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Controversial Judgment of Iftikhar Chodhary Regarding Master and Servant Doctrine

PLJ 2011 SC 614 · Peshawar High Court

This Supreme Court decision dealt with a series of appeals by Pakistan Telecommunication Company Limited (PTCL) against rulings from several High Courts that had ordered reinstatement of employees or granted them benefits like the Voluntary Separation Scheme after their contracts were terminated or they were otherwise let go.

The central legal question was whether PTCL, a partly privatized company (with the federal government still holding a majority 62% stake), could be taken to court through constitutional petitions, and whether its employees had enforceable statutory rights or were simply governed by ordinary contract law, known as the "master and servant" principle.

The Supreme Court held that since the government retained majority ownership, PTCL remained subject to the High Courts' constitutional jurisdiction. However, because PTCL had no statutory service rules, its employment relationships were governed by ordinary master-servant principles rather than public law protections. This meant contract employees had no vested right to continued employment or regularization once their contracts ended; the employer had discretion to end their service, subject only to standard notice requirements under labor law. The Court set aside the High Court judgments that had reinstated employees, ruling that such terminations were lawful, though affected employees remained entitled to one month's notice or pay in lieu, as applicable to workmen.

This judgment matters because it clarified the limits of judicial protection for employees of partially privatized state enterprises lacking formal statutory service rules.

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