Law: Contract Act (IX of 1872)

Section: 73,74

(a) Master and servant-------   ----Right of master to take action against employee-Grounds on which services of employee can be terminated by employer.   In law the employer has certain well recognised privileges. One of them is that an employer is entitled to rely on the incompetency or inefficiency of an employee (as a ground for dismissal) even if it comes to his notice later on.   If a servant indulges in competitive business, and fails to pay full attention to his employer's work or indulges in pilferage, these are good grounds on which his services can be prematurely terminated.   Halsbury's Laws of England, Vol. XXV, para. 995 ; Malabar Forest and Rubber Co. v. D. H. Macleod A I R 1926 Mad. 270: Bostan Deep Sea Fishing & Ice Company v. Ansell (1888) 39 Q B D 339; Ridgway v. Hunger Ford Market Co. 111 E R 379; All India Reporter Ltd., Bombay v. D. D. Datar A 1 R 1951 Nag. 412; Pearse v. Foster and others 54 L T R 664; Gujrat Manu facturing Co. v. Govind Flair A I R 1940 P C 101 and Reid v. Explosives (1887) 19 Q B D 264 ref.   (b) Contract Act (IX of 1872)----   ---- Ss. 73 & 74-Contract of service - Wrongful dismissal of servant-Servant entitled to damages-Measure of damages.   It is only in those cases in which no sum is specified that the damages are to be determined after taking into consideration the probabilities of employee obtaining employment elsewhere. It will be noticed that under the English Common Law Where a contract of service provides that a sum shall be payable in the event of breach, such sum is recoverable if in fact it constitutes liquidated damages and not a penalty on the principle that the sum named is the result of honest and genuine pre-estimate of damages.   In Pakistan the law on this point is governed by sections 73 and 74 of the Contract Act. In cases where the parties have not contemplated before hand a fixed amount as damages, its estimate is to be made in accordance with section 73. But if the parties have pre-estimated the damages, it will be assessed in accordance with the principles laid down in section 74 of the Contract Act.   If the plaintiff fails to prove…