' This is a Miscellaneous Appeal under section 64 of the Provincial Employees' Social Security Ordinance, 1965 against an order dated 12-11-1983 passed by the Social Security Court.
2. The facts giving rise to this appeal, briefly stated, are that since 1979 the appellants are registered with the Korangi Directorate of respondent No, 1, Sind Employees' Social Security Institution established under section 3 of Provincial Employees Social Security Ordinance, 1965.
Since then they have been regularly filing their returns and making deposits of the contribution required to be deposited under the Ordinance which was accepted without any objection for the years ending 1981.
3. The respondent No, 1 Institution through their Directorate's letter dated 31-3-1983 deputed their officers to check the record of the appellants. In response to the said letter all the records were made available to respondent No, 1 by the appellants.
4. By letter dated 14-6-1983 the respondent Institution demanded arrears of Rs, 2,77,276.05 on the ground that as a result of checking of the records, there was less payment for five years from 1978 to 1982 at the rate of Rs, 55,455.21 per year, thus making a total sum of Rs, 2,77,976 including increase at the rate of 50 %, details whereof were annexed to the said letter. The appellants filed objections against the demand on 23-6-1983 against receipt. The notice of demand under section 81 of the West Pakistan Land Revenue Act, 1957 was set aside by the respondent Institution by their letter dated 30-6-1983 by which the respondent Institution not only reduced the amount demanded in the notice under section 81 of the Land Revenue Act but also agreed to recheck the record and review the matter. The appellants, however, again produced the relevant record on 21- 7-1983 and 24-7-1983 but the respondent Institution did not check them and on 25th of July, 1983 they falsely and mala fide alleged that record produced was irrelevant without going through the allegations of the appellants or the record required.
5. On that very day i,e, 25-7-1983, the respondent Institution under the attachment order issued by the Director, Korangi Directorate of the respondent Institution one Agha Salem came to the office of the appellants and threatened attachment of the appellants' property if the amount claimed by the respondent Institution was not paid then and there. As result of the threat and coercion, the appellants had no option but to pav the amount of Rs, 2,21,820.85 which also included Rs, 4,436.40 as recovery charges. This attachment was without any fresh notice of demand under section 81 or 82 of the Land Revenue Act, 1957. It was alleged that the recovery under section 83 of the Land Revenue Act was without lawful authority and of no legal effect and was made mab fide. It was also alleged that no opportunity was afforded to the appellants to object to the said attachment as prescribed under Land Revenue Act.
6. The appellants against the said orders of the respondent Institution filed an appeal under section 9 of the Ordinance in the Social Security Court. The Social Security Court, having held that it is not the appellate authority in connection with the orders passed by the Director of the respondent Institution, dismissed the said appeal by his order dated 12-11-1983 against which this appeal has now been filed under section 64 of the Ordinance as referred to above.
7.Learned counsel for the appellant contended that the orders passed by the Director of the respondent Institution will be deemed to be the orders authorised on behalf of the respondent Institution moreso when he issued letter dated 14-6-1983 (Annexure 'B') asking the appellants that if they have any objection as to the demand, made therein, representation may be made to him within seven days, with all documentary evidence, failing which the demands shall stand confirmed and recovered as arrears of land revenue under Land Revenue Act. The appellants filed their "objections" under section 57 which were entertained by the Director and final demand was reduced which is to be treated as "decision" of the Institution, as to the final demand which was, in fact, recovered by employing coercive method. Alternatively, he submitted that if the said orders of raising the demands and making it final and recovering the same are not the orders of the respondent Institution, the I the said orders including recovery by the Director of the respondent Institution are illegal and without jurisdiction.
8. Learned counsel for respondent No, 1 contends that the order passed by the Director are not the orders passed by the respondent Institution in as-much as it is Commissioner only who in exercise of the powers conferred on him, could exercise the powers of the Institution under section 57 of the Ordinance. Since the appellants did not file any appeal under section 57 of the Ordinance, the of the Social Security Court dismissing the appeal cannot be assailed.
9. Before dealing with the points involved in the appeal it is deemed proper to first give the scheme of the Ordinance. Under section 3 of the Provincial Employees' Social Security Ordinance, 1965 there has been established by a notification an Institution to be called the Employees' Social Security Institution which is a body corporate having perpetual succession and common seal. Section 4 of the Ordinance provides that the General Directions and Superintendence of the affairs of the Institution shall vest in a Governing Body which, with the assistance of a Commissioner, may exercise all powers and do all acts and things which may be exercised or done by the Institution.
Section 20 provides that subject to the other provisions of Chapter 3, the employer, shall in respect of every emyloyee pay to the Institution a contribution at such times, at such rates and subject to such conditions as may be prescribed, section 21 provides that every employer shall keep such records and shall submit to the Institution such returns, at such times, in such form and containing such particulars relating to the persons employed by him, as may be provided in the regulations.
Section 22 provides that any official of the Institution, duly authorised by a certificate in a form specified in the regulations, may, for the purpose of inquiring into the correctness of any of the particulars stated in the records of returns referred to in section 21 require an employer to furnish to him such information as he may consider necessary.
10. Section 23 provides that the recovery of contribution due may be made as arrears of land revenue. Section 25 relates to the return of contribution paid erroneously whereas section 26 speaks of increase of contribution where safety rules are not observed. Section 27 deals with the extinguishment of claims to contribution as provided in the re:_sulations. Sections 28 to 34 deal with the Employees' Social Security Fund, its accounts and audit and the valuation of assets and liabilities. Sections 35 to 52 deal with the various benefits of the employees which they are entitled to under the Ordinance. Section 57 deals with decision of complaints, questions and disputes to be decided by the Institution in such a manner and within such time as the regulations may provide.
Section 58 deals with power of the Institution to review. Section 59 provides appeal to Social Security Court against a decision of the Institution under sections 57 and 58, Sections 60 to 63 deal with the Constitution, jurisdiction and powers of Social Security Court. Section 64 makes order of a Social Security Court appealable to the High Court and section 65 provides stay of payment of contribution to the Institution pending appeals. Section 80 gives power to the Governing Body of the said Institution to make regulations subject to the condition of previous publication by notification. This power includes to make regulations, inter alia, by notification prescribing the manner in which and the time within which complaints, questions and disputes shall be decided and the circumstances and manner in which the Institution may reopen cases and review decisions.
11. It is admitted that no regulations have been framed by the Governing Body of the respondent Institution till the filing of this appeal. The Governing Body, however, framed the regulations as notified on 9th February, 1984. In view of this position that there are no regulations the appellants appear to be justified in looking upon the director to be authorised on behalf of the respondent Institution and moreso on the basis of letter, dated 14-6-1983 directing the appellants to file objections, if any, as to the demands "before him" and taking all steps including making coercive recovery of dues for and on behalf of the respondent Institution. In fact the counter-affidavit filed on behalf of respondent Institution clearly admits that respondent No, I raised the aforesaid demand by its letter of 14-6-1963. The relevant paras. 2 and 3 of the said counter-affidavit are reproduced below :- "2. With regard to the facts stated in the Memo. Of Appeal I submit that the appellant did not pay all the contributions 1:gally due for the years 1978-1982. The records of the appellant for the year 1982 were checked and an amount of Rs, 55,455.48 (including increase) was found short paid than what was actually payable by the appellants. Respondent No, 1, therefore, raised a demand for this sum alongwith a sum of Rs, 2,21,820 being the shortfall for the years 1978 to 1981, by its letter of 14th June, 1983. The appellants were asked to submit their objections to this demand within a period of 7 days alongwith any documentary evidence which they failed to do. The respondent allowed further time to the appellant to produce the records ; but the appellants from time to kept evading the same. A final notice dated 18th July, 1983 was given to the appellants to produce their records but they only produced irrelevant records and, therefore, the respondent by their letter of 25th July 1983 informed the appellants that recovery under section 83 of the Land Revenue Act will be proceeded with.
3. The orders of the respondent No, 1 are, therefore, legal and valid in law."
12. To repel the contention of the learned counsel for the appellants, learned counsel for the respondents relied on two judgments reported in Sind Provincial Social Security Institution v.
Ahmad Karachi Halva Merchant Ltd. (1) and Pakistan Industrial Promoters Ltd. v. Punjab Employee's Social Security Institution (2).
13. In the first case of this Court, it appears that only impugned letters were issued by the Director, Employees' Social Security Institution but no final dues were determined or recovered. It was, thus, held that no appeal would lie before Social Security Court under section 59 against such letters.
The appellate order passed by the Social Security Court was, thus, set aside and the case was remanded to the Institution for its decision under section 57 (1)1983 PLC 516 (2)1981 PLC 465 of the Ordinance. It is, however, pertinent to note that in that case the learned counsel appearing for the respondents had conceded that in the two letters issued by the Director there was nothing to show that any decision under section 57 of the Ordinance was taken by the Institution.
14. In the second case decided by a Single Judge of the Lahore High Court, Regulations had already been framed by--the Institution in 1973 which laid down the manner and time within which the complaint 'was to be made to the Commissioner under section 57 of the Ordinance. So, the letters addressed to the officers of Social Security disputing liability and rate of contribution were not treated as complaints under section 57 and they were not held to be a "decision" of the Institution as envisaged under section 57 of the Ordinance, as only a "notice, of demand" had been issued in the case.
15. Reliance was also placed on an unreported judgment of this Court in Miscellaneous Appeal No, 44 of 1978 (Sind Employees' Social Security Institution v. Ameen Agencies). In this case to the learned counsel for the respondents had conceded that there being no decision under section 57 of the Ordinance, the appeal before the Social. Security Court was not maintainable.
16. It may be noted that in all the three cases, referred to above, the final amount of contribution was neither determined nor recovery had been made and the matter was, therefore, remanded to the Social Security Institution for deciding the dispute raised by the employers on the various grounds mentioned in their various letters. So, all the three cases cited by the counsel for respondents are distinguishable.
17. Learned counsel for the respondents during the hearing of the appeal has filed two documents namely, (1) Sind Employees' Social Security Procedure for deciding complaints and review of decisions, Regulations, 1983, published in Official Gazette of February 9, 1984, and (2) Notification, dated 18-10-1972 empowering the Director of the respondent Institution to act as Assistant Collector Grade-I under the Land Revenue Act for the purpose of recovery of the amounts recoverable as arrears of land revenue under section 23 of the West Pakistan Social Security Ordinance, 1965.
18. On reading of the Regulations it is amply clear that the same was made enforceable on 9-2- 1984. It has, therefore, no application to the instant case inasmuch as it does not have retrospective operation.
19. Admittedly there were no regulations so as to empower the Commissioner to decide Any question or dispute arising out of any matter enumerated in section 57 of the Ordinance or actions taken in the instant case or prior to that date. If there was some arrangement by way of some resolution of the Governing Body of the Institution, as submitted before me by the counsel for respondents, that the objections taken by the employer as enumerated in section 57 are to be decided by the Commissioner under section 57 of the Ordinance, the same was not made public by any notification or circular except the one produced in the Court during the hearing. In any case, the taking of decision as to the fixing of final liability on the employer and recovering the said liability as arrears of land> revenue, in the instant case, will A be purported to be the matters decided by the Institution in the absence of any Regulations, and the actions taken by the Director shall be deemed to be the actions taken for and on behalf of the Institution as contemplated by section 57 read with section 23 of the Ordinance.
20. In this respect, aid may be sought from the doctrine of Indoor Management as argued by the learned counsel for the appellants. Reliance was placed by him on a D. B judgment by this Court reported in The Pakistan Employees' Co-operative Housing Societies Ltd., Karachi v. Anwar Sultana and others (1), in which it was observed as under :- "Broadly and briefly stated, this doctrine is to the effect that persons contracting with a company and dealing in good faith may assume that acts within its constitution and powers have been properly and duly performed and are not bound to inquire whether acts of internal management have been regularly done."
' The learned Judges for the above observations referred to a passage at page 431 of Halsbury's Laws of England (Third Edition) that :- "A company which has appointed a manager of its business is bound by contracts made by him in the usual course of the business, although sufficient powers have not in fact been delegated to him."
' The same position has been summed up on page 55 of his book in Indian Company law (Ninth Edition) by K. M. Gosh by stating that :- "People dealing with a company are fixed with notice of any limitations of the powers of the company contained in the statute under which it is incorporated or in the memorandum of articles of association but if it is shown that a particular act was ostensibly authorised by them, persons dealing with the company are not concerned to see that the company has put itself into a position to exercise its powers properly parties are not concerned with the internal management of the company. They are not concerned to see that there was a proper quorum of directors present, or that persons who are apparently directors had in fact been validly appointed, 'these are matters of internal management."
' The learned Judges also referred to a decision in Dehra Dun Mussorie Electric Tramway Co Ltd.
And another v. Jagmaridar Dass and others (2), in which a Division Bench observed that:- "a company is liable for all the acts done by its directors even though un authorised by it, provided such acts are within the apparent authority of the directors and not ultra vires of the company.
Persons dealing bona fide with a managing director are entitled to assume that he has all such powers as he purports to exercise if they are such powers which, according to the constitution of the Company, a managing director can have,"
' A similar view finds mention in British Thomson Houston Co. Ltd. v. Federated European Bank Ltd. (: ), as well as in P. V. Domodra Reddi and another v. Indian National Agencies Ltd. (4).
21. Relying on the Doctrine of Indoor Management, the Director of the Institution appears to have acted in this case, for and on behalf of the Institution for all relevant purposes under section 57 of the Ordinance and therefore an appeal would lie under section 59 of the Ordinance to the Social Security Court. The Social Security Court, Sind Labour Court No, 1 thus failed to exercise its jurisdiction vested in it under section 59. Accordingly I set aside the order dated 12-11-1983 and remand the case to respondent No, 2
(1) PLD 1969 Kar. 474 (2) AIR 1932 All. 141
(3) 1932 K B 176 (4) AIR. 1946 Mad. 35 ' for decision on merits and in accordance with law as provided in the Ordinance.
22. Before parting with this case, I would, however, like to observe that Mr. J. H. Rahimtoollah also argued at some length about the coercive recovery of the amount of contribution said to be due, for which violations of sections 81, 82 and 83 have been pleaded but since I am remanding the case for hearing on merits wherein the question of the liability and its recovery in accordance with law will be considered and decided by the Social Security Court, I do not think it proper to make any comments on this issue.
23. In the result, the order, dated 12-11-1983 is set aside and the case is remanded as stated above.
The parties will, however, bear their own costs;