1. GHULAM RASOOL K. SHAIKH, J.--This is a writ petition challenging the order dated 24-3-1970, passed by the Labour Officer and Inspector of Factories, directing the petitioners to pay gratuity, unavailed leave salary, etc. to the affected employees, within a fortnight of the issue of this letter otherwise legal action would be taken against them.
2. The petitioners and one Hyder Ali Bhimji were the partners of the dissolved firm of Chartered Accountants carrying on the profession of Chartered Accountants under the name and style of "Messrs Nariman Hyder Bhimji & Company" under the Chartered Accountants Ordinance, 1961. The firm had employed staff numbering about 135 and assigned different duties which were enumerated in the petition. It is said that 16 were Registered Articled Clerks and forty-nine Registered Audit Clerks, as duly registered as apprentices under the Chartered Accountants Ordinance, 1961, and after passing the prescribed examinations they qualify as Chartered Accountants. The period of training ranges from 3 to 6 years, and during that period Articled Clerks pay a certain sum by way of premium under law to their Principals and the Principals in turn make certain payments by way of allowances to the clerks. In addition there were twenty-three unregistered clerks included part-time employees who had joined the firm in order to obtain some basic knowledge of accountancy for themselves. The firm had also employed 19 Senior Audit Assistants out of them two were Chartered Accountants and most of the others were preparing themselves for examinations. Three Senior Income-tax Assistants were also engaged and their duties] were to make appearance before the Income-tax Authorities to conduct cases as well as to prepare and file Income-tax returns etc. of the clients. Apart from this the firm had employed Typists, Telephone Operator, Peons, Drivers, Sweepers and Liftman and a despatch clerk and their number was about 24. Out of the total staff of 135 persons some of the stall bad less than nine months' services. The firm did not have any Provident Fund Scheme nor did the rules for office staff provide the payment of gratuity. However, the permanent employees were entitled to one month's privilege leave with no provision for the accumu-lation thereof.
3. The firm was dissolved on 28-2-1970 and prior to dis-solution one month's notice dated 5-1-70 were served upon the entire staff for terminating their services. On receipt of those notices all the employees made a representation to the firm demanding gratuity and other benefits, which according to the petitioners did not form part of their contract of employment, and it was further contended that the West Pakistan Industrial and Commercial Employment (Standing Orders)
4. Ordinance, 1968, did not apply to them, as they did not fall within the term of "commercial establishment" as defined by section 2(b) of the aforesaid Ordinance.
5. It was further stated in the petition that the overwhelming majority of the former employees had been re-employed by the two new firms which have been set up on the dissolution of the old firm, thus in effect there had only been a technical break of employment of those re-employed employees.
6. In the alternative it was pleaded that in case the West Pakistan Standing Orders Ordinance, 1968, was applicable, the benefits were for those employees who would fall within the meaning of "workmen" as defined in section 2(i) of the Ordinance and in this category the typists, telephone operator, peons, sweeper, liftman and despatch clerk would be entitled to the benefits provided that the requisite statutory conditions were fulfilled. So for the remaining employees were concerned they would not be treated as "workmen".
7. Since the employees were not able to receive any amount by way of gratuity, provident fund etc., from the dissolved firm, they approached the Labour Department. On the basis of their representation the Labour Officer and Inspector of Factories issued notice to the petitioners who sent reply by letter dated 7th March 1970, resisting the claim and inter alia pleading that the West Pakistan Standing Orders Ordinance, 1968, was not applicable. The contention of the petitioners was not accepted and the impugned order was passed and communicated to the petitioners by a letter dated 24th March 1970, and it reads as under: -- <i>"Subject:--Termination of Services</i> of Employees--Messrs Nariman Hyder Bhimji & Co.
8. Attention is drawn towards your termination notices dated 5th January 1970, wherein the services of all the employees of your above-named concern have been terminated w. e. f. 28-2-70. The plea taken in the aforementioned reference is not tenable in law as the service of nobody could be terminated without paying him legal dues as provided in the law.
9. You are, therefore, advised to clear all the dues such as gratuity, unavailed leave salary etc. of the affected employees within a fortnight of the issue of this letter otherwise legal action will be taken against you."
10. Aggrieved by this letter the present petition was filed impleading the inspector appointed under section 6 of the West Pakistan Industrial and Commercial Employment (Standing Orders)
11. Ordinance No, VI of 1968, hereafter called the Ordinance, and five other persons who were said to be the representatives of the displaced staff.
12. It was urged on behalf of the petitioners that the Ordinance was not applicable to a firm of Chartered Accountants and in the alternative it was argued that even if the Ordinance was applicable the dispute could be resolved only by the Industrial Court under section 18 and the Inspector appointed under the Ordinance was not competent to issue the impugned letter directing the petitioners to clear the dues of the employees whose services came to an end on the dissolution of the firm.
13. In order to attract the provisions of the Ordinance and the benefits available thereunder, it is necessary for the respondents to show that the employees of the dissolved firm were covered by the definition of the term "Commercial Establishment" as laid down by section 2(b) of the Ordinance, which reads as under:-- "(b) 'commercial establishment' means an establishment in which the business of advertising, commission or forwarding is conducted, or which is a commercial agency, and includes a clerical department of a factory or person who for the purpose of fulfilling a contract with the owner of any commercial establishment or industrial establishment, employs workmen, a unit of a joint stock company, an insurance company, a banking company or a bank, a banker's office or stock- exchange, a club, a hotel, a restaurant or an eating house, a cinema or theatre, and such other establishment or class thereof, as Government may, by notification in the official Gazette, declare to be a commercial establishment for the purposes of this Ordinance."
14. Apparently the definition is enumerative and exhaustive in some respects. It was urged on behalf of the petitioners that although there were various categories of concerns, the establishment of which were covered by it but the firm of Chartered Accountant was not mentioned in the definition. In this connection our attention was also invited to the definition of the same term as laid by section 2(e) of West Pakistan Shops and Establishments Ordinance, VIII of 1969, which included Chartered Accountant. The relevant clauses read as under: -- " (e) 'commercial establishment' means an establishment which carries on any business, trade or profession or any work in connection with, or incidental or ancillary to, any business, trade or profession and includes-- (iii)a clerical department of a factory or of any industrial or commercial undertaking; (iv)an insurance company, joint stock company, bank, brokers' offices or exchange and office of lawyers, income-tax practitioners, registered accountants, contractors and engineers."
15. On the basis of this definition it was urged that since the terms as defined by the Ordinance was conspicuous by the absence of Chartered Accountants, the Legislature never intended to apply the Ordinance or the benefits available under it to the employees of the firm of Chartered Accountants.
16. So the intention of the Legislature was plain and clear and nothing in the Ordinance could be stretched in order to include the displaced employees. To support this, reference was made to the definition of the term as laid down by West Pakistan Minimum Wages for Unskilled Worker Ordinance No, XX of 1969, which is exactly similar to the one in the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance.
17. On the other hand it was contended on behalf of the respondents that the petition was not maintainable as the impugned order was not a final order and respondent No, 1 could not be prevented from performing his statutory duties. It was maintained that the staff of the petitioner's firm was covered by the expression, "the office establishment of a person who for the purpose of fulfilling a contract with the owner of any commercial establishment or industrial establishment employs workmen". Elaborating this, it was urged that the engagements of the firm of Chartered Accountants by other concerns for the examination of their accounts, make report, tender advice and perform other functions in that behalf, amounted to contract within the meaning of the aforesaid expression. With regard to the powers of the Inspector, it was maintained that his authority to prevent violations of the provisions of the Ordinance and ensure its compliance was unexceptional and while acting in pursuance of that authority he could issue the directions as the occasion demanded.
18. In the case of "commercial establishment" the Ordinance is applicable if 20 or more workmen are employed or were employed on any day during the preceding 12 months. To bring the case within the scope of the expression, "the office establishment of a person who for the purpose of fulfilling a contract with the owner of any commercial establishment or industrial establishment employs workmen" sought in aid by the respondents, the first requirement is that there should be a contract.
19. It is a matter of serious consideration whether the word "contract" has been used in the ordinary sense embracing every engagement or used in a special sense confined to the nature of the business of the other contracting party, in other words whether there is nexus between the functions of the Chartered Accountants and the nature of the business of the owner engaging them. The other requirement is that the staff employed for the purpose should be workmen within the meaning of the term as laid down by section 2(i) of Ordinance, which reads as under: "(I) 'workman' means any person employed in any industrial or commercial establishment to do any skilled or unskilled, manual or clerical labour for hire or reward."
20. The conditions of the employment of the workmen are regulated by the standing orders embodied in the schedule to the Ordinance. In this connection I would make reference to the Standing Order No, 1 which classifies the workman as (1) permanent (2) probationers (3) Badlis (4) temporary, and
(5) apprentices and their qualifications. According to this an apprentice is a learner who is paid an allowance during the period of his training.
21. The other Standing Order is No, 12 which reads as under: "12(1). For terminating employment of a permanent work man, one month's notice in writing shall be given either by the employer or the workman. One month's wages calculated on the basis of average of wages earned by the workman during the last three months shall be paid in lieu of notice.
22. (2)No temporary workman, whether monthly-rated, weekly-rated, daily-rated or piece-rated and no probationer or badli, shall be entitled to any notice or pay in lieu thereof, if his services are terminated.
23. (3)Where the employment of any workman is terminated, the wages earned by him and other dues including payment for "unavailed leave as defined in clause (1) of Standing Order No, 8, shall be paid before the expiry of the Standing Order No, 8 shall be paid before the expiry of the (sic) is terminated.
24. (4)The services of a permanent or temporary workman shall not be terminated on grounds of misconduct, otherwise than in the manner prescribed in Standing Order 15.
25. (5)Where the services of a permanent workman are terminated for reasons other than misconduct, he shall, in addition to the wages payable to him under clause (1), be paid gratuity equivalent to fifteen days' wages for every completed year of service or any part thereof in excess of six months ; provided that no such gratuity shall be payable in case where the employer has established a Provident Fund to which such workman is a contributor, and the contribution of the employer to such Fund is not less than the contribution made by the workman.
26. (6)The provisions of clause (5) shall apply to any permanent workman whose services were terminated within a period of three months immediately before the coming into force of this Ordinance."
27. It is clear from this standing order that the permanent workman is placed in a better position. His service cannot be terminated without notice or pay in lieu thereof as well as he is entitled to gratuity under certain circumstances. These benefits are not allowed to the other categories of workmen.
28. As regards the Provident Fund, the benefit is allowed under Standing Order No, 17 which reads as under: "No workman who is a member of any Provident Fund, shall be deprived, due to retrenchment, discharge or termination of service in any manner other than by way of dismissal for misconduct, of the benefit of that Provident Fund, including the employer's contributions thereto: Provided that in case of resignation, or dismissal for misconduct, no workman shall be deprived of any portion of his own contribution to such Provident Fund: Provided further that in case of resignation after five years of service a workman shall be entitled to the employer's share of contribution as well."
29. There is no provision in the Ordinance making it compulsory for the employer to establish Provident Fund nor any other provision of law has been pointed out. In this connection it may be mentioned that the petitioners have denied the establishment of Provident Fund.
30. We have considered the contentions raised on behalf of the parties and confining ourselves to the propriety of the directions issued by the Inspector, we are of the opinion that there is considerable force in the contentions, raised on behalf of the petitioners.
31. The powers of the inspector appointed under the Ordinance are laid down by section 6(2) which reads as under: "An inspector may at all reasonable hours enter on any premises and make such examination of any register or document relating to the maintenance or enforcement of the standing orders and take on the spot or otherwise such evidence of any person, and exercise such other powers of inspection, as he may deem necessary for carrying out the purposes of this Ordinance."
32. Thus it is clear that under this provision of law the inspector has only the power of inspection of the premises as well as the register or documents relating to the maintenance or enforcement of the standing orders or hold an inquiry or exercise such powers of inspection for carrying out the purposes of the Ordinance but he has no power to issue any direction as has been issued by the impugned letter. Then comes section 7 which provides penalties and procedure for the contravention of the standing orders. The relevant subsections are subsections (3) and (5) which read as under: "(3) Whoever contravenes any of the provisions of this Ordinance shall, if no other penalty is elsewhere provided by or under this Ordinance for such contraventions, be punishable with fine which may extend to one hundred rupees.
(5) No prosecution for an offence punishable under this Ordinance shall be instituted except by, or with the previous permission in writing of, the inspector."
33. The inspector and the learned counsel for the respondents sought in aid these provisions and it was urged that the inspector had the power to issue the necessary directions. We are unable to accept this contention. These provisions do not provide the necessary authority to the inspector to issue any such direction At the most what an inspector can do is that if he finds that there is contravention of any provision of the Ordinance he can file a complaint in the Court of 1st Class Magistrate as laid down by subsection (6). Indeed the non-payment of gratuity, provident fund and other dues to the employees whose services have been terminated and to whom the Ordinance applies amounts to the contravention of the provisions of the Ordinance but that does not mean that the inspector had been invested with the power to order the payment of those dues to the persons entitled to receive them. There is no other provision in the standing orders conferring any such authority upon the inspector. This power vests in the industrial Court under section 18 of the Ordinance which lays down the grievance procedure. It is provided by this section that any individual workman who has a grievance in respect of any matter under the Ordinance and intends to seek redress thereof shall observe the procedure laid down therein. The procedure is that within the period mentioned therein he has to approach the employer and if the grievance is not redressed he can make a complaint to the industrial Court having jurisdiction and upon such a complaint the Court has power after giving notice to the employer concerned and giving the parties an opportunity of being heard, to decide the matter in such a summary way as it deems fit.
34. In view of this provision of law the action taken by the inspector is misconceived and is not sustainable. It is not possible to accept that simultaneously two different authorities exist to entertain the complaint and issue directions for payment of those dues. Keeping in view the various provisions of law it is plain enough that the inspector had usurped the powers of the industrial Court and proceeded to issue the direction.
35. The matter is not so simple as has been treated by the inspector. The determination of the questions involved in these proceedings depend upon the interpretation of the terms "commercial establishment" and "workman" as defined by section 2(b) and (i) respectively as well as other provisions of the Ordinance which in our view was beyond the competence of the inspector. It needed judicial approach and depended upon the evidence which would be necessary for the disposal of these important questions of law and fact. The inspector is neither expected nor can profess to possess the requisite legal knowledge or acumen to interpret the intricate provisions of statute. It is entirely the function of the Court. It is for this very reason that the inspector has not been invested with the power to adjudicate the dispute and issue the directions for the payment of the dues. Moreover, no evidence was recorded by the inspector, but he decided the entire question and took action on merely two papers i,e,, the representation made by the employees and the explanation given by the petitioners. This material could hardly be sufficient to reach a proper conclusion. The inspector dealt with the matter in a summary manner and gave no reasons in reaching the conclusion that the Ordinance was applicable in this case. The proper course for the inspector would have been to refer the employees to the industrial Court for proper adjudication of the questions involved in the case or at the most he could file a complaint in the Court of the 1st Class Magistrate as required by section 7 of the Ordinance and it would have then been for that Court to find whether the Ordinance was applicable and whether there was any contravention of the provisions of the of Ordinance, although we are of the view that in the circumstances of the present case even this latter course would have been inapt and only the industrial Court would be competent to decide the various complicated questions of law involved in this case upon taking evidence which may be tendered by the parties. It is also not possible for us to resolve the dispute in the absence of evidence and in these proceedings we cannot embark upon that inquiry.
36. The learned counsel for the respondents referred to the authority in the case of Rabindra Nath Sen and others v. First Industrial Tribunal, West Bengal and others , in which it was held that the firm of Chartered Accountants carrying on auditing work on a magnified scale with more clients than he himself can manage and engaging employees to assist the firm, is an industry within the meaning section 2( j) of the Industrial Disputes Act 1947 and the dispute between the firm and the employees can validly be referred to Industrial Tribunal. But when this authority came under review during the course of arguments it was conceded by the learned counsel that this authority was not helpful in the present case. Despite this concession we would like to state that the question involved in that case was whether the firm was an industry within the meaning of Industrial Disputes Act whereas the questions involved in the present case are in respect of the powers of the inspector and the entitlements of the employees to the benefits allowed under the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance. Even the mere fact that the firm is an industry it does not necessarily follow that all the employees are workmen whatever be their status or are entitled to all the benefits available under the Ordinance irrespective of their classification. The term "Industrial Establishment" has been defined by section (2)(f) of the Ordinance which applies if the workmen are fifty or more and it reads as under: "(f) 'industrial establishment' means- (i)an industrial establishment as defined in clause (ii) of section 2 of the Payment of Wages Act, 1936 (1V of 1936); or (ii)a factory as defined in clause (j) of section 2 of the Factories Act, 1934 (XXV of 1934); or (iii)a railways as defined in clause (4) of section 3 of the Railways Act, 1890 (IX of 1890) ; or (iv)the establishment of a person who, for the purpose of fulfilling a contract with the owner of any industrial or commercial establishment, employs workmen."
37. The first three clauses are not applicable. It is the fourth clause which is the same as is found in the definition of the term "commercial establishment" and had been sought in aid by the respondents.1 This has already been dealt with. Furthermore, in that precedent case evidence was led and on the basis of the evidence and the duties, of the Chartered Accountants laid down by statutes, the verdict was given but in the present case no such evidence is available. This, on the contrary, fortifies our view that without proper evidence no adjudication is possible and the dispute cannot be resolved, much less it could be possible for the inspector to find that the provisions of the Ordinance had been violated providing a justification to take action.
38. Lastly, it was urged on behalf of the respondents that the petition was premature and incompetent as no final order had yet been passed by the inspector. We are unable to accept this contention.
39. The perusal of the order which has already been reproduced leaves no room for doubt that he had passed the final order and directed the petitioners to clear the dues and on failure to make compliance they were threatened with legal action. This objection is, therefore, overruled.
40. For the aforesaid reasons we are unable to support the impugned order issued by the inspector and, therefore, accept the petition and quash the order. Looking to the peculiar circumstances of the case we order that each party should bear its own costs. A T R 1963 Cal. 310