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Petitioner: SHAHEEN AIRPORT SERVICES VS Respondent: SINDH EMPLOYEES' SOCIAL SECURITY JUDGMENT
Court Name: Supreme Court of Pakistan Judge(s): Saeeduzzaman Siddiqui, Ajmal Mian, Shafi-ur-Rehman Title:SHAHEEN AIRPORT SERVICES vs SINDH EMPLOYEES' SOCIAL SECURITY
JUDGMENT
Reported As: 1994 SCMR 881 Result: Appeal dismissed Judgment JUDGMENT ' AJMAL MIAN, J.---This is an appeal with the leave of this Court against the judgment dated 8-3- 1992 passed by a learned Single Judge of the High Court of Sindh in Miscellaneous Appeal No, 38 of 1990, filed by the appellant under section 64 of the Employees' Social Security Ordinance, 1965, hereinafter referred to as the Ordinance, against the judgment dated 12-11-1990 of the 1st Sindh Labour Court, Karachi, dismissing the appellant's appeal and upholding the order of the Commissioner, Sindh Employees' Social Security Institutions, Karachi, holding that the appellant was liable to make contribution under section 20 of the Ordinance, dismissing the above appeal by maintaining the above judgments/ordeRs, Leave to appeal was granted to consider the following two questions:-- "(1) Whether the relationship between the appellant and porters working at the airport is that of employer and employee? (2) Whether the amount of Rs,2 received by porter, per trip, out of the A total amount of Rs,10 paid by every passenger at the airport falls within the definition of 'WAGES' ?" 2. The brief facts are that the appellant is a subsidiary of Shaheen Foundation which was registered as a trust to cater to the serving as well as the retired personnel of the Pakistan Air Force. The appellant renders various services at the airport including providing porter services to the passengers at the Karachi Airport at the request of the Civil Aviation Authority, which has been entrusted with the management and control of the various civil airports in Pakistan. It appears that in the year 1988 upon checking the record of the appellant, the respondent raised a demand of Rs,2,20,300.15 against the appellant through letter dated 18-9-1988 being the amount of
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contribution under section 20 of the Ordinance for the period from January, 1987, to December, 1987. In response to the above demand, the appellant admitted its liability to the extent of Rs,730.14 but filed objections in respect of the rest of the demand. It seems that subsequently the appellant's Assistant Manager (Accounts) appeared before the Director of the respondent and admitted the appellant's liability to the extent of Rs,14,884.15, but the Director reiterated the above demand and called upon the appellant to pay an amount of Rs,2,13,199.01, which was followed by a formal notice of demand dated 20-10-1988. Thereupon, the appellant raised a dispute under section 57 of the Ordinance before the Commissioner, Sindh Employees' Social Security Institutions, Karachi. It appears that the Commissioner, after hearing the parties by his decision dated 19-12-1989, held that the appellant was liable for the payment of contribution amounting to Rs,2,13,199.01. The appellant, being aggrieved by the above decision, filed appeal under section 59 of the Ordinance, which was heard and dismissed by the learned 1st Sindh Labour Court, Karachi by its aforesaid judgment dated 12-11-1990. After that, the appellant filed the above Miscellaneous Appeal under section 64 of the Ordinance, which was dismissed by the judgment under appeal. Against the above judgment, the appellant filed a petition for leave to appeal, which was granted to consider the above questions. 3. In support of the above appeal, Mr. Shahenshah Hussain, learned Advocate Supreme Court appearing for the appellant, has urged as follows:- (i) Though the Ordinance is a beneficial statute and is to be construed liberally, but the Court cannot construe the same in a manner which may violate the provisions of the same; (ii) that the porters employed at the airport are engaged in contract for service and not contract of service as neither the appellant nor the porters are covered by the definitions of the words "employer" and "employee" given in clauses (9) and (8) respectively of section 2 of the Ordinance, nor remuneration received by the porters can be treated as "wages" in terms of clause (30) of section 2 of the Ordinance. (iii) That there was no express or implied agreement between the appellant and the porters in order to bring about the relationship of employer and employee. On the other hand, Mr. Sheikh Abdul Sarwana, learned Advocate Supreme Court appearing for the respondent, has submitted as under:-- (I) That the Ordinance is a specie of statutes which have been enacted in terms of clause (c) of Article 38 of the Constitution of the Islamic Republic of Pakistan, 1973, hereinafter referred to as to Constitution, which enjoins that the State shall provide for all persons employed in the Service of Pakistan or otherwise, social security by compulsory social insurance or other means and, therefore, the provisions thereof are to be construed liberally with the object to extend the benefits of the same to the maximum people. (ii) That the relationship between the appellant and the porters in terms of above clauses (9) and (8) of section 2 of the Ordinance respectively is that of employer and employee and that what a porter receives as remuneration for the services, is covered by the term "wages" as defined in clause (30) of section 2 of the Ordinance. (iii) That there is no legal requirement that in order to make the appellant liable for contribution under the Ordinance, there should be an express or implied agreement between the appellant and the porteRs, What is required is that the services should be rendered pursuant to an agreement which, in the present case, was admittedly between the appellant and the Civil Aviation Authority. 4. Before dealing with the contentions which touch upon the merits of the case, it may be pertinent to dilate upon the above first contention of the learned counsel for the parties i,e. As to the rule of interpretation. Mr. Shahenshah Hussain, in support of his above first contention, has referred to the case of the Workmen of M/s. Firestone Tyre and Rubber Co. Of India (Pvt.) Ltd. v. The Management
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and others (1973) 1 Supreme Court Cases 813) and the case of Lalappa Lingappa and others v. Laxmi Vishnu Textile Mills Ltd. (1981) 2 Supreme Court Cases 238). ' In the first case, the Indian Supreme Court, while construing the provisions of section 11-A of the Industrial Disputes Act, 1947, inter alia, held that in construing the provisions of a welfare legislation, Courts should adopt beneficial rule of construction i,e. If two constructions are reasonably possible then the construction which furthers the policy and the object of the Act and is more beneficial to the employees, is to be preferred to achieve the legislative purpose provided it is possible to do so without doing violence to the language used by the Legislature and keeping in view as to what was the previous position of law and to what extent the section exhibits intention to change the same. ' Whereas in the second case, the Indian Supreme Court, while interpreting the provisions of Payment of Gratuity Act, 1972, in context with the Badli employees, has held that if language is clear and explicit, plain meaning must be followed even in a social welfare legislation and inconvenience and hardship are not good grounds for deviating from the above rule. It was also held that beneficial construction to such legislation was permissible only where the provision was capable of two constructions. 5. On the other hand, Mr. Sheikh Abdul Sarwana, learned counsel for the respondent, has referred to clause (c) of Article 38 of the Constitution, Preamble to the Ordinance, the case of Kohinoor Chemical Co. Ltd. And another v. Sindh Employees' Social Security Institution and another (PLD 1977 SC 197) and the case of Messrs Macdonald Layton Constain Limited, West Wharf; Karachi v. Punjab Employees' Social Security Institution, Lahore and 2 others (PLD 1991 SC 1055). ' It may be observed that above Article 38 of the Constitution is a part of Chapter II of the Constitution, which contains Principles of Policy. It envisages promotion of social and economic well-being of the people in terms of its clauses (a) to (f). Whereas clause (c) of it enjoins that the State shall provide for all citizens employed in the service of Pakistan or otherwise, social security by compulsory social insurance or other means. ' It may further be observed that Preamble to the Ordinance envisages introduction of a scheme of social security for providing benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death, and for matters ancillary thereto. ' Whereas in the above first case this Court, while construing the provisions of section 2(8) and (11) of the Ordinance, held that the Ordinance is a beneficial or remedial legislation conceived as a means of ameliorating the law of working class and as such it would be in keeping with the accepted principles of interpretation that it should be so construed as to advance the remedy and suppress, the mischief, or else it would frustrate the legislative intent. ' In the above second case this Court again, while construing sections 2(11) and 20 of the Ordinance, observed that the petitioner (who was the employer in the. Above case and which had filed a petition for leave to appeal against the judgment of the Lahore High Court) in order to deprive a section of labour class employed by them of due benefits under the Ordinance, . Took up untenable pleas and adopted such positions which it was difficult to establish. It was further observed that "In such a situation under the Islamic dispensation, even if the case for both the sides had been equally balanced, in order to advance the command regarding social justice, as contained in the Objectives Resolution, the decision to be rendered by this Court would have gone in favour of upholding the workers' right to the Social Security Cover". 6. There cannot be any cavil with the proposition that the Court cannot construe even a beneficial statute in such a way that it may violate its provisions nor the Court can place a beneficial interpretation on a provision contrary to its language merely on the ground that its literal construction will cause hardship or would not be beneficial to the class for whose benefit the statute in question was enacted. However, at the same time, the Court, while construing a beneficial enactment, can take into consideration the object for which it was enacted and the
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mischief which it intended to suppress, and if two possible constructions of a provision of such a statute are possible, one which favours the class of persons for whose benefit the statute has been enacted, would be C preferred. In the case in hand, the Ordinance is a specie of a statute which was to be enacted by the State with the object of promoting social and economic well-being of the people and, therefore, it is a beneficial enactment intended to provide social security to the workmen covered by the provisions of the same and, hence, it is to be construed liberally and if two constructions are possible, one which extends the benefit of the Ordinance to more workmen and the other which limits such benefit, the former is to be preferred. 7. Adverting to the above second contention of Mr. Shahenshah Hussain, it may be observed that in order to understand the above contention in its right perspective, it may be appropriate to reproduce paras. 2 and 3 of the memo. Of petition of the above appeal, wherein the appellant itself has described the arrangement for porter services as follows:-- "2. That Civil Aviation Authority which was constituted under Civil Aviation Authority Ordinance, 1982 is responsible for providing operational facilities to the airlines in the country. This authority, therefore, initiated a porter service scheme for engaging porters for carrying the luggage of the passengers from curbsides to check-in counters on departure and from arrival halls to curbsides on arrival. This facility is akin to the railway coolies stationed at the various railway stations throughout the country. The petitioner was subsequently requested by the authority to undertake this venture of providing porter services to the passengeRs, 3. That the petitioner, therefore, made arrangements for porter services at Karachi Airport. These porters work on individual basis and are available for carrying the luggage of the passengeRs, They charge Rs,10 per trip as fixed by the Civil Aviation Authority and out of this amount, they pay Rs,8 to the petitioner and retain Rs,2 for themselves. The petitioner takes Rs,8 for the reason that it provides counters, furnitures and other miscellaneous items to the porters and also get them security passes from the relevant authority." ' From the above-quoted paras. Of the memo of petition, it is evident that the appellant at the request of the Civil Aviation Authority has taken upon itself to provide porter services for carrying the luggage of the passenger from curbsides to check-in counters on departure and from arrival halls to curbsides on arrival. It is also evident that for the above service, for one trip Rs,10 are charged, which amount is shared between the appellant and the porters at the ratio of Rs,8 and Rs,2 respectively. 8. Mr. Shahenshah Hussain has referred to the case of Abdur Razzaq Malik v. The Water and Power Development Authority through its Chairman and 3 others (PLD 1973 Lahore 188), the case of Taj Din and 44 others v. Punjab Laboure Court No, 3, Lyallpur and another (PLD 1976 Lahore 1169), the case of Lakshminarayan Ram Gopal and Son Ltd. v. Government of Hyderabad through the Commissioner, Excess Profits Tax (AIR 1954 SC 364), the case of V.P. Gopala Rao v. Public Prosecutor, Andhra Pradesh (1969) Supreme Court Cases 704), para. 872 from Halsbury's Laws of England, Fourth Edition, Vol. 25, and the definition of the term "contract of service" given in Stroud's Judicial Dictionary, Fourth Edition, page 587. ' In the above first case, a learned Single Judge of the Lahore High Court quoted para. 872 from the Halsbury's Law of England, Vol. 25, page 448 in order to determine, what is the law of master and servant and to what extent the petitioner which an employee of WAPDA, is governed by it and concluded that, firstly, the relationship is to be the result of the contract, secondly, the mere fact that it is the result of the contract would not necessarily mean that the relationship of master and servant exists between the employer and the employee. ' In the above second case, another learned Single Judge of the Lahore High Court, while construing the provisions of clause (xxviii) of section 2 of the Industrial Relations Ordinance, 1969 (which
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defines "employer") after referring the case-law, held that a concept of employment involved three ingredients: (i) employer; (ii) employee; and (iii) the contract of employment. ' Then he went on describing each of the above ingredients and observed that "prima fade test for the determination of the relationship between the employer and the employee is the existence of the right in the employer to supervise and control the work done by the employee not only in the matter of directing what work the employee is to do but also the manner in which he shall do his work". ' In the above third case, the Indian Supreme Court highlighted the difference between relationship of master and servant and of principal and agent by observing that principal has the right to direct what work the agent has to do but the master has the further right to direct how the work is to be done. ' In the above fourth case, the Indian Supreme Court, while construing provisions of section 2(k) of the Factories Act, 1948, held that there are four indicia of contract of service, namely: (i) The master's power of selection of his servant; (ii) the payment of wages or other remuneration; (iii) the master's right of suspension or dismissal; (iv) the master's right to control the method of doing the work. ' It also observed that the critical test of relationship of master and servant is the master's right of superintendence and control of the method of doing the work. ' Whereas para. 872 of Halsbury's Law of England, Fourth Edition, Vol. 25 at page 448 and para. 3 of the definition of the term "contract of service" given in Stroud's Judicial Dictionary, Fourth Edition, at page 587 read as follows:-- ' Halsbury's Law of England: "872. The contract of service.--- The relationship of master and servant is characterised by a contract of service, express or implied, between the master and the servant. A contract of service is one in which a person undertakes to serve another and to obey his reasonable order within the scope of the duty undertaken. Whether or not a particular contract is a contract of service is a question of fact, depending upon the terms of the engagement, the method of remuneration, and the power of controlling and dismissing the worker, although none of these factors is by itself conclusive. A contract of service must be distinguished from a contract for services. The distinction between a servant and an independent contractor is considered hereafter. The distinction between a service occupancy and a tenancy of premises is considered elsewhere in this work." Stroud's Judicial Dictionary: "(3) A contract to render services is not the same thing as a 'contract of service', semble, the latter implies some relationship of master and servant and involves an obligation to obey orders in the work to be performed and as to its mode and manner of performance (Simmons v. Heath Laundry Co. (1910) 1 KB 543). Thus, there is no such contract of service between a taxicab driver and the owner of the cab which the driver takes out day by day, because the driver is not under the control of the owner while working the cab." 9. On the other hand, Mr. Sheikh Abdul Sarwana has referred to the case of United States of America v. Albert Silk (331 US 704), the case of Market Investigations Ltd. v. Minister of Social Security (1969) 2 QB 173), the case of Sindh Employees' Social Security Institution v. Consolidated Sugar Mills Limited (1989 SCMR 888) and paras. 501 and 502 of the Halsbury's Law of England, Fourth Edition, Vol. 16.
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' In the above first case, the subject-matter before the Supreme Court of United States were two appeals arising out of the judgments of the United States Circuit Court of Appeals for the Tenth Circuit for the district of Kansas and United States Circuit Court of Appeals for the Seventh Circuit for the northern district of Illinois, Eastern Division. The first case referred to in the above judgment is known by the name of SILK. The facts of the above case were that the respondent Albert Silk was doing business under the name and Style of Albert Silk Coal Company. He sued United States (the petitioner) before the Supreme Court to recover taxes allegedly to have been illegally assessed and collected from him for the years 1936 to 1939 under the Social Security Act as an employer of certain workmen, some of whom were engaged in unloading coal cars and the others in making retail deliveries of coal by truck. His courtyard consisted of two buildings; one for office and the other a gathering place for workeRs, He used to pay to unloaders an agreed price per ton to unload coal. He owned no truck himself but used to contact those workers who used their own trucks to deliver coal at a uniform price per ton. He used to pay the above agreed price to the truck owners which he used to recover from the customers alongwith the price of the coal. He succeeded in his action for the recovery of the amount recovered from him for the social security in respect of the above unloadcrs and truck owners before the District Court of United States for District Kansas and before the United States Circuit Court of Appeals for the Tenth Circuit. After that the matter came up before the Supreme Court of United States, which held that the factum that the unloaders did not work regularly was not significant and they did work in the course of the employer's trade or business, which brought them under the coverage of the Social Security Act. It was further held that SILK was in a position to exercise all necessary supervision over their simple task. As regards the driver owners of the trucks, it was held that they were independent contractors on account of their responsibility for investment and management. ' In the above second case, the facts were that appellant company was engaged in the field of market research. In addition to their permanent staff at its headquarters office, it employed interviewers for about 8,000 to 10,000 interviews annually to provide information for the company's customers about the habits and opinions of members of the general public, retailers or other people in commerce, industry and the profession. The company employed a small number of interviewers who worked full-time but most of the work they drew from a panel of about 470 interviewers mostly married women wishing to earn pin-money. Between May, 1964 and 3-12-1965 MRs, Anne Florence Irving was a member of the aforesaid panel and from time to time during that period, she acted as an interviewer in connection with that particular survey which the company was conducting. On 2-8-1966 the company applied to the Minister for a decision, whether while working under the above engagements MRs, Irving was included in the class of employed persons for the purpose of National Insurance Acts, 1964 and 1965 and was employed in insurable employment within the meaning of the National Insurance (Industrial Injuries) Acts, 1946 and 1965. Section 1(2) of the latter Act defined "employed persons" as persons gainfully occupied in employment in Great Britain being employed under contract of service. The plea of the company before the Minister was that MRs, Irving worked for the company under a series of contracts for the services and was not covered by the above provision. However, the Minister held that MRs, Irving's employments by the company were under the contracts of service. The company filed appeal which came up for hearing before Cooke, J., before whom inter alia it was urged by the company that the contract between the company and MRs, Irving made no provision for time of, sick pay and holidays and, therefore, it was not a contract of service. It was also urged before him that the relationship of master and servant was normally conceived of a continuous relationship and that the factum that there was a series of contracts was more consistent with those contracts being contracts for services than the contract of service. The above contentions were repelled and with reference to the above second submission, the following observations were made:--
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"For my part, I doubt whether this factor can usefully be considered in isolation. It must I think be considered in connection with the more general question whether MRs, Irving could be said to be in business on her own account as an interviewer. In considering this more general question I take into account the fact that MRs, Irving was free to work as an interviewer for others, though I think it is right to say that in this case there is no finding that she did so. It also takes into account the fact that in her work as an interviewer MRs, Irving would, within the limits imposed by her instructions, deploy a skill and personality which would be entirely her own. I can only say that in the circumstances of this case these factors are not in my view sufficient to lead to the conclusion that MRs, Irving was in business on her own account. The opportunity to deploy individual skill and personality is frequently present in what is undoubtedly a contract of service. I have already said that the right to work for others is not inconsistent with the existence of a contract of service. MRs, Irving did not provide her own tools or risk her own capital nor did her opportunity of profit depend in any significant degree on the way she managed her work. ' Taking all the factors into account and giving full weight, I hope, to Mr. Pain's persuasive arguments, I am clearly of opinion that on the facts of this case the Minister was right in concluding that MRs, Irving was employed by the company under a series of contracts of service, and the appeal accordingly must fail." ' In the above third case, this Court has construed clauses (8) and (9) of section 2 and section 20 of the Ordinance which are in issue in the case in hand. The relevant facts of the above case were that the respondent was engaged in manufacturing sugar at its mills located in Ranipur, district Khairpur. It appears that for the sugarcane…
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