However, as I have pointed out, both the defendant's witnesses have denied that the said Scheme was circulated amongst the defendant's staff and Mr. Ibadat Yar Khan submitted that their evidence was supported by the contents of Exh.
8. Exh. 8 is described as a confidential memorandum and is apparently addressed only to Departmental Heads. At the bottom of the memorandum, there is a footnote with the initials of the persons to whom its copies were sent, and it is not disputed before me that the initials are the initials of the defendant's Departmental Heads. Prima facie this would show that the said Scheme was not meant to be circulated amongst the defendant's staff. But its last para. states that the addressees could "communicate the Scheme to interested employees verbally". Therefore Mr. Alvi, who was the Departmental Head, was entitled, in the exercise of his discretion, to communicate it to the plaintiff. I shall not consider here the plaintiff's statement in his examination-in-chief, but he has said in his cross-examination that Mr. Alvi had shown him the said Scheme. In these circumstances, as the defendant claims that its Departmental Head, namely, Mr. Alvi did not show the said Scheme to the plaintiff it should have examined Mr. Alvi. Its only explanation of its failure to do so is that Mr. Alvi had left its service after obtaining emoluments under the said scheme undtr threats from Mr. S. S. Jafri, then Industries Secretary to the Government of Pakistan. First of all the allegation of threats by Mr. Jafri is pure hearsay and is not fit to be treated as evidence. Secondly, merely because Mr. Alvi had left the defendant's employment it did not mean that it was relieved of its liability to examine him. But, as I have observed, the defendant has examined Mr. Hyder and Mr. D'Souza, therefore I have to consider their evidence. Mr. Hyder's evidence is not relevant at all because he admitted in his cross-examination that he had no personal knowledge of the facts of the case and his evidence in chief was based only on the examination of the relevant files which were not even produced before me. However, Mr. D'Souza claims to have taken over from Mr. Alvi in October 1967 and has said that he had remained the Head of the Departments in which the plaintiff was working until long after his resignation. I have however not been impressed by the evidence of this witness, who was produced only after Mr. Hyder's admission in his cross-examination that he had no personal knowledge of the plaintiff's case. Further, Mr. Hyder has not stated that Mr. D'Souza had become the plaintiff's Deparmental Head in October 1967 nor was the plaintiff cross-examined about it. Again, whilst the plaintiff said very clearly in his evidence that he did not hear from the defendant about his resignation until he received the defendant's letter Ex h. 11 dated 4th January 1968, Mr. D'Souza claimed in his evidence that, as the Departmental Head, he had met the plaintiff in December 1967 in order to persuade him not to resign, and had explained to him that the said Scheme was within the sole discretion of the management and was not applicable to him, as he was not surplus. As the defendant did not cross-examine the plaintiff on the alleged meetings between him and Mr. D'Souza, I am not able to believe Mr. D'Souza's evidence. In the circumstances discussed, having seen the plaintiff, I fully believe his claim that he had been shown a copy of the said Scheme by Mr. Alvi, and, that he had submitted his resignation after having examined it. But this finding can help him only if his acceptance of the said Scheme amounted to a contract, and I shall now examine this aspect of the case.
8. The first para. of the said Scheme states that it is open only till the end of 1967, and, as the plaintiff had submitted his resignation on 1st December 1967 (Ex h. 9), Mr. Shaikh Hyder argued that, as von as the defendant had received this letter, it created a contract under which the defendant was compelled to accept the plaintiff's resignation and to pay him emoluments under the said Scheme. On the other hand, the defendant's case is that the said Scheme was introduced to eliminate surplus staff and even when an employee intimated his desire to resign, the question whether his resignation was to be accepted or not was within the sole discretion of the defendant's management, and Mr. Ibadat Yar Khan further submitted that, at the highest Exh. 8 was not, an offer but an invitation for an offer. In order to decide these arguments, it is necessary to refer briefly to the said Scheme.
9. As I have already pointed out, it is described as a "confidential memorandum", and the defendant has proved that it was circulated only amongst its Departmental Heads, with authority to those Heads to show it to employees. This, I think, is a circumstance which supports the defendant's case, because if it had been intended to confer a right on all the defendant's employees, there would have been no need whatever either to mark it confidential or to restrict its circulation. Any other vie w would make it a hazard for the Heads of a large organisation to communicate with one another. Turning now to the terms of the said Scheme, it states : "Revised Voluntary Resignation Scheme.--The Voluntary Resignation Scheme which was discontinued has been reintroducted on improved terms for all employees effective August 20, 1967 and will remain is effect till the end of the current year.
Employees separating under the revised scheme will get the following benefits. Then the document goes on to state the manner in which benefits to employees separating are to be calculated.
Finally the last para. states : "You may communicate the scheme to interested employees verbally and advise the Personnel Department of their names so that their benefits can be worked out and a clear picture may be given to the employees concerned."
Nowhere does the document states that employees were entitled to resign under it, and on the whole its contents are more consistent with the defendant's plea that it had, under it, the option of accepting or refusing the resignation of its employees. Additionally, the heading of the document shows that it was a revised scheme and it further states that the old scheme was being re- introduced on improved terms. It is common ground between the learned counsel that the old scheme is set out in the memorandum dated the 5th August, 1966 (Exh. 7). This memorandum also contains a scheme for the resignation of the defendant's employees and further expressly states that all resignations were subject to review by the General Manager. Because Exh. 8 does not expressly state that the Management had reserved the right of accepting or not accepting the resignation of an employee, Mr. Shaikh Hyder submitted that this was an indication in support of his interpretation that the said scheme conferred a right on the defendant's employees. But, as I have pointed out, Exh. 8 clearly specifies that the said Scheme, has to be read with the earlier scheme, and it further states that it was only the old scheme which was re-introduced on improved terms, The words "improved terms" would refer to financial benefits, therefore on a proper interpretation of Exh 8 it seems to me that the only alteration under the said scheme was about the pecuniary benefits and that all the other terms and conditions of the old Scheme continued. This means that the provision in this old scheme (Exh. 7) that the acceptance of the resignation of any employee was in the sole discretion of the defendant's General Manager was automatically incorporated into and/or continued under the said Scheme. I therefore agree with Mr. Ibadat Yar Khan that the said scheme was not an offer but only an invitation for an offer.
9-A. However, assuming for the sake of argument that the said Scheme was an offer I do not think this helps the plaintiff's case. Not every offer that is accepted becomes a binding contract under law, otherwise every host, who cancels an invitation for dinner which has been accepted by his guests, would be confronted by claims for damages for cancelling his offer for a dinner. In all systems of jurisprudence the law has drawn a distinction between promises which are intended to create legal relations and promises which are not intended to create legal relations, and so the Contract Act has drawn a distinction between promises simplicitor and promises which are agreements enforceable at law. Subsection (b) of section 2 of the Contract Act prescribes that when a proposal made by a person to another person is accepted by that other person it becomes a promise. Subsections (c), (d) and (e) then state : "(c) The person making the proposal is called the `promisor', and the person accepting the proposal is called the 'promisee'.
(d)When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise.
(e)Every promise and every set of promises, forming the consideration for each other, is an agreement."
Thus, it is only a promise supported by a consideration which) becomes a contract under our laws.
Assuming therefore that the said scheme can be treated as a promise by the defendant to its employees, the plaintiff can succeed only if he can show that he had advanced consideration for the defendant's proposal. I therefore, invited Mr. Shaikh Hyder to show what consideration had been given by the plaintiff so as to bind the defendant. Learned counsel could only refer me to the plaintiff's letters of resignation to the defendant. But the plaintiff was always free to resign from his employment, according to law, and the only reason for submitting his resignation under the said scheme was the hope of obtaining the substantial emoluments under that C scheme, therefore in submitting his letter of resignation he did not act to his detriment, and this letter cannot be treated as consideration on his part so as to bind the defendant. I may quote here a passage from Mulla's Commentary on the Contract Act, and as I prefer the lucid statement of the law (I say so with respect) by Sir Morris Gwyer, I shall quote a passage from the 7th Edition of Mulla at page 25 : "The essence of consideration is that the promisee takes on himself some kind of burden, or 'detriment,' as the English authorities call it. Where the consideration is a present performance and not a promise . . . . the deteriment may consist either in actually parting with something of value, or in undertaking a legal responsibility, or in foregoing the exercise of a legal right. It is not common experience that the exercise of one's legal rights is always profitable; nevertheless that which the law deems worthy of its protection must be presumed to be of some value. Thus the performance which constitutes a consideration may be negative as well as positive, provided that the promisee's abstinence from exercising a right was undertaken at the request of the promisor.
There need not be a total abandonment of the right, or an undertaking to suspend it for a definite time. Such an undertaking, if it exists, is of course not a performance, but a promise, and then the contract is formed by mutual or reciprocal promises (subsection ( f )).
In my humble opinion this passage states the correct law. As the plaintiff did not do anything to his detriment or part with anything of value or undertake any legal responsibilities by seeking the emoluments of the said scheme. I am of the view that even if the said scheme was an offer, there was no consideration for it so as to make it an agreement.
10. However, Mr. Shaikh Hyder said that his case was supported by English decisions which I shall now consider. In Carlill v. Carbolic Smoke Ball Co. the defendants were the proprietors of a medical preparation called the Carbolic Smoke Ball. This smoke ball was sold at 10 sh. and they issued an advertisement in which they offered to pay 100 to any person who contracted influenza after having used their smoke balls in the specified manner. The plaintiff purchased the defendant's smoke balls. But despite having used it according to the defendant's instructions, she contracted influenza, therefore she sued the defendants for the offered by the defendants under their advertisements. Her claim was upheld by the Court of Appeal. This judgment supports the plaintiff to this extent that the defendant cannot repudiate the said scheme merely because it was not specifically addressed to him. But, as I have shown, the real point for determination is whether it can be said that the plaintiff has given consideration for the said scheme, and on this point I shall quote the observation of Lindly, L. J. at page 264 : "I come now to the last point which I think requires attention--that is, the consideration. It has been argued that this is nudum pactum --that there is no consideration. We must apply to that argument the usual legal tests. Let us see whether there is no advantage to the defendants. It is said that the use of the ball is not advantage to them. The answer to that, I think, is as follows. It is quite obvious that in the view of the advertisers a use by the public of their remedy, if they can only get the public to have confidence enough to use it, will react and produce a sale which is directly beneficial to them. Therefore, the advertisers get out of the use an advantage which is enough to constitute a consideration.
But there is another view. Does not the person who acts upon this advertisement and accepts the offer put himself to some inconvenience at the request of the defendants? Is it nothing to use this ball three times daily for two weeks according to the directions at the request of the advertiser? It appears to me that there is a distinct inconvenience, not to say a detriment, to any person who so uses the smoke ball. I am of opinion, therefore, that there is ample consideration for the promise."
Applying the principles laid down in these observations, it is clear that the Carbolic Smoke Ball Company was bound by its promise, because, by purchasing the smoke ball for 10 sh., which was a very substantial amount 80 years ago, and by using it, the plaintiff had done something to her detriment. But it cannot possibly be said that the plaintiff had acted to his detriment by writing a letter of resignation in which he demanded the emoluments available under the said scheme, therefore the judgment cited is distinguishable on the facts. On the other hand, the observations in the first para. quoted lend some support to the defendant's interpretation of the said scheme.
10-A. Mr. Shaikh Hyder also referred me to a decision of the Court of Appeal in Davies v. Rhondda District Urban Council . The facts in that case were that the defendant was the local education authority, and the plaintiff was employed by it as a teacher. At the outbreak of the First World War, before the introduction of compulsory Military service in England, the defendant had issued a circular that if any teacher employed by it volunteered for military service, it would continue to pay that teacher his full civil pay less a deduction on account of his army or navy pay and/or allowances. The plaintiff, who was a teacher, informed the defendant that he would volunteer for military service on the basis of its circular and did so. As the defendant did not pay him his salary he filed a suit against it which was dismissed on the ground that there was no contract between the parties because there was no consideration on the plaintiff's part. The Court of Appeal set aside1 2 the trial Court's judgment and held that the plaintiff had advanced consideration to the defendant so that there was a contract between the parties. Mr. Shaikh Nyder submitted that this judgment supported his argument because the plaintiff also had submitted his resignation in the instant case. But in the judgment cited it was not the plaintiff's resignation from his employment with the defendant that constituted consideration but the fact that he had volunteered for military service on the basis of the defendant's circular. This is made very clear from the following passage in the judgment of Pickford, L. J. at page 168: "On the faith of that circular the plaintiff joined the Army. The Military Service Act, 1916 (5 and 6 Geo.
5 c. 104) was not in operation at that time, and therefore he was not bound to join the Army ; but he did join it on the faith of that resolution, and it will be noticed that in the letter in which the resolution is sent to him it was said to apply to teachers who are serving or may volunteer for service, and therefore it is obvious that it was never intended to apply simply to persons called up for active service in the sense of being reservists and liable to call, and not volunteers. The plaintiff was a volunteer, and it was pointed out to him that the resolution was intended to apply to volunteers. Upon that he joined. It is said that there was no contract, and there was no contract on the part of the council to pay him the money. I mean contract in fact, whether ultra vires or not is another matter. It seems to me that there was as a clear contract as you could have, assuming the defendants have the power to make it."
Thus, as there can be nothing more to a man's detriment than volunteering for military service in a war, on a proper appreciation of the facts, far from helping the plaintiff's case, the judgment cited goes against his plea. I have therefore no doubt that, in the instant case, the plaintiff's purported resignation did not amount to consideration on his part.
11. As the plaintiff's letters of resignation did not amount to consideration, it is clear that there was no contract between the parties, so that in any view of the matter the plaintiff is not entitled to the benefits of the said scheme or to any relief. It is therefore not necessary to consider the other arguments advanced by the learned counsel, and the second issue is decided against the plaintiff.
The suit is without merit and is dismissed, but in the circumstances, I leave the parties to bear their own costs. (1893) 1 Q B 256 (1918) 86 L J K B 156