Tassaduq Hussain Jillani, J.--This judgment shall dispose of Civil Appeal No, 2782/2006 & Civil Petition No, 2584-L/2002 as they are directed against the same judgment dated 10.5.2002 passed by a learned Judge of the Lahore High Court, whereby he allowed the FAO No, 16/2002 and set aside the order dated 31.3.2001 passed by the Vice Commissioner, Punjab Employees Social Security Institution and directed that respondent who is appellant in the instant appeal (Fareed Company (Pvt) Limited) is mandated to make the payment/ contribution in terms of Section 20(8) of the Punjab Social Security Ordinance (hereinafter to be described as the Ordinance).
2. Facts in brief are that the appellant. Fareed Company/ Contractor was engaged by Nestle Milk Pack (Pvt) Limited for a certain construction work in its Factory premises at Sheikhupura Road. After the completion of the work, the Social. Security Institution issued a notice to the appellant for payment of Rs, 16,22,512/- "as short paid contribution" towards the social security fund, which was challenged by it before the Vice Commissioner Social Security Institution who after hearing both the parties vide order dated 31.3.2001 held that it was Respondent Nestle Milk Pack Limited who was liable to make payment of a sum of Rs, 12,61,917/- as short paid contribution. The operative part of the said order reads as under: "After hearing the parties, going through the contents of complaint, all the material available on record, statutory provisions relating to "Employer" as defend (sic) under Section 2(9) of the Social Security Ordinance read with Section 1(3), 2(8) and 20 as well as comprehensive judgment of Honorable Supreme Court of Pakistan in Civil Appeal No, 49 of 1988, 1989 SCM R 888 titled Sindh Employees Social Security Institution Versus Consolidated Sugar Mills Ltd, whereby the owner of the Industry was obliged to contribute to the Social Security Institution for employees engaged through the contractor. - Moreover by keeping in view the spirit of said Statutory Provisions and judgment of Honourable Supreme Court of Pakistan as mentioned, the respondent had raised the demand against M/s. Nestle Milk. Pack Ltd., 32-K.M, Sheikhupnra Road, Lahore notified under Section 1(3) of the ordinance being the owner of the industry and not against the complainant. On the basis of these enumeration, the complaint of complainant was not liable to be entertained u/S. 57 of the Social Security Ordinance, 1965."
The order of Vice Commissioner was challenged by Respondent No, 4 in CA 2782/2006 (Nestle Milk Pack Limited) before the Social Security Court which upheld the order vide the judgment dated 11.12.2001 by holding as follows: The learned counsel for the appellant has erred in averring that the liability of the owner of a building is to the extent of guarantor only and that he is not liable to make payment of contribution.
The matter has been thoroughly discussed and finally adjudicated upon by the Honourable Supreme Court in the case reported as 1989 SCM R 888 wherein owner of an establishment has been held obliged to contribute to the social security fund for employees engaged through the contractor. The citation referred to by the Respondent No, 3 i,e, 1993 CLC 984 and 1989 CLC 2332 also supplement the contention of the Respondent No, 3."
The learned High Court, however, reversed the judgment of the Social Security Court on grounds inter alia as under:-- "8. In my opinion, the provisions of Section 20(8) of the Ordinance are clear and unambiguous.
Wherever an employer whose premises have been notified under Section 1(3) of the Ordinance engages a construction contractor to undertake construction work at such premises, the said employer is obliged only in a secondary capacity as a guarantor to ensure that social security contribution is paid by the construction contractor in respect of the workers employed by him while undertaking the construction work. It follows, therefore, that if the employer in such cases is merely a guarantor, the principal obligation for making payment of the social security contribution would fall on the contractor and not on the employer."
3. Learned counsel for the appellant in support of the appeal submitted that the learned High Court has not appreciated the true import of Section 2(9) of the Ordinance which defines the employer and it is the employer who has to make the contribution. According to him, the Court has misconstrued the expression "guarantee" appearing in Section 20(8) of the Ordinance because the said expression only mandates that the employer/owner shall ensure that the social security is paid in respect of the workers of the contractor but it by no stretch of imagination, shifts the liability to contractor. He further contended that the legislative intent is reflected in the definition clause i,e, Section 2(9) would have an important bearing when it is read with Section 20(1) of the Ordinance.
4. Learned counsel for the Nestle Milk Pack (Pvt) Ltd. defended the impugned judgment by submitting that the law has created a distinction in ordinary contracts and in the contracts relatable to construction work. In the former contracts, it is the owner of the premises/factory where the workers are employed, who is liable to make the contribution whereas in the latter kinds of contracts, it is the contractor.
5. The Social Security Department is being represented by two counsel and surprisingly they have taken conflicting stands i,e, one has challenged the impugned judgment by filing CPLA No, 2564- L/2002 and at the same time, one counsel Mian Inam-ul-Haq, ASC, who is appearing in CA 2782/2006 is defending the impugned judgment. The latter while defending the impugned judgment submitted that the appellant Fareed Company Limited had been duly making the contribution to the Social Security Institution for the period from November, 1996 to June, 1998 without any objection whatsoever and in the grounds of appeal before the learned High Court, the respondent had specifically taken this plea and had also annexed the receipt/documents in proof thereof.
6. Learned counsel for the petitioner in Civil Petition No, 2564- L/2002 however, on Court query submitted that he was merely instructed to file the petition but to be fair to him has not seriously opposed the impugned judgment.
7. Having heard learned counsel for the parties at some length, we find that the issue raised i,e, whether the Respondent No, 4 (Nestle Milk Pack Limited) is mandated under the Ordinance to make the social security contribution or the appellant contractor, entails interpretation of certain concepts/expressions used in the Ordinance i,e, the "employee" the "contractor" and the "guarantor". It would, therefore, be pertinent to refer to some of those provision this and the charging Section of the Ordinance. Those are as follows:-- "2(9) "employer" means in the case of works executed or undertakings 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".
"20. Amount and paym ent of contributions.--(1) Subject to the other provisions of this Chapter, 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 [not more than six per cent] and subject to such conditions as may be prescribed[:] [Provided that no contribution shall be payable on so much of an employee's wages as is in excess of [four] hundred rupees per day or [ten] thousand rupees per month.]]
(2) deleted
(3) ..........
(4) deleted (5)........................
(6) ..................
(7) .........................
(8) In the case of construction work the owner of the building shall guarantee the payment of contributions by the contractors. (Emphasis is supplied)
(9)In the case of works executed or undertakings carried on behalf of the State by a contractor or licensee, the competent public authority shall, before final settlement of the claims of the contractor or licensee arising out of the contract, require the production of a certificate from the Institution showing that the necessary contributions have been paid, and in default of such certificate it shall deduct from the amount otherwise payable in settlement of such claim, the appropriate amount of the contributions payable, and pay such amount direct to the Institution. "
8. In common parlance, the "employee means a person or organization that employees people.
However, the "employer" as defined in Section 2(9) has certain connotation, import & distinct features. Two distinct features-noted by this Court in Sindh Employees' S.S.L Vs. Consolidated Sugar Mills Ltd. (1989 SCM R 888) are "firstly, in the case of Works and undertakings on behalf of the State, the contractor or the licensee carrying on the work has been made the employer. Secondly, 'in every other case' that is in which State's interest is not in that manner directly involved "the owner of the industry, business, undertaking or establishment in which an employee works" has been made the employer."
9. The definitions provided in Section 2 of the Ordinance including the above are subject to a rider and Section 2 commences with the said rider, which is to the effect that "in this Ordinance, unless the context otherwise requires, following expressions shall have the meanings hereby respectively assigned to them, that is to say (Emphasis is supplied). The context in the case in hand is provided in the charging Section i,e, sub-section (8) of Section 20.
An analysis of this provision would indicate that while sub-- section (1) of Section 20 makes the "employer" liable to make the social security contribution in respect of every employee "whether employed by him directly or through any other person" but in matters of construction work sub- section (8) of Section 20 creates an exception by providing that "in the case of construction work the owner of the building shall guarantee the payment of contributions by the contractor". There are three significant elements of this sub-Section with reference to the obligation to pay the social security contribution. Firstly, the contractor of a construction work is being considered as a category apart. Secondly, the said contractor is being obligated to pay the social security contribution and thirdly, the owner of the building to which the construction work relates is being mandated to "guarantee the payment of contribution by the contractor". Thus the owner of the building under this provision is only a "guarantor" to ensure that the payment of contribution is made by the "contractor" in cases of construction work. In Sindh Employees supra, it is significant to note, the contract was not of construction work rather it was relatable to "works like removal of
(i) mud/ash; (ii) Bagasse; (iii) loading/unloading of sugar-cane; (iv) sugar bag stacking; and (v) carriage of its employees by buses". That is why the owner of the industry was held liable to make the contribution. The legislative intent appears to be that in all construction works it is the "contractor" who has to make the contribution and the owner of the building has only to "guarantee" the said payment by the former.
10. The impugned judgment for the afore-referred reasons has not been found by us to be against the legislative intent or the law declared. For what has been discussed above, we do not find any merit in this appeal and the petition, which are dismissed.