2006 PLP 211 (PLC)

MUHAMMAD NAWAZ ABBASI, J.

This appeal by leave of the Court has been directed against the judgment dated 16-3-2001 passed by a learned Judge in Chambers in the High Court of Sindh at Karachi whereby the appeal filed by the respondent herein against the order dated 14-10-99 passed by First Social Security Court No.1 Karachi, was allowed. The leave was granted in this appeal vide order dated as under: "Petitioner seeks leave to appeal from the Sindh High Court judgment dated 16-3-2001 in Miscellaneous Appeal No.35 of 1999 allowing appeal against order dated 14-10-1999 passed by the Social Security Court No.1, Karachi.

2. Facts leading to this petition appear to be that petitioner issued a notice dated 8-5-1996 to the respondent management, calling upon it to pay a sum of Rs.14,30,950 by way of contribution to the social security amount payable on guaranteed payment made to the employees, which had been detected on periodical checking of the records. Respondent submitted a detailed reply, insisting that the contribution demanded was not payable as guaranteed payment made to the employees did not fall within the definition of expression "wages" as contained in section 2(30) of the Provincial Employees Social Security Ordinance, 1965 (hereinafter referred as the Ordinance, 1965). As view point of the respondent management, that this payment was in the nature of bonus/ex-gratia and no such demand was raised in the past was not accepted by the petitioner, latter preferred a complaint under section 57 of the Ordinance, 1965, which was dismissed vide decision dated 5-12-1987. An appeal, in terms of section 64 of the Ordinance 1965 was, however, accepted through the impugned judgment by a learned Judge in Chambers of the Sindh High Court, leading to this petition.

3. After hearing learned counsel for the parties and perusing impugned judgment as well as documents on record, we are inclined to grant leave to appeal, inter alia, to examine whether the guaranteed payment made by the respondent management to A its employees being uniform and regular in character would not fall within the ambit of expression "wages" in terms of section 2(30) of the Ordinance 1965? It is ordered accordingly."

2. The controversy in the present case relates to the liability of the respondent for the payment of Social Security Contribution to the Sindh Employees Social Security Institution, appellant herein, and the point requiring determination is what is the true import of expression `guaranteed payment' and whether guaranteed payment by the employer to the employees, cannot be treated as part of the wages for the purposes of Social Security Ordinance, 1965. The learned Judge in Chambers in the High Court of Sindh having discussed the proposition in detail, has given the verdict that guaranteed payment was not part of wages of the employees. The learned counsel for the appellant taking us to the various settlement entered between the employer and employees time by time through C.B.A submitted that a payment in terms of settlement between the employer and the employees would be considered as an obligation of the employer and in case of failure of employer to make such payment, it would be recoverable as, part of the wages under the law. In support of the above contention, the learned counsel has placed reliance on Brook Bond Pakistan Ltd. v. Sindh Employees' S.S.I (1990 SCMR 175), National Embroidery Mills Ltd. v. Punjab Employees' Social Security Institution (1993 SCMR 1201), Consolidated Sugar Mills v. Sindh Employees Social Security Institution (PLD 1991 SC 862) and (PLD 1978 Karachi 744).

3. Learned counsel for the respondent, on the other hand, has contended that the expression `guaranteed payment" was used for the first time in the settlement of the employer with CBA in respect of the payment made to the Hotel employees in lieu of the services rendered by them to the customers in addition to their wages and it being voluntary payment, would not be considered part of their wages. Therefore, the employer would have no obligation to make social security contribution on such payments. He argued that wages in terms of section 2 (30) of Social Security Ordinance, 1965 means remuneration for services rendered by a person which is payables to him in cash or in kind but does not include the payment made in respect of special expenses, gratuity and pension. In nutshell, the contention of the learned counsel was that in the light of definition of wages, the voluntary payment in addition to the legal remuneration, cannot be considered part of the wages and the guaranteed payment is a special payment which is paid as aid and is not a remuneration for services to be treated as part of wages.

4. It is appropriate to examine the proposition in the light of relevant provisions of law. The term `wages' has been defined in section 2(30) of Social Security Ordinance, 1965 as under:- "30. "Wages" means remuneration for service paid or payable in cash or in kind to a secured person, not being less than remuneration based on the minimum rates of wages declared under the Minimum Wages Ordinance, 1961 (XXXIX of 1961), without taking account of deductions for any purpose, under a contract of service or apprenticeship, expressed or implied, and shall be deemed to include any dearness allowance or other addition in respect of the cost of living and any payment by the employer to a secured person in respect of any period of a authorized leave, illegal lockout or legal strike; but does not include:-- (a) any payment for overtime; or (b) any sum paid to the person employed to defray special expenses entailed by the nature of his employment; or (c) any gratuity payable on discharge; or (d) any sum paid as bonus by the employer." The above definition of `wages' obviously includes remuneration for service paid and payable in cash or in any other kind except the payments mentioned in clauses (a) to (d) section 30-ibid. The expression 'guaranteed payment' means making of a payment as an obligation under an instrument.

5. This is an admitted fact that the guaranteed payment was regularly being treated as an integral part of the settlement between the management of the Pearl Continental Hotel, and the workers union since long, therefore, this type of payment having been not specifically excluded from the purview of section 2(30) of Social Security Ordinance, 1965, would be deemed to have been treated as part of wages. In plain words wages means all kinds of payments which may be covered by the definition of remuneration for the services rendered by a person and the word `remuneration' has greater significance than the `wages' which may include the payments in respect of allowances, or services rendered and such other payments. The definition of term wages in subsection (30) of section 2 of Social Security Ordinance, 1965 is comprehensive and exhaustive and except the occasional payment which is not considered as part of wages, all payment which are made under any rule or an instrument, contract or settlement either as a statutory or contractual obligation must be treated as part of wages unless specifically excluded from the definition of wages under the law. The concept of social security contribution is to promote the welfare of working class and the payments made and expenses incurred by an employer on welfare and well being of his employees as his obligation are included in the definition of wages therefore, the provisions of the Ordinance cannot be construed in a manner which may destroy the purpose and defeat its object. It is clear from the scheme of law that if an employer in discharge of his contractual or statutory obligation pays an amount to an B employee for the services rendered by him it will be treated as part of wages in terms of section 2(30) of Social Security Ordinance, 1965 and notwithstanding the mutual understanding that such payment would not be considered as part of wages the same would remain part of wages unless is excluded from the definition of wages under the statute. However, the payments which are made by the employer occasionally without any statutory or contractual obligation for the well being of his employees, cannot be treated as part of wages but if the similar category of payment is made as contractual or statutory obligation, it would become part of wages under the law. This Court in Consolidated Sugar Mills v. Sindh Employees Social Security Institution (PLD 1991 SC 862), observed that if an employer pays any amount to an employee in discharge of his contractual or statutory obligation for the service of the employee, it will be covered by the definition of the term "wages" given in above clause (30) of section 2 of the Ordinance notwithstanding that the parties may provide in the settlement that it is not to be treated as part of wages unless under some statutory provision, it can be so provided. However, we may also observe that if an employer occasionally without being under a contractual or statutory obligation, makes ex gratia payment to his employees for their well being, the same will not be covered by the above definition of the term "wages". The similar view was taken by this Court in Brooke Bond Pakistan Ltd. v. Sindh Employees' S.S.I (1990 SCMR 175).

6. The appellant had not raised any other point before the High Court and leave was also granted only on sole question whether guaranteed payment was part of wages or not, therefore, we in the light c of foregoing discussion hold that guaranteed payment in the present case would be deemed as part of wages. This appeal is therefore, allowed with no order as to costs. M.H./S-2/S????????????????????????????????????????????????????????????????????????????????????????? Appeal allowed.