This is an appeal under Section 64 of the Employees' Social Security Ordinance, 1965, against an order dated 17.4.2003 passed by the Social Security Court, Punjab. It has been stated before this Court that since December, 2002, the appellants are making the social security contribution. The dispute only relates to the period from June, 1993 until before December, 2002, during which such contributions were not made.
2. The reason for not making the contributions is inter-alia that the services were not extended during this period to the employees of the appellant and that the appellant had to suffer medical expenses with respect to the employees during this period.
3. The question whether the facilities were being provided during this period, is not answered by the parawise comments which were submitted before the Vice-Commissioner by the Director Social Security and a reference in this connection may be made to Paragraph 6 (Annexure D-1 at page 26), which reads as follows:
6. It is fact that no medical care has been provided to the workers of complainant's unit because the case of the complainant on his request for entering into an agreement under Section 46 of Ordinance had already been referred to Head Office for approval, a reply of which has not so far been received by this office, in spite of issuance of reminder on the subject, on 30th August, 1993 vide No, SSLE/Cont/(S)/93/2001. It is imperative need to state that the complainant was informed about the latest position of his case by this office vide Letter No, SSLE/Cont/(S)/93/2148, dated 24.8.1993."
4. Section 46 of the Ordinance enables the parties to enter into an agreement, whereby the employer provides facilities himself and such provisions are regulated by the agreement. Section 46(5) reads as follows: The institution may enter into an agreement with an employer who maintains a hospital or dispensary or any other medical facility for the benefit of his employees for the utilization of such hospital dispensary or facility for the purposes of the institution and such agreement may, among other things specify the persons to whom medical care shall be provided, the type of benefit to be made available, the minimum level of such benefit, the conditions under which such benefit shall be provided, the extent of supervision which the institution may exercise over the hospital, dispensary or other medical facility, the submission of reports to the institution by the employer, and the extent and manner of reimbursement to the employer."
5. This Court has been informed that since the year 1993 the 'petition for entering into a contract with the institution was kept pending and the contract was never signed (Annexures M/4 & N).
6. The relevant Notification whereby the provisions of the Social Security Ordinance, 1965, were extended, is dated 15.12.1992.
7. The appellant is not shy of admitting his legal liability. But the argument from his side appears to be sound when the appellant invokes the principle of quid pro quo. A reference in this connection may be made to the preamble part of the Ordinance, which reads as follows: "Whereas it is expedient to introduce a scheme of social security for providing benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death, and for matters ancillary thereto."
8. It is absolutely clear that this Ordinance came about for providing benefits/services to the employees and their dependents, referred to in the preamble part of the Ordinance and corresponding to these services, a financial contribution is to be made by the employer. Therefore, both the employer and the institution are to fulfil their obligations in terms of the duties imposed on them under the provisions of the Ordinance. The contribution is, therefore, in the nature of a fee attracting inter-alia the principle laid down in the following case law: (i) Mehboob Yar Khan and another vs. Municipal Committee, Mian Channu and two others (PLD 1975 Lahore 748), (ii) Sheikh Muhammad Ismail & Co. Ltd. vs. The Chief Cotton Inspector, Multan Division, Multan and others) PLD 1966 SC 388); (iii) Abdul Majeed and another vs. Province of East Pakistan and others (PLD 1960 Dacca 502).
9. As to what happens when an employer provides the envisaged facilities/services to its employees in a case where these facilities/services have not been provided by the institution? The answer to this is well given in the case of Kohinoor Chemical Co. Ltd. and another qs. Sindh Employees' Social Security Institution and another {PLD 1977 SC 197 (relevant portion at page 211)1, which reads as follows:-- "(1) ...........
(2) ..............
(3) ..............
(4)The arrears of contributions may not be realised from an employer for the period during which he had made alternative arrangements for affording the necessary benefits to the employees and had made a contribution in that behalf at least equal to the rate prescribed under the Ordinance and the Rules and Regulations framed thereunder. Otherwise, the realisation of arrears would mean a double levy on the employer, without any corresponding benefits to his employees.
However, the existence of any such adequate alternative arrangements must be established to the satisfaction of the Social Security Institution."
10. This Court had also the advantage of reading the observations of the Honourable Chief Justice of Pakistan in this case and the relevant portion of which is being re-produced below: "It was stated from the bar by the learned counsel for the Employer, respondent herein, that the workers employed at the Head Office have all along been provided, under an agreement, some of the services which the respondent would have rendered to them had they been registered with it under the West Pakistan Employees' Social Security Ordinance. If that be so then the appellant will have no liability to make additional contribution to the fund of the Social Security Institution. A distinction must be made in this respect between a tax and a fee. The contribution which the Employer and the workers are required to pay to the Social Security institution is in the nature of a fee for rendition of services enumerated in the West Pakistan Employees Social Security Ordinance and not a tax. There is thus no absolute liability to pay on the part of the Employer as well as the workers."
11. This Court respectfully takes guidance from the observations of the Supreme Court in this case and would direct the Social Security Department to exclude from its claim of arrears the money which was already contributed by the Employer against medical expenses borne for the benefits of its bona-fide employees and their dependents, provided the Employer satisfies the Institution through proper record about the expenditures so made. The matter, therefore, for this exercise has to be ' referred back to the Institution for purposes of calculations and satisfaction about the expenditures made and for needful action thereafter as per the observations made herein above.
12.After the calculations are made with respect to the general expenditures, the rest of the expenditures shall be paid without any penalty because there has been a bona-fide objection.
Besides a stay order was also obtained throughout against this demand. In this connection, reliance is placed on PLD 1991 SC 308 (relevant portion is at page 315).