1. ABDUL HAYEE KURESHI, ACTG. C. J-The present petition has been filed by the Rice Export Corporation of Pakistan Limited to challenge the order of the Presiding Officer, Vth Sind Labour Court at Karachi in an application, bearing No. 29, under section 34 of the Industrial Relations Ordinance, and the order of Sind Labour Appellate Tribunal, dated 29th October, 1980, in Appeal No. Kar. 556/1980.
2. By the orders, which were passed at the instance of Rice Export Corporation of Pakistan Employees'
3. Union (respondent No. 3), the petitioner was directed to establish the Workers' Participation Fund in accordance with the scheme provided in the Companies' Profits (Workers' Participation) Fund Act X11 of 1968.
4. We have heard Mr. Obaid-ur-Rehman's for the petitioner, and Mr. Shaikh Haider for the respondents.
5. The brief facts of the case are that the Petitioner/Corporation was registered as a Company under the Companies Act V11 of 1913 on 28th August, 1974. The Memorandum of Association states the objects of the Petitioner/ Corporation. Paragraph 3 of the said Memorandum reads as follows: "III. The objects for which the Corporation is established are:
(1) (a) to carry on the business of export of rice from Pakistan including all operations connected with its procurement, milling, cleaning, storage. Packing and sales for export ;
(b) to take all measures necessary for promoting export of rice from Pakistan, including internal and foreign publicity, delegations to foreign countries, invitation to foreign delegations to visit Pakistan ;
(e) to maintain adequate market intelligence service including opening of offices in important international markets ;
(d) to construct, build, erect, purchases, or acquire by lease, grant, assignment, transfer, exchange or otherwise buildings, godowns, Grading Centres, Cleaning Plants, show rooms, business centres, information centres and bonded or other warehouses including plinths."
6. It is admitted in paragraph I of the petition itself that the aim and object of the Corporation is mainly to carry on the business of export of rice from Pakistan, including "all operations connected with its procure--ment, cleaning, storage, and packing for export of rice from Pakistan." The Government of Pakistan had, by a notification, dated 28th October, 1974, decided that, as from 22nd August, 1974, all the functions relating to "receiving, storing, inspection, handling, clearing, forwarding and shipment of rice for export" shall stand transferred to and be performed by the petitioner-Corporation.
7. The Rice Export Corporation of Pakistan Employees' Union filed an application under section 34 of the Industrial Relations Ordinance, 1969; before the Vth Sind Labour Court , seeking a direction from the Labour Court to oblige petitioner/Corporation to establish the Workers' Partici--pation Fund and to make payment to the Fund as per Rules. This application was resisted by the petitioner/Corporation on the ground that the scheme contained in the Workers' Participation Act applied only to "industrial undertakings", and the, petitioner/Corporation was not an industrial undertaking, because it was only engaged in commerce. The other defence, that was raised by the petitioner/Corporation, was that an application under section 34 of the Industrial Relations Ordinance was not maintainable, because the Companies Profits (Workers' Participation) Fund Act, 1968 provided for the remedy, which the workmen could utilise for the purpose of obtaining relief. It was also contended that the petitioner/ Corporation was a department of the Government, and, therefore, it could not be compelled to set up a Fund, as envisaged in the said Act. The learned Presiding Officer of the Vth Sind Labour Court, Karachi, repelled the contentions raised on behalf of the petitioner/ Corporation, and held that it was liable to establish the Fund to accordance with the scheme contained in the Companies Profits (Workers' Participation) Fund Act, 1968. The petitioner/Corporation, thereafter, filed an appeal before the Sind Labour Appellate Tribunal, Karachi, and the same . Contentions were raised. This appeal has been dismissed. The present petition has been filed for a declaration that the orders of the Labour Court and the Appellate Tribunal may be declared to be as of no legal effect.
8. The first point, that has engaged our attention, is in regard to the contention that the Companies Profits (Workers' Participation) Fund Act of 1968 is not applicable in the instant case, because the petitioner/ Corporation is not an `industrial undertaking" within the meaning of clause (a) in the Explanation, which appears in paragraph I of- the scheme framed under the Companies Profits (Workers' Participation) Fund Act in pursuance of the provisions of section 2 (e) of the said Act. It is stated that the petitioner/Corporation is a commercial concern as distinct from an "industrial undertaking".
9. "1. Scope of the Scheme.-The scheme applies to all companies engaged in industrial undertakings which satisfy any one of the following conditions, and to such other companies as the Federal Government may, by notification in the official Gazette, specify in this behalf, namely:
(i) The number of workers employed by the Company at any time during a year is 50 or more.
(ii) The paid-up capital of the Company as on the last day of its accounting year is Rs. 20 lakhs or more.
10. (i.e) The value of the fixed assets of the company at cost as on the last day of the accounting year is Rs. 40 lakh or more.
11. Explanation.-In this scheme-
(a) "industrial undertaking" means an institution, organisation, enter--prise of establishment which involves the use of electrical, mechani--cal, .Thermal, nuclear or any other form of energy transmitted mechanically and not generated by human or animal agency and which is engaged in any one or more of the following operations, namely:
(i) the subjection of goods or materials to any manufacturing, assembly, finishing or other artificial or natural process, which' changes their original condition or adds to their value."
12. It would appear that an institution, organisation, enterprise, or, establishment would be termed as an "industrial undertaking," if the functioning involves the use of electrical, mechanical, or any other form of energy transmitted mechanically, and not generated by human, or, animal agency. Such electrical, or, mechanical energy should be employed for the purpose of subjection of goods, or, materials to any manufacturing. Assembling, finishing, or, other artificial, or, industrial processing, which may change the original condition, or, add to the value of the goods so treated. On analysis, it would appear that, if an institution uses electrical; or, mechanical energy for the purpose of subjecting goods, or, materials to any artificial, or, industrial process, or, finishing the said goods with a view to change its original condition, or, to add to the value of the goods, or, materials, the institution, so employing energy for such purpose, would be termed to be an "industrial undertaking".
13. The main contention of Mr. Obaid-ur-Rehman's is that rice is an agricultural product and the Corporation exports rice, and if, any treat--ment is given to the rice for the purpose of obtaining better price, sub---clause (i) of clause (a) appearing in the Explanation contained in paragraph 1 of the Schedule to the Companies Profits (Workers' Participa--tion) Funds Act would not be attracted. At this stage, reference may be made to paragraph 3 in the Memorandum of Association (reproduced in an earlier part of this ,judgment), which states that the petitioner/Corporation is to carry on "all operations connected with its procurement, milling, cleaning, storage, packing and sales for export". (The underlining' is ours). In order to understated the factual position, a reference may be. Made to the evidence of Secretary in the office of the petitioner/Corporation, who was examined for the purpose of finding out the actual process of work, or, operations of the petitioner/Corporation. A copy of the cross---examination of this witness has been placed on the record as Annexure `A' to the counter-affidavit filed by respondent No. 3. 1n his evidence, the witness stated as follows :- "The respondent has its plants Pipri and Landhi. There are about 12 plants in Pipri and 4 in Landhi. It is a fact that there is always an Aspirator and cleaner Machine in each -plant, which are operated with the electricity. Each plant has stone separate machine, trial silender machine, paddy separator machine, Ribber roll .Seller,Husk separator, Farling Foum, Policy Foum, Rottery sieves, and double Trieur Silendar. All these machines are run with electricity. Each plant has two sets of the abovesaid machine. About 60--Jo or a little more of employees of the respondent are being posted in the above-said plant. WP purchase rice only. Most of the rice purchased by us is proceeded through the abovesaid machines."
14. It would appear from the passage, that has been reproduced above, that the petitioner has an aspirator and cleaner machine in each one of the sixteen plants, which have been set up by the petitioner/Corporation. The witness has also stated that each plant has stone separator machine, paddy separator machine, husk separator and rottery sieves. The witness admitted that all these machines are run with electricity, and he also stated that most of the rice, purchased by the petitioner/Corporation, is processed through the abovesaid machines. It would thus appear that the petitioner employs electrical and mechanical form of energy. The next question, which arises, is, whether. By subjecting rice to a treatment in these machines, is the process of finishing accomplished and does such process and to the value of rice, which is subjected to such treatment. The learned Advocate for the petitioner has stated before us that sub-clause (i) of clause (a) to the Explanation in paragraph of the scheme under the Companies' Profits (Workers'
15. Participation) Fund Act would be fulfilled only if the finishing obtains a change in the original condition of rice, or, adds to its value. He submits that neither is the condition of rice changed nor is the value of rice increased by such process. We cannot agree with such a contention. It is admitted case that plants have been installed by the petitioner/Corpo--ration for separating stone, paddy, husk, etc., from the rice, which is purchased by the Corporation locally for export. After such admixtures are removed from rice, the change in the original condition is obvious. Because these plants are operated for the purpose of cleaning the rice and removing dust, husk and paddy. It seems the petitioner is confusing the import of the words "original condition" with original components. A faint attempt was even made by Mr. Obaid-ur-Rehman's to set up a case that rice in its intrinsic quality is not changed, and the mere process of cleaning does not change the original condition of rice. This argument appears to be fallacious, because one cannot state that rice, which is graded to size and uniformity and out of which all the husk, paddy and dust is removed, would be the same rice as was admixture of broken and full grains containing dust, busk and paddy. We would say that even the components have been changed. To a question that we asked the learned Advocate, he even replied that the Corporation also employs a process of polishing. The rice. What is more that. Such process of cleaning, polishing and grading the rice obviously adds to its value. It is common knowledge that only the best quality rice is exported from Pakistan, and such rice is fully treated and cleaned before sending the same to foreign countries for earning foreign exchange. There can be no two opinions that rice, which is un-graded and mixed with dust, husk or paddy, fetches far lesser price than rice, which has been so graded that full grains are separated from broke ones, and the dust, or husk, or paddy is removed. In any case, the A process of cleaning is resorted to by the petitioner/Corporation for the purpose of grading, purifying and/or refining the rice. It is so stated in paragraph 2 of the grounds in the petition itself.
16. Since it is the case of the petitioner that rice is refined and purified, the conclusion cannot be escaped that such process will change the original condition of rich and add to its value. If the value is not increased, there would be no fun in refining, or, purifying the rice. It is also admitted before us that rice is actually graded and even this process is adopted obviously for the reason of adding to the value of rice, because, if full grain is mixed with half grain, or, quarter grain, the rice would not fetch the same price. We are, therefore, of the view that the process of cleaning, finishing, and polishing the rice definitely adds to its value, and even the original condition is changed.
17. The next point, that has been urged by Mr. Obaid-ur-Rehman's, is that the petitioner-Corporation is a limb of the Government, and, therefore, it could not be considered to be an "industrial undertaking". It is stated that the Corporation, though registered as a Company, was performing such functions, which were performed by the Government earlier to the formation of this Corporation. It is also stated that the shares are controlled by the Government. The first argument appears to be self-- destructive. The very fact that the Government set up a -Company for the performance of its functions would show that the Government did not intend to perform those functions as are now being performed by the petitioner/Corporation. The Gazette Notification of the Ministry of Commerce, dated 28th October, 1974, would seem to make the position absolutely clear. In the Notification, it is clearly stated that all the functions, relating to export of rice, shall stand transferred to the petitioner/Corporation and all contracts in respect of the said functions entered into, or, made in the name of the President of Pakistan, on behalf of the Government of Pakistan, shall stand transferred to and be performed and enforced by the petitioner/Corporation.
18. It would appear that the Government completely washed out its hands from export trading in rice, and such functions were to be performed by the petitioner; Corporation, which was set tip with its own funds. The mere fact that funds were provided by the Government for the establishment of the petitioner/ Corporation would- not alter the situation as far as the working of the Corporation was concerned. What is more that clause 6 of the Articles of Association provides that the Directors of the petitioner) Company may allot, or, otherwise dispose of the shares to such persons on such terms and conditions as the Federal Government may direct. This would indicate that even the share of the petitioner,/Company are liable to disposal though on the directions .Of the Federal Government. The learned Advocate has pointed out that clauses 127 and 130 of the Articles of Association provide for appointment of Chairman and Manag--ing Director by the Federal Government. Even this argument does not advance the case of the petitioner, because such persons, who are appointed Chairman, or, Managing Director, do not, after their appoint--ment, act as servants of the Federal Government. Nor do they draw their salary from the exchequer.
19. Admittedly, they obtain their salary from the petitioner/Corporation so long as they are on deputation to the said Corporation. Reference has been made by .The Advocate. For the petitioner to a Division Bench judgment in the case of Sind Industrial Trading Estate Limited v. Central Board of Revenue (PLD 1975 Kar.128). In that case, the Trading Estate was established as a Company, registered under the Companies Act. A question arose, Whether the Trading Estate was liable to pay taxes to the Income-tax Department. The learned Judges held the Trading Estate to be nothing more than a depart--ment of the Provincial Government, although clothed with juristic personality.
20. The learned Judges arrived at the conclusion, because the Trading Estate was performing such essential functions, which were entrusted to the Province in regard to development of trade and industry. In any case, the authority referred to related to imposition of income-tax, and the learned Judges, coming to the conclusion that all the profits of the Trading Estate again vested in the Government, arrived at that con--clusion. In the present case, the Memorandum of Association confers full and total powers on the petitioner/Corporation to carry on its business and maintain its own funds. Further, in regard to matters, which are the subject-matter of the present case, clause 24 of the Memorandum of Association clearly states that it is one of the objects of the Company "to provide, set apart and pay a portion of the net profits of each unit of undertaking of the Corporation to the employees of that particular unit". This clause would mean and imply that such portions of the profit as are to be set apart, or, paid to the employees of the petitioner/Corporation has to be paid by the petitioner/Corporation, and not by the Government. This would also indicate that the petitioner/Corporation is an independent body having its own funds, and, for such reason.
21. Article 165 of the Constitution was not applicable.
22. The case cited by the learned Advocate is completely distinguishable. In that case, the question related to payment of income-tax, but, in the instant case, the dispute concerns the terms and conditions of employees. No .Doubt, the Government is not liable to pay, or, contribute to the Fund, but surely the employees of the petitioner/Corporation are not employees of the Government.
23. The last point, that has been urged before us,, is that, since the scheme contained in the Companies Profits (Workers' Participation) Fund Act provides for matters relating to investment of the fund, eligibility to benefit of the scheme and distribution of the fund, the Labour Court had no jurisdiction to entertain an application under section 34 of the Industrial Relations Ordinance. By a careful examination of the schedule contained in the Companies Profits (Workers' Participation)
24. Fund Act, there can be no doubt whatsoever that the respondent had no venue before the authorities constituted under the Act to obtain a direction to the employers for the creation of, a Fund. ,-In any case, respondent No. 3 had invoked the jurisdiction, because the petitioner/ Corporation had refused to establish a Fund, and, in case of such refusal, there was no other alternative available to the respondent Labour Union, except to make an application under section 34 of the Industrial Relations. Ordinance for the purpose of enforcing a right, which was guaranteed, or, secured to be workmen under the Companies ,Profits (Workers' Participation) Fund Act.
25. We see no force in this petition, and dismiss the same. A short order to such effect was passed on 8th March, 1983, and- the reasons for such short order appear in this judgment.