1990 PLP 338 (PLC)

The Social Security Court No. 1 after taking into consideration the arguments advanced by the learned counsel for the parties held that the employer of the respondent was not liable to pay contribution in respect of employees working in/or in connection with the painting of gas cylinders; stacking of such cylinders and providing of security services. The appeal was allowed by order dated 31‑8‑1986. The appellant being aggrieved against the order dated 31‑8‑1986 has filed the present appeal. M.A. No. 19 of 1988: The facts leading to the filing of the above appeal are that by Gazette Notification dated 16‑6‑1977 the provisions of the Ordinance were made applicable to the employer and employees of the respondent. The respondent is engaged, inter alia, in the business of textile mills proprietors and yarn and textile manufacture and to establish run work, maintain and control textile mills and works ancilliary thereto. The case of the appellant as set out in the memo. of appeal is that the respondent started paying contribution at the rate of 7% of the wages paid to any employee working in/or in connection with the work of a notified establishment under any contract of service, whether written or oral, express or implied, provided that such contribution is payable only on those wages that do not exceed Rs.60 per day. Consequently, the respondent started paying contributions of the wages of its employees. In 1985 officers of Landhi Directorate of the Institution inspected the records of the respondent for the period October, 1982 to September 1984 and found that the respondent was not paying contributions in respect of all its employees working in/or in connection with the business of the respondent. According to the appellant there was a total outstanding arrears amounting to Rs.121,704.51. The excuse for non‑payment of contribution given by the respondent was that this amount was in respect of persons engaged through the contractors and that the respondent was not responsible for paying social security contributions on their wages. The persons so employed were engaged in the work of loading and unloading waste and roving and packing. It is the further case of the appellant that prior to induction of the contractors in October, 1982, the employer of the respondent establishment was paying contribution on the wages of those persons who were engaged in work of loading and unloading waste, roving and packing. By letter dated 30‑6‑1986 the respondent was asked to pay the arrears of contributions. The respondent raised a dispute by filing a complaint under section 57 of the Ordinance before the Commissioner of the Institution. The Commissioner by its decision dated 14‑9‑1986 held that contribution in respect of those persons is payable by the respondent and further held that the respondent is liable to pay Rs.1,16,098.47. The respondent went in appeal which was allowed by the Social Security Court No. 2, Karachi. The learned Social Security Court No. 2, Karachi, by its decision dated 9‑3‑1988 held that the employer of the respondent was not liable to pay contribution on the wages of persons engaged by "independent contractors". The appellant being aggrieved against the judgment dated 9‑3‑1988 has filed the present appeal. Mr. S.A. Sarwana, the learned counsel for the appellant in support of the above appeals urged that the employers of the respondent are liable to pay contribution for employees engaged through contractors. In support of his contention, he relied on the un‑reported judgment dated 10‑1‑1989 of the Hon'ble Supreme Court in Civil Appeal No. 49 of 1988 wherein it was held that the owner respondent is obliged to contribute to the Social Security Fund for employees engaged through the contractor. On the other hand Messrs Abdul Hafeez and I.H. Zaidi, the learned counsel for the respondents in the above appeals submitted that the employers are not employing any worker through the contractors but the contractors are their employers. In support of their contentions, they relied on unreported decision of Supreme Court in Civil Appeal No. 39 of 1977 decided on 13‑2‑1983, 1987 S C M R 1463, 1985 S C M R 257 and P L D 1976 Lah. 1097. In order to appreciate the respective contentions of the parties, it may be pertinent to quote hereinbelow the relevant or Nations of the Hon'ble Supreme Court in the above case Civil Appeal No. 49 of 1988 of Social Security Institution v. Consolidated Sugar Mills Ltd. which read as under:‑‑ "Coming to the definition of employee, the requirements are that (i) he must normally be working for at least twenty four hours per week; (ii) he must be working for wages; (iii) he must be working in connection with the work of the industry, business, undertaking or establishment; (iv) he must be working under a contract of service or apprenticeship. The exclusions are for the present not relevant. What the High Court considered as deficient was that "neither the amount of wages nor the terms and conditions on which these workers will be employed by the contractors is spelt out from these agreements". These deficiencies were not the requirements of the definition. It was not the finding that no wages were at all paid by the contractor or that they were not employed on contract of service. All the terms of the contract have not to be established once the contractual relationship is established. There appears to be a mistaken impression that the contract of employment has to be between the owner and the employee. The definition of employer and employee do not contain or exhibit any such contstraint or limitation. In this context of these definitions the charging provision (section 20) leaves no manner of doubt or ambiguity. Employer has been defined to mean the owner and the owner has been charged under section 20 for contribution. Even where the owner does not fall strictly within the definition of an employer as in the case of State undertaking or an owner of a plot over which he wants to get a building constructed through the Contractor, the liability under the Ordinance has been cast on the State under subsection (9) and on the owner of the building under subsection (8) of section

20. Such extensions cannot be interpreted as to imply the exclusion of other owners defined as employers but as including them within the charging provisions. Reading these provisions together the conclusion is inescapable that the owner of the industry is liable for employees engaged for his industry even through the contractor. The contention that the Contractor should be taken to be employer and not the owner, as expressed in the agreements with the contractors and made liable for the contribution, cuts across the scheme of the statute where it was intended by law to make the Contractor, the employer, the statute made provisions for it directly [State undertakings‑‑Section 2(9)] or indirectly [section 20(8) and section 20(9)]." In Civil Appeal No. 39 of 1977, Muhammad Sharif and others v. Punjab Labour Court No. 3, decided on 13‑2‑1987 the Hon'ble Supreme Court was considering the "worker" as defined under section 2(xxviii) of I.R.O., 1969. It was held that such workers having no contract of service with the employer, therefore cannot be deemed to be the employees as defined in the Statute. In Munir Ahmed v. The State 1985 S C M R 257, the facts were that the factory did not issue attendance tickets to certain workers who were employed by the contractor. In that case the admitted position was that an employer is required to issue such tickets only to the persons employed by him as workers. In these circumstances the proceedings were quashed. In Farid Ahmed v. Pakistan Burmah Shell Ltd. 1987 S C M R 1463 the facts that according to the terms of contract entered into between the respondent and the contractor who is running Saifee Filling Station and employees number of his own pump attendants and personnel to provide the required services. According to the contract the workers employed by the contractor are to be his employees. In this case, definition of workman as contained in section 2(xxviii) of I.R.O., came up for interpretation. In a case reported in P L D 1976 Lahore 1097, it has been held that word `industry' is of widest aptitude and includes in its sweep every conceivable human activity. It is well‑recognised principle that any exposition of law in a judgment has to be read in the context of issues raised therein and the facts of the case from which such issues arise. I would, therefore, leave the matter at that only and would not like to say anything further since the question whether the employer shall in respect of every employee, whether employed by him directly or through any other person pay to the institution a contribution at such times, at such rate and subject to such conditions as may be prescribed, is a matter which arises for decision in the above appeals. I am inclined to hold that the dictum of their lordships of the Hon'ble Supreme Court of Pakistan in the above case of Social Security Institution v. Consolidated Sugar Mills Ltd. that the owner of the industry is liable for employees engaged for his industry even through the contractors binds this Court and I do not think therefore the cases cited by the learned counsel for the respondents can be of material assistance either to the learned counsel for the respondents or to me. I respectfully follow the dictum as it would tersely apply to the facts of this case. I hold that the employers of the respondent establishments are liable to pay contributions on the wages of persons engaged by them directly or through contractors at such rate and subject to such conditions as may be prescribed. I would accordingly accept these appeals and set aside judgments dated 31‑8‑1986 and 9‑3‑1988 of the Social Security Courts and restore those of the institutions under section 57 of the Social Security Ordinance, 1965. In the facts and circumstances of the case, the parties are directed to bear their own costs of these appeals. M.Y.H./S‑530/K Appeals accepted.