Form No.

HCJD/C-121

ORDER SHEET
IN THE LAHORE HIGH COURT LAHORE
JUDICIAL DEPARTMENT
Writ Petition No.6618/2007
KOH-E-NOOR INDUSTRIES (PVT) LIMITED
VS
EMPLOYEES OLD-AGE BENEFITS INSTITUTION, ETC.

S.No of Date of Order with signature of Judge, and that of parties of counsel, where
order/ order/ necessary.
Proceeding Proceeding

06.05.2015 Mr. Munawar Ahmad Javed, Advocate for the

petitioners in both the writ petitions.
M/s. Hafeez Saeed Akhtar, Advocate for the
respondents.

Through this single order, I propose to decide two matters

(W.P.No.6618/2007 and W.P.No.9976/2011) as both carry almost similar
questions of law and facts.

2. In Writ Petition No.9976/2011 the order dated 31.03.2010 passed by

the Appellate Authority is under challenge, whereas, in writ petition
No.6618/2007 the petitioner has assailed the decision dated 02.09.2006
passed by Board of Trustees, Employees Old Age Benefits Institution
(hereinafter to be called as “Institution”) in the capacity of appellate
authority, the decision dated 29.11.2005 passed on the review petition of
the petitioner and decision dated 26.09.2005 passed by Adjudicating
Authority, Faisalabad on the ground that special allowance payable under
Punjab Special Allowance (Payment) Act, 1988 is not covered under the
EOB Act and secondly the petitioner is not responsible for the payment of
Institution contribution with respect to the employees engaged through
independent Contractors and wages as well as other dues paid to them by
the said Contractors.

3. The learned counsel for the petitioner submits that Section 8 of the
Punjab Special Allowance (Payment) Act, 1988 clearly speaks that special
allowance shall not form part of wages of the workers for the purpose of
any other law including the purpose of provident fund, gratuity and bonus
and calculating wages for over-time work and it is special law which shall
prevail over the general law. Adds that for the first time this issue was
decided in the light of Social Security Ordinance vide judgment 1996 PLC
373 and 1999 SCMR 1466. Contends that there is hell of difference
between the definition of employee, employer, etc in Social Security
Ordinance and EOB Act. Further contends that at the most if it is decided
that petitioner is liable to pay the amount of contribution on the special
allowance under Punjab Special Allowance (Payment) Act, 1998 then it
only could recover/pay from the date of judgment i.e. 1996 PLC 373, as it
will not affect retrospectively and will be implemented prospectively in the
light of rule of law decided by the apex Court. In case of employees
engaged by the independent contractor, as the petitioner never paid the
wages to those employees and it was the responsibility of the contractor to
pay the wages to all the persons employed by him, for the same reason the
petitioner could not be liable for the payment of contribution on behalf of
those employees of the contractor and if any liability for payment is, that is
on the shoulder of the contractor and further submits that case law under
Social Security Ordinance, 1969 in respect of the contract employment
could not support the respondents’ stance as the definition of employee,
employer, wages and contribution in EOB Act is different from Social
Security Ordinance. Further adds that EOBI charge contribution only when
the employee is registered before him and in the absence of any
registration, no contribution could be claimed because the contribution is
only with regard to the payment of pension to certain employees but when
those employees do not exist and no record is available how they are
entitled for the contribution on their behalf. The learned counsel for the
petitioner in addition to the above grounds with reference to Noon Sugar
Mills added that the Adjudicating Authority fixed the responsibility for
certain period and for the remaining period left the matter open to be
decided after checking of the record and this order was not assailed before
the appellate authority by the EOBI but the appellate authority also added
the amount for the period which was not earlier calculated after checking
the record of the petitioner, which is not permissible under law, thus is
liable to be set-aside. In support of his arguments, the learned counsel
placed reliance on the case PLD 1968 SC 101, PLD 1991 SC 777, 2009
SCMR 1169, 1985 SCMR 257 and 1961 PLC 432 (Supreme Court of India.

4. The learned counsel representing the respondent submits that EOB

Act being federal statute has overriding effect on provincial statute i.e.
Punjab Special Allowance (payment) Act, 1988, and for the same reason
Institution is competent to recover the amount received by the employee on
the basis of Punjab Special Allowance (Payment) Act, 1988. Further
submits that Hon’ble Supreme Court of Pakistan in its judgments only
interpreted the law and no new law is created by the apex court, hence, the
EOBI could receive contribution from the date of enactment of Punjab
Special Allowance (Payment) Act, 1988. Further added that even if the
petitioner’s company obtained Labour through agent/third party, the
petitioner is covered under EOB Act to pay the contribution on behalf of
the Labour provided by the contractor. Reliance has been placed on 1999
SCMR 1477 and PLD 1988 SC 131. Lastly added that the respondent could
charge statutory increase under section 13 of the EOB Act and with
reference to Noon Sugar Mills contended that under Order 41 Rule 33 CPC
the appellate court could increase the amount payable without respondents
having gone into appeal.

5. I have heard the arguments of learned counsel for the parties at

considerable length and perused the available record with reference to the
relevant case law.

6. The issue with regard to special allowance payable under Punjab

Special Allowance (Payment) Act, 1988, has been decided by the Hon’ble
Supreme Court of Pakistan in the case PLD 1999 SCMR 1477, to the effect
that Punjab Special Allowance (Payment) Act, 1988 is provincial statute
and the bar imposed under section 8 of the said Act that the special
allowance shall not form part of the wages of workers for the purposes of
any other law, have no overriding effect on federal statute and federal law
would prevail on the principle of repeal by implication. The EOB Act is
also federal statute and in case of any conflict between the two, federal
statute will prevail. Similar was the situation with Social Security
Ordinance and the Hon’ble Supreme Court in the above referred judgment
considering the principle of adaptation having the constitutional mandate
under Article 268 of the Constitution of Islamic Republic of Pakistan, 1973
with regard to conflict in federal and provincial statute, held that:-

"Leave to appeal is granted to consider whether the special

allowance being, paid to a workman in pursuance of the
provisions of the Punjab Employees Special Allowance
(Payment) Act, 1988 is to be treated as part of his wages for
 the purpose of computing the contribution which his employer
is liable to make under the Social Security Ordinance, 1965,
despite the specific exemption granted by section 8 of the
aforementioned Act. The interim order already made on 17-1-
1996. to continue during the pendency of the appeals on the
same terms.

In a unitary form of Government, all the Legislative Powers.

of necessity, vest in the legislature of the given country in the
federal form of Government, however, the legislative powers
vest in the respective legislatures in line with the dispensation
under the Constitutional-document/concerned.

It is in the spheres of distribution of legislative powers in a

federal set up that a conflict of sorts between the legislation by
the Federal -Central Legislature and Provincial /State
Legislature can arise for resolution by the Judiciary.

Articles 141,142 and 143 of 1973 Constitution respectively

deal with (1) extent of Federal and Provincial Laws (2)
subject matter of Federal and Provincial Laws and (3)
inconsistency between Federal and Provincial Laws]

Under Article 141 (ibid) (Majlis-e-Shoora (Parliament)] may

make law for the whole or any part of Pakistan and a
Provincial Assembly may make laws for the Province or any
part thereof. Under Article 142 (ibid) Majlis-e-Shoora
(Parliament) has exclusive powers to make laws with respect
to any matter in the Federal Legislative List and [Majlis-e-
Shoora (Parliament)] and': a Provincial Assembly also have
powers to make laws with respect to any matter in the
Concurrent List. Under clause (c) of Article 142 (ibid) a
Provincial Assembly shall and [Majlis-e-Shoora
(Parliament)], shall not, have power to make laws with
respect to any matter"...not enumerated in either the Federal
Legislative List or the Concurrent Legislative List'. Further in
the event of any inconsistency between the Federal law and
the Provincial Law, the; mandate of the Constitution, as
contained in Article 143 (ibid) is that "...then the Act of
Mallis-e-Shoora (Parliament, whether passed before or after
the Act of the Provincial Assembly, or, as the case may be, the
existing law, shall prevail and the Act of the Provincial
Assembly shall, to the extent of the repugnancy, be void.”

7. Hence, the same principle is applicable to the EOB Act and the
special pay allowance payable under Punjab Special Allowance (Payment)
act, 1988 could be included in the wages of employee for the purposes of
contribution under EOB Act.

8. The above referred judgment of the apex Court was passed when
consolidated judgment of this court passed in Writ Petition No.6186/1995
reported in 1996 PLC 373 was assailed and view of this Court was upheld
and it was observed that the definition of wages provided in Social Security
Ordinance includes special allowance. On the same principle the definition
of wages as provided under EOB Act also does not exclude special
allowance, hence, on the principle of law decided in 1996 PLC 373 by the
High Court and in PLD 1999 SC 1477 by the Hon’ble Supreme Court of
Pakistan after examining the Social Security Ordinance, is also applicable
to the EOB Act and the petitioner is liable to pay the contribution on the
basis of special allowance.

9. The stance of learned counsel for the petitioner is that the matter was
for the first time decided in 1996 PLC 373, when the said judgment was
passed on 26th of October, 1995 and as earlier this question of law was
never decided, hence, before this date the contribution could not be
recovered from the petitioner as it will be equated with retrospective
implementation of statute. I have carefully considered the above argument
and hold that the case law referred by learned counsel for the petitioner i.e.
PLD 1965 SC 261 is distinguishable as in that case the Hon’ble Supreme
Court did not accept the view of the settlement authorities that the exercise
of delegated power under displaced persons Act 1958 was subject to
revision, review and appeal and to avoid the inconvenience and
disturbances that would necessarily follow, the Hon’ble Supreme Court in
the case PLD 1968 SC 101, held that decision in JALAL DIN’s case (PLD
1965 SC 261) was applicable from the date of delivery of judgment i.e. 2nd
November, 1964. It was further held that the said judgment did not have the
effect of altering the law as from commencement of the Act so as to render
void of its own force all relevant orders of Settlement Authorities and the
High Court. The other judgment referred by learned counsel for the
petitioner i.e. PLD 1991 SC 777, is also with reference to PLD 1968 SC
261 and in the judgment reported in 2009 SCMR 1169, relied upon by
learned counsel for the petitioner that retrospectively contribution could not
be recovered, is also not beneficial to the petitioner because this view in
this judgment was with reference to PLD 1990 SC 99 (judgment of Shariat
Appellate Bench of Hon’ble Supreme Court of Pakistan), which declared
the Land Reforms Regulations, 1972 against the injunction of Quran and
Sunnah. The Hon’ble Shariat Appellate Bench of the Hon’ble Supreme
Court itself specified the date on which the decision shall take effect as
required under Article 203(d) of the Constitution of Islamic Republic of
Pakistan, 1973 and could not support the petitioners. For the reasons
discussed above, all the judgments referred by learned counsel for the
petitioner are not applicable to his case for prospective recovery of amount
with regard to special allowance under Punjab Special Allowance
(Payment) Act, 1988.

10. Now, reverting to the EOB Act, it is the duty of the employer to pay
the amount to the Institution in respect of an insured person and department
acts later on for the recovery of contribution, if the employer fails to
comply with the provisions of EOB Act. The law with regard to special
allowance was promulgated in 1988 and at that time EOB Act was in field.
It was duty of the petitioner to pay the amount and if he did not pay the
same he could not get its benefit. High Courts and the Hon’ble Supreme
Court of Pakistan only interpret the law and it will be applicable from the
date when law is enforced. In this respect, I am fortified by a judgment
reported in “MALIK ASAD ALI versus FEEDERATION OF PAKISTAN
through Secretary, Law, Justice and Parliament Affairs, Islamabad and
others” (PLD 1998 SC 161), wherein, it has been held that:-

It is a well-settled law that a new or an amending statute touching

the, vested rights of the parties operates prospectively unless the
language of the legislation expressly provides for its retrospective
operation. However, the presumption against the retrospective
operation of a statute is not applicable to statutes dealing with the
procedure as no vested right can be claimed by any 1 party in
respect of a procedure. The only exception to the retrospective
operation of a procedure law is that if by giving it a retrospective
operation, the vested right of a party is impaired then to that
extent it operates prospectively. The above principles applicable
to a new or an amending statute, however, cannot be applied
strictly to the law declared by the Courts through interpretative
process i The Courts while interpreting a law do not legislate or
create any new law or I amend the existing law. By interpreting
the law, the Courts only declare the true I meaning of the law
which already existed. Therefore, to that extent the law declared
by the Court is applicable from the date the law is enacted.”

It is not the case of the petitioners that earlier some different interpretation
of the statute was available in the light of any other judgment of the High
Court or that of Hon’ble Supreme Court of Pakistan. Hence, the only and
sole interpretation of High Court and Supreme Court of Pakistan 1998 PLC
373 and PLD 1999 SC 1477 shall hold the field and will apply from the
date when Punjab Special Allowance (Payment) Act, 1988 was
promulgated.

11. Further, the controversy whether the petitioner is bound to pay

contribution on the wages of workers provided by a contract or working
through a contract or performing duties under an agent, is to be resolved
keeping in view the definition of words “employee” and “employer” i.e.
Section 2(bb) and 2(c) of the EOB Act, the relevant sections are reproduced
hereunder:-
"2(bb). "employee" means any person employed, whether
directly or through any other person, for wages or
otherwise, to do any skilled or unskilled, supervisory,
clerical, manual or other work in or in connection with
the affairs of an industry or establishment, under a
contract of service or apprenticeship, whether written or
oral, express or implied, and includes such person when
laid off):

Provided that a director of a limited company or

of a corporation set up under any law shall not be
treated as an employee under this Act, irrespective of his
wages or emoluments];

(c) "employer", in relation to an industry or

establishment, means any person who employs, either
directly or through any other person, any employee, and
includes--

(i) in the case of an individual, an heir, successor,

administrator or assign;
(ii) 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; and

(d) "employment injury" means a personal injury to an

insured person caused by an accident, or by such
occupational disease as may be specified in the
regulations, arising out of and in the course of his
employment".

A bare reading of above definition clarify that “employee” is a person

employed whether directly or through any other person for wages or
otherwise and an “employer” with reference to Industry and establishment
included any person who employees either directly or through another
person an employee. Both these definitions when read together made it
clear that all the workers performing duties through a contract or an agent,
or services of those employees have been provided by a contract, their
contribution shall be paid by the petitioner/employer. This matter was
earlier decided by the apex Court in the case “Messrs BOLAN MINING
ENTERPRISES versus BOARD OF TRUSTEES, EOBI and others” (2010
SCMR 1573) and it was held that:-

6. The language as employed to define "employee" is free from

any ambiguity as it has been couched in a very simple and plain
language and no scholarly interpretation whatsoever is called for.
It cannot be stretched too far as suggested by Mr. Muhammad
Humayoon, learned Advocate Supreme Court on behalf of
appellant because the definition of "employer" has removed all
the doubts if any which means any person who employs either
directly or through any other person any employee meaning
thereby that it would be immaterial to consider by whom an
employee was got employed. The only question which needs
determination would be with whom such employee is performing
his duties. It is not disputed that the employees under question are
performing their duties with Messrs Bolan Mining Enterprises
(appellant) and are being paid as such. The 'learned Advocate
Supreme Court on behalf of appellant has argued in oblivion of
the fact that "employees'" contractor" and "employees got
employed through contractor" are not synonymous because such
employees are not performing their duties with the contractor who
had just managed their employment with the Messrs Bolan Mining
Enterprises (appellant). It can be thus inferred safely that the
contractor had acted just an agent or a middle man by whom the
services of such employees were secured. Besides that such
employees have never been excluded from the definition of
"employee". It is an admitted position that such employees are
under the administrative and financial control of employer i.e.
Messrs Bolan Mining Enterprises (appellant) and the contractor
by whom such manpower was provided does not figure in. The
learned Advocate Supreme Court was asked pointedly that how
such employees got employed by the contractor can be deprived
from the benefits as conferred upon them under the EOAB Act,
1976 which is a beneficial legislation and the question of
preferential treatment or discrimination does not arise but no
answer could be given and rightly so because there can be no
answer as such employees by no stretch of imagination can be
deprived of any benefit conferred under the EOAB Act, 1976. It is
worth-mentioning that such employees are performing their duties
along with other employees under same management and
therefore, the source of their employment would immaterial.

8. The law laid down in case of Sindh Employees' S.S.I. (supra) is

applicable and the question of any deprivation of such employees
does not arise. Even otherwise the provisions as enumerated in
section 9(1) of the EOAB Act, 1976 provides that every employer
shall pay contribution in respect of every person in his insurable
 employment read with the provisions as contained in section 2(bb)
and 2(c) of the EOAB Act, 1976 whereby the "employee" and
"employer" have been defined and all the doubts if any have been
removed by giving such an exhaustive definition of "employee"
and "employer". The learned Advocate Supreme Court at this
juncture was asked that how section 9 of the EOAB Act, 1976
being charging section cannot be made applicable to such
employees but no answer could be given. In our view a futile
attempt has been made to frustrate the beneficial provisions of
Labour Laws with an attempt to evade statutory liability by
exploiting certain legal provisions of law and such like techniques
and mechanism are usually evolved to avoid financial
responsibilities having complete legal sanctity behind it which
cannot be appreciated.”

Hence, this principle has already been decided by the Hon’ble Supreme
Court of Pakistan and the petitioner is bound to pay the contribution of the
workers performing their functions under a contractor, agent, etc.

12. For what has been discussed above, writ petition No.6617/2007
“KOH-E-NOOR INDUSTRIES (PVT) LIMITED versus EMPLOYEES
OLD-AGE BENEFITS INSTITUTION, ETC” is found to be without any
merit and is dismissed accordingly.

13. So for as Writ Petition No.9976/2011 “NOON SUGATR MILS

LIMITED B HALWAL versus EMPLOYEES OLD-AGE BENEFITS
INSTITUTION, ETC”, is concerned, the law points as discussed above are
decided against the petitioner herein. However, with regard to additional
ground relating to this petition, it has been observed that contribution for
certain period has not been fixed by the officials of the Institution after
examining the record and the Adjudicating Authority directed that after
examining the record contribution could be fixed, but the appellant
authority also added the amount of contribution with regard to the period
for which relevant record was not checked by the concerned officials.
Hence, this writ petition (W.P.No.9976 of 2011) is decided on this issue in
the terms that judgment of the appellate authority is set-aside, however, the
authority under EOB Act will be at liberty to check the record of the
petitioner firm in accordance with law and fix the responsibility.

(MUHAMMAD QASIM KHAN)

JUDGE.
APPROVED FOR REPORTING.
Javed*