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Petitioner: Messrs GULISTAN WEAVING MILLS VS Respondent: THE COMMISSIONER and another
Court Name: Lahore High Court Judge(s): Dr. Munir Ahmed Mughal Title: Messrs GULISTAN WEAVING MILLS vs THE COMMISSIONER and another Case No.: Writ Petition No,22194 of 1996 Date of Judgment:1999-07-01 Reported As: 2000 PLC 37 Result: Petition allowed
JUDGMENT
JUDGMENT ' The petitioner Mills is a public limited company Respondent No, 4 sent a letter to the petitioner's Mills on 18-5-1994 and called the record from the petitioner's Mills. The petitioner's Mills replied to respondent No,4 that since the petitioner's Mills has not been notified under section 1(3) of the West Pakistan Employees' Social Security Ordinance. 1965 for the imposition of social security scheme. Hence, the production of record was unwarranted by law. Respondent No,4 instead of supplying of copy of the notification with regard to the imposition of social security scheme to the petitioner sent notice for payment of Rs,15,000. The petitioner referred back the same on the ground that since there was no notification the demand has no entity in the eye of law and requested for its withdrawal. Therefore, respondent No,3 sent notice under section 81 of the Land Revenue Act, 1967 for the recovery of the amount of Rs,6,36,000 by coercive method. The petitioner has also challenged the validity of the said notice. 2. Notice of the writ petition was given to the respondents. In response to it respondent No,1 has appeared through the learned Assistant AdvocateGeneral, Punjab, Lahore, while respondents Nos,2 to 4 are represented by their counsel and have also filed written statements in which the issuance of the letter by respondent No,4 and also the reply given by the petitioner and the su bsequent demand and recovery notice by the respondents have been admitted and it has been pleased that the notification stood issued and it was specifically mentioned in it that the Ordinance has been made applicable to any other the unit functioning in the premises of the notified establishment and that as the petitioner Mills is functioning in the notified premise of Messrs Gulistan Weaving Mills, the Ordinance is also applicable to the petitioner Mills.
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3. The point for consideration is as to whether the proceedings taken against the petitioner's Mills without specifically mentioning the name of the petitioner's Mills in the Schedule to the notification in pursuance of Notification No,Lab.V/II-61/90 dated 31-7-1991 under section 1(3) of the Punjab Employees' Social Security Ordinance, 1965 are without lawful authority and of no legal effect. Consequently, the demand notice dated 20-9-1994, the impugned order dated 25-1-1995 and the order dated 6-6-1996 of the Social Security Court, Punjab, Lahore are illegal. 4. Arguments have been heard at length. 5. Learned counsel for the petitioner has submitted that another Mills M/s. Gulistan Weaving Mills situated on the same road, which is also a public limited company having its own entity, boundaries, accounts and the employees and similarly registered with the Government of the Punjab and the Government of Pakistan for all purposes of a separate public limited Company. The said Mills has been notified for the purposes of the applicability of Social Security Scheme and that the respondents treating both the Gulistan Weaving Mills and the Gulshan Weaving Mills as one are illegal and without any authority imposing the notification to the petitioners' Mills whereas the petitioner's Mills is a juristic person having been registered as public limited company by shares under the Companies Ordinance, 1984 and also the petitioner's Mills is separately registered under the Factories Act, 1934 with the Directorate of Labour Welfare, Lahore Region, Lahore vide Registration Certificate No, F/LR/SKP/184, dated 22-12-1991 and is also paying contribution to the Employees' Old-Age Benefits Institution with whom it is also registered. Further, it is registered with the Government of Pakistan Collectorate of Central Excise and Sales Tax, Lahore it has its own account, own staff and all other things required for its independent entity. Learned counsel for the petitioner further submitted that under the Punjab Employees' Social Security Ordinance, 1965 the applicability of the Ordinance is to be made by the Government of the Punjab by a Notification specifying in this behalf and that no such Notification has so far been issued and respondent No,4 has erred in sending notice for the payment of amount without looking into the matter with the scheme of the social security has been made applicable to the petitioner's Mills and that respondent No,3 has started the coercive method against the petitioner's Mills. Learned counsel for the petitioner further submitted that petitioner's Mills was forced to file a complaint under section 57 of the Social Security Ordinance, 1965 before respondent No,2 alongwith an application for interim relief. Respondent No,2 rejected the prayer of interim relief and the petitioner preferred to run before the Social Security Court against the order of respondent No, 1 which was granted but was later on vacated by dismissing the appeal on 6-6-1996 holding that the appeal, against interim order did not lie. The petitioner filed F.A.O. No, (sic) against order, dated 6-6-1996 which was also dismissed being incompetent. Meanwhile the petitioner also filed Writ Petition No, 1643 of 1995 in the Lahore High Court which was also dismissed on the plea that relevant original Notification has not been shown by the petitioner to the respondent which was also held not maintainable and was dismissed on 26-2-1995 in limine. However, it was observed that in case petitioner approaches respondent No,2 for obtaining necessary Notification it shall be supplied to the petitioner but shall be dealt with him with due respect and strictly in accordance with law. Thereafter, the petitioner sent a letter, dated 13-9-1995 to respondents Nos,3 and 4 for supply of the petitioner's Mills. No reply was given. The petitioner again wrote a letter for the supply of the Notification to clear the matter and then another letter dated 4-4-1996 for the same purpose. These letters were sent to respondent No,1 who also wrote a letter to respondent No,2 to supply a copy of the notification to the petitioner's Mills. No reply was given and respondent No, 1 again sent a letter to respondent No,2 but to no avail. Respondent No,2 vide his order dated 20-11-1996 also directed to respondents Nos,3 and 4 to supply the said notification to the petitioner's Mills it is further submitted that petitioner being public limited company having its juristic entity and answerable to its shareholders about payment cannot pay the undue amount which is not legally payable to the institution. The
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petitioner having requested the respondents that a Gazette Notification to this effect may be issued and the petitioners will ,be readily paying the contribution to the institution but to no avail. It is further submitted that the respondents have not provided facilities and benefits to the workers of the petitioner's Mills and that the amount of contribution cannot be claimed from the petitioner's Mills as the same is not a tax but a fee for rendering the services required under the Ordinance and that the action of the respondents against the petitioner's Mills is against law and without jurisdiction and that they cannot recover any amount from the petitioner's Mills without the Gazette Notification of the applicability. It is further submitted that there is no other adequate, sufficient. Effective and immediate remedy available to the petitioner's Mills against the illegal acts of the respondents as such the writ jurisdiction of the High Court is being invoked and it is sought that the judgment dated 6-6-1996 passed by the learned Judge Social Security Court. Punjab, Lahore and the order dated 25-1-1995 passed by the Vice-Commissioner, Punjab Employees' Social Security Institution be set aside and the operation of the demand notice dated 20-9-1994 by respondent No,4 be: suspended and the notice under section 61 of the Land Revenue Act issued by respondent No,3 be declared as illegal, against law and of no legal effect and that the respondents be directed to supply the Notification, if any, with regard to the petitioner's establishment. 6. Learned Assistant Advocate-General, Punjab as well as learned counsel for respondents Nos, 2 to 4 have frankly conceded that there is no Notification wherein the name of the petitioner's Mills was specifically mentioned in the schedule. They both have stressed that the words 'or any unit functioning in ,the premises of the establishment' brings the petitioner's Mills within the meaning of Notification: 7. I have given due consideration to the valuable arguments on both sides. 8. The relevant law is contained under Chapter 1 of section 1 (3) of the West Pakistan Employees' Social Security Ordinance No, X of 1965 which is reproduced for ready reference:- "Chapter I-Preliminary, 1. (3) It shall come into force at once but shall apply only to' such' areas, classes of persons, Industries, or Establishments from such, date or dates and with regard to the provision of such,benefits as Government may by notification specify, in this behalf," ' The Notification in question is also reproduced:-- ' THE PUNJAB GAZETTE PUBLISHED BY AUTHORITY, LAHORE, WEDNESDAY, JULY 31, 1991 GOVERNMENT OP THE PUNJAB LABOUR DEPARTMENT ' The 31st July, 1991 ' No, Lab -V/11-61/40.--In exercise of the powers conferred by subsection (3) of section 1 of the West Pakistan Employees' Social Security Ordinance,. 1965 (West Pakistan Employees' Social Security Ordinance No,X .Of 1965)i the Governor of the Punjab is pleased to apply with effect from 1st August 1991 or the date of publication of the Gazette notification whichever is later the said Ordinance to then employer and employees of the establishments, mentioned in the schedule annexed hereto and/or any other unit functioning in the premises of the establishments and to direct that the employeesuf such establishments shall be entitled to benefits provided in sections 35, 36.37, 38, 39, 40, 41, 42, 43, 44 and 45 of-the Ordinance. ' SCHEDULE ' AREA SERIAL NO. NAME AND ADDRESS OF THE UNIT ' Lahore (s) 1 to 331.... ' SHEIKHUPURA 332 to 335 ' 336. M/s. Gulistan Weaving& Mills,(Pvt.)Ltd, Ferozewala ' District Sheikhupura 357to339............. The legal background of the promulgation, of the Ordinance No,X of 1965 is that it was an Ordinance to introduce a scheme, of social security f providing benefits to certain employees or
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their dependents. In the- event oft sickness, maternity. Employment injury or death and for matters: ancillary thereto and whereas the Provincial Assembly of West Pakistan was not in session and the Government of Punjab is satisfied that circumstances exist which render immediate legislation necessary at that time, therefore, in exercise of the powers conferred on him by clause (1) of Artide 79 of the then Constitution, the Governor of West Pakistan was pleased to make and promulgate the said Ordinance. The Ordinance.. Was published, in the Gazatte of West Pakistan, Extraordinary 17th May, 1965 at page 2195, Chapter.1 is Preliminary and section 1 deals with as short title, extent, commencement and application of the Ordinance which reads as under:-- "CHAPTER I ' PRELIMINARY 1. Short title, extent, commencement and application.--(1) This Ordinance may be called the Provincial Employees' Social Security Ordinance, 1965. (2) .......................... (3) It shall come into force at once but shall apply only to such areas, classes of persons, Industries or Establishments. From such date or dates and with regard to provision of such benefits as Government may by notification, specify in this behalf." .9. The scheme of the Ordinance is that it comes into force at once and extends to the whole of West Pakistan but its application was limited only to such areas, classes of persons, industries or establishments, from such date or dates and with regard to the provisions of such benefits as Government may by notification, specify in this ,behalf, the idea is gradual application and extension, of Ordinance as regards areas, industries and benefits depending upon experience gained and the progress made in enforcement. 10. In the case of Kashmir Corner v. Sindh Employees' Social Security Institution, Karachi (PLD 1975 Kar. 36), the material facts were that at the shop situated at Zebunnissa Street the appellants sell both imported goods and locally purchased goods while the owners of this shop also run a cottage industry, at 101/27. Korangi Industrial Area, Karachi known as the Kashmir Corner Industry and there was a demand from the appellants in respect of both these establishments and the demand in respect of the Kashmir Corner Industry is not disputed and is not the subject-matter of the said appeal. The liability to pay in respect of the Zebunnissa Street Establishment. The liability arises if at all, from the West Pakistan Employees' Social Security Ordinance, (West Pakistan Ordinance, 1965). By a notification, dated the 15th October, 1968 the Ordinance was made applicable with effect from the 1st November, 1968 to various establishments in the Karachi District and one of these at Serial No,195 was Kashmir Corner Industries, Plot 101, Sector 27.K-1. Area, Karachi. The language in which the notification was made so applicable was also worth noticing. It was.-- "No, Lab-III-sss- 1/67.--In exercise of the powers conferred by subsection (3) of section 1 of the West Pakistan Employees' Social Security Ordinance, 1965 (West Pakistan Ordinance No,X of 1965), the Governor of West Pakistan is pleased to apply with effect from the first day of November, 1968, the said Ordinance to the areas mentioned in column 2 of the Schedule annexed hereto and to the employer and the employees of establishments mentioned against each of such areas in column 3 thereof, and to direct that the employees of such establishments shall be entitled to the benefits as provided in sections 35, 36, 37, 38, 39, 40, 41, 42, 43, 44 and 45 of the said Ordinance." 11. The Hon'ble Chief Justice of the High Court of Sindh and Balochistan observed:-- "The notification does not refer and the Ordinance does not, therefore, apply to a single natural person or legal entity all the employees of which are to be given the benefits of the Ordinance. On the contrary in its own terms it talks of the 'employers of establishments mentioned against each of such areas' and the word 'establishment' is itself defined in the Ordinance thus, establishment means organization, whether industrial, commercial, agricultural or otherwise'. By reason of this definition and section 1(3) of the Ordinance which I have already quoted it seems plain that the
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Ordinance was not to apply to all concerns owned by a particular person or a legal entity as such but to industries or establishments specifically stated (Ignore as being irrelevant for present purposes, the words 'classes of persons'). It seems to me, therefore, that the intention of the legislation was to provide specifically for the employees of such industries or establishments. The demand in respect of the Zebunninna Street Establishment is made on the basis in that establishment are sold some of the goods manufactured in the Korangi Establishment and that the two establishments have a common ownership. In my opinion that mere fact does not connect the two sufficiently for the4 purpose of making the Ordinance applicable to the Zebunnissa Street Establishment. It is in fact the case of the appellant, which is not denied, that a great deal of the products manufactured at the Korangi Establishment are exported while the Zebunnissa Street Establishment sells goods which are not manufactured at the Korangi establishment only." ' It was further observed by the Hon'ble Chief Justice of the said Court:- "Reliance was finally placed upon the definition of the expression 'Social Security Area' and which is defined to mean an area to which this Ordinance has been applied. This would indeed have carried the case of the respondent to a successful conclusion had the. Ordinance been made applicable or was capable of being made applicable to all kinds of establishments within a particular area. Whether a notification could have issued in respect of all establishments within a particular area is not a question which I am called upon to decide because the notification itself although it does define the area is nevertheless in terms restricted to certain named establishments." ' And ultimately, it was concluded that the appellants were not liable to pay any contribution in respect of the Zebunnissa Street Establishment and, therefore, the appeal was allowed with costs and the order of the 1st Sindh Security Court, Karachi was set aside. 12. In the case of the Kohinoor Chemical Co. Ltd. And another v. Sindh Employees' Social Security Institution (PLD 1977 Supreme Court 197) where there was common question of law as to the application of certain provisions of the West Pakistan Social Security Ordinance, 1965 to the Staff working at the head office of the establishments notified under section 1(3) of the said Ordinance even though the Head Office is not specifically mentioned in the relevant notification issued by the Provincial Government. The matter went in appeal before the Hon'ble Supreme Court of Pakistan by way of two appeals. One by Kohinoor Chemical Co. Ltd. And the other by Sindh Employees' Social Security Institution and the Hon'ble Supreme Court observed:-- "As regards the Kashmir Corner Industries, we may state at once that it is difficult to accept the contention advanced on behalf of this company that the establishment in the Zaibunnissa Street (formerly known as Elphination Street), Karachi, has nothing at all to do with the notified establishment situate in the Korangi Industrial Area. Such an assertion is negatived by the address printed on the letter addressed by the company itself to the Director of the Social Security Institution on the 18th of May, 1974. This letter clearly shows that the head office of the company is located at Kashmir Corner Elphtinston Street, Karachi. It follows, therefore, that here again it is a matter for investigation to determine as to which of the employees working in the Elphtinston (now Zaibunnissa Street) establishment are working in connection with the work of the notified establishment." ' In the same judgment, the Hon'ble Supreme Court observed:-- "In order to appreciate the respective contentions advanced on behalf of the parties it is necessary to refer to the relevant provisions of the statute. ' As already stated, subsection (3) of section 1 of the Ordinance enjoins that it 'shall apply only to such areas, classes of persons, industries or establishments, from such date or dates, and with regard to the provisions of such benefits as Government may, by notification, specify in this behalf, the notification of the 15th of October, 1968 has been issued under this provisions, and it specifies
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Karachi District as the territorial limits for the application of the Ordinance and further prescribes that the employees of the establishments mentioned in the notification shall be entitled to the benefits as provided in certain sections of the Ordinance. ' The term employee's has been defined in clause (8) of section 2 of the Ordinance as meaning any person working normally for at least twenty-four hours per week, for wages, in or in connection with the work of any industry, business undertaking or establishment, under any contract of service of apprenticeship whether written or oral, express or implied." ' According to clause (ii) of the same section 'establishment' means an organization whether industrial, commercial, agricultural or otherwise. ' Now it is clear that the two definitions the terms 'employee' and 'establishment' have to be read together in order to arrive at a correct interpretation of the scope of the notification insured by the Provincial Government. Similar terms employed in the comparable Indian Legislation, namely. Employees State Insurance Act, 1948 fell for interpretation by a Division Bench of the High Court in Employees State Insurance Corporation v. Ganpathlal Pillal (AIR 1961 Mad. 176). The word 'employee' is defined in section 2(9) of the Indian Act as meaning-- 'any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies, and (1) who is directly employed by the principal employer on any work of or incidental or preliminary to or connected with the work of the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere...' ' The leaned Judges took the view that only persons who were in some manner or other connected with the work of the factory, namely the manufacturing process could be said to be employees within the meaning of the definition even though there were the words incidental or preliminary to, but both these , had to be understood in conjunction with the words with the work of the factory. Having reached this conclusion they proceeded to examine whether the employees in question were performing any work in connection with the notified factory. It will be seen that only those employees were regarded as being liable to pay the necessary contribution whose work had a nexus with the work of the notified factory or establishment. ' There is no doubt that we are dealing with a beneficial or remedial legislation conceived as a means of ameliorating the lot of the working class, and, as such it would be in keeping with the accepted principle of interpretation, as observed in Divisional Superintendent, PWR, Karachi v. Bashir Ahmad (PLD 1973 SC 589) that it should be so construed as to advance the remedy and suppress the mischief, or else it would frustrate the legislative intent. It would appear, therefore, that, in keeping with the object of the legislation, as wide an interpretation should be placed or the terms 'employee' and 'establishment' as permissible within the language employed in the statute. ' Viewed in this light, the term 'establishment', as defined in clause (ii) of section 2 of the Ordinance, does not appear to me to be confined in its scope to merely the four walls of the physical premises where the notified establishment may be located; on the contrary the definition speaks of an organization whether industrial, commercial, agricultural or otherwise. In its literal sense an organization connotes a systematic arrangement for a definite purpose. In the legal sense it describes a system, a body or a society furnished with organs for the normal exercise of its appropriate functions. It follows, therefore, that an organization is not necessarily to terminus with the physical premises where it may be located. It is possible that a part of its stricture may be situated elsewhere but it must nevertheless be integral to its main functions and objects. ' That this is the proper construction of the term 'establishment' appears to find support from the definition of the term 'employee' as given in clause (8) of section 2 of the Ordinance, which includes in the definition not only a person working in the industry or establishment but also in connection with the work or any industry, business, undertaking or establishment. It is clear to me that a person
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who is working in connection with the work of an establishment may not necessarily be physically located in the notified premises but may be elsewhere of course, within the social security area as notified under clause (3) of section 1 of the Ordinance. The essential test in such a case would be whether the person concerned is indeed working in connection with the work of the notified establishment. The late Chief Justice has rightly remarked, in the case of the Kashmir Corner Industries that the mere fact of common ownership could not be made the basis of extending the social security benefits to employees of a sister concern, although they are not working in connection with the notified establishment. Similarly, the benefit could not be extended to employees simply described as working in the head office of the organization or establishment concerned, unless a proper inquiry is held to establish whether they are indeed working in connection with the notified establishment. ' Mr. Ali Ahmad Fazeel drew our attention to certain items in the Notification of the 15th October, 1968, in which the Head Office Establishment had been separately notified, and argued that without such separate notification the employees of the head office could not at all be included in the benefits. The argument is untenable for the reason that such…
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