2001 SCMR 1599 (PLP)

Later on vide Amending Ordinance XVII of 1983 the word "establishment" was defined to be an "establishment" to which the West Pakistan Shops and Establishments Ordinance, 1969 for the time being applies and notwithstanding anything contained in section 5 thereof includes clubs, hostels, organizations and messes not maintained for profits or gain and Establishment including hospitals, for the treatment or care of sick, infirm, destitute or mentally unfit persons. Under section 2(i) of West Pakistan Shops and Establishments Ordinance, 1969 a shop has been defined to be an establishment. The amended definition of establishment has enlarged the scope of application of Employees' Old‑Age Benefits Act, 1976 because it also covers a shop, therefore, no doubt is left that the shops being run by the establishment fall under the definition of establishment individually and jointly. It may be noted that the establishment is the employer of the staff members working in the shops and according to the definition of employer under section 2(c) of Employees' Old‑Age Benefits Act, 1976 it means any person who employs either directly or through any other person any employee and includes in the case of an individual an heir, successor administrator or assign or a person who has ultimate control over the affairs of an industry or establishment or where the affairs of an industry or establishment are entrusted to any other person whether called a managing agent, managing director, manager, superintendent, secretary or by any other name such other person etc. The conjunctive study of word "establishment" and employer under section 2(c) and (e) of Employees' Old‑Age Benefits Act, 1976 manifestly makes it clear that their affairs are being controlled by the establishment from its head office because they had been employed to supervise the interest of the appellant in different parts of the country and the income whatever they generate ultimately is subject to income‑tax under the Income‑Tax Ordinance, 1979, therefore, no doubt is left that the shops/sales depots are the cluster of commercial establishments, thus, it is responsible to make the contribution on behalf of insurable employees in terms of section 9 of Employees' Old‑Age Benefits Act, 1976. Kohinoor Chemical Co. Ltd. and another v. Sindh Employees' Social Security Institution and another PLD 1977 SC 197 ref. K.M.A. Samadani, Senior Advocate Supreme Court for Appellant. Nemo for Respondents Date of hearing : 15th May; 2001. IFTIKHAR MUHAMMAD CHAUDHRY, J.‑‑‑This appeal is by the leave of the Court against Judgment of Lahore High Court dated 22nd March, 1994 whereby Writ Petition No.1658 of 1988 filed by appellant has been dismissed.

2. Leave to appeal has been granted to consider "whether for the, Purposes of making contribution to the funds created by the Employes' Old Age Benefits Act, 1976 each shop and sale depot is to be treated as a separate unit or whether they are all to be take as forming part on one establisher.

3. Precisely stating the facts of the instant case are that on 5th February, 1987 vide Demand Notice No.LRS/F‑OP/87/171 appellant was called upon to make payment of Rs.10,08,000 as contribution under section 9 of the Employees' Old‑Age Benefits Act, 1976 (hereinafter referred to as the "Employees' Old‑Age Benefits Act, 1976") for period from July, 1976 to December, 1986 in respect of the employees in the insurable employment of the appellant working in various shops and sale depots being run by the appellant together with statutory increase at the rate of 50% total amounting to Rs.15,12,

000. Appellant denied its liability and submitted a complaint under section 33 of the Employees' Old‑Age Benefits Act, 1976 before the Adjudicating Authority who proceeded with the matter during course whereof evidence was also recorded and ultimately vide order dated 23rd July, 1987 it was held that appellant is liable to make payment of contribution. Appellant being dissatisfied both from Demand Notice as well as order of Adjudicating Authority preferred a Writ Petition before Lahore High Court, Lahore which has been dismissed vide impugned judgment.

4. Mr. K.M.A. Samadani, learned Senior Advocate Supreme Court contended that appellant has got 190 shops and 15 sale depots located in different parts of the country where strength of employees is less than ten in each unit, therefore, Employees' Old‑Age Benefits Act, 1976 is not applicable because each shop and sale depot of appellant is running independently. He further submitted that on account of the original definition of word "Establishment' under section 2(e) of Employees' Old‑Age Benefits Act, 1976 the shops of appellant do not fall within the meaning of Industrial or Commercial Organization inasmuch as under the Amended definition of Establishment vide Ordinance XVII of 1983 the shops and sale depots are not covered by this definition as well for the purposes of payment of contribution, therefore, while setting aside impugned order it may be held that as each shop and sale depot of appellant is being run independently, therefore, no liability of contribution can be fixed upon appellant treating the shops and sale depots as one Commercial Establishment for the purposes of Employees' Old‑Age Benefits Act, 1976.

5. Respondents ‑ not present because they have already been ordered to be proceeded against ex paste. Though to set aside ex parte order a C.M.A. No.89‑L of 2001 was moved on their behalf but it was also not pursued.

6. We have heard learned counsel for appellant and have also carefully considered factual as well as legal aspect of the case. Before dilating upon the points involved in the matter we consider it appropriate to note that learned counsel for appellants made two very important admissions namely the staff members posted in the shops and sale depots of appellant located in different parts of the country are transferable from one place to another place and appellant is also making payment of income‑tax etc. on the joint business of all the shops/depots. It may be noted that appellant is a private limited concern and it has been registered under the repealed Companies Act, 1913 and now Companies Ordinance, 1984. We enquired from learned counsel to explain the objects of the company from Memorandum of the Company he expressed his inability because same was not readily available with him. However, in view of two admissions at the bar noted hereinabove we have drawn a conclusion that the shops/depots of appellant company are the part and parcel of their business and their activities remain under direct control of the Principal/Head Office of appellant and no shop or depot is being run independently for to purposes of earning profits and making payments of income‑tax as well as controlling the affairs of the staff posted therein. It is also to be noted that during proceedings under section 33 of the Employees' Old‑Age Benefits Act, 1976 before Adjudicating Authority, appellant produced its Manager Administration who, in cross‑examination, admitted that appellant is owner of the said shops. The employees working therein are the employees of the appellant and their affairs such as appointments, promotions, removals, postings, transfers etc. are managed and controlled by the appellant. This witness further went on saying that budgets of the shops are prepared by the appellant. The respondent also led evidence who also confirmed that appellant has complete administrative control over the employees working in various shops, and their salaries are paid by the appellant. Similarly their appointments, postings, transfers and promotions are done by the appellant. To further substantiate his plea he produced documents Exhs.R/1 to R/6 including appointment letters addressed to various persons issued under the signatures of appellant company. The contents of these documents were not disputed by the appellant. In view of the evidence so available on record next question for consideration would be as to whether shops/sales depots of the appellant do fall within the unamended definition of word "Establishment" under section 2(e) of Employees' Old‑Age Benefits Act, 1976, if so, to what effect? It would be appropriate to note that in the Employees' Old‑Age Benefits Act, 1976 originally the word "establishment" was defined to be an organisation whether industrial, commercial or otherwise under section 2(e). This Court in the case of Kohinoor Chemical Co, Limited and another v. Sindh Employees' Social Security Institution and another PLD 1977 SC 197 had an occasion to define the word "Establishment" as well as "Employee" under section 2(8) and (11) of the West Pakistan Employees' Social Security Ordinance (X of 1965). It is to be observed that under section 2(11) of the said Ordinance the word "Establishment" means an Ordinance whether industrial, commercial or agricultural or otherwise. For the purpose of instant case the definition of word "Establishment" is identical so far as it relates to industrial or commercial organization. In Kohinoor Chemical Company (ibid) word "Establishment" was defined as follows:‑‑ .the term "Establishment", as defined in clause (11) of section 2 of the Ordinance, does not appear to me to be confined in its scope to merely the four walls of the physical premises where the notified establishment may be located, on the contrary, the definition speaks of an organization whether industrial, commercial agricultural or otherwise. In its literal sense an organization connotes a systematic arrangement for a definite purpose. In the legal sense it describes a system, a body or a society furnished with organ for the normal exercise of its appropriate functions. It follows, therefore, that an organisation is not successfully coterminous with the physical premises where it may be located. It is possible that a part of its structure may be situated elsewhere, but it must, nevertheless be integral to its main functions and objects. Later on vide Amending Ordinance XVII of 1983 the word "Establishment" was defined to be an "Establishment" to which the West Pakistan Shops and Establishments Ordinance, 1969 for the time being applies and notwithstanding anything contained in section 5 thereof includes clubs, hostels, organizations and messes not maintained for profits or gain and Establishment including hospitals, for the treatment or care of sick, infirm, destitute or mentally unfit persons. It is to be seen that under section 2(j) of West Pakistan Shops and Establishments Ordinance, 1969 a shop has been defined to be an establishment. Therefore, we are of the opinion that the amended definition of establishment has enlarged the scope of application of Employees' Old‑Age Benefits Act, 1976 because it also covers a shop, therefore, no doubt is left that the shops being run by the appellant fall under the definition of establishment individually and jointly. It may be noted that C the appellant is the employer of the staff members working in the shops and according to the definition of employer under section 2(c) of Employees' Old‑Age Benefits Act, 1976 it means any person who employs either directly or through any other person any employee and includes in the case of an individual an heir, successor, administrator or assign or a person who has ultimate control over the affairs of an industry or establishment or where the affairs of an industry or establishment are entrusted to any other person whether called a managing agent, managing director, manager, superintendent, secretary or by any other name such other person etc. The conjunctive study of word "Establishment" and employer under Section 2(c) arid (e) of Employees' Old‑Age Benefits Act, 1976 manifestly makes it clear that their affairs are being controlled by the appellants from its head office because they had been employed to supervise the interest of the appellant in different parts of the country and the income whatever they generate ultimately is subject to income‑tax under the Income‑Tax Ordinance, 1979 therefore, no doubt is left that the shops/sales depots are the cluster of appellant commercial establishments, thus appellant is responsible to make the contribution on behalf of insurable employees in terms of section 9 of Employees' Old‑Age Benefits Act, 1976. Therefore, for the foregoing reasons we see no merit in the appeal which is dismissed leaving the parties to bear their own costs. M.B.A./S‑122/S Appeal dismissed.