1982 PLP 647 (PLC)

(3) Relief and costs. The parties have agreed that the documents filed by the parties with the plaint may be read in evidence. The plaintiff has also examined one witness. Issue No. 1 has not been pressed. Issue No. 2. ‑‑The plaintiff has contended that it was created under National Insurance Corporation Act, 1976 (Act XXIII of t 976). The learned Counsel for the plaintiff has referred to item 29 of the Federal Legislative list part 1 of the Fourth Schedule and Articles 70 and 142(x) of the Constitution of Islamic Republic of Pakistan 1973. and various provisions of Act XXIII of 1976 to establish that the Corporation is performing the functions of the Federal Government and is, therefore, a department of the Government. He has contended that the entire capital belongs to the Federal Government, the management who appoint the Chief Executive and directors, who hold office at the pleasure of the Government. The functions of the Corporation according to the plain tiff's counsel is restricted only to the business relating to the insurance of public properties as defined in section 2 (6) of the Act which inter. Alia Include the properties belonging to Trading Corporation of Pakistan, Pakistan Industrial Credit and Investment Corporation, National Ship ping Corporation etc. The profits of the Corporation are credited to the Revenue of the Government: It .has been contended that the plaintiff is a Government Department. Reliance has been placed by the learned Counsel, on Sind Estate Ltd. v. Central Board of Revenue and 3 others (P L D 1975, Kar. 128), where S I T E was held to be a department of Government. In Akbar Ali Bokhari v. State Bank of Pakistan (P L D 1977 Lab. 234), it was held that State Bank of Pakistan .is a person performing the functions in connection with the affairs of the Federation. On the basis of these authorities the learned Counsel contended, that it is not the corporate status of the plaintiff which will finally determine the issue but in order to determine the real character and status of the plaintiff veil ‑ of incorporation will have to be lifted. The learned Counsel has relied upon The President v. Mr. Justice Shaukat Ali (P L D 1971 S C 585), for lifting the veil of incorporation to establish that it is a department of the Federal Government. In view of the observations made in P L D 1975 Karachi and 1977 Lahore, the plaintiff is performing the functions of the Federal Government and can be deemed to be department of the Government.

3. Mr. S. A. Sarwana, the learned counsel for the defendants has invited attention to various provisions of the Employees Social Security Ordinance, 1965 (Ordinance X of 1965) and has contended that even ‑ it is accepted that the plaintiff is performing the functions of the Federal Government, and may be treated as a Government department, which has not been admitted by him, the fact remains that the employees of the plaintiff have not been exempt from the coverage provided by the Ordi nance. The plaintiff is covered by the definition of establishment as pro vided by section 2(11) of the Ordinance. Plaintiff is a commercial organi zation. To fully appreciate the contention of the defendants it would be convenient to reproduce the relevant provisions of the Ordinance as follows:‑ Section 2 (8).‑"Employee" means any person, working, normally for at least twenty four hours per week, for wages, in or in connection with the work of any industry, business, undertaking or establish ment, under any contract of service or apprenticeship. whether written‑or oral, express or implied but does not include‑ (a) persons in the service' of the State, including members of the Armed Forces, Police and Railway servants; (b) persons employed in any undertaking under the control of any Defence organization or Railway administration; (c) persons in the service of a local council, a municipal committee. A cantonment board or any other local authority; (d) any person in the service of his father, mother, wife, son or daughter, or of her husband (e) * * * (f) any person employed on wages exceeding (one thousand) rupees per mensem ; (g) "employer" means in the case of works executed or undertaking carried on by any contractor or licensee on behalf of the State, the contractor or licensee working for the State, and in every other case the owner of the industry, business, undertaking or establishment in which an employee works and includes any agent, manager or representative of the owner ; Section 2 (11).‑ Establishment" means an organization, whether industrial, commercial, agricultural or otherwise."

4. From the definitions provided in the Ordinance the plaintiff is an employer and also an establishment engaged in commercial activity. While defining the word "employer" and "establishment" no exception has been made nor it has been provided that certain category of persons, shall not be treated as employer or establishment. It therefore, follows that every person falling within the definition of the "employer" shall be treated as such without any exception. However, while defining the word "employer" there are certain exceptions provided and the word "employee" does not include persons in the service of the state including members of the Armed Forces, Police force and Railway servants. Per sons employed in any undertaking under the control of any Defence Organization or Railway administration, persons in the service of a local council, a municipal committee, a cantonment board or any other local authority have also been excluded. Section 20 provides that every employer shall in respect of every employee whether employed by him directly or through any other person pay to the defendant No. 1 a con tribution at such time and such rate and subject to such conditions as may be prescribed. This section casts a liability upon an employer to pay its contribution for the employees. The employer will however be not liable to pay in respect of such persons who do not fall within the defini tion of, "employee" if any person disputes the liability to pay the con tribution then he has to establish either of the two facts. (1) That he is not an employer or (2) that the persons working with him do not fall within the definition of the word "employee". As the contribution is paid in respect of employees it is the nature and character of the persons working in an establishment that has to be considered and determined and not that of the employer. It is the status of the employee, which materially governs the applicability of the Ordinance.

5. Mr. A. Rauf the learned counsel for the plaintiff aware of this position contended that as the plaintiff is a department of the Federal Government, all persons employed with it. should be treated as persons in the Service of the State who are not "employees" within the meaning of the Ordinance. It has, therefore, to be seen whether the employees of the plaintiff are persons in the service of the State or employees of the Corporation. Although in the cases referred by the plaintiff the status of the Corporation for various purposes has been treated to be as a Govern ment department, there does not seem to be any observation in those cases holding that their employees shall also be treated as the Govern ment employees or persons in the service of the State. The learned counsel for the defendant has referred to 1971 S C M R 566, where it was held that Oil & Gas Corporation which performs the functions of the State may be treated as a government department but their employees are employees of the Corporation and cannot be treated as government servants and are not entitled to rights and privileges afforded to a govern ment servant. To the same effect observation was made in 1971 S C M R 568, in respect of an employee of P. I. A. Further reliance has teen placed on P L D 1966 S C 848 which relates to an employee of East Pakistan Industrial Development Corporation, The Supreme Court has, therefore, ruled in specific terms that even the employees of those Corporations which are completely owned and managed by the Government and per forming the functions of the State cannot be treated as Government servants. In this context reference is made to Muhammad Aslam v. National Shipping Corporation (P L D 1979 Kar. 246) where it was held that Constitutional safeguards against arbitrary dismissal or removal from service are not available to servants of Registered Companies or Statutory Corporations. In view of these observations of the Supreme Court and High Court the employees of the plaintiff cannot be treat as government servants and therefore, they are not excluded as provided by section 2(8) (a) of the Ordinance.

6. The learned counsel for the plaintiff has contended that the Ministry of Law, Government of Pakistan has given an opinion holding that the defendant is not entitled to recover the contribution from the plaintiffs. There is no direction issued by the Federal Government to the Provincial Government for exempting the plaintiff from the operation of the Ordinance, and therefore, a mere opinion on a point of law cannot be said to have any binding effect.

7. In view of the above discussion the defendants have jurisdiction] to issue notification bringing the plaintiff's establishment within the Social Security Scheme and the demand made in pursuance‑ of such notification is valid and proper. In the prayer clause the plaintiff has erroneously mentioned the date of notification as 5th March, 1980. In fact it is a notice of demand dated 5th March, 1980. The plaintiff has not challenged the notice of demand on any other ground. Issue No. 3‑In the result the suit is dismissed. An additional ground for dismissal of suit will be that although the notification dated 16th August, 1978 has been challenged its copy has not been filed with the plaint nor produced at any stage of the proceeding and further that no prayer ‑has been made in respect of notification dated 16th August, 1978. As the question involves interpretation of statute parties to bear their own costs. Suit dismissed,