Case Summary & Legal Holding

This judicial decision was delivered by the Lahore High Court (Honorable Mr. Justice Shahid Karim). The matter involves proceedings between Ms Hyundai Nishat Motor Pvt. Ltd. through Asfand Yar Suleman and Province of Punjab etc, officially reported as 2026 LHC 4044. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.

Full Judgment Text & Judicial Ruling

COURT: Lahore High Court (Honorable Mr. Justice Shahid Karim) DECISION DATE: 08-06-2026 CASE DETAILS: Labor 33757/26 ============================================================ JUDGMENT SHEET IN THE LAHORE HIGH COURT, LAHORE JUDICIAL DEPARTMENT

W.P No.33757 of 2026 M/s Hyundai Nishat Motor (Pvt.) Ltd. Versus Province of Punjab & others J U D G M E N T

Date of Hearing. 16-06-2026

PETITIONERS BY: M/s Shahryar Kasuri, Waseem Ahmed Malik, Mian Mahmood Rashid, Ms. Ruhi Saleha, Khalil ur Rehman, Muhammad Shahid Usman, Iftikhar Ahmad Almas, Ali Umrao, Irfan Dawood, Abbas Ali Awan, Rana Muhammad Afzal Razzaq Khan, Faisal Anwar Minhas, Muhammad Asif, Asif Amin Goraya, Behwal Asad R asul, Muhammad Asim Mumtaz, Mustafa Kamal, Kashif Habib Sheikh, Tassawar Sohail and Malik Muhammad Zarif, Advocates. RESPONDENTS BY: Mr. Saqib Mubarak Bhatti, Advocate for PESSI. Mr. Zafar Zulqarnain Sahi, Advocate for FBR. Mr. Muhammad Tahir Yaqoob Khan, D.A.G with Zulfiqar Ahmad, Secretary WWF and Faisal Tariq, Director (Legal) WWF. Mr. Hassan Ijaz Cheema, A.A.G. with Ms Naseem Mushtaq, Law Officer, Finance Department.

Shahid Karim, J :-. This constitutional petition and the petitions at Schedule -I broa ch a common question of law and are being decided by this common judgment. These petitions challenge notices (of different dates in each petition) for payment of contributions towards the Punjab Workers’ Welfare Funds ( PWWF) and Workers’ Profit Participation Fund ( WPPF). It has been stated in the impugned notices that every eligible establishment is liable W.P No.33757 of 2026

2 to pay 2% of total income towards PWWF and every applicable company is required to deposit the left out amount of 5% of annual profits to WPPF within t he prescribed time. The notices allege that the petitioners have failed to deposit the outstanding dues regarding these contributions for the relevant financial years and have been directed to deposit the dues immediately and to submit a written explanati on within seven days of receipt of notice. In response to these notices the petitioner companies have relied upon their status as trans -provincial entities having presence in multiple provinces as well as Islamabad capital territory and relied upon the ho lding of Supreme Court of Pakistan in Messrs Sui Southern Gas Company Ltd. v. Federation of Pakistan (2018 SCMR 802 ) to contend that the provisions of provincial labor laws are not applicable to the petitioners who are nonetheless liable to discharge the liability arising under the federal law. 2. In deciding these petitions two provincial laws will be engaged under which the impugned notices have been issued. These laws are the Punjab Workers’ Welfare Fund Act, 2019 ( “the 2019 Act” ) and the Companies Prof it (workers’ Participation) Act, 1968 ( “the 1968 Act” ). The latter law was a federal law and upon devolution of labor laws to the provinces after the Constitution ( Eighteenth Amendment) Act, 2010 , the 1968 Act is now a provincial subject and the Province of Punjab has, from time to time, made amendments in that law which are not relevant here. W.P No.33757 of 2026

3 The only amendment relevant for our purposes and pursuant to which the notices have been issued is through the Companies Profits (Workers’ Participation) (Amendment ) Act, 2025 and thereby Employees’ Social Security Institution (the Institution ) has been empowered to issue notices and recover the contributions under these laws. 3. To reiterate, the petitioners do not challenge the provisions under which the payments o f PWWF and WPPF have been demanded. The only challenge is to the power of the Institution to do so on behalf of the government of the Punjab as according to these companies they are trans - provincial entities not amenable to the provincial laws and hence n ot liable to make contributions to provincial funds. In sum, the question is; who can compel the payment of PWWF and WPPF contributions? The Federation or the Province of Punjab? 4. It would not be necessary to delve into nuanced discussion regarding the constitutionality of the impugned notices as this subject has engaged the attention of Council of Common Interests constituted under Article 153 of the Constitution of Islamic Republic of Pakistan, 1973 ( “the Constitution”). It provides that: 153. Council of Common Interests (1) There shall be a Council of Common Interests, in this Chapter referred to as the Council, to be appointed by the President. (2) The Council shall consist of— (a) the Prime Minister who shall be the Chairman of the Council; (b) the Chief Ministers of the Provinces; and W.P No.33757 of 2026

4 (c) three members from the Federal Government to be nominated by the Prime Minister from time to time. 3 Omitted (4) The Council shall be responsible to Majlis -e-Shoora (Parliament) and shall submit an Annual Report to both Houses of Majlis-e-Shoora (Parliament). 5. The functions of the Council have been delineated in Article 154 of the Constitution which provides that: “154. Functions and rules of procedure: (1) The Council shall formulate and regulate policies in relation to matters in Part II of the Federal Legislative List and shall exercise supervision and control over related institutions. (2) The Council shall be constituted within thirty days of the Prime Minister taking oath of office. (3) The Council shall h ave a permanent Secretariat and shall meet at least once in ninety days: Provided that the Prime Minister may convene a meeting on the request of a Province on an urgent matter. (4)] The decisions of the Council shall be expressed in terms of the opinion of the majority. (5) Until Majlis-e-Shoora (Parliament) makes provision by law in this behalf, the Council may make its rules of procedure. (6) Majlis-e-Shoora (Parliament) in joint sitting may from time to time by resolution issue directions through the Federal Government to the Council generally or in a particular matter to take action as Majlis -e-Shoora (Parliament) may deem just and proper and such directions shall be binding on the Council. (7) If the Federal Government or a Provincial Government is dissatisfied with a decision of the Council, it may refer the matter to Majlis-e-Shoora (Parliament) in a joint sitting whose decision in this behalf shall be final.” 6. It is evident from a combined reading of Articles 153 and 154 that the Council shall f ormulate and regulate policies in relation to matters in Part II of the Federal Legislative List. Entry 13 of Part II of Federal Legislative List provides for the following subject: “13. Inter-provincial matters and co-ordination.” Entry 18 also provides that: W.P No.33757 of 2026

5 “18 Matters incidental or ancillary to any matter enumerated in this Part.” 7. Pursuant to the mandate of Articles 153 and 154 the question regarding collection and recovery of contributions to the funds from trans-provincial entities was referred to the CCI which, in its meeting held on 23.12.2019 (Agenda No.14) decided as follows: “119. The CCI considered the Summary dated 23 rd may, 2019 submitted by Ministry of Overseas Pakistani & HRD and observed that none of the provinces has developed a workable mechanism for resolution to address the post - devolution issues of pension of migrating employees. The Council held that being trans -provincial and inter - provincial matter, both the organizations i.e. EOBI & WWF should remain with the Federal Government to perform its functions under Employees Old -Age Benefits Act, 1976 and Workers Welfare Fund Ordinance, 1971, till such time a mutually agreed mechanism is developed.” 8. Subsequently a committee was constituted by CCI on devolution of Employees Old -Age Be nefits Institution and Workers Welfare Fund to the provinces, which in its meeting held on 7th July, 2020 resolved as under: “No further action is required with respect to EOBI as CCI decided that EOBI shall remain with the Federal Government. As regard to WWF it is submitted that in pursuance of Council of Common Interests (CCI) decision dated 12.03.2020 discuss devolution s mechanism of Workers Welfare Fund was held in this Ministry on 12.03.2020 under to the Chair of SAPM for OP&HRD. It was 5. decided in the meeting that provincial - governments would devise mutually , agreeable devolution mechanism of F Workers Welfare Fund (WWF) within two al months and submit detailed proposals to s this ministry in compliance of CCI decision. However due to outbreak of d Corona virus Provincial labour a de partments did not furnish their proposals. The matter was again discussed during a meeting held on 04.06.2 020 under the chair of SAPM for OP&HRD. It was decided in the meeting that:- i) All the provinces would enlist relevant issues associated with devolution mechanism with possible solution and submit the same to Ministry by 12.06.2020. W.P No.33757 of 2026

6 ii) The Ministry of OP&HRD would consolidate the proposal and prepared a draft mechanism for discussion by 19.06.2020. iii) Next meeting on the issue will be held in Lahore or KP to discuss the 1st draft of devolution mechanism preferably in person. As yet only proposal from KP has been received, while response from other provincial departments is awaited. The matter is being followed u p by this Ministry vigorously by issuing reminders on 20th April, 21st May and 19th June, 2020, in addition to telephonic contacts. 9. The third meeting of the committee was held on 2 nd October 2020 and was attended by the Secretary Labor Department of Punjab in which it was decided: “7. After detailed discussion on the issues of trans - provincial and stand -alone companies the following was agreed. i. The province who have enacted the required legislation may go for collection of 2% from the stand -alone companies in their Provinces after the resolution of collection issue with FBR. ii. For the trans -provincial companies who have one or more offices in two or more than two Provinces will continue to contribute toward the Trust Fund Account through FBR and Participation Act, 1968. iii. With regard to distribution of liquid assets a mechanism needs to be developed in consultation with four provinces. iv. A reference to FBR needs to be sent requesting them for providing the list of Companies who were contributing towards the 2% payment required under WWF Ordinance, 1971. v. The assets of around 124 billion needs to be reconciled with Finance Division & AGPR and a formula for distribution to the Provinces needs to be worked out. 8. The meeting ended with vote of tha nks from/to the Chair.” 10. For the purposes of these petitions, the crucial clause in the agreement reached between the various stakeholders is set out at clause (ii) above according to which the trans - provincial companies who have one or more offices in two or more than two provinces will continue to contribute W.P No.33757 of 2026

7 towards the Trust Fund Account through FBR and participation Act, 1968. It is clear by now that the subject matter of these petitions has been taken up at the highest level by a constitutional bod y, that is, CCI which is mandated by the Constitution to resolve such issues. In particular these issues have arisen on account of the amendments made in the Constitution through the Eighteenth Amendment and which devolved a large number of subjects to the provinces. The complexities which visited the devolution of these subjects are still being grappled with by the Federation and the provinces and the mo re suitable forum to do so is CCI whose jurisdiction has been invoked in the matter. The counsel for b oth the parties agree that the matter has not been resolved as yet and status quo in this regard persists. This means that the decision made in the meeting of the committee held on 2nd October 2020 has to be followed by the government of the Punjab. The ineluctable conclusion is that the impugned notices have been issued in clear violation of the decision made by the committee constituted by CCI and hence cannot be sustained. Simply because through an amendment the Institution has been empowered to make recoveries of contributions under the funds would not mean that the power extends to recovering contributions from trans-provincial entities which is a distinct category and regarding which CCI has yet to make a decision. W.P No.33757 of 2026

8 11. Similar question of law came b efore the High Court of Sindh at Karachi in a number of constitutional petitions, inter alia, C.P No. D 1250, which were disposed of in the following manner: “The Court was ass isted with the pertinent provision of the Constitution stipulating that decision s of the CCI are subject to challenge vide reference to the Parliament, hence, It was argued that post 2019 no occasion remained for these matters to continue to be entertained In writ Jurisdiction. The Council of the Common Interests is a representative body constituted inter alia to facilitate comity between the federating units and each Province has representation therein. In the event of either the Federal Government or a Provincial Government is dissatisfied with a decision of the Council, they remain at liberty to precipitate a reference before a joint sitting of the Parliament. Despite repeated opportunity, recorded vide orders dated 16.10.2024 and 14.11.2024, it is nobody's case that the aforesaid decision of the Council has been referred / assailed before the Parliament. Therefore, the respective learned counsel have sought that all these matters be disposed of In terms of the Council of Common interests' decision on Agenda Item 14 bearing NO. CCI.14/1/2019 dated 23.12.2019, referred to supra. Order accordingly. It was articulated on behalf of the petitioners that their liberty to challenge the vires of the enactment, as and when occasion arises, not be curtailed by orders herein. The respondents' learned counsel articulated no cavil in such regard. Order accordingly.” 12. There is no reason to disagree with the decision made by the Sindh High Court. The doctrine of deference compels this Court to stay its hands till CCI decides upon the issue. In sum, the impugned notices are ultra vires and run counter to the CCI’s decision dated 23.12.2019 and are unsustainable on that ground. 13. In view of the above, these petitions are allowed. the impugned notices are struck down. It is made clear that the petitioners shall have a right to lay a challenge to any W.P No.33757 of 2026

9 adverse decision made by CCI or any other authority at a future time.

(SHAHID KARIM) JUDGE

Approved for reporting.

JUDGE

* Rafaqat Ali W.P No.33757 of 2026

10 Schedule-I

Sr. No. W.P Nos. Title 1. 17703/ 2026 M/s Rudolf Pakistan (Pvt.) Ltd v. Province of Punjab 2. 23007/2026 Kamal Ltd. v. Province of Punjab 3. 23906/2026 Maple Leaf Cement v. Province of Punjab 4. 24157/2026 Desigentex Pvt. Ltd. v Province of Punjab 5. 25176/2026 Fashion & Trends (Pvt.) Ltd. v. Province of Punjab 6. 25478/2026 Bhanero Textile Mills Ltd. v. Province of Punjab 7. 25481/2026 Blessed Textile Mills Ltd. v. Province of Punjab 8. 25483/2026 Faisal Spinning Mills Ltd. v. Province of Punjab 9. 28393/2026 Saad Textile Mills v. Province of Punjab 10. 29907/2026 M/s Art Vision (Pvt.) Ltd. v. Province of Punjab 11. 29989/2026 Ahsan Chappal Store v. Province of Punjab 12. 29992/2026 Service Global Footwear Ltd. v. Province of Punjab 13. 30002/2026 M/s Gloves n Gloves v. Province of Punjab 14. 30007/2026 Samira Industries (Pvt.) Ltd. v. Province of Punjab 15. 30018/2026 Shahzor Feeds (Pvt.) Ltd. v. Province of Punjab 16. 30689/2026 Flying Cement Co. Ltd. v. Province of Punjab 17. 32196/2026 Pioneer Cement Ltd. v. Province of Punjab

\ (SHAHID KARIM) JUDGE * Rafaqat Ali

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