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Petitioner: VERA and others VS Respondent: Messrs KAZI AND KAZI LTD. and others
Court Name: Supreme Court of Pakistan Judge(s): Zaffar Hussain Mirza, Abdul Qadir Sheikh, S. A. Nusrat Title: VERA and others vs Messrs KAZI AND KAZI LTD. and others Case No.:Civil Appeals Nos. 126-K to 134-K of 1976, 33-K to 38-K, 40-K, 41-K to 47-K of
JUDGMENT
Reported As: 1990 PLC 159 Result: Order accordingly Judgment JUDGMENT ABDUL KADIR SHAIKH, J.--All these appeals relate to Stevedores, working in the Port of Karachi who, for many decades, employed dock labour through Tindals and Serangs under Licence granted by Karachi Port Trust. The business of Stevedores involves loading and unloading of the goods from the vessels. Under the centuries old system, the Stevedores, for their business, required the engagement of a number of Tindals and Serangs in their permanent employment, on a nominal monthly payment, by way of retainership, and if and when Stevedores required the labour force for any ship, Tindall and Scrangs used to procure gang of dock workers for Stevedores to work under them. These workers were registered as dock workers but they were not the employees of any person, nor were they paid monthly wages; they received payment only when they were required to work through the Tindals and Serangs for Stevedores, and they were paid by the Stevedores for the work actually done by them. Their engagement was of a casual nature, for a particular job, and hence there was no certainty of work for the dock labour with any of Stevedores. ' Over the years, number of dock workers increased, and it is said that in September, 1972, they were 4060 in number. There were rival Trade Unions of dock workers and often they resorted to strikes, or adopted go-slow tactics, resulting in heavy congestion at the Port, and Conference Lines had imposed surcharge on the cargo for and from Karachi, which seriously hampered the growth of export and import business of Pakistan. This situation compelled the authorities to evolve some solution. Consequently, this problem was considered in a meeting held at Karachi on 11-9-1972, under the chairmanship of the Minister of Education and Provincial Co-ordination, Government of Pakistan. The meeting, besides the officials, was attended by the representatives of the Stevedores,
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Bargaining Agent and rival Trade Unions. One of the important decisions taken in this meeting was that the future system of work at the Docks will be by Gang-Rotation, including Tindals and Serangs. It will he put into effect from 13-9-1972." As a result, all dock labours were given work by rotation on a requisition by any Stevedore who needed dock labour. This meeting was followed by another high level meeting on 1-11-1972 under the chairmanship of the Minister for Political Affairs and Communications. At this meeting, it was, inter alia, decided to set up immediately a Dock Labour Board with a view to introduce, within two months, Karachi Port Workers (Regulations of Employment) Scheme. The rotation system already in force under the decision at the previous meeting held on 11-9-1972 was confirmed. The Central Government notified the formation of the Dock Labour Board (hereafter referred as Board) under notification published in the Gazette of Pakistan dated 17-11-1972. Under the new system, dock workers were neither the employees of the Stevedores, nor were they permanently attached to them, they became entitled to get work through the Board, by a system of rotation of gangs, and Tindals and Scrangs were wedded to these gangs. Tindals and Scrangs who under the ages-old system were attached, as retainers to Stevedores, lost their full-time employment with the Stevedores, as Stevedores, as and when required, could get any Tindal or Serang with a gang consisting of dock workers who were to be supplied by the Board to them on a requisition. In order to furnish statutory recognition to this arrangement Karachi Dock Workers (Regulation of Employment) Ordinance, 1973 was promulgated with the purpose to regulate the employment of the dock workers in Karachi Port, and to ensure the efficient loading and unloading of ships in Karachi. It empowered the Government to frame a scheme, and accordingly, the Federal Government by Notification dated 3-12-1973 framed Karachi Dock Workers (Regulation of Employment) Scheme, 1973 (hereafter referred as Scheme) under which Karachi Dock Labour Board was established with effect from 12-1-1974. Before this Board was set up, the said Ordinance was repealed and replaced by the Dock Workers (Regulation of Employment) Act, 1974. It is however, the admitted position that the said Scheme is the scheme under the Act. It may be stated at this stage that under the Scheme, the Board was empowered to fix the number of dock workers to be registered under the various categories, to increase or decrease the number of registered workers in any category, to determine the wages, allowances and emoluments of dock workers and to take disciplinary action against them. The Board was also empowered to ensure minimum wages for dock workers, and dock workers could not leave their employment except by giving one month's notice in writing to the Board. The Scheme also empowered the Board to levy an Education Cess, very similar if not identical, to that under the Workers' Children (Education) Ordinance, 1972, and it is also the admitted position that the Board collects this Education Cess from Stevedores. The dispute in Civil Appeals Nos. 126-K to 134-K of 1976 arose as the Stevedores, served notices on Tindals and Serangs terminating their services in these words: "We regret to inform you that consequent upon the introduction of "Rotation System" and regulation of your employment through the Dock Labour Board, your services arc no longer required by us, as your employment is not controlled by us as such any more. Your services as Retained Serang/Tindal are therefore terminated with immediate effect and you may arrange to collect your settlement dues including one month's pay (Retaining Fee) in lieu of notice immediately from our office." The Tindals and Serangs filed a grievance petition under section 25-A of the Industrial Relations Ordinance, 1969 before the Fourth Junior Labour Court, Karachi, which succeeded by the decision dated 24-9-1973 whereby Stevedores were directed to withdraw the termination notice against the Tindals and Serangs, who were to be considered as continued employees of the respective Stevedores. The Stevedores filed appeals against the decisions, but these were dismissed.
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However, on Constitution petitions filed by the Stevedores in the High Court of Sind and Baluchistan, the decision was reversed as the High Court took the view that since there was no evidence before the Junior Labour Court that either the Tindals and Scrangs were in a permanent employment of the Stevedores or they could be kept in employment by the Stevedores under the changed circumstances. The finding was based on no evidence. The Constitution petitions were accordingly allowed. Leave to appeal was granted by this Court by the order dated 26-1-1976 in order to examine, inter alia, the submission that Stevedores have for over 100 years paid Tindals and Serangs monthly retainership, and it could not have been the intention of the Federal Government that by constituting the Board, Stevedors be enabled to dismiss Tindals and Scrangs, or, in other words stop monthly payment of retainership to them. It is an admitted position that under the scheme an individual dock worker is not permanently attached to, or in the regular/permanent employment of any of the Stevedores. It is also an admitted fact that Tindals and Serangs and the gang of the dock workers are supplied to the Stevedores by the Board, on rotational basis, if and when required by the Stevedores. It is thus obvious that no Stevedore has any worker permanently attached or engaged by him. The ages-old system by which Stevedores required the engagement of a number of Tindals and Serangs in their permanent employment, on a nominal monthly payment by way of retainership, was totally abolished, and a new revolutionary system was created with the set-up of the Board. Under the new arrangement, dock workers as well as Tindals and Serangs were to work with any Stevedore to whom they were attached by the Board according to their rotation. The system of permanent employment whereby Stevedores could exercise a certain degree of control on Tindals and Serangs, by virtue of payment of retainership fee, was discontinued, and Stevedores were no longer obliged to pay the retainership-fee to the Tindals and Serangs. It is also admitted that the new arrangement which was brought about after the decision at the high level meetings held on 11-9- 1972 and 1-11-1972, referred to in the earlier part of the judgment, was acted upon by the Stevedores as well as the Tindals and Scrangs. In the first meeting held on 11-9-1972 it was decided that "the future system of work at the clock will be by Gang Rotation, including Tindals and Serangs. It will be put into effect from 13-9-1972." In the subsequent meeting held on 1-11-1972, it was noted that Rotation System was popular with the workers, and should continue with some modifications, in that, Tindals and Serangs would be wedded to their gangs and will rotate with them. It was in these circumstances that Stevedores served the impugned notice to Tindals and Serangs by which what was indeed the actual position that obtained at that time was confirmed. Admittedly with the set up of the Board, the employment of a particular Tindal or Serang with a particular Stevedore came to an end, and the dock workers as well as Tindals and Serangs started to work with any Stevedore to whom they were attached by the Board according to their rotation to get work. Learned Judges in the High Court have correctly summarised the situation that "by the introduction of Dock Labour Board and coming into force the new system of allotment of dock labours on rotation, the concept of employment of any Serang or Tindal with a particular Stevedore vanished absolutely. The Tindals and Scrangs not being under the control of any particular Stevedore or performing their functions for any particular Stevedore, the Stevedores in turn are not obliged to give them retainership or any other benefits to which they were entitled under the previous system." Since both the parties, namely, Stevedores on one hand and Tindals and Scrangs on the other hand acted upon the above arrangement, and in fact they could not do so otherwise under the Scheme that was introduced, their previous relationship stood severed. It is not even the case of the Tindals and Serangs that after the introduction of the new arrangement they could continue to work under the basis of old relationship. The impugned notices, therefore, only confirmed the state of affairs that obtained between the parties. We, therefore, find no justification for interfering with the
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impugned judgment dated 8-9-1975, and Civil Appeals Nos. 126-K to 134-K of 1976 have no merit. It is, however, clarified that this judgment will not preclude the Tindals and Serangs from claiming any benefits of employment which may be admissible under the law in spite of the termination of their employment with the Stevedores concerned. In Civil Appeal No, 33-K of 1978 and connected appeals, the application of the provision of Workers' Children (Education) Ordinance and the Rules framed thereunder has been challenged. Under the provision of the Ordinance, every employer of an establishment in which the number of workers employed at any time during a year is not less than 20, is to pay Education Cess at the rate of Rs,100 per worker per annum. The words "Employer", "Establishment" and "Worker" have been defined in the said Ordinance as under:-- "(a) "Employer" in relation to an establishment means the person who has ultimate control over the affairs of the establishment. (b) "Establishment" means any office, firm, industrial unit, undertaking, shop or premises in which workers are employed for the purpose of carrying on any business, trade, manufacture, calling, service, employment or occupation. (c) "Worker" means any person employed whether directly or through any other person, in any establishment to do any skilled, or unskilled, manual or clerical work for hire or reward whose monthly wages do not exceed one thousand rupees." The Board received a letter dated 1-1-1975 from the Excise and Taxation Officer, P-Division, Karachi stating that the Board had not filed any return under the said Ordinance for more than two years, and it was required to file these in the prescribed form. The Board, in reply, contended that it had been constituted only from 14-1-1974, and that, in any case, it was not liable to pay the 'Education Cess' in respect of dock workers or its employees. This reply was not considered by the Department as satisfactory, and, therefore, a challan for payment of Rs,8,22,000 and Rs,8,17,700 for the years 1973-74 and 1974-75 was issued. This was followed by a notice of demand under section 81 of the Land Revenue Act, requiring the Board to deposit sum of Rs,16,39,700 as Education Cess within 15 days. It was in these circumstances that the Board challenged the Departmental action in Constitutional Petition No, 318 of 1975. The Stevedores also received notice for payment of Education Cess for the years 1972-73 and they challenged the levy of this Cess in Constitutional Petitions Nos. 264 to 269 of 1976. On behalf of the Board, it was contended that the Board constituted by the notification dated 12-1- 1974 was a different Board, than the one set up earlier, and in any case the dock workers are not the "workers" of the Board, which is a statutory authority charged with the duty of looking after the welfare of the dock workers, registering them, regulating their employment with the Stevedores, ensuring that the registered dock workers get a guaranteed minimum wage in a month, imposing levy upon the beneficiaries of the scheme for meeting the cost of operating the Scheme and certain other matters. It was contended on behalf of the Stevedores that the Dock Workers are not their "workers", and as such they are not liable to pay 'Education Cess' under the Ordinance. The precise argument was that the Education Cess was payable only in respect of such workers as are employed on monthly or some regular basis, and since the employment of dock workers by the Stevedores was purely of a casual character, depending entirely on the Stevedores getting a contract of load or unload of a ship and further as the employment was only for such period as the work lasted, the dock workers cannot be considered as "workers" of the Stevedores for the purpose of the said Ordinance. On the other hand, it was contended on behalf of the Department that the Stevedores were required to pay Education Cess in respect of all workers employed by them, including dock workers, irrespective of the period for which such workers are employed, and that the said Ordinance does
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not require that workers should be paid or employed on monthly basis. On review of the provisions of law, the learned Judges in High Court held that the Dock Workers are not workers of the Board, for, the main object of the Dock Workers (Regulation of Employment) Act, 1974, and the Scheme is to ensure regularity in the employment of the Dock Workers by the Stevedores, and to give necessary powers to the Board to attain this object. According to learned Judges, the Board was not an "Employer" as defined under the Act which in relation to a Dock Worker means "a person by whom a Dock Worker is employed or is to be employed." All these circumstances, according to the learned Judges, show that the Dock Workers are not the workers of the Board for the purposes of the said Ordinance, despite the fact that the Board exercises certain powers in respect of them and in certain cases pays allowances, disappointment money etc. Learned Judges, however, took the view that Stevedores fall within the meaning of "Employer" under the Ordinance and the definition of the word "Employment" is wide enough to cover the organisations and undertakings maintained and run by them. In this behalf, learned Judges observed as under:- "Since the Stevedores have ultimate control over the affairs of their respective establishments, they also undoubtedly are "employer" for the purpose of the said Ordinance. It is also not disputed that the dock workers perform work for hire or reward in the establishment of Stevedores. It is not contended that any dock worker earns a monthly wage exceeding one thousand rupees. However, it was contended on behalf of the learned counsel for the Stevedores that reference to "monthly wages" in the definition of "Worker" in the said Ordinance would seem to indicate only such workers as are engaged or paid on monthly basis and would exclude the type of casual employment given to the dock workers, who are engaged for short period, when the occasion requires, and have no element of permanency in their employment. It was further contended that because of the 'Rotation System' introduced in the employment of dock workers, the dock workers are not attached to the Stevedores who are required to employ them in turn according to the Register maintained by the Dock Labour Board so that one gang of dock workers may work for a Stevedore for only a few days and then be replaced by a second or a third gang and so on. We are unable to accept the argument that the words "Monthly Wages" in the definition of "Worker." narrows the definition to only those workers who are either employed or paid on monthly basis. The expression "Monthly Wages" has been used only for the purposes of fixing the total emoluments earned by a worker during a month, beyond which he would not be deemed to be a worker for the purposes of the said Ordinance. it is immaterial whether he is paid on daily, weekly, monthly or other basis or even whether his employment is on daily, weekly or monthly basis". It was contended on behalf of the Stevedores that the dock workers are the employees of the Board in view of the provision made in the Scheme itself under its paragraph 35(2) which is to the effect that: "A registered dock worker in Register 'A' who is available for work shall be deemed to be in the employment of the Board." In this regard the learned Judges observed as under:-- "The fact that a deeming clause has been used shows that it was by a legal fiction that the said workers were considered to be in the employment of the Board. This was necessary in order to empower the Board to require the registered dock workers to be available for work at the call stands or control points and also to bar such workers from engaging themselves for employment under a registered employer (Stevedore) unless they were allocated to that employer by the administrative body of the Karachi Dock Labour Board. The Karachi registered Dock Workers are thus to be deemed to be in employment of the Board only for the limited purpose specified in the Scheme, and so that the Board may have some legal control over them. This provision in the
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Scheme can by no means be construed to mean that the dock workers, who are placed for employment with the Stevedores and are paid by the latter, are "Workers" of the Karachi Dock Labour Board for the purpose of the said Ordinance." As regards the levy of the Education Cess by the Board from the Stevedores, learned Judges observed that the nature of the purpose of the two Cesses is entirely different. The Education Cess levied by the Board from the Stevedores, shipping agencies and the shipping lines and the K.P.T. cannot thus be considered to be Education Cess payable under the Ordinance as the Board cannot be considered to be the agent of the Provincial Government for the collection of the Education Cess under the Ordinance. In this regard, learned Judges further observed that the purpose of deeming clause that Dock Workers are to be in the employment of the Board is to empower the Board to rotate and call at stands or control points and, if so required, to remain on such stands and points. On the view of the case reproduced above, learned Judges allowed the Constitution petition filed by the Board, dismissed those filed by the Stevedores. Leave to appeal was granted by this Court in order to appreciate the submission, inter alia, that learned Judges in the High Court failed to appreciate that after the enforcement of the Scheme, neither the Tindals/Scrangs nor the Dock Workers can be said to be the employees of Stevedores. In this behalf it was further urged that the provisions of the Ordinance and the Rules framed thereunder do not even contemplate payment of Education Cess by Stevedores in view of the peculiar nature of employment of dock labour by Stevedores through the Board. It was further urged that the Stevedores cannot be held liable to the payment of the Education Cess as this Cess was being paid by them to the Board under the Scheme. The question for consideration also arose with regard to the payment of Education Cess by the Board. In order to appreciate various submissions made at the Bar, it is appropriate that we may refer to the relevant provisions of the Ordinance. The words "Employer", "Establishment" and Worker" are defined as under:-- (a) "Employer" in relation to an establishment means the person who has ultimate control over the affairs of the establishment. (b) "Establishment" means any office, firm, industrial unit, undertaking, shop or premises in which workers are employed for the purpose of carrying on any business, trade, manufacture, calling, service, employment or occupation. (c) "Worker" means any person employed whether directly or through any other person, in any establishment to do any skilled, or unskilled, manual or clerical work for hire or reward whose monthly wages do not exceed one thousand rupees." Under the provision of section 3, every employer of an establishment in which the number of workers employed at any time (hiring the year is not less than 20, is liable to pay Education cess at the rate of Rs,100 per worker per annum. Under the subsection (2) of section 3 every employer is required to prepare and deliver a Return showing the number of workers employed in the establishment during the preceding quarter, and the levy of the Education Cess is to be made on the basis of the number of workers shown in the Return. According to Rules framed under the Ordinance, the Education Cess is due annually, and may be demanded or recovered either in a lump sum for a year, or quarterly or six monthly basis as may be considered appropriate by the District Excise and Taxation Officer. In view of the admitted position that no individual is permanently attached to or in the regular employment of any Stevedores, and that a Gang of Dock Workers is supplied to the Stevedores by the Board, on Rotational Basis, if and when required by the Stevedores, it is obvious that no Stevedore has any worker attached to or engaged by him. It was stated at the Bar that the total number of Registered Dock Workers arc in the range of more than 6,000 and total Registered
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Employers (Stevedoring Companies) are more than 20 in number. Thus in view of this peculiar type of relationship between the Dock Workers vis-a-vis the Stevedores, if the provisions of Workers' Children (Education) Ordinance are made applicable to the Stevedores, then each of these 6000 Dock Workers is a worker of each of over 20 Stevedoring Companies. In other words, each Stevedoring Company would be liable to pay for all the dock labourers, who are over 6000 in number, and the Education Cess payable for over 6000 dock employees would be as many times as the number of the Registered Stevedoring Companies which presently are over 20. The situation such as this, obviously, is not contemplated by the Ordinance and the Rules framed thereunder. The provisions of the Ordinance contemplate a normal relationship between an Employer and a Worker, and not a situation that exists between Stevedores and Dock Workers under the Scheme. In view of the peculiar nature, of employment contemplated by the Scheme there can be no escape from the conclusion that the provisions of the Ordinance are not attracted to the existing relationship between the Stevedores and the dock labour of the Karachi Port. We therefore hold that the levy of Education Cess from the Stevedores in relation to their employment of Dock Workers falls outside the scope of the Ordinance and is thus not warranted by law. The position pointed out by the High Court with regard to the relationship between the Board and the dock labour also does not contemplate liability of Education Cess by the Board, and we wholeheartedly agree with the…
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