' This miscellaneous appeal is directed against the order of learned Judge, Social Security Court No, 8, Karachi dated 23-10-1986.
2. Brief facts leading to this appeal are that the appellant is a Statutory body established under Social Security Ordinance, 1965, whereas the respondent is an Establishment to whose employees and workers the benefits under sections 35 to 45 of the said Ordinance are applicable on 25-10- 1981 the appellant called upon the respondent, to pay a sum of Rs,1,85,643.44 towards Social Security contribution and increases in respect of its workers for the period from July, 1977 to 30-3- 1978, 17-12-1978 to 30-9-1979 and 10-11-1979 to 31-8-1980. The respondent, however, disputed the liability to pay contribution on the ground that the workers, on whose account the contribution was demanded by the appellant, were, at the material time, employed by an independent contractor and there was no relationship of servant and Master between them and the respondent. The objection of the respondent was not accepted by the appellant and consequently the respondent filed an application under section 57 of the Ordinance before the Commissioner, Social Security Institution. The application of the respondent was rejected by the learned Commissioner vide his order dated 20-9-1984, whereupon the respondent filed appeal under section 59 of the Ordinance before the learned Social Security Court, who by its impugned order set aside the order of the learned Commissioner and held that the respondents were not liable to pay the Social Security contribution in respect of the workers/employees employed by the independent contractor.
3. I have heard Mr. S.A. Sarwana learned counsel appearing for the appellant, whereas none appeared for the respondents.
4. The main question, that requires consideration and decision in this appeal, is whether the respondents are liable to pay the contribution under the Ordinance in respect of the workers/employees, who were employed by independent contractor. It is not disputed that the said workers did carry out the work for or on behalf of the respondent, but it is contended that there was no relationship of employer and employees between the said workers and the respondent as their appointment orders were issued by independent contractor, who made the payments of wages to them. In this context it will be relevant to reproduce the definition of words 'employer' and 'employee' as defined in section 2(8) and (9) of the. Ordinance which read as under:- "2. Definitions.--In this Ordinance, unless the context otherwise requires, following expressions shall have the meanings hereby respectively assigned to them, that is to say; (1).
(2)..
(3)
(4)..
(5)..
(6).
(7).
(8)"employee means any person working, normally for at least twenty-four hours per week, for wages, in or in connection with the work of any industry, business, undertaking or establishment, under any contract of service or apprenticeship, whether, written or oral, express or implied but does not include:-
(a) person in the service of the State including members of the Armed Forces, Police and Railway servants;
(b) persons employed in any undertaking under the central of any Defence organisation or Railway administration;
(d) any person in the service of his father, mother, wife, son or daughter, or of her husband;
(e) (omitted by Ordinance IX of 1972, section 2, First (Schedule).
(f) any person employed on wages exceeding one thousand rupees per mensum;
(9) "employer" means in the case of works executed or undertakings carried on by any contractor or licensee on behalf of the State, the contractor or licensee working for the State, and in every other case the owner of the industry, business, undertaking or establishment in which an employee works and includes any agent, manager or representative of the owner;."
5. The learned Judge of Social Security Court, while passing the impugned order has relied upon the cases of Taj Din v. Punjab Labour Court No, 3, Lyallpur PLD 1976 Lah. 1169 and Qadri Brothers Foundry and Workshop, Karachi v. Sind Employees' Social Security Institute, Karachi PLD 1977 Kar.
112. In the Lahore case the question for decision was as to whether the petitioners were employees of the Company as defined in the I.R.O. Of 1969 or were the employees of the contractor. The learned Judge has denied word `contractor' to be "a person who in the pursuit of an independent business undertakes to do specific jobs of work for other persons without submitting himself to their control in respect to the details of the work". In the above case while discussing the question of employee in contractor employment, it was held as under:- "A concept of employment involves three ingredients, (i) employer; (ii) employee; and (iii) the contract of employment. The employer is one who employs i,e,, one who engages the services of other persons. The employee is one who works for another for hire. The employment is the contract of service between the employer and the employee whereunder the employee agrees to serve the employer subject to his control and supervision. Employment brings in the contract of service between the employer and the employee. The control of the Management, which is a necessary element of the relationship of master and servant, is not directed towards providing or dictating the nature of the article to be produced or the work to be done, but the process of work the person carries out in the execution of the work. The manner of work is to be distinguished from the type of work to be performed."
6. In the Karachi case the payments of wages were made to the contractor on behalf of the workers employed by the contractor. It was held that the plaintiffs (Establishment) would be deemed to be the employer of any workman engaged by the contractors, to whom they had assigned work in connection with their establishment by reason of the definitions of "employer" contained in the Ordinance, as the contractors would be deemed to be the representatives of the employer, but in order that 'contribution' should be levied upon such payment, it has to be established by the respondent that the workmen employed by the contractor, fall within the definition of 'employee' as contained in the Ordinance, for 'contributions' are payable only in respect of employees. Now only such persons are deemed to be 'employees' for the purposes of the Ordinance as have been working normally for at least twenty-four hours per week for wages in or in connection with an industry, business, undertaking or establishment. Mr. Sarwana conceded that there was no evidence on record to show that the workmen employed by the plaintiff's contractors had been engaged in connection with the work of the plaintiffs or their establishment for a period of not less than twenty-four hours per week".
7. It is submitted by Mr. S.A. Sarwana learned counsel for the appellant that the Ordinance has been promulgated for the benefit and security of the workers and as such its provisions should be liberally interpreted and the employer should not be allowed to circumvent the provisions of Ordinance by adopting certain under hand methods. Reliance is placed on PLD 1977 SC 197 wherein it has been held that 'Social Security Ordinance is a welfare legislation and should be interpreted liberally to advance the object of the legislation so as to give the benefit to as many workers as possible." Reference is also made to Craies on Statute Law 7th Edition 1971, at page 175 the learned author has observed "a Statute should be interpreted so as to give effect to the public policy as laid down by Legislature." Reliance is also placed on PLD 1963 SC 663 at 702 wherein it is held "Interpretation must advance purpose of Statute, not defeat it. Every word is to have some effect".
8. In this context, while interpreting the relevant provisions of the Ordinance, it may be helpful to refer to the preamble in order to ascertain the intention of legislature for promulgating the Ordinance. The preamble provides "whereas it is expedient to introduce a scheme of social security for providing benefits to certain employees or their dependents in the event of sickness, maternity, employment injury or death, and for matters ancillary thereto The Governor of West Pakistan is pleased to make and promulgate the following Ordinance".
9. Keeping in view the purpose of Legislature as it spelt out in the aforesaid cited preamble of Ordinance and the accepted principles of interpretation of such statute as laid down by their Lordships of Supreme Court. I agree with the contention of the learned counsel for the appellant that the Ordinance should be liberally interpreted so as to ensure the welfare of the workers for whose benefit this Ordinance has been promulgated.
10. Mr. S.M. Sarwana has also referred to the case of United States of America v. Silk (1946) 131 U.S. 704, wherein the Supreme Court, while considering similar question under the American Social Security Act, 1935, held that "the Act was to be construed liberally in order to achieve its objective and the Common Law tests of control etc. Were no longer decisive and that one had to look to the economic reality of the relationship to determine its true nature".
11 The Supreme Court of India has also concerned a similar question in 1978 L L J 397 and held that "the true test is that where a worker or group of workers labors to produce goods or services and these goods or services, are for the business of another, that other is, in fact, the employer. He has economic control over the workers existence, skill and continued employment. If he for any reason chokes off, the worker is virtually laid off. The presence of intermediate contractors with whom alone the workers have an immediate contractual relationship is of no consequence, when on lifting the veil, the naked truth is discovered, though draped in a different paper arrangement, that the real employer is the management and not the immediate contractor." It was further held that "Courts should be astute to avoid the mischief and achieve the purpose of the law and not be misled by the may a of (sic) legal appearances".
12. The definition of 'employer' under the Ordinance, as reproduced above, includes employers representative. Word 'representative' has not been defined in the Ordinance. In Black's Law Dictionary Vth Edition the word `representative'is defined to mean amongst others, as "one who represents or stands in the place of another. One who represents others or another in a special capacity, as an agent, and has been defined in the same dictionary to mean, amongst others, as "one who acts for or in place of another by authority from him, a substitute, a deputy, appointed by principal with power to do the things which principle may do.
13. The respondent is alleged to have engaged workers through four contractors under agreement under which each contractor had to provide minimum force of 12 persons per day in accordance with the normal requirements of work at the Rice Mill on instructions of the Deputy Production Manager. This agreement, as is evident from the Order of the Commissioner, provides that these workers had to work at the Mill of the respondents. This contract further provides that the wages etc. And any compensation for the injury during the course of engagement would be the responsibility of the contractor and the Company would not be liable. The works that were assigned to be done by the contractor, through their laborers were in fact the work which the principal viz. The respondent No, 2 should have done. The contractors were in fact acting as agent of respondent, while carrying on those works and as such will be considered as representative of the respondent. The definition of 'employee' does not provide that the contract should be with the employer, but provides that any person working for wages normally for at least twenty-four hours per week in or in connection with the establishment mentioned therein under any contract of service would be an 'employee'. This provision further shows the categories of persons, who are excluded from such definition. The workers employed by contractor to do the work in or in connection with the work of the Industry or establishment are not excluded from the definition of 'employee'. Word 'any' before words 'contract of service' is significant. Thus, if the definition of words `employee' and 'employer' is liberally construed a contract of service, even with the contractor as representative of the employer, would be deemed to be a contract of employment with the 'employer'. In this respect I am in respectful agreement with the view of learned Judge expressed in the aforementioned Karachi case. In my opinion, therefore, the workers employed by the contractors to do work in or in connection with the work of respondent No, 2, would be employees within the meaning of employee as defined in the Ordinance provided it is shown that they have normally worked for the respondent for at least twenty-four hours per week.
14. The Ordinance is a welfare statute and its prime-purpose is the welfare of the workers and to achieve this purpose it authorises the collection of certain contributions mentioned in the Ordinance from 'employers'. It cannot be said to be a fiscal statute with prime purpose of collecting revenue. The workers for whose benefit the contribution is collected, is described as secured person as defined in section 25 of the Ordinance. The order of the learned Commissioner shows that the appellant was not able even to find out the names of the workers. There is nothing on record to show that these workers have been enrolled as secured workers for the purpose of extending benefit to them under the Ordinance. The main purpose of this exercise by the appellant appears to be to collect revenue from employers and not to extend the benefit of this collection under the statute to the workers for whose benefit it is to be collected, as even their names are not known to the appellant. Furthermore, there is nothing on the record to show that each particular worker or workers for whose benefit the contribution is sought to be recovered from the employer, has personally worked for at least twenty-four hours in a week so as to bring them within the ambit of definition of employee as contained in the Ordinance.
15. In view of the aforesaid discussion, I am of the opinion that the respondent is liable to pay the contribution etc. Under the Ordinance for the workers employed by its contractor to work in or in connection with the establishment/industry of respondent No, 2, provided they are found to have personally worked for at least twenty-four hours in a week. But in the instant case, as there is no evidence to show that the workers on whose behalf the contribution was being collected had worked for twenty-four hours in a week in or in connection with the work of respondent No, 2, the appellants are not entitled to recover the disputed amount from the respondent. The appeal stands disposed of in the above terms with no order as to cost.