ABID AZIZ SHEIKH, J.--- Through this Constitutional Petition, petitioner has challenged notifications dated 18.10.2012, 30.1.2013 and 12.8.2014 with the prayer to set aside impugned demand notice dated 26.8.2014 with consequential relief that respondents be directed to refund the additional amount of social security paid by petitioner under impugned notifications.
2.Brief facts are that petitioner is a public limited company derives income from the manufacturing, distribution and sale of cement within and outside Pakistan. The petitioner is registered with Punjab Employees Social Security Institution (respondent No.3) and paid contribution on account of social security in respect of its secured employees (contribution) under Provincial Employees Social Security Ordinance, 1965 (Ordinance). Respondent No.3 from time to time issued last notifications dated 18.10.2012, 30.1.2013 and 12.8.2014 under the Ordinance for the purpose of levy of contribution and also issued impugned demand notice dated 26.8.2014 for the recovery of outstanding contribution under last notification dated 12.8.2014. The petitioner being aggrieved filed this constitutional petition assailing impugned notifications and demand notice.
3.Learned counsel for the petitioner argued that amount of contribution is to be calculated and payable under charging section 20 of the Ordinance. Submits that before amendment in section 20 of Ordinance on 13.12.2013, the section 20 provided that no contribution shall be payable on employee wages in excess of Rs.400 per day or Rs.10000/- per month. Submits that section 2(8)(1) of the Ordinance is not a charging section and only provides definition of "employee" and before notification dated 18.10.2012, it provided that employee means any person working for wages but does not include any person employed on wages exceeding 10000/- rupees. He submits that wage limit prescribed under section 2(8)(f) of the Ordinance was only to determine the employee and was not charging provision for the purpose of recovery of contribution which could only be made under section 20 of the Ordinance. He submits that vide impugned notification dated 18.10.2012, monthly wage ceiling under section 2(8)(f) was enhanced from Rs.10000/- to Rs.12500/- by the Government by exercising powers under section 71 of the Ordinance. This limit was further enhanced from Rs.12500/- to Rs.15000/- vide impugned notification dated 30.1.2013. He submits that though limit under section 2(8)(f) was enhanced to define employee but no corresponding amendment was made in the charging section 20 of the Ordinance to increase the maximum limit for payment of contribution by the employer. He submits that without amending charging provision of section 20 of the Ordinance, the respondents on the basis of above notifications under sections (8)(f) and 71 of the Ordinance have started recovery of contribution from the petitioner on the enhanced monthly wage ceiling for the purpose of definition of employee. He contends that unless charging provision was amended, the enhanced contribution could not be recovered merely by amending the definition of employee under section 2(8)(f) read with section 71 of the Ordinance. He placed reliance on Messrs Dawood Cotton Mills Ltd, Karachi v. Social Security Institution, Karachi (PLD 1978 Karachi 744) and Messrs Dawood Hercules Chemicals Ltd v.
Commissioner, Social Security, Lahore and another (1981 PLC 1). Submits that subsequently on 13.12.2013 through Provincial Employees Social Security (Amendment) Act, 2013 (Act of 2013) charging provision of section 20 of the Ordinance was amended and it provided that no contribution shall be payable in excess of wage determined by the Government under section 71 of the Ordinance, Submits that though after amendment charging section 20 of the Ordinance has been linked with determination of wage limits under sections 71 and 2(8)(f) of the Ordinance, however, submits that said amendment being against the interest of employee and spirit of Ordinance, the impugned notification dated 12.8.2014 issued after the amendment in section is also not sustainable and consequently impugned demand notice dated 26.8.2014 is liable to be set aside on this ground as well.
4.Learned counsel for the respondents submits that upper wage ceiling of employees for levy of contribution was enhanced by the Government from Rs.10000/- to Rs.12500/- and later to Rs.15000/- per month vide notifications dated 19.10.2012 and 30.1.2013 by exercising jurisdiction under sections 71 and 2(8)(f) of the Ordinance and as such respondents were lawfully entitled to recover the contribution based on such enhanced rates. He submits that in any case, after amendment in section 20 of the Ordinance on 13.12.2013 through Act of 2013, now charging provision of section 20 provides that maximum limit of contribution will be as determined by Government under section 71 of the Ordinance. Therefore, argued that after amendment in section 20 of the Ordinance, the subsequent notification dated 12.8.2014 is in line with the provisions of the Ordinance and demand notice based on said notification is also valid. He adds that in prayer of this petition, none of the provision of the Ordinance is under challenge, therefore, impugned notification dated 12.8.2014 issued as per provision of Ordinance, cannot be set aside. The learned Law Officer supported the above arguments and further submits that even if notifications dated 18.10.2012 and 30.1.2013 cannot be used for recovery of contribution but still said notifications are valid for definition of employee under section 2(8)(f) of the Ordinance.
5.I have heard the arguments of learned counsel for the parties and perused the record.
6.The controversy and period involved in this case can be divided into the two parts. First part is regarding period prior to amendment of section 20 of the Ordinance on 13.12.2013 when impugned notifications dated 18.10.2012 and 30.1.2013 were issued. Second part is regarding the post amendment period of section 20 of the Ordinance after 13.12.2013, when impugned notification dated 12.8.2014 was issued and on the basis of which impugned demand notice dated 26.8.2014 was addressed. In order to better appreciate the controversy and decide the vire of these two set of periods and notifications, it is necessary to reproduce pre amendment and post amendment provisions of section 2(8)(f), section 20 and section 71 of the Ordinance as here under:- Pre-Amendment Provisions (before 13.12.2013)Post Amendment Provisions (After 13.12.2013)
"2(8) "employee" mean any person working for wages....but does not include-
(a) ..........................................
(f) any person employed on wages exceeding ten thousand rupees per mensem Provided that an employee shall not cease to be an employee for the reason that his monthly wages exceed ten thousand rupees:
20. Amount and payment of contributions.- (1) Subject to the other provisions of this Chapter, the employer shall, in respect of every employee... 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 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.
(3) ..........
(4) **[2(8) "employee" means any person employed ................but does not include-]
(a) .......................................
(f) any person employed on wages exceeding the wages determined by the Government under section 71:
20. Amount and payment of contributions.-(1) Subject to the other provisions of this Chapter, the employer shall, in respect of every employee... pay to the Institution a contribution at such times, [at the rate of 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 the wages determined by the Government under section 71.
71. Review and modification of wage limits, contribution and benefits.- (1) In January of eachyear, the Governing Body shallreview the wage limits specified in clause
(t) of subsection (8) of section 2 and the rates of contribution and benefits provided under this Ordinance in the light of any changes in wage levels or living costs and shall submit a report thereon together with its recommendations to Government.
(2) Government may, afterconsidering the said report and recommendations, by notification, enhance or reduce the wage limits specified in clause (0 of subsection (8) of section 2 or the rates of benefits payable under this Ordinance.71. Review and modification of wage limits, contribution and benefits.--- (1) In January of each year, the Governing Body shallreview the wage limits [***] and the rates of contribution and benefits provided under this Ordinance in the light of any changes in wage levels or living costs and shall submit a report thereon together with its recommendations to Government
(2) Government may, after considering the said report and recommendations, by notification, enhance or reduce the wage limits or the rate of benefits payable under this Ordinance.
7. Bare perusal of pre-amendment provision of section 2(8)(f) of the Ordinance shows that ceiling of wage limit under said section was only to determine that who will be employee for the purpose of the Ordinance. Section 71 of the Ordinance empowered the government to enhance or to reduce the wage limits specified under section 2(8)(f) of the Ordinance. The provision of section 2(8)(t) of the Ordinance was not a charging section for the purpose of determining the contribution under the Ordinance, rather charging provision was section 20 of the Ordinance which before amendment provided that employer shall in respect of every employee pay to the institution a contribution at such times and such rate not more than 06% and that no contribution shall be payable in excess of Rs.400/- per day or Rs.10000/- per month. Before amendment, section 20 of the Ordinance not only prescribed the rate of contribution but also stipulated the maximum limit of contribution by the employer. The perusal of impugned notifications dated 18.10.2012 and 30.1.2013 shows that the monthly wage ceiling under section 2(8)(f) of the Ordinance was increased from Rs.10000/- to Rs.12500/- and then to Rs.15000/- by Government however while exercising its power under section 71 of the Ordinance, no corresponding amendment was made in charging section 20 of the Ordinance at that time. These increases on monthly wage ceiling under section 2(8)(f) of the Ordinance through notifications dated 18.10.2012 and 30.1.2012 were only to expand the net of institution to embrace more employees by enhancing the wage limit. However, these enhancements of ceiling were not to increase the limits of contribution which was to be governed and charged under section 20 of the Ordinance. Pre-amended provision of section 20 of the Ordinance prescribed rate of 06% of wages and maximum limit of wage was Rs.400/- per day and Rs.10000/- per month, therefore, by merely enhancing the monthly wage ceiling in section 2(8)(f) of the Ordinance through impugned notifications dated 18.10.2012 and 30.1.2013 by exercising power under section 71 of the Ordinance, the department could not recover the contribution on said enhanced wages of Rs.12500/- or Rs.15000/-.
8. The similar view was also expressed by this Court in Messrs Dawood Hercules Chemical Ltd v.
Commissioner, Social Security, Lahore and another (1981 PLC 1), where it is held as under: The obvious conclusion from the above position, therefore, would be that the matter requires re- examination as to whether the contribution has been charged in accordance with law or not.
Subsection (4) of section 20 of the Ordinance in very clear terms provides that no contribution shall be payable on wages which are in excess of Rs.20 per day. Notwithstanding the position that the definition of "employee" as contained in subsection (8) of section 2 of the Ordinance was amended and as per amended clause (f) of the employee to be excluded was any person employed on wages exceeding rupees one thousand per mensem, subsection (4) of section 20 was not amended. Resultantly the contribution could only be charged on wages up to Rs.20 per day as provided by the charging section 20 of the Ordinance".
Same opinion was also expressed by Sindh High Court in Messrs Dawood Cotton Mills Ltd, Karachi v.
Social Security Institution, Karachi (PLD 1978 Karachi 744). The relevant observation is reproduce hereunder:- "The learned counsel for the Social Security Institution Mr. Sarwana has contended that the original definition of an employee given in clause (8) of section 2 of the Ordinance excluded from its ambit those employee whose salaries were more than Rs.500 per mensum, but this amount of Rs.500 was substituted by Rs.1000 in 1975 by Ordinance XXVI of 1975, it was further contended that it was due to mistake that necessary amendment had not been made in subsection (4) of section 20 in Regulation 4 referred to above, The above contention of the learned counsel for the Institution can not be accepted as nothing can be read into a clear provision of an enactment.
The Court cannot presume that on account of any mistake necessary amendment could not be made in the above subsection and or in the aforesaid Regulation. As this aspect has not been adverted to either by the Institution or by the Social Security Court, it will be just and fair that I should remand the above appeals to the Institution with the direction to investigate into the question as to whether the payment demanded by it in respect of the above item if included would make the wages of some of the employees more than Rs.20 per day. The wages paid to employees whose wages are more than Rs.20 per day are to be excluded in computing the amount of contribution in view of the aforesaid subsection (4) of section 20 of the Ordinance".
In view of the clear legal position and law settled in above judgments, there is no manner of doubt that demand and recovery of excess amount under pre amendment impugned notifications dated 18.10.2012 and 30.1.2013 was patently illegal and without jurisdiction.
9.Now coming to the second part of post amendment provisions and impugned notification dated 12.8.2014 and recovery notice dated 26.8.2014. The respondents after amending charging section 20 of the Ordinance through Act of 2013 issued impugned notification dated 12.8.2014 under section 2(8)(t) read with section 71 of the Ordinance, where limit was enhanced from Rs.15000/- to Rs.18000/-. Charging provision of section 20 of the Ordinance was amended through Act of 2013 on 13.12.2013 and it provided that contribution shall be at the rate of 06% and no contribution shall be payable in excess of wages determined by Government under section 71 of the Ordinance. By amending charging section 20 of the Ordinance through Act of 2013, the legislation linked the maximum limit of contribution with the declaration of limits prescribed by Government under section 71 of the Ordinance for the purpose of employee definition under section 2(8)(f) of the Ordinance. Perusal of post amendment impugned notification dated 12.8.2014 shows that government under section 71 of the Ordinance enhanced the upper wage ceiling from Rs.15000/- to Rs.18000/- per month and daily wage rate from Rs.600/- to Rs.700/- for the purpose of levy of contribution as envisaged under section 2(8)(f) of the Ordinance. The said notification dated 12.8.2014 is in line with the provision of post amendment provisions of section 2(8)(f), section 20 and section 71 of the Ordinance as after the amendment in section 20 through Act of 2013, the notification issued by Government under section 71 of the Ordinance will also determine the maximum limit of contribution under charging section 20 of the Ordinance.
10.he petitioner in this constitutional petition has not challenged the vires of amendment made in section 20 of the Ordinance through Act of 2013. In absence of said challenge, impugned notification dated 2.8.2014, which is in line with amended provision of section 20 of the Ordinance cannot be held to be illegal. The petitioner counsel has not shown that how this notification is ultra vires of scheme or any provision of the Ordinance. The learned counsel for the petitioner stressed that impugned notification dated 12.8.2014 is against the interest of employees. I am afraid even this argument is misconceived, as none of the employee has challenged the notification dated 12.8.2014, being against their interest and further enhanced ceiling of wages for contribution by employer is beneficial to the employees and by no stretch of imagination can be taken as adverse to the interest of employees. In view of above, the impugned notification dated 12.8.2014 and demand notice dated 26.8.2014 based on notification dated 12.8.2014 are intra vires of law and does not suffer from any legal infirmity.
11. In view of above, this constitution petition is partly allowed to the extent that impugned notifications dated 18.10.2012 and 30.1.2013 cannot be made basis for recovery of contribution under section 20 of the Ordinance. However, to the extent of impugned notification dated 12.8.2014 and demand notice dated 26.8.2014 based on said notification, this constitutional petition is dismissed.