1985 PLP 467 (PLC)

Mr. Hamid Khan further argued that should the Cost of Living Allowance form part of wages for the purposes of Employees' Old‑Age Benefits Act, 1976 there was no need for amendment of the definition of 'wages' as contained in section 2(p) by expressly providing therein that the Cost of Living Allowance shall form part of wages. In view of the above Mr. Hamid Khan prayed that the respondent Institution be directed to restrain from recovery of the Employees' Old‑Age Benefits Contribution on the Cost of Living Allowance. The Advocate of the appellant No. 1 adopted the arguments of Mr. Hamid Khan and did not add any new point. Mr. Ghulam Mustafa representing the respondent Institution contended that the definition of the term wages contained in section 2(p) of the Employees' Old‑Age Benefits Act was an instance of legislation by reference or incorporation. He said that the definition of the term wages as contained in section 2(vi) of the Payment of Wages Act, 1936 reads as follows: ‑-- 2(vi) "Wages" means all remuneration capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable whether conditionally upon the regular attendance, good work or conduct or other behaviour of the person employed or otherwise, to a person employed in respect of his employment or of work done in such employment, and includes any bonus or other additional remuneration of the nature aforesaid which would be so payable and any sum payable to such person by reason of the termination of his employment, but does not include (a) The value of any house accommodation, supply of light, water, medical attendance or other amenity, or of any service excluded by general or special order of the Provincial Government. (b) Any contribution paid by the employer to any pension fund or provident fund. (c) Any travelling allowance or the value of travelling concession. (d) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (e) Any gratuity payable on discharge. From the perusal of this definition it is clear that all remuneration which is capable of being expressed in terms of money shall form part of wages except those benefits which have been expressly excluded by the Legislature in this definition. He suggested that Cost of Living Allowance is definitely remuneration which the employer is bound by law to pay to the workers in addition to what has been settled by way of contract of service. This being a specific sum of money shall necessarily be included in the wages. However since there was an express prohibition by way of section 7 of the Cost of Living (Relief) Act, 1973 this allowance was not to form part of wages for the purposes zf any law thus it was not to form part of wages for the period from 19th April, 1976 to 30th April, 1977 for the purposes of Employees' Old‑Age Benefits Act, 1916. On Promulgation of the Employees Cost of Living (Relief) (Amendment) Ordinance, 1977 (IX of 1977) application from 1st May, 1977, section 7 was amended to provide that notwithstanding anything contained in any law for time being in force, the Cost of Living Allowance shall form part of wages. Referring to the proviso of section 7 which inter alia provided that the Cost of Living Allowance shall not form part of wages for the purposes of Payment of Wages Act, 1936, Mr. Mustafa pointed out that this proviso shall only affect the Payment of Wages Act and shall have nothing to do with the purposes of Employees' Old‑Age Benefits Act, 1976. To justify his contention he argued that it was well established law that if a subsequent Act brings into itself something contained in former Act it shall be deemed to be the part of the subsequent statute on the date of incorporation and then there will be no occasion to refer back to the former act at all. He brought two rulings of the superior Courts to press his point. Thus he concluded that the Cost of Living Allowance shall form part of wages for the purposes of Employees' Old‑Age Benefits Act, w.e.f. 1‑6‑1977 and the contribution are payable at the rate of 5% of the amount paid as Cost of Living Allowance. He further argued that the section 7 of the Employees' Cost Living (Relief) Act, 1973 as amended specifically provides that the Cost of Living Allowance shall form part of wages for the purposes of contribution towards Provident Fund, Gratuity, Bonus, Social Security Scheme and Overtime Work. The Definition of the term wages in the West Pakistan Social Security Ordinance, 1965 manifestly includes COLA in the wages. Thus there was no need to mention contributions towards Social Security Scheme in section 7 of the Cost of Living (Relief) Act, 1973. As redundancy cannot be conceived in a statute any apparent redundancy must be reconciled. Hence the obvious intention of the Legislature would be that this allowance shall form part of wages for the purpose of contribution towards all Social Security Schemes including EOBI. We, have carefully heard the arguments of both the parties. We agree with the contention of representative of the respondent. In the event of legislation by reference it is established principle of inter pretation of statutes that the clauses incorporated in a subsequent statute shall be deemed to have been written in that statute on the date of its promulgation and thereafter no reference shall be made to the former statute. The Hon'ble Court of Dacca reproduced an extract of an English Judgment in Re: Wood's Estate (1886) 31 Ch. 607 and had relied thereon in Messrs Usmania Glass Sheet Factory Ltd. v. Assistant Collector Custom, Chittagong P L D 1968 Dacca 276 that, "if the subsequent Act brings into itself by reference some of the clauses of a former Act, the legal effect of that, as has often been held, is to read those sections into new Act just as if they had been written in it with pen, or printed in it, and, the moment you have those clauses in the latter Act, you have no occasion to refer to the former Act at all." Similarly the Hon'ble Lahore High Court held that, "when certain provisions from an existing Act have been incorporated into a subsequently Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, could be deemed to be incorporated in it, at all events if its possible for the subsequent Act to function without the addition" (P L D 1970 Lah. 195). From these rulings there is no room left to the proposal that the proviso of section 7 of the Employees' Cost of Living Allowance shall apply to the Employees' Old‑Age Benefits Act, 1976 besides the Payment of Wages Act. Mr. Hamid Khan has also conceded that the Employees' Old‑Age Benefits is a Social Security Scheme and we find considerable weight in the argument of Mr. Mustafa that contribution towards Social Security Scheme which has been expressly made payable on the Cost of Living Allowance includes the Employees' Old‑Age Benefits Scheme. Thus, we declare that the contribution is payable on the Cost of Living Allowance allowed to the employees under the Cost of Living (Relief) Act, 1973 w.e.f. 1‑5‑1977 onwards. Mr. Hamid Khan has stated that an intricate question of law was involved in the matter so the delay in payment of contribution was not willful or deliberate hence no increase on the amount of contributions was payable by the appellants. Moreover the respondent had wrongly assessed the amount of contribution which in fact was much less. The representative of the Institution agreed that if the appellants submit their record for proper determination of the contribution payable on Cost of Living Allowance, the Institution shall revise the demand accordingly. However with regard to the increase he pointed out that the Hon'ble High Court of Sind has held in the matter of Rashid Textile Mills Ltd., Karachi v. Commissioner Sind Employees' Social Security and another 1980 P L C 800 that, "if an employer fails to pay the contribution which was due under the law, under a bona fide misunderstanding even then he is not absolved of the liability to pay the increase on contribution," The appellants are accordingly directed to furnish a statement of accounts showing the month-wise amount paid towards Cost of Living Allowance and the contribution payable thereon to the respondent Institution within 15 days and also produce necessary record to substantiate their statement. The respondents are directed to revise their demand accordingly. The increase under section 13 of the Act D should be charged at the rate of 1 % per month which must not exceed 50% in any case. Appeals dismissed. A. E. Appeal dismissed.