Ayesha A. Malik, J: Through this petition, the Petitioner has impugned letter dated 24.4.2014 issued by Respondent No.2.
2. The case of the Petitioner is that it is a construction company. The Petitioner regularly pays its contribution under the Punjab Employees' Social Security Ordinance, 1965 ("Ordinance") in respect of its secured employees as defined under the Ordinance. The Petitioner is registered with the Directorate of Social Security, Model Town office of Respondent No.2 where monthly contributions are regularly deposited. The grievance of the Petitioner is that the Respondents through various different letters have required the Petitioner to deposit contributions at a local level in the localities where it carries on its projects of construction works. Learned counsel for the Petitioner stated that the Petitioner carries on construction works in various parts of the Province and the Respondents have required through its letters specifically through impugned letter dated 24.4.2014 to pay contribution to the local offices of the Respondent Punjab Employees Social Security Institution ("PESSI"). Learned counsel stated that in this regard, the Petitioner has been issued letters dated 18.7.2014, 27.8.2014, 9.9.2014, 25.11.2014, 10.12.2014 and 4.8.2015 by the Respondent PESSI. Learned counsel argued that the stated letters are contrary to the Ordinance and the Provincial Employee's Social Security (Contribution) Rules, 1966 ("Rules"). Learned counsel stated that Rule 5 of the Rules specifically provides as follows:- "The employer shall submit to the local office of the Institution at which he is registered, the copies of pay rolls or contribution schedules referred to in rule 4(1) within fifteen days of the end of each month, or such extended period, not exceeding forty-five days, as the Institution may allow on good causes being shown for the extension, and at the same time shall pay, at the said local office, the total amount of the contribution shown thereon as due."
Learned counsel stated that therefore the impugned letter is against the Rules which specifically require the employer to pay contribution in the local office where the employer is registered.
Learned counsel further submitted that the Petitioner is required to pay its contribution to the Respondents which goes to a Fund created under Section 28 of the Ordinance and as such the Respondents are obligated to provide all the prescribed benefits under Sections 35 to 46 read with Section 47 and 48 of the Ordinance from the Fund. He stated that the Respondents are obligated to maintain lists of all hospitals, dispensaries and other facilities where the benefits should be made available for holders of Social Security Registration Cards.
3. Report and parawise comments have been filed on behalf of the Respondent PESSI. Learned counsel for Respondent PESSI places reliance on Regulation 3 of the Provincial Employees' Social Security (Employers' Returns and Records) Regulations, 1967 ("Regulations") which provides:- "An employer whose establishment has been brought within the scope of the Ordinance by Government Notification under the provisions of Section 1(3) shall complete an application to be registered on the appropriate form (Form Respondent-1 attached as Appendix III) obtainable from the nearest local office of the Institution, indicating thereon the appropriate number of his employees liable to become secured persons, and shall send to the local office within 10-days of the said Notification." Learned counsel stated that therefore the contributions have to be made to the local office in order to ensure that the Petitioner is paying contribution with respect to all its employees working in different local areas of the Province.
4. Heard and record perused.
5. The basic issue before the Court is with respect to the manner in which the contribution is to be received from the Petitioner that is whether the Petitioner is to make contributions in the local area where it carries on its projects or whether it is required to make its contribution at the local office where it is registered. The scheme of the Ordinance is that PESSI shall provide benefits to employees or their dependents in the event of sickness, maternity, injury or death during employment. In terms of Section 2(5) of the Ordinance, contribution means:- "The sum of money payable to the Institution by an employer in respect of an employee in accordance with the provisions of this Ordinance." Employee in terms of Section 2(8) 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, expressed or implied."
In terms of Section 2(25):- "Secured person means a person in respect of whom contributions are or were payable under this Ordinance."
The Respondent PESSI collets all contributions paid under the Ordinance and deposit them into a Fund established under Section 28 of the Ordinance called Employee's Social Security Fund. The Fund is administered by the Institution for the purposes of the Ordinance. In terms of Section 35 of the Ordinance, a secured person who is certified, by a medical practitioner authorized by the Institution is entitled to sickness benefit, maternity benefit, death grant, medical care during sickness and maternity, medical care of dependents and injury benefits. In terms of Section 46 of the Ordinance, in order to provide the stated benefits, the Respondent Institution may with the approval of the Government, establish and maintain such hospitals, dispensaries and other facilities for providing the medical care in pursuance of the provisions of the Ordinance. In terms of Section 46, the Respondent Institution can enter into agreement with Government, any local authority, private body or individual with regard to the provisions of medical care to persons entitled to it under this Ordinance. The Respondent Institution can enter into an agreement for the benefit of its employees for the utilization of the hospital, dispensary or facility and the conditions under which the benefits should be provided, the extent of supervision which the Institution may exercise over the hospital, dispensary or other medical facility and the extent and manner of the imbursement to the employer. As per Section 48 of the Ordinance, all claims for benefits under the Ordinance are to be made within such times as may be prescribed and shall be based on such documents, information and evidence as to entitlement as may be provided in the regulations.
Payments in respect of such benefits will also be made in such manner and at such times and places as may be provided in the regulations. The Regulations framed under Section 80 of the Ordinance provide that a secured person shall obtain a Secured Person's Registration Card in terms of Form Respondent-5, Appendix VI of the Ordinance from the local office of the Institution and thereafter a secured person can claim the benefits provided under the Ordinance for himself or for his dependents. The name and social security number of the employee shall be inserted in the Form B-2, B-2A as Appendix I and VIII together with all other particulars specified. On the basis of the given information, the secured person is entitled to claim all amounts due against the provisions of the medical facilities in terms of the agreement it has with the Respondent Institution under Section 46 of the Ordinance. Therefore on the basis of the stated provision, it is clear that an employer is required to deposit contributions for all secured persons with the Institution and on the basis of the centrally collected funds, the medical facilities must be provided to the secured persons.
6. The question that has arisen is whether the contributions under Section 20 of the Ordinance have to be made at the local office where the employee resides and are carrying on the employers works or is the contribution to be made at the local office where the employer is registered. Section 20 of the Ordinance provides that: "Subject to the other provisions of the 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 rate [not more than six per cent] and subject to such conditions as may be described."
Rule 5 of the Rules provides that: "The employer shall submit to the Local Office of the Institution at which he is registered, the copies of pay rolls or contribution schedules referred to in rule 4(1) within fifteen days of the end of each month, or such extended period, not exceeding forty-five days, as the Institution may allow on good causes being shown for the extension, and at the same time shall pay, at the said Local Office, the total amount of the contribution shown thereon as due."
The issue is caused due to Regulation 3 of the Regulations which provides that:- "An employer whose establishment has been brought within the scope of the Ordinance by Government Notification under the provisions of Section 1(3) shall complete an application to be registered on the appropriate form (Form Respondent-1 attached as Appendix III) obtainable from the nearest local office of the Institution, indicating thereon the appropriate number of his employees liable to become secured persons, and shall send to the local office within 10-days of the said Notification."
A bare review of the above shows that Regulation 3 has omitted the words 'the nearest local office of the Institution' where the employer is registered.
7. Local office is not defined in Section 2 of the Ordinance nor is it defined in the Rules or the Regulations. The impugned letter, however, has clarified that all establishments will pay contribution in respect of their existing and on going projects at the Sub Office concerned within the territorial jurisdiction of such works, projects or activities are being carried out. It further states that the concerned office and such establishments are required to get their employees registered with the concerned Directorate or Sub Office so that their employees can be benefitted from the nearby Directorate as per their entitlement under the rules. Learned counsel for the Respondent PESSI stated that the reason for the impugned letter is that the Petitioner carries on works throughout the province and in the event of any sickness or injury caused during the course of its employment, for the benefit of the employee, the medical facilities available as per the Ordinance be made available locally. Therefore the impugned letter requires the Petitioner to deposit its contribution for its workers in the locality in which they are carrying on the works. Learned counsel stated that in this way the local office of the Respondent PESSI will be able to collect the contribution and ensure its payment to the secured persons of that area.
8. The spirit of the Ordinance is that under Section 28, Employee's Social Security Fund is established in which all contributions are made and from that Fund medical benefits are to be provided. Furthermore the Ordinance contemplates the verification process whereby the Respondent PESSI can check the books of the employer for the purposes of inquiring into the correctness of all contributions made for all its employees who are entitled to the benefits provided under the Ordinance. In terms of Section 22(3) of the Ordinance:- "If an employer fails or maintain records or to submit returns as required by the regulations, or otherwise fails to comply with the provisions of sub-section (1) and thereby makes it difficult to ascertain the identity of persons required to be secured or the amount of contribution payable, the contribution shall be assessed on the basis of such evidence as the Institution may find satisfactory for this purpose."
Furthermore Section 24 of the Ordinance provides in the event of default in payment of contribution to a secured person by the employer, the secured person is entitled to all the benefits as if the default has not occurred. This means that a secured person is entitled to its benefits under the Ordinance irrespective of the fact that the contribution has been paid by the employer. The secured person will be entitled to the benefits provided for in Chapter V of the Ordinance and the amounts liable to be collected from the employer can be collected from the employer in terms of Section 23 of the Ordinance as arrears of land revenue. This means that the Respondent PESSI cannot deny the secured person, the benefits it is entitled to on the pretext that contribution has not been paid. Seen in this context, the understanding of the Respondent PESSI that contribution should be made locally and that the Petitioner should register its employees locally where it is carrying on its works is totally misconceived. The Petitioner is required to register its employees at the local office of the Respondent PESSI where it is registered and is required to pay all contributions for such employees at that local office where it is registered. The mandate of the law is that all contributions are centralized and paid towards the Fund and from the Fund all amounts are disbursed and paid out to all secured persons entitled under the Ordinance. In this regard, the Respondent PESSI is required to set up its own verification mechanism to ensure that the employer registers all persons and that it has paid the required contribution for all secured persons.
9. In this case, it is also necessary to note that it is not the grievance of the Respondent PESSI that the Petitioner is not making the requisite contributions for its employees. It is their case essentially that since the Petitioner carries on construction works throughout the Province it will be beneficial for its employees to avail medical facilities locally, hence contributions should be made locally.
However, given the specific provisions of Section 46 of the Ordinance, there is no reason to deny the statutory benefits to the secured persons on the ground that the contribution was not made locally. The Respondent PESSI is required under the Ordinance to provide the requisite benefits to secured persons from the Fund and not treat a contribution as a local payment for availment of benefits.
10. In view of the aforesaid, this petition is allowed and impugned order dated 24.4.2014 passed by Respondent No.2 is set aside. For the purposes of reading Regulation 3 relied upon by Respondent PESSI, the context use of the word 'local office' in the Regulations shall be the same as given in the Ordinance and in the Rules, meaning that the 'local office' shall be read as 'local office of the Institution at which it is registered'