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Official Citation: 2024 PLC 188
Court / Jurisdiction: Islamabad High Court
Year of Decision: 2023
Decision Date: 2023-03-08
Parties: ICI Pakistan Ltd vs Appellate Authority EIBI & others
Ruling Summary: This decision was rendered by the Islamabad High Court on 2023-03-08, officially reported as 2024 PLC 188. In this matter between ICI Pakistan Ltd and Appellate Authority EIBI & others, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 PLC 188
Court Name: Islamabad High Court Judge(s): Saman Rafat Imtiaz Title: ICI Pakistan Ltd vs Appellate Authority EIBI & others Case No.: Writ Petition-118-2022 Date of Judgment:2023-03-08 Reported As: 2023 IHC 434, 2024 PLC 188 Result: Petition Allowed
Judgment
SAMAN RAFAT IMTIAZ, J. 1. Through the instant petition the Petitioner [ICI Pakistan Limited] has assailed the Order dated 24.11.2021 ("Impugned Order") passed by the Respondent No.1 [Appellate Authority, Board of Trustees of the Employees Old-Age Benefits Institution] whereby the appeal filed by the Petitioner against the Decision dated 24.10.2017 ("Decision") passed by the Adjudicating Authority-III, Islamabad has been dismissed. 2. The brief facts as per the Memo of Petition are that the Petitioner is a public limited company that manufactures a diversified range of products including soda ash. The Petitioner received letters dated 22.11.2013 and 12.12.2013 from the Respondent No.2 [Employees Old-Age Benefits Institution, (Jehlum Region)] requesting information and notifying that its team will visit the Petitioner's premises to check its record. Thereafter, the Respondent No.2 paid several visits to the Petitioner's establishment in order to check the relevant record for the period of July, 2010 to June, 2012 following which Demand Notice dated 23.08.2014 ("Demand Notice No.1") was issued alleging that no payment has been deposited by the Petitioner on behalf of the drivers and other employees of the 10-15 goods transport companies engaged by the Petitioner for the distribution of its products all over Pakistan and in view thereof an amount of Rs.3,780,000/- was demanded as payment of contribution under the Employees' Old-Age Benefits Act, 1976 ("EOB Act, 1976") and statutory increase in respect of 300 allegedly insured persons for the period from July, 2010 to June, 2012. The Petitioner responded vide reply dated 30.08.2014 stating that the Petitioner is not responsible for registration of truck drivers or other personnel who are in the employment of independent transport companies which are separate establishments.
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3. The Respondent No.3 [Shaukat Brothers Goods Forwarding Agency] is the transport contractor of the Petitioner for transport of soda ash. It is further stated in the memo of petition that the Respondent No.3 is itself duly registered with the Respondent No.2 as an 'employer' and' establishment' under Registration No. BCCO202 and has been making its own contributions/payments as required by law. The Respondent No. 2 nevertheless persisted in its demands vide letters dated 19.09.2014, 23.10.2014, 23.12.2014, and 20.10.2015. The Petitioner replied vide letters dated 30.08.2014, 27.11.2014, and 16.01.2015 reiterating that there is no employer/employee relationship between the Petitioner and the persons engaged by the Respondent No.3. According to the Petitioner it advised the Respondent No. 3, in good faith, to meet with the officials of the Respondent No. 2 to clarify the matter but the inspection of the record of the Respondent No.3 could not take place as the concerned official of Respondent No.2 was unavailable on account of having been transferred. 4. Subsequently, the Respondent No. 2 allegedly acting with undue haste and without affording an opportunity of hearing to the Petitioner, erroneously and unlawfully invoked Section 12(3) of the EOB Act, 1976 and issued the Demand Notice dated 28.12.2015 ("Demand Notice No.2") to the Petitioner claiming an aggregate amount of Rs.4,536,000/- as employer's share of contribution under Section 9 of the EOB Act, 1976 in respect of the alleged 300 insured persons without any supporting evidence or any reference to the material on the basis of which such conclusion was reached. 5. The Petitioner, being aggrieved of the Demand Notice No.2, lodged a complaint before the learned Adjudicating Authority under Section 33 of the EOB Act, 1976. However, the Adjudicating Authority rejected the complaint of the Petitioner vide the Decision holding that the Respondent No. 2 is at liberty to proceed against the Petitioner in respect of the alleged default in payment of contribution in accordance with the EOB Act, 1976. The Petitioner preferred an appeal before the Respondent No. 1, which has been dismissed vide the Impugned Order while the Decision of the Adjudicating Authority has been upheld and the Respondent No. 2 has been directed to recover the outstanding dues from the Petitioner being principal employer' for the period from July, 2010 to June, 2012 in accordance with the law. 6. The learned counsel for the Petitioner submitted that the Petitioner is not the employer' as defined in Section 2(c) of the EOB Act, 1976 of the truck drivers or other personnel of the Respondent No. 3 nor are they in the insurable employment' of the Petitioner and as such they do not qualify as the Petitioner's employees' or insured persons' as per the meaning ascribed to such terms in the EOB Act, 1976. He argued that the Respondent No.1 was unable to appreciate that the Petitioner has not directly or through any other person employed the drivers/other employees of the Respondents No.3 as the Transportation Agreement between the Petitioner and Respondent No.3 is that of transportation services. The Respondent No. 3 has himself admitted that the Petitioner merely pays freight' to the Respondent No.3 which proves and establishes that the Petitioner does not pay any salaries or wages to any persons engaged by the Respondent No.3 and as such the Petitioner has no nexus or privity of contract with the persons engaged by the Respondent No.3. He stressed upon Section 2(e)(v) of the EOB Act, 1976 which includes a Road Transport Company within the definition of establishment'. He drew the attention of this Court to Section 2(7) and Section 3A of the Road Transport Workers Ordinance, 1961 (" Road Transport Ordinance") to submit that a Road Transport Company such as Respondent No.3 falls under the definition of employer' as per the EOB Act, 1976. He relied upon Farid Company (Pvt.) Ltd. Vs. Vice-Commissioner, Pessi, 2012 SCMR 1428, Muhammad Nawaz Vs. Member Judicial Board of Revenue, 2014 SCMR 914, Fauji Fertilizers Company Ltd. Vs. National Industrial Relations Commission, 2014 PLC 10, Messrs Agri Auto Industries Ltd. Vs. Employees Old-Age Benefit Institution, Hub Region, 1990 PLC 21, Farid Ahmad Vs. Pakistan Burmah-Shell Ltd., 1987 SCMR 1463, Mian Munir Ahmad Vs. The State, 1985 SCMR 257, M/s Overseas Marine Trading Agencies (Pvt.) Ltd. Vs. The Board of Trustees,
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Employees Old-Age Benefits Institution, 2005 PLC 175, Pakistan Burmah Shell Ltd,. Karachi Vs. Sindh Labour Court No.IV, Karachi, PLD 1979 Karachi 109 (incorrectly cited as PLD 1978 Karachi 109), Seagull Exports (Pvt.) Ltd. Vs. Sindh Labor Appellate Tribunal, 2002 PLC 212 and Dharangadhra Chemical Works Ltd. Vs. State of Saurashtra, AIR 1957 SC 264. 7. On the other hand, the learned counsel for the Respondents No.1 and 2 submitted that the Petitioner has admitted its liability vide its letter dated 25.06.2018 written to Respondent No.3. He submitted that the ultimate services are given to the Petitioner who is the main beneficiary of the services rendered by the drivers/other employees and that according to all the material collected by the Respondent No.2 it is clear and apparent that the drivers/other employees are employed by the Petitioner through Respondent No.3 yet neither of them has declared them as employees. He highlighted the injustice that was done to almost 300 workers and that it is their welfare that is at stake. He also highlighted that the Petitioner has only challenged the Impugned Order passed by the Appellate Authority and not the Decision of the Adjudicating Authority and therefore he argued that no judgment can be passed by this Court in the instant petition against the Decision. He relied upon Metropolitan Steel Corpn. Ltd. Vs. Employees Old-Age Benefits Institution and the Board through Chairman, 2016 PLC 499, Messrs Bolan Mining Enterprises Vs. Board of Trustees, EOBI, 2010 SCMR 1573, Attock Cement Pakistan Company Vs. The Board of Trustees, Employees Old- Age Benefits Institution, 2004 PLC 106, Messrs Service Sales Corporation (Pvt.) Limited Vs. Assistant Director, Field Operation Employees Old-Age Benefits Institution, 2001 SCMR 1599, Ghulam Nabi Vs. Muhammad Mansha, 1988 SCMR 1571 and Messrs Abdul Aziz Noor Muhammad Vs. Employees' Old-Age Benefits Institution, 1983 PLC 198. 8. Interestingly enough the Respondent No.3 has also disowned the alleged 300 drivers, etc., as employees of Respondent No.3 and submitted that only 8% of the soda-ash produced by the Petitioner is transported by Respondent No.3 for which purpose it has five permanent employees, all whom are fully registered with Respondent No.1 and their contribution is been regularly deposited. It was further submitted on behalf of the Respondent No. 3 that the remaining 92% of soda ash produced by the Petitioner is transported by the purchasers themselves. 9. Arguments advanced by the learned counsel for the parties have been heard and the record attached with the file has been perused. Doctrine of Merger 10. I will first address the objection raised by the learned counsel for the Respondents No.1 and 2 that adjudicating the instant matter is a futile exercise given that the Decision, whereby the Respondent No.2 has been held at liberty to proceed against the Petitioner for the default in question, has not been challenged in the instant writ petition and as such even if the petition is allowed as prayed for the Decision shall remain in the field. 11. I am afraid the contention has no merit in view of the Doctrine of Merger according to which the decision passed by a lower forum merges into the decision of the higher forum in appeal/revision irrespective of whether the higher forum affirms, modifies or reverses the order or judgment of the forum below. Reliance is placed upon Bashir Ahmed Abdini Vs. Hon'ble chairman and Member of Administration Committee and Promotion Committee of Hon'ble High Court of Baluchistan, 2022 SCMR 448. Consequently, if the Impugned Order passed by the higher forum is set aside by this Court in the instant matter, the Decision of the lower forum, having merged into the Impugned Order, will no longer be available especially since both are concurrent judgments although as observed in the cited judgment it does not make a difference whether the higher forum affirms, modifies or reverses the order or judgment of the forum below. 12. Even otherwise, the Petitioner is not just seeking setting aside of the Impugned Order but has also prayed for a declaration to the effect that the Petitioner is not the employer of the alleged 300
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persons mentioned in the Impugned Order. If such prayer is allowed, it will have the same effect as setting aside the Decision. 13. Moreover, the Petitioner has also prayed for any other better and additional relief fit and appropriate in the facts and circumstances. The Petitioner has alleged that the Adjudicating Authority of Respondent No.2 failed to differentiate and provide clarification as to whether or not the employees in question were the employees of Respondent No.3 or of the Petitioner vide its Decision. In view of such contents of the Memo of petition and the arguments submitted by the legal counsel for the Petitioner in its oral submissions, I am of the view that this Court is not precluded from passing judgment in respect of the Decision as additional relief if available on merits. I am fortified in my view by the judgment passed in Mst. Zahida Begum Vs. Ashfaq Ahmed, PLD 2020 Lahore 684 and Mst. Noor Elahi Vs. Muhammad Abbas, 2022 YLR 2383 wherein it was held that any additional or adequate relief may be granted even if not specifically prayed for if borne out of the contents of the pleadings as a Court, in aid of justice, is vested with unfettered powers. That said I now proceed to examine the Impugned Order. Impugned Order 14. The question that arises in the facts and circumstances of the case has been correctly framed vide the Impugned Order i.e. whether the responsibility of the payment of contribution under the EOB Act, 1976 in respect of drivers and other employees in question is upon the Petitioner or the Respondent No.3. However, the Impugned Order is devoid of analysis or reasoning for the decision reached. The Impugned Order directs the Respondent No. 2 to recover the outstanding dues from the Petitioner in respect of 300 allegedly insured persons for the period from July, 2010 till June 2012 by describing the Petitioner as the "principal employer" without discussing the legal basis or significance of the said term. 15. The Impugned Order merely reproduces the relevant provisions of the EOB Act, 1976; refers to some case law (including incorrect citations); and provides a litmus test without actually discussing how under the facts and circumstances of the case such litmus test is satisfied or the referred case law applicable. It bears no indication of any independent application of mind. For all the foregoing reasons the Impugned Order constitutes a non-speaking order and is as such in violation of Section 24-A of the General Clauses Act, 1890. Reliance is placed upon Saudagar, EPS Industries (Pvt.) Ltd. Vs. Deputy Commissioner Inland Revenue, Audit Unit-02, Zone-III, 2021 PTD 2024. 16. The facts and circumstances of the case law referred to by the Respondent No. 1 in the Impugned Order are distinguishable and as such not applicable to the case at hand. The petitioner in Attock Cement Pakistan Company (Supra) argued that the word employee appearing in the EOB Act, 1976 does not include employees employed by the contractor. Similarly, the petitioners in Metropolitan Steel Corpn. Ltd., (Supra) entered into an agreement with contractors for providing staff to carry out certain jobs in the establishment but argued that persons hired on contract basis through a contractor do not fall under the definition of employee' under the EOB Act, 1976. 17. In contradistinction to such cases, the Petitioner before this Court does not dispute that a person employed "through any other person may be included in the definition of 'employee' as given in the EOB Act, 1976. The dispute raised by the Petitioner however is whether the truck drivers of independent transport contractors such as the Respondent No. 3 can be considered as persons employed by the Petitioner through any other person' so as to fall within the definition of 'employee' as per the EOB Act, 1976 by virtue of the transportation agreements entered into by the Petitioner with such transport contractors for the provision of transportation services. 18. The Impugned Order also relied upon the case of Messrs Bolan Mining Enterprises (Supra) however in the said case it was undisputed that the employees under question were performing their duties with the appellant who was paying them in cash and that such employees were in the
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administrative and financial control of the appellant. The Respondent No. 1 failed to discuss whether the reasons that prevailed with the Honorable Supreme Court in Bolan Mining Enterprises Board of Trustees (Supra) are applicable to the facts of the instant case especially considering that the Petitioner denies that it is paying wages to the truck drivers (the effect of Petitioner's denial of payment of wages is discussed in paragraphs below). 19. Clearly, the Respondent No. 1 was unable to appreciate the fine but crucial difference between the questions before the Courts in the case law relied upon in the Impugned Order and the one raised by the Petitioner in the instant case. Section 12 of EOB Act, 1976 20. Before we take up the substantive question arising out of the facts and circumstances of the instant case which has not been answered by the Impugned Order, it is important to consider the submission of the Respondent No. 2 (as recorded in the Decision passed by the Adjudicating Authority of the Respondent No. 2) that the demand of Rs.4,536,000/- vide Demand Notice No.2 by the Respondent No. 2 was raised by invoking sub-section (3) of Section 12 of the EOB Act, 1976. Let us therefore consider the provisions of Sections 10 and 12 of the EOB Act, 1976 in light of the relevant definitions provided therein: 2. Definitions.-In this Act, unless the context otherwise requires,- (i) "insured person" means an employee who is or was in insurable employment; (j) "insurable employment" means employment of a person under a contract of service or apprenticeship, whether written or oral, express or implied and in respect of which contributions are payable under this Act; 10. Records and Returns by Employers.- Every employer shall keep such records and shall submit to the Institution such returns, at such times, in such form and containing such particulars relating to persons employed by him, as may be provided in regulations. 12. Officials of Institution to Check Employer's Books.-(1) Any official of the Institution, duly authorised by a certificate in a form specified in the regulations, may, for the purpose of inquiring into the correctness of any of the particulars stated in the records or returns referred to in section 10 or the purpose of ascertaining whether any of the provisions of this Act have been complied with.- (a) require an employer to furnish to him such information as he may consider necessary : or (b) at any reasonable time, enter any establishment or other premises occupied by such employer and require any person found in-charge thereof to produce and allow him to examine such accounts books and other documents relating to the employment of persons and payment of wages, or to furnish to him such information, as he may consider necessary ; or (c) examine, with respect to any matter relevant to the purposes aforesaid, the employer, his agent or any other person found in such establishment or other premises, or any other person whom the said official has reasonable cause to believe to be or to have been an insured persons. 3(2) The official referred to in sub-section (1) shall not demand production of account book and other documents referred to in clause (b) of sub-section (1) for a period of two years from the date of registration of the establishment or the 1st day of July, 2005, whichever is later, if the employer does not reduce the number of insured persons in respect of whom contribution are paid under section 9:. Provided that on expiry of two years period, if the employer enhances the number of insured persons by at least ten percent, it shall be accepted without any question otherwise checking of record shall be done as provided in sub-section (1), by an officer not below the rank of Assistant Director, duly authorized in this behalf and no question shall be asked about the previous two years.; and.
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(3) If an employer fails to maintain records or to submit returns as required by the regulations, or otherwise fails to comply with the provisions of sub-section (1) and thereby makes it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable, the contribution shall be assessed on the basis of such evidence as the Institution may find satisfactory for this purpose. [Emphasis added]. 21. As may be seen from the above reproductions, every "employer is required to keep and submit such returns as may be provided in the regulations pursuant to Section 10 of the EOB Act, 1976. For the purpose of inquiring into the correctness of any of the particulars stated in the returns referred to in Section 10 ibid or to ascertain whether the provisions of the EOB Act, 1976 are being complied with, an authorized official of Respondent No. 2 may require an employer to furnish information in accordance with clause (a) of sub-section (1) of Section 12 of the EOB Act, 1976 or may examine account books and other documents relating to the employment of persons and payment of wages in accordance with clause (b) of sub-section (1) of Section 12 of the EOB Act, 1976 or may examine any person as described under clause (c) of sub-section (1) of Section 12 of the EOB Act, 1976. It is only when the employer fails to maintain records or to submit returns as required by the regulations or otherwise fails to comply with the provisions of sub-section (1) of Section 12 of the EOB Act, 1976 so as to make it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable that the contribution shall be assessed on the basis of such evidence as the Respondent No. 2 may find satisfactory for this purpose in the prescribed manner. 22. In the case at hand, however, neither the Impugned Order nor the Decision addresses the question as to whether or not the pre-requisites of the assessment provided for under sub-section (3) of Section 12 of the EOB Act, 1976 as detailed herein above were satisfied prior to the issuance of the Demand Notices. The Decision passed by the Adjudicating Authority of Respondent No.2 records the Respondent No.2's submission that a team was constituted to check the records of the Petitioner vide letter dated 22-11-2013 but the record was not produced on one pretext or another and list of contractors nor copies of their contracts/agreements were provided despite several visits and verbal requests and that a commission was constituted for record checking with the consent of both the parties but that such commission submitted the report stating that the Petitioner refused to produce any record for verification when the commission visited the Petitioner's establishment on 31-03-2017 and that due to such refusal of the Petitioner the Respondent No. 2 had no choice but to make their own assessment. 23. On the other hand, the letter dated 23-08-2014 written to the Petitioner by the Respondent No.2, a copy of which has been attached with the instant petition, refers to checking of record of the Petitioner's establishment on 23-07-2013. This by itself shows that the Petitioner's records were checked by the Respondent No. 2 on 23-07-2013. Yet there is no finding in the Decision or the Impugned Order as to which account books or other documents or information the Respondent No. 2's authorized official required to be furnished or produced for examination which the Petitioner did not furnish or produce as per Section 12(1)(a) and (b) of the EOB Act, 1976 so as to make it difficult to ascertain the identity of persons required to be insured or the amount of contribution payable. There is also nothing on the record to highlight any evidence of examination conducted of any person as described in Section 12(1)(c) of the EOB Act, 1976. 24. Even if the conditions precedent contained in Section 12(3) of the EOB Act, 1976 are satisfied, the assessm ent thereunder cannot be based on whim. It must be based on evidence. The learned counsel for the Respondents No. 1 and 2 submitted that it is clear and apparent from all the material collected by the Respondent No.2 that the drivers/other employees are employed by the Petitioner through Respondent No.3. However, neither has the Respondent No. 2 brought such material before this Court nor has such material been discussed in the Impugned Order or in the Decision.
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25. For starters it is noted that the Respondent No. 2 asserted in the Demand Notice No.1 that the Petitioner has engaged 10-15 transport contractors for the purpose of distribution of its products. Ironically, neither the Impugned Order nor the Decision shed light on how the Respondent No.2 determined that the Petitioner has hired 10-15 transport contractors especially in light of the fact that according to the Respondent No. 2 the Petitioner did not provide list of contractors and copies of their contracts/agreements with such contractors despite repeated demands. Be that as it may, apart from the Respondent No. 3 none of the other 10-15 transport contractors have even been identified. Similarly, the identity of the alleged 300 insured persons remains shrouded in mystery. 26. It is also not clear as to how the amount of Rs.4,536,000/- demanded vide the Demand Notice No.2 has been assessed by the Respondent No.2 as the contribution payable by the Petitioner in respect of the alleged 300 insured persons. The contribution under Section 9 of the EOB Act, 1976 is a percentage of the wages however there is no evidence as to the quantum of the wages on the record. This Court therefore finds that both the forums below have failed to establish whether the conditions precedent for invoking Section 12(3) of the EOB Act, 1976 were satisfied nor has any evidence been highlighted to substantiate the assessment made thereunder. 27. Most importantly, the Demand Notice No.1 written to the Petitioner by the…
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