1990 PLP 577 (PLC)

Salman Talibuddin for Respondent. This appeal under section 59 read with section 25 of the Sind Employees Social Security Ordinance, 1965 is directed against the order dated 17‑9‑1987 passed by the Commissioner, S.E.S.S.I., Karachi whereby the learned Commissioner has disposed of the application of the appellant and disallowed the refund on Cost of Living Allowance of Rs.40 per month for the period from. 1‑7‑1981 to 29‑7‑1983 of the compensation paid by the appellant to the Institution of Rs.40 admissible to the employees.

2. The facts of the case in brief are that the Government had allowed Cost of Living Allowance of Rs.40 p.m. to be paid to each worker employed in Industrial/commercial establishments w.e.f. 1‑7‑1981. The appellants paid the said allowance to the workers in their employment. This Cost of Living Allowance, did not form part of wages for the purpose of Social Security Contribution. The appellant establishment voluntarily started and continued paying Contribution to the Institution right from 1‑7‑1981. At a later stage, the Director, Kotri Directorate, by his letter dated 6‑12‑1983 asked the appellant establishment to pay contribution on Cost of Living Allowance. The appellant establishment demanded refund of the contribution paid on Cost of Living Allowance or alternatively to adjust the same against .the future contribution payable by the appellant establishment. There was correspondence between the parties. However, the Director by his letter dated 30‑7‑1984 rejected the request of the applicant for refund or adjustment of the contribution paid on the ground that the applicants were voluntarily paying the contribution on Cost of Living Allowance from 1‑7‑1981 and the Institution had paid benefits to their workers on the same. Later on, the contribution amounting to Rs.9,737.52 for the period from December, 1983 to April, 1984 was refunded to applicants after deduction of Rs.427.36 on account of cash benefit. The applicants were not satisfied with the refund and claimed further refund of Rs.50,638.27 for the period from 1st July, 1981 to November, 1983. This claim was rejected; hence the present application was made before the learned Commissioner, S.E.S.S.I., Karachi. After hearing the parties, the learned Commissioner was pleased to allow refund for the period of 6 months immediately preceding 30‑1‑1984 and rejected the remaining refund w.e.f 1‑7‑1981 to 29‑7‑1983 hence; this appeal.

3. I have heard learned Advocates of the parties and perused the record.

4. The learned Advocate for the appellant contended that the appellants resisted the demand on additional Cost of Living Allowance of Rs.40 p.m. of 1981 from very beginning. The Institution confirmed by their letter dated 6‑12‑1983 that the demand was made by the Institution to pay the contribution. The appellant has produced letter of the Director of the said Institution dated 6‑12‑1983 as Annexure 'B' addressed to the appellant. In this letter, the Director has demanded payment of Social Security Contribution of the minimum wages. This clearly shows that the appellant himself was not paying this amount voluntarily but it was being charged by the Institution. The appellant sent the reply by their letter dated 30‑1‑1984 in which the appellant stated that payment of Cost of Living Allowance of Rs.40 per month, per worker is not permissible under the law and the excess amount recovered from the appellant may be refunded, to the appellant or it may be adjusted. Again another letter was sent on 23‑6‑1984 to the Director by the appellant in which the same thing was repeated. Both the letters are produced as Annexures `C' and `D'. The letter was received on 24‑6‑1984 from the Director, Kotri Directorate in which .the appellant was informed that the Social Security Contribution is not payable on the amount of additional Cost of Living Allowance of Rs.40 allowed from 1‑7‑1981. This is for your information. The learned Advocate for the appellant contended that this clearly shows that this amount was being recovered by the respondent Institution through their letter dated 24‑6‑1984 Annexure `D‑1' and on resistance, the Director for the first time informed the appellant that this amount is not payable on the additional Cost of Living Allowance. This letter is produced as Annexure `D‑1' There was exchange of letters. The learned Advocate contended that these letters written by the Director clearly show that this amount was being recovered by the Institution and it was never paid voluntarily. The learned Advocate contended that this deduction was illegal as the respondent admitted that the appellant was not liable to pay deduction on the additional Cost of Living Allowance from 1‑7‑1981 and has allowed the refund for the period of this month and disallowed. which is illegal. The learned Advocate contended that these documents show that the correspondence was taken immediately.

5. The learned Advocate for the respondent contended that the appellants were paying this deduction of their own accord voluntarily from the very beginning, without any demand. This amount to be refunded under Section 25 of S.S.Ordinance for the period of six months and the same has been allowed.

6. I have considered the arguments and perused the record. Admittedly the appellants are not liable to pay the Social Security Contribution to the respondent Institution w.e.f. 1‑7‑1981 on the Cost of Living Allowance of Rs.40 p.m. It is also an admitted fact that the appellant are paying contribution to the Institution from 1‑7‑1981 on the additional Cost of Living Allowance of Rs.40 p.m. The appellant has produced the letter dated 6‑12‑1983 of the Director the respondent Institution whereby the Director has asked the appellants to pay the Cost of Living Allowance as the Government has revised the cost of living allowance at the rate of Rs.40 per month for each worker and further demanded to pay the Social Security Contribution on full emoluments including Rs.40 immediately alongwith arrears. This clearly shows that the arrears were never recovered by the respondent Institution from the appellant from 1‑7‑1981 on additional cost of living allowance of Rs.40 per month. The reference in this letter is given by the Director that the Government vide Notification No.SO(L‑II)/13‑4/78, dated 13‑10‑1983 has revised minimum rates of wages for the adult unskilled male and female workers as under and it is further mentioned in this letter that the arrears were demanded from the appellant which were paid by the appellant. I am in disagreement with the contention of learned Advocate for the respondent that the appellant were voluntarily paying this amount on the additional Cost of Living Allowance. So also is alleged in the impugned order of the learned Commissioner, S.E.S.S.I. Further from correspondence of the respondent, it is clear that the demand was made by the respondent of this contribution on the additional Cost of Living Allowance of Rs.40 p.m. Even this fact has been admitted by the respondent that the appellant are not liable to pay this l contribution and the refund has been allowed for six months. I find from the correspondence that the letters were written by the Director, S.E.S.S.I. whereby the contribution was demanded alongwith arrears from the appellants which was paid by them.

7. Under the circumstances, it cannot be said that the appellants are entitled to the refund only for the contribution paid by them from 30‑11‑1973 to 1‑7‑1981. The letter of the Director clearly shows that the arrears were also demanded from the appellant in the letter dated 6‑12‑1983. The appellants have already allowed refund for six months. I am satisfied that the appellants are also entitled to the refund of excess contribution paid .by them on additional cost of living allowance of Rs.40 per month from 1‑7‑1981. I, therefore, accept this appeal and set aside the impugned order passed by the learned Commissioner, S.E.S.S.I. dated 17‑9‑1987 and direct that the additional cost of living allowance recovered from 1‑7‑1981 on additional cost of living allowance of Rs.40 be refunded to the appellant till 29‑6‑1984. A.E./1221/Lb.S??????????? Appeal accepted.